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Why Should you Prioritise Clearing HMRC Debt as Soon as Possible?

hmrc debt management

Drowning with debts and interest rates is a nightmare for everyone. If not managed beforehand, the consequences can be deadly. You should be extra cautious when it comes to Her Majesty’s Revenue and Customs or HMRC debt management. Whether it’s about VAT, income tax, or NI arrears, you have to act faster than you think.

All these are considered priority debts, and if not paid accordingly, you can be forced to attend court hearings. Or, bailiffs can knock on your door. Before such circumstances hit you, you should be careful about HMRC debt management strategies. Or else, it’s a matter of time to get engulfed by legal complications.

What is HMRC Debt Management?

As we have already stated, HMRC debt refers to the sets of debts associated with tax credit overpayments, income tax, National Insurance, and VAT arrears. Any HMRC debt management is a priority debt, and you should resolve it as early as possible. Her Majesty’s Revenue and Customs department look after such related debts and their proceedings. Primarily, they help the taxpayers in paying all the existing taxes. But, the same is not true for past-own debts.

If you wish to set up a tax payment plan, you should contact the HMRC department or the specialist. Financial specialists are aware of how to approach the department for a convenient settlement. 

Step-by-Step Guidelines to HMRC Debt Management

If you’re struggling with paying tax arrears and you’re far behind from your milestone, then it’s time that you put everything under control. Here’s how you can achieve HMRC debt management for tax arrears:

Inspect your Tax Bills

If HMRC has contacted you, then check if they have mentioned the right tax amount to be paid. Get the HMRC debt management letter that addresses your due debt amount. You must have handed them the right information regarding your business, and you need to update them with new data. In case you skip this, the tax bill might be soaring.

Fix the Budget

After you’re sure about what you’ve to pay for HMRC debt management, work out how much you can afford to pay. Go through your earnings, outgoings, and overall budget to make sure that you can pay before the due date. Keep in mind that you might have to deal with other forms of debts and mortgages as well.

Get in Touch with HMRC

You should call the HMRC debt management number to contact and settle the debt payments to an agreement. You better be representing the budget that you have crafted after deducting all the expenses from your earnings. However, you shouldn’t ever offer such a payment plan that you can barely afford. 

On the other hand, before your next tax bill is due, you should be clearing all the existing arrears. If you are unable to do this, HMRC might force you to pay a certain amount for a longer period. Therefore, contact HMRC debt management phone number to set an affordable payment plan.

Pay and Keep Updating HMRC

After you have talked to HMRC debt management, you should start paying them. Even though HMRC doesn’t accept your payment, you should offer what you can afford. Don’t let them show the excuse that you’re escaping your priority debt, such as income tax arrears or VAT. If you’re struggling to pay to HMRC, contact the officials. Or else, they’ll assume that you’re avoiding the tax payments.

What Happens if you Skip your HMRC Debt?

If you’re self-employed, then your earnings might seem to be unbalanced. And, you find it difficult to keep the HMRC debt management amount consistent. Now, if you fail to offer a particular instalment to debt management HMRC, the authority can take action against you.

Well, consequences might differ from person to person according to what they owe. If you owe more than £5000 as an HMRC debt amount, then the authority might initiate the bankruptcy process against you. You should better contact your financial advisor if you have skipped the HMRC debt management scheme. 

Here are the detailed actions that HMRC can take against you.

Send Debt Collectors

HMRC needs no court order to pursue debt collection charges on you. They can send you bailiffs to take over your business goods and stocks at your premises. If your business location doesn’t have enough equipment to cover the tax arrears, then they can chase you home. In case you prevent them from invading your business premises, they can gain a warrant to break in.

Issue a County Court Judgement

Another consequence of missing debt management and banking HMRC plans can be a County Court judgment filed against you. You’ll receive court forms if HMRC contacts the County Court. Fill those forms with amounts that you can afford. If you don’t start paying to CCJ, then the authority might attach the debt to your property.

Withdraw Money out from your Savings and Wages

You must have some sort of savings in banks and building societies. HMRC can sneak into those details and take money from your savings. Well, this is going to take place, only if you owe more than £1000. And, HMRC has to leave more than £5000 as savings in your account.

On the other hand, if you work under an employer and receive monthly wages, then HMRC debt management can collect the debt to increase the tax from your wage. This will be applicable for an amount of up to £3000 when you’re earning less than £30000.

Initiate a Magistrate Court Hearing

It can be another chance for HMRC debt management to take action. If your debt is under £2000, then HMRC can issue a summons to court. You have to be present at that hearing and offer an instalment payment policy. Keep in mind that you have to keep paying those instalments. 

Frequently Asked Questions Regarding HMRC Debt Management

Suppose you’re in doubt whether HMRC can file different cases against you or what further steps that HMRC can take — Well, you’re not the only one who is concerned about this. That’s why we have answered some of your queries in this section.

Is it Possible to Write off HMRC Debt?

Yes, you can write off HMRC debt management by issuing a competent IVA scheme. Debt managements and banking HMRC should be accepting your proposal if you agree to pay a specific amount through IVA. However, the position should be offering HMRC more money than what they can get through the bankruptcy process.

Is HMRC Affecting Your Credit Score?

Though HMRC debts are priority debts, they won’t affect your credit score. You can check your credit rating and HMRC debt managements to keep an eye on your financial conditions.

Is it Possible to Go to Jail for not Paying HMRC Debt?

Well, we have already stated the consequences of missing payments towards HMRC debt management. And, it can be very rare for anyone to face any imprisonment or similar cases for not paying HMRC debt. Get a plan done after HMRC debt management contact. Otherwise, they can chase you to your business and home to take control over your possession. Additionally, bailiffs can sell all your belongings at auctions to get the money back you owe to them.

Is it Possible for HMRC to Look into your Bank Account?

Yes, HMRC can look into your bank account. They do have the authority and wide-ranging channels to get anything out about their debtors. We have mentioned that they can take out money from your savings, as well as your wages. Contact HMRC debt managements experts to get rid of debts swiftly.

HMRC Debt Management: Ways to Get out of Debts

Luckily, HMRC considers multiple ways to help debtors to eliminate tax payments and other issues. If you have received an HMRC debt management letter, here are a few ways that you can try to repay the debt.

Individual Voluntary Arrangement

Through an IVA, you propose an affordable amount to pay to your creditors. Before making an IVA agreement between you and HMRC debt management, check out the guidelines of HMRC. They have specific guidelines regarding accepting IVAs. You should consider a financial advisor to mediate between you and your creditors.

Debt Consolidation

If you want to consolidate all your existing debts into one and take out a new loan, then debt consolidation is for you. However, if not revised properly, it can add more trouble with repayments. Opt for this plan only when you are aware of all the possible outcomes, and you’re ready to tackle them.

Debt Relief Order

This is an alternative to bankruptcy and can’t be applied to companies. If you’re a resident of Wales or England and have assets, then you can apply for a debt relief order. The amount of debt should be less than £2000, and your assets should be worth at least £1000. Thus, it freezes the debts and interests. After twelve months, you can write off HMRC debt management.

Other Possibilities to Get Rid of HMRC Debt Management

Apart from the above opportunities, you can go for a time to pay arrangement. This issues monthly instalments to be paid by you for twelve months. You can also opt for a debt management plan. But, irrespective of what plan you select to get out of HMRC debt managements, you should check out the existing debt and have soundproof knowledge regarding your budget. And, we can help you in this matter so that you can propose a reasonable HMRC debt management plan.