What happens if I don’t pay Tax to HMRC? Will HMRC take my house?

This is a frequent concern and post Covid we have seen a more robust and more active approach from HMRC in pursuing tax liabilities from both businesses and individuals.

If you do not pay your tax bill and you do not engage with HMRC, HMRC may either visit you at your home or business address or use a debt collection agency to discuss settling your debt.  Therefore, if you receive a letter relating to an HMRC Notice of Enforcement or a letter stating HMRC will pass you debt to a debt enforcement team, this is serious, HMRC will take further actions and you should take legal advice as soon as possible. If you contest the debt, you should review our other page on Out of time of Late HMRC Appeals.

What happens if I don't pay tax?

 

Our specialist HMRC and Disputes Solicitors know that the enquiries we receive are often complex and time sensitive. In certain cases we can offer initial fixed price consultations and our specialist HMRC and Disputes Solicitors would be happy to discuss if your enquiry would be suitable for this route.

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

If both parties cannot reach an agreement, and you continue to refuse to pay the debt, HMRC may use their enforcement powers to collect the debt.

If HMRC visit you, they will ask about your financial situation and your ability to pay and try to agree how best to settle the debt with you, either via one full payment or through instalments. HMRC are able to take payment directly from you during a home visit and carry card payment machines to allow them to take payment from you at your home or business address.

If after the first visit you have not settled the debt, HMRC may use their further enforcement powers. Post Covid, we are seeing these being used more frequently. We have set out some of HMRC’s powers in responses to questions we are frequently asked:

Can HMRC enter my house to take my possessions without a warrant?

In effect yes. HMRC can take your possessions to sell to cover the debt. HMRC can instruct private auctioneers to collect the goods and they can use a locksmith to enter your premises to remove the possessions, if necessary. They do not need a warrant from the courts or to give any notice to you first. Certain fees will also apply to remove and sell the goods and these will be covered by the sale of your possessions.

Can HMRC take money directly from my bank account without my permission?

Yes. HMRC can recover debt directly from your bank account. This is called ‘direct recovery of debt’. HMRC can do this when you owe £1,000 or more and have enough funds in your bank accounts to cover the debt and your reasonable living costs.

Can HMRC change my tax code with my current employer?

Yes. HMRC can recovering debt through adjusting your tax code. HMRC can tax up to 50% of your gross income through this process.

HMRC have put penalties and interest on a debt I owe them, this seems unreasonable, can they do this?

If you do not engage with HMRC and do not pay your tax bill on time, you may have to pay interest on the outstanding amount as well as a penalty or surcharge. If you were unaware of the debt, feel you have a reasonable excuse as to why it is disputed please see our other page on Out of time of Late HMRC Appeals. Once you understand your position, you can then engage with HMRC and you can either appeal their decision or to come to an arrangement so as to avoid any enforcement action.

Our specialist HMRC and Disputes Solicitors know that the enquiries we receive are often complex and time sensitive. In certain cases if you wish to discuss if a tax liability can be appealed out of time or if you have a reasonable excuse, we can offer fixed price consultations and our specialist HMRC and Disputes Solicitors would be happy to discuss if your enquiry would be suitable for this route.

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

Can HMRC take me to court?

Yes. HMRC will seek to recover debt through county court proceedings, property and pensions. HMRC can use county court processes to ask the court to grant an order against you which could include: a charging order, an attachment of earnings order, third party debt orders, insolvency – whichever is most suitable in the circumstances.

  • HMRC can obtain charging orders – this is usually placed on an asset such as your property. HMRC has the power to recover debts from the sale of your property when you sell or through a court action known as an ‘order for sale’ they can force you to sell the property.
  • Attachment of Earnings Order – These allow regular deductions to be taken from your PAYE wages to pay your debt. This is separate to adjusting your Tax Code.
  • Third Party Debt Order – The order allows HMRC to take direct payment from whoever owes you money to pay what you owe to HMRC.
  • Insolvency – HMRC will only apply to the courts to make a person or company insolvent as a final course of action. Insolvency processes open to HMRC include, but are not limited to:
    • voluntary arrangements
    • company moratoriums using the Corporate Insolvency and Governance Act
    • debt restructuring plans or schemes
    • bankruptcy and winding up orders

It’s also important to note that if you or your business are taken to court and you are not successful, you may also have to pay some or all of HMRC’s legal costs, so there are often additional costs to consider before commencing action in the courts.

If you’ve received a tax bill or tax penalty from HMRC and you cannot pay or disagree with HMRC’s decision, it is important to seek legal advice as soon as possible to understand your position.

Our specialist HMRC and Tax Disputes Solicitors know that the enquiries we receive are often complex and time sensitive.

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.