HMRC handle any debts that relate to Income Tax, National Insurance, VAT arrears and tax credit overpayments. These are considered ‘priority debts’ so if you owe any of these, it’s important that you try to deal with them as soon as possible. If you fail to pay them, you could be inflicted with serious consequences such as court action, bailiffs and even imprisonment.

Getting in control of HMRC Debts

Getting back into control of your HMRC debts doesn’t have to be difficult – even if it feels like an impossible task to take on.

It’s easy to assume a large government organisation like the HMRC is always right with their calculations – but that is not always the case – so make sure to double check.

Ask yourself:

▪️Have you provided them with up to take figures for your business takings?

▪️Have you made sure all your business expenses are in order?

▪️Do they have all your information correct on the correspondence they’ve sent?

If any of this information isn’t correct, it can lead to miscalculations and sometimes you could end up paying more than you need.

What action can HMRC take?

▪️Applying to the courts for a County Court Judgement (CCJ) to be issued against you – legally outlining a repayment plan an significantly impacting your ability to get credit in the future. Failure to pay a CCJ can lead to more serious consequences, as well as putting your home and business properties at risk if a ‘charging order’ is then applied for.

▪️Issuing a magistrates’ court summons – which you will be required to attend with details of your business and personal finances. A payment plan will be decided – which must be kept to. Failure to stick to a court decided payment plan can lead to further court appearances – and even prison if it’s decided you have the money but haven’t made payment.

▪️Starting bankruptcy proceedings – if your debts total more than £5,000, bankruptcy can be sought by HMRC which will lead to assets you own (including your home) being sold to settle your debts. You will not be able to hold a directorship during your bankruptcy and your credit rating will be severely impacted, almost certainly leading to consequences for your business.

▪️Applying for an attachment of earnings – where, if you’re employed, a significant amount of money can then be taken from your wage before reaching you.

▪️Seizing money you have saved. In some instances, HMRC will take money directly from your savings accounts, although to do so you must have more than £5,000 remaining in savings when the debt is settled.

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