What is it and how can it help?
HMRC Debt Management and Banking Department is a support service run by HMRC to help taxpayers with paying their debts (for taxes in the future – not for use with tax debts due for past payments).
Be sure to contact the HM Revenue & Customs Debt Management and Banking 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?
Monday to Friday, 8am – 8pm, call the HMRC debt management helpline: 0300 200 3887.
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.
What 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.
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.
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, see our guide here on HMRC enforcement action, for more information.
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