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Her Majesty’s Revenue and Customs (HMRC) oversees various tax-related debts, including VAT, National Insurance, and income tax arrears. Timely resolution of these debts is crucial, as they are classified as ‘priority debts’, subject to severe consequences such as court action, bailiffs, and, in extreme cases, imprisonment.
Regaining control of HMRC debts is feasible, albeit initially daunting. While HMRC calculations are generally reliable, verifying owed amounts is prudent. Ensuring accurate business takings, meticulous expense records, and correspondence verification minimizes miscalculations.
Formulating a budget is pivotal in debt management. Begin by assessing personal monthly business income and essential outgoings, encompassing mortgage or rent, utilities, and food expenses. Deducting essential outgoings from income yields disposable income, forming the basis of feasible debt repayment.
Open dialogue with HMRC is paramount. Contact HMRC to establish a regular payment plan tailored to your financial capacity. While HMRC aims for debt clearance within the financial year, negotiating affordable payments based on your budget is essential.
Maintaining communication with HMRC is imperative. Proactively updating contact information and making occasional overpayments foster goodwill, enhancing cooperation and mitigating punitive measures.
HMRC adopts a formal, swift escalation process for non-payment. Setting up a Time to Pay Arrangement is advisable, sparing individuals from dire consequences such as court action, bankruptcy, or asset seizure. In the event of non-compliance, HMRC may resort to legal actions like County Court Judgements, magistrates’ court summons, or bankruptcy proceedings.
Various UK charities offer assistance with HMRC debts. Organizations like Business Debtline, Citizens Advice, and TaxAid provide valuable guidance, empowering individuals to navigate HMRC debt challenges effectively.
Procrastination exacerbates HMRC debt issues. Immediate action, proactive communication, and adherence to negotiated payment plans are indispensable in averting adverse consequences and safeguarding financial stability.
Delaying resolution of HMRC debts is perilous. Initiate dialogue with HMRC promptly, devise viable repayment strategies, and seek support when needed. By addressing HMRC debt expeditiously, individuals mitigate risks and secure a stable financial future.
Tell us about your current debts and one of one of our experienced advisors will talk you through all the options available.
Dependant on your circumstances and financial situation, we’ll look at the solutions so you can choose an option that suits you.
Once you have chosen a solution, we will take the necessary steps to arrange this for you.
Lucy Novo Deakin is a licensed insolvency practitioner in the UK by the Insolvency Practitioners Association (IPA).
My Debt Plan Ltd provides insolvency solutions to individuals, specialising in IVA’s. All advice given is provided in reasonable contemplation of an insolvency appointment. Where you are not suitable for an IVA, we may refer you to one of our trusted partners who specialise on alternative solutions, and as such we will receive payment for the introduction if you enter into a debt solution with one of our partner companies.
Registered address 2nd Floor Blenheim Court, Cheadle, Cheshire, England, SK8 2JY Company Registered in England and Wales Number 10992838 Data Protection ZB284067.
To find out more about managing your money and getting free advice, visit Money Helper, an independent service set up to help people manage their money.
*Our advice on your options is always free. We will always notify you if a solution you choose has any cost.
**Of 2,381 IVA cases approved between January-December 2023, the average expected write off assuming successful completion is 74%.
A debt write off amount between 25% and 75% is realistic, however, the debt write off amount will differ for each customer upon their individual financial circumstances and is subject to approval of their creditors. Any remaining qualifying unsecured debt in your IVA will be written off, however some unsecured debts will be excluded, such as court fines, child maintenance and student loans, therefore you will need to continue paying these both during and after the IVA.
