What Happens If I Don’t Pay My Tax Bill On Time?

25/06/2022 - 7 minutes read

If you cannot pay your tax bill on time, HMRC can work with you to find a way for you to pay what you owe:

  • – as quickly as possible
  • – in a way that is affordable for you

If you have a tax debt, except in cases where HMRC suspect fraud or criminal activity, they will try to contact you to talk about your situation and agree on a way forward before they take any action.

What Happens If I Don't Pay My Tax Bill On Time?

What Happens If I Don’t Pay My Tax Bill On Time?

HMRC may:

  • – ask you to agree to a payment plan based on your financial position, called a Time to Pay Arrangement
  • – use any overpaid tax that would normally be repaid to you to clear other outstanding tax debts you have
  • – adjust your tax code to collect any outstanding tax debts, if you receive PAYE income

You should reply as soon as possible, so HMRC knows you need support and are not refusing to pay what you owe.

HMRC can use their debt enforcement powers to collect outstanding taxes if you do not speak to them about how you will pay what you owe.

If you do not engage with HMRC or refuse to pay what you owe

If you do not respond when HMRC try to contact you they may either:

  • – visit you at your home or business address to help them understand your circumstances so they can work with you to settle the tax you owe
  • – use a debt collection agency to discuss settling your debt

If HMRC visits you they will:

  • – ask about your financial situation and your ability to pay
  • – try to agree on how best to settle the debt with you, which might be making one full payment or paying through instalments using a Time to Pay Arrangement

In 4 out of 5 cases HMRC reaches an agreement with their customers. If they cannot reach an agreement with you, they may use their enforcement powers to collect the debt.

HMRC and debt collection agencies

HMRC may use one of the following debt collection agencies to contact you on their behalf, to discuss settling your debt:

  • – 1st Locate (trading as LCS)
  • – Advantis Credit Ltd
  • – Bluestone Consumer Finance Limited (trading as Bluestone Credit Management)
  • – BPO Collections Ltd
  • – CCS Collect (also known as Commercial Collection Services Ltd)
  • – Moorcroft Debt Recovery Ltd
  • – Oriel Collections Limited
  • – Past Due Credit Solutions (PDCS)

All the debt collection agencies HMRC work with are regulated by the Financial Conduct Authority and must follow their processes and guidance at all times. HMRC carry out regular reviews to make sure they do.

A debt collection agency working for HMRC will only contact you by letter, SMS text message or phone. They will never visit you at your home or place of work.

You can either:

  • – pay them what you owe HMRC if you are able to — once your payment has been cleared the agency will send it to HMRC to credit to your HMRC account
  • – talk to them about how you can pay your debt using a Time to Pay Arrangement

If you cannot pay what you owe in full or agree to a Time to Pay Arrangement the agency will pass your case back to HMRC to deal with. They will then contact you to tell you what will happen next.

Debt collection agency phone calls

When you speak to a debt collection agency on the phone, they will always ask you some security questions at the start of the call — this is to protect you and the confidentiality of your tax affairs.

They will not be able to talk to someone else on your behalf unless you give them consent to do so in the call — this lasts for 24 hours for each debt you discuss with them. If you want someone to act on your behalf for more than 24 hours, you will need to give HMRC written authority for them to do so by completing a form 64-8.

If you tell the debt collection agency that you have an agent acting for you, they will need to check with HMRC that they are authorised to speak to them before they can contact them. This may mean there will be a short delay in dealing with your case.

Recovering the debt directly from your bank account

Creditors like HMRC (or those acting on a creditor’s behalf) can recover debts directly from customers’ banks and building society accounts.

For HMRC, this can apply to customers in England, Wales and Northern Ireland who:

  • – owe £1,000 or more
  • – have enough funds in their bank accounts to cover the debt and their reasonable living costs

This is called ‘direct recovery of debt’.

Get help and extra support

HMRC know that some of our customers need extra support and understand they may have debts to other creditors as well as HMRC.

You should contact HMRC if you cannot pay the tax you owe or disagree with the debt amount.

If you’re struggling to pay HMRC and other creditors you can get free independent debt advice on the MoneyHelper website.

You can also nominate a professional tax agent, a friend or a family member to deal with your HMRC tax affairs on your behalf.

How can MCL Accountants help?

Contact MCL Accountants on 01702 593 029 if you cannot pay your tax bill on time or if you need any assistance with the preparation and submission of your business accounts or self-assessment tax returns to HMRC.