Tax debts are something that you are advised not to ignore. There are severe implications that you may have to face for not clearing your debts. In the UK, the HMRC (Her Majesty’s Revenue and Customs) is the department that is in charge of tax collection. They classify any money that you owe them as a ‘priority debt’, which implies that you must clear them off, as soon as you can.
And if you don’t, there are different actions that they can take against you. Moreover, they have been bestowed with authorities recently. This has increased the extent to which they can go to recover debts.
Now, there might be some reasons why you’re having trouble paying your tax bills. But ignoring repayment demands from HMRC is something that is never encouraged. There are numerous ways to come out of this situation, without any severe consequences and without any foul play. Read to get a complete understanding of this matter and get to know how long can HMRC chase a debt.
What happens if You haven’t Paid the Tax Bills, Yet?
If there is a payment left due, the HMRC sends you a reminder. These are simple requests, and they don’t threaten you. Now, most of the people often ignore them. But, it would be wrong to think that you can avoid paying the debt altogether.
After the reminders are ignored repeatedly, you’ll get an enforcement notice. This notice will impart a time of 14 days to make the payment. If you fail to pay within this time, the HMRC will implement severe actions to recover the money. This is where you must get to know how long can HMRC chase a debt.
How does HMRC Recover Debts?
The HMRC can undertake various methods to recover the money that you owe them. However, you can avoid that by convincing them that you’re unable to pay the bill. If they’re convinced, you might get time to make the payment in instalments. Otherwise, they are authorized to take the following actions:-
Recover the Amount from your Bank Account
If you refuse to repay the debt, the HMRC can directly recover the money from your bank account. It is one of the recently implemented authorizations that the government has recently given.
But, there are some conditions for them to take this action. Firstly, the debtor has refused to pay the debt in person repeatedly. Second, there should be a minimum balance of at least £5,000 left in the debtor’s account, after the deduction.
So, if you’re genuinely unable to pay, they won’t take this step against you. And, for those who are liable under these conditions, the HMRC will notify them before proceeding.
Confiscating over your Possessions
Suppose you have an insufficient amount of money to make the payment, in such cases, the HMRC is authorized to confiscate your possessions and sell them to recover the money.
But, you’ll be given a week to pay your debt before this action is taken. If the money from the sale is less than what you owe, then you’ll have to pay the remaining amount. And, if it’s more than what you owe, the extra sum of money will be returned to you.
From your Income or Pension
If you refuse to pay the tax bill, the HMRC can recover the amount you owe them from your income or pension. Specifically, they’ll put a tax on the money you receive. The amount to be deducted every year depends on the amount you earn or get as a pension. This would continue until the money you owe has been recovered fully. The only way to avoid this would be to clear your debt.
Through Debt Collectors
The HMRC does not always use their own officers for debt recovery, they may also take the help of an agency who collects debts. In such cases, the agency would notify you and demand a direct payment. But, still, the question lingers how long can HMRC chase a debt.
The HMRC can also opt for legal action if you refuse to pay your tax bill. The proceedings can vary, depending on where you live in the UK, i.e. England, Scotland, Wales, Northern Ireland, the terms tend to vary.
What if You can’t Afford to Pay the Tax Debt?
If you can’t pay your debt bills, all at once, you must contact the HMRC office, and inform them about the problem. Often, people keep ignoring the notices, but that is a wrong move.
What you might not know is that the HMRC also offers help to the people who can’t clear their debt bills. You can get into a TTP (Time to Pay) agreement with them. This would allow you to pay the bills in instalments, which would be easier for you, and you can eliminate the stress as well. You can also, possibly, have it included in your IVA, if you have one.
Can Debt Calculations made by HMRC be Inaccurate?
Did you find the amount shown in the tax bill to be too high, then what you expected? Then, you might not be mistaken. Further, you must also get to know how long can HMRC chase a debt.
Besides, calculation mistakes can often be committed by the HMRC. You must make sure that’s not the case. You can contact the HMRC office and request them to re-calculate your debt.
Is there any Time Limit for HMRC to Recover Debts?
The HMRC can keep accounts of tax debts that are as old as 20 years. Thus, it can be seen as the utmost period for which HMRC can chase a debt. That means there’s no way you can simply avoid paying your tax bills. And, especially not after the new implications in powers, that they have been given. The only way to clear off your debt is by paying it. They will write off your tax debts only when it’s totally impossible to recover them.