Dealing with HMRC tax debts

October 10, 2014

Her Majesty’s Revenues and Customs (HMRC) is one of the biggest creditors in Scotland and across the rest of the UK. Millions of people make payments to the government through HMRC in the form of income taxes, National Insurance and VAT every year, and it’s important that they do so because it is a legal requirement and an essential part of how the country functions.

However there are thousands of people around Scotland and elsewhere who find themselves unable to settle the debts they owe HMRC at the time they are being demanded. Failing to pay money owed to HMRC can have serious consequences and involve legal charges or bailiff visits.

Therefore, it should generally be taken as a matter of urgency and high importance that your HMRC tax debts be settled as promptly as possible or if not promptly then at least with full disclosure and complete transparency.

Plan ahead

Planning ahead and budgeting wisely is a sensible approach to managing your finances whatever your situation but if you are struggling with HMRC debts then it is particularly important. Plus, it is yet more crucial to plan ahead if you are self-employed or you run a business of any sort as, unlike ordinarily employed men and women in Scotland, you’ll be obliged to pay a single sum of money as income taxes on an annual basis.

Inform HMRC

It is often very difficult for self-employed individuals to budget sufficiently well so that they can pay off their income taxes in full on the day they are due, which, for many people, is the reason they are heavily indebted to HMRC. If this is your situation and you’re worried about your ability to afford your taxes then you should get in touch with HMRC directly to explain your situation.

If you call HMRC to discuss your arrears then they will explain your legal obligations to make payments as far as you are able but they will understand that you can’t pay money you don’t have. By calling in person, you can sometimes avoid facing late payment penalty fines and you should be able to establish a plan of action regarding how you might work towards paying off the debts that you owe.

Stick to your side of the bargain

Assuming you’ve been able to come to some sort of arrangement regarding your repayment of HMRC tax arrears then it is very important to stick to the terms laid out. HMRC isn’t generally interested in adding charges to your account or keeping you indebted, as some commercial lenders might be. All that matters to the HMRC is that you find a way of paying off the debts you owe in full. There is usually flexibility available when it comes to setting out a repayment plan but failing to adhere to its terms can lead to a demand for immediate payment in full.

Get help

If you do reach the point at which HMRC is demanding immediate payment of all tax arrears from you then it’s important to get help. It could be that you’ll soon find yourself dealing with bailiffs and court actions against you and the prospect of insolvency can then enter the equation.

Scotland Debt Solutions provides straightforward guidance on how to cope and deal with issues around insolvency and can explain what kind of debt solution might work best for you. Call us directly for a free consultation and to find out how you can become debt-free.

John Baird

Insolvency Adviser

Tel: 0800 063 9250

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