HMRC Bailiffs and Enforcement Officers – Can They Enter My House?
A Bailiff, HMRC officer or an Enforcement Officer has the power to take control of your goods and possessions in order to satisfy a debt.
ReadHMRC Bailiffs and Enforcement Officers – Can They Enter My House?
A Bailiff, HMRC officer or an Enforcement Officer has the power to take control of your goods and possessions in order to satisfy a debt.
ReadWhat is an HMRC Notice Of Enforcement?
Any creditor who is owed money has the power to serve a Notice of Enforcement if they obtain a court order. HMRC or landlords do not need a court order, however they must still obey strict regulations to retrieve debt.
ReadOur Advice If You Can’t Pay Corporation Tax
If you can't pay your corporation tax, then it may be that the company is insolvent. Get in touch with HMRC to explain the situation.
ReadHow To Get Help With VAT Arrears
Is your business suffering from VAT arrears? Failure to pay VAT on time can lead to problems with HMRC who will try and recover the debts. We can advise on your options
ReadPenalties for late payment of PAYE and NIC
HMRC implement penalties for late payment of periodic PAYE /NIC from businesses.
ReadWhat are PAYE Security Deposits?
Since 6 April 2012 HMRC have been able to demand PAYE security deposits under paragraph 4(2)(a) of Schedule 11 to the VAT Act 1994.
ReadWhat is an HMRC Distraint Notice (Notice of Enforcement)
A Notice of Enforcement (previously distraint) is where HMRC has lost patience with the company it is now seeking to recover the debt. An HMRC officer will turn up at the business.
ReadHMRC Debt Management Department
What is it and how can it help? His Majesty’s Revenue and Customs (HMRC) handles debts relating to Income Tax, VAT arrears, tax credit overpayments and National Insurance. Upon owing any of these ‘priority’ debts it is best to try and settle as soon as possible. HMRC have some assistance in place. You can call HMRC Debt Management support service on 0300 200 3887.Be sure to contact the specialist Department if you are in need of setting up a tax payment plan because you owe tax and are unable to pay HMRC. They understand how HMRC's Enforcement Department (the main department that collects taxes) works and can offer guidance in how best to approach them. So how can they be contacted? You can call the HMRC debt management helpline: Monday to Friday, 8am – 8pm: 0300 200 3887.If you are aware that you will not be able to pay the tax bill in full before your payment deadline then you should instead call the Business Payment Support Service on 0300 200 3835; open 8am – 8pm Monday to Friday and 8am – 4pm on Saturday.For those authorised as a tax agent or adviser for clients, wishing to discuss PAYE, VAT, Self-assessment or tax credit queries, there is an Agent Dedicated Line. See more information here. One particular role the department has is send warning letters. When you are behind on paying tax, either late to pay or have not yet paid, then the HMRC debt management department have the task to issue reminder letters and chase for payment with the threat of further actions if payment is not made. And this is just stage one. Letters, penalties and enforcement actions will come rapidly. It is a key function for those within this department. What does the letter cover? Ultimately the letter covers the following:The amount HMRC believe you owe Details of how to pay Next steps and what action may be taken if the debt is not paidThere have been scams where debt management letters have been sent but not from HMRC. Look out for a legitimate website address and phone number – matching to that on the www.gov.uk website. Note that all HMRC helpline numbers will begin with 0300. Look for correct grammar and no requests for bank details. Remember to Check The Calculation One thing is for sure. No one is perfect and correct each and every time. Even HMRC can make errors in calculations. So be sure to not assume the calculation is accurate just because it comes from a large government organisation. Always double check and back track records to ensure what you owe is correct.When contacting HMRC it is crucial that you are prepared and have all necessary information to hand. Such information includes:Your name and address Your tax reference The registered company name and address Details regarding why you are struggling to pay your tax bill What you have done to raise the money How much you can pay now An approximation of how much time you need to repay the outstanding balance Information regarding the companies assets, cashflow and expenditureWhat options are there? Individual Voluntary Arrangement (IVA) This is a formal arrangement between you and your creditors, allowing time for you to pay back your debts over an agreed and specified time. Note: HMRC do accept IVAs but usually have their own guidelines about the circumstances in which they’ll accept this. Speak with an insolvency practitioner such as us at Company Rescue who can help you prepare a proposal for HMRCs consideration. Time to Pay Arrangement These are monthly instalments over a period of twelve months (usually). Be aware that all other taxes must be paid when due or this arrangement will go into default. This would mean HMRC are likely to doubt the company’s ability to pay its future payments and so any chances of reaching a further agreement to settle the debt will be halted. Hence, we advise you to get assistance in proposing such a plan to ensure you can realistically afford it. Debt consolidation Taking out a new loan in order for existing debts to be covered. This simplifies your repayment process and helps reduce interest on any debts. However, this can make the situation worse if it is done without a clear understanding of the fine print of all the loans involved. Therefore, you must consider this option strategically. Debt management plan A formal arrangement made between you and your creditors so you can pay off your debts. Unlike an IVA, creditors can still take legal action during this process. Debt relief order This is a low-cost alternative to bankruptcy. However, this is not suitable for companies; only for individuals living in England or Wales with few assets (£1000 max worth) and minimal debt (less than £20,000). The debt-relief order freezes any interest and repayments for 12 months and after that period debts will be written off. What if an agreement cannot be