HMRC can try to recover the money you owe in a number of different ways.
Changes to your tax code
For some debts to HMRC, if you are currently working for an employer either full or part-time, HMRC may try to recover the money by changing your tax code. This allows them to recover the debt from your wages before you get them. If you think HMRC are trying to do this for a debt you owe, contact us for advice.
The ‘bailiff’ will be a collector appointed by HMRC Commissioners. HMRC can use bailiffs to recover debts without getting a court order first. This is known as 'taking control of goods'.
If they gain entry to your home, the bailiff will usually list items and ask you to sign a ‘controlled goods agreement’. This allows you to keep use of the goods listed whilst you make payments by instalments. If you do not pay, the goods listed on the controlled goods agreement can be removed. HMRC bailiffs may also remove your goods straight away or lock them up on your premises until you pay what you owe. You should try to agree affordable payments by instalments.
There are some goods which cannot be taken such as basic household items and goods owned by other people. HMRC can take goods used in your business, if you are still self-employed. Contact us for advice.
bailiffs' entry rights
You do not have to let the bailiffs into your home but they can come in through open doors. If you refuse entry to an HMRC bailiff, they may apply for a warrant to break into your home, but this is unlikely to happen very often. If you park your vehicle on a public road, HMRC bailiffs can use force to get into the vehicle and take control of it. If you park your vehicle on your drive, the bailiffs may clamp or remove it. If you can, keep your vehicle locked in a garage.
Direct deductions from bank accounts
If you owe HMRC at least £1,000 they can ask your bank if there is any money in your account to pay this debt. They will normally be able to do this 30 days after you have the letter from HMRC telling you how much you owe.HMRC can do this without going to court first.In most cases if you account is less than £5,000 in credit, HMRC cannot take any money.
types of tax
The minimum amount of £1,000 that must be owed to HMRC can be made up of any type of tax including income tax and VAT.
If you don’t agree that HMRC can take this action, for example the debt has been paid, you can object to HMRC. Contact us for advice.
HMRC can ask for money to be taken from a joint account. Only money in the account belonging to the person who owes the debt can be taken. However, HMRC will assume balances in joint accounts are split equally. For example, if the account is in two names, and only one person owes the debt, HMRC will say 50% of the money in the account can be taken.
County court action
HMRC may make a claim through the County Court to get a county court judgment (CCJ) against you. This may be done if bailiff action is not successful. County court action is most commonly used to recover income tax and National Insurance arrears. A CCJ will be recorded on your credit reference file for six years and can affect your ability to get further credit.
- When county court action is taken against you, you will get a ‘claim form’. This gives details about the debt and tells you how much the creditor says you owe them.
- You can complete the ‘admission’ form if you admit the debt and want to make an offer to pay the debt in instalments.
- If you want to dispute all or part of the debt, contact us for advice.
The County Court should consider your circumstances and your income and outgoings before making a decision about how the debt should be paid back. The final decision about how much you should pay back each month is taken by the court, even if the collector wants a higher amount.
See our fact sheet:
If HMRC applied for a CCJ against you on or after 1 October 2012, they can apply to secure the debt against any property you own, even if you have not missed payments on the CCJ. If HMRC applied for a CCJ against you before 1 October 2012, the rules are different. Contact us for advice.
If you miss payments on a CCJ, HMRC can take other types of action against you through the County Court, which could include:
See our fact sheet:
- taking regular deductions from your wages if you are working, called an ‘attachment of earnings order’;
- freezing money in your bank account, called a ‘third party debt order’; and
- applying to court for a ‘judgment summons’.
The court can issue a ‘judgment summons’ for you to go to court and explain why you have not paid. If HMRC do this, you can be sent to prison if you have:
- had the money to pay the amount of the judgment summons since the CCJ was made; and
- wilfully neglected or refused to pay as the court ordered.
In practice, HMRC do not use this procedure very often.
Magistrates’ court action
If you owe less than £2,000 on income tax or National Insurance, in some situations HMRC could recover the debt through the magistrates’ court. The process is called ‘summary proceedings’ but is not used very often. The collector has 12 months to start summary proceedings once the debt is due.
- You will receive a magistrates’ court summons to go to a hearing. Try to make an arrangement to pay with the collector. If this is agreed, the magistrates’ court may accept this at the hearing. If you are unable to go for a very good reason such as illness, see if the collector will ask the court to give you more time by delaying the hearing.
- Take any evidence of recent payments with you to the hearing. You can ask the magistrates’ court for time to pay the debt back in instalments that you can afford. Take your budget and proof of your income to the hearing.
HMRC do not usually make applications to send people to prison. However, debts owed to HMRC may still need to be treated as priority debts.
magistrates' court bailiffs
If you do not pay, magistrates' court bailiffs could be used to collect the debt. Magistrates' court bailiffs can force entry to your home to remove goods, but this should only be done as a last resort and when it is reasonable. Contact us for advice.
See our fact sheet:
See our fact sheets:
If you owe£5,000 or more, HMRC could apply to make you bankrupt. Bankruptcy means that valuable things you own (your ‘assets’) could be sold to help pay your debts. You would usually receive a ‘statutory demand’ before being made bankrupt. This is a legal document which shows what HMRC claim you owe.
Bankruptcy should be a last resort for HMRC after other methods of recovering the debt have been attempted. It is very important to let the collector know if you have very little income or no assets, particularly if your home is worth less than any mortgage or secured loans on it. If the collector can see that you do not have any assets, they may decide not to make you bankrupt.