reached? If no agreement is made, the debt management department are likely to ask you some questions about your personal finance situation to see if you can settle the debt or not. They must be satisfied that you are being honest in attempting to pay the debt and are not withholding funds for other things non-related.A debt management officer will be appointed to handle your case and it is there job to challenge any expenditure they see as unnecessary.If an agreement cannot be reached and/or the debt is ignored completely, enforcement action will be taken by HMRC. This is done so they can collect the money owed. There are various ways this is done. For more information see our guide here: HMRC enforcement action. What if I cannot pay? When you cannot pay you must act quick. Ultimately, it is a warning sign and triggers potential insolvency as per the insolvency test criteria. What options do I have? Speak with a licensed insolvency practitioner to help with getting a Time To Pay Deal. For example, us at KSA Group (owner of this site). We have years of experience in dealing with HMRC, especially in proposing realistic TTPs.Propose a company voluntary arrangement (CVA) to HMRC. This is a proposal to restructure the debt, for example paying monthly repayments to creditors, over an agreed period of 3-5 years. Note that in this scenario some of the debt may be approved to be written offSeek funding from elsewhere i.e. invoice finance, bank loan, sales of assetsPlace your company into administration. In doing this you cease any legal action, being protected by a moratorium, whilst you work with an insolvency practitioner to plan the next steps which may involve a CVA or voluntary liquidationPlace your company into a creditors voluntary liquidation. This will allow no chance of rescue – it means the end for your company. Under this procedure you simply follow the steps and have assistance in shutting your company down.So, all in all, do your best to avoid enforcement action and contact HMRC as soon as a payment has been missed or in advance of the payment deadline if you know you will be unable to pay. Delaying these sorts of priority payments will only make the problem worse.For any queries and/or guidance in dealing with outstanding payments to HMRC and the options available to you, contact our team of experts today on 0800 970 0539
ReadHow does HMRC collect its debts?
HMRC is what is called a “sophisticated creditor” in that they know all the best methods of collecting in overdue taxes. What is more, they have economies of scale that ensure that it is worth their while to chase even the smallest of debts.HMRC will use various methods to ensure that taxpayers pay what is due:Seizure of Goods The use of penalties to deter non-compliance Statutory demands Winding up petitionsHMRC is responsible for all taxes and duties and there is no particular difference in the methods used for collecting taxes, whichever type of tax it is. VAT and PAYE are perhaps pursued more readily as they do make up the largest types of tax that a company pays. VAT in particular as the company in question has in effect collected the tax from its customers and should pass it on to HMRC. The steps that are taken by HMRC - HMRC debt collection process Reminders In the first instance HMRC will start collecting in debts by issuing payment reminders and these can be in the form of letters and even SMS texts. Failure to pay the amount owed may well mean that it is outsourced to a HMRC debt collections agency. HMRC have started to use these debt collection agencies more and more in recent years. The amount HMRC pays to private-sector debt collectors has quadrupled in the past 5 years, suggesting it may be stepping up the pressure on people who cannot pay their tax bills. HMRC debt collection agencies are as follows:1st Locate (trading as LCS) Advantis Credit Ltd Bluestone Credit Management Ltd BPO Collections Ltd CCS Collect (also known as Commercial Collection Services Ltd) Moorcroft Oriel Collections Limited Past Due Credit Solutions (PDCS)These agencies are likely to start sending more reminders in a more aggressive manner threatening legal action or the seizure of goods. Control of Goods As registered bailiffs, the agency may well take action to take control of goods or property at the companies registered address, to then sell on at auction in order to settle the debt. This is known as distraint. For more information on the regulations see here.The officer either from the HMRC, or a certified bailiff contracted by HMRC, is issued with a Writ of Control. They will then send the Notice of Enforcement to the debtor, on 7 clear days’ notice, excluding Sundays and bank holidays.This notice period gives the debtor an opportunity to contact HMRC and either pay in full or request/negotiate payment by instalments.If payment in full is not made within this 7 day period or an instalment arrangement agreed, the officer will attend the debtor’s premises after the expiry of the 7 clear day notice period to take control of goods (formally called seizure). If the debtor doesn't sign a Controlled Goods Agreement (formerly Walking Possession) or make payment in full, the officer can make arrangements to remove goods and sell the goods over which he has taken control (seized).Obviously, in many cases the value of goods belonging to the company is not enough to cover the costs of the debt. However, the threat of removal can focus minds and funds found elsewhere.If the seizure of goods does not yield results then HMRC may as a last resort issue a winding up petition. Winding up petition Please refer to this page for information about the winding up petition process.In essence HMRC will instruct its solicitors to petition the court to rule that the business cannot pay its debts and should be closed and wound up. This means that the debt to HMRC cannot get any worse as the company will stop trading. It is unlikely in most cases that HMRC will get its money except perhaps in the more high profile cases such as with football clubs that are often saved at the last minute when faced with a petition.
ReadHMRC Warning Letter of Distraint or a Petition
HMRC will send a letter warning of enforcement action or a petition in the event of non payment of taxes such as VAT or PAYE. If you receive one of these letters you must act to avoid legal actions. There are ways to avoid getting such a letter.
Read