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Chasing and Managing Debts by HMRC

hmrc debts written off

Her Majesty’s Revenue and Customs (HMRC) the governing body of the UK deals with various debts, taxes, and national insurance. Mainly the HMRC gives the ultimate priority in several forms of debts and other expenditures. The actual goal of the HMRC is to successfully collect all the debts that are due. 

Now, there are several queries – How long can HMRC chase a debt? What will happen when you don’t pay to HMRC? Knowing the answers to these questions are important for dealing with the HMRC. If you fail to do so, then you might face such situations where bailiffs could interfere in your matter and take legal actions. 

HMRC: Important Stages of Debt Collection 

The latest procedures of debt collection have become more advanced nowadays, by the HMRC. Some of the processes are now set to automatic to prevent too much usage of human resources in the debt collection procedure. 

The Tax Time Management 

There is a certain time limit for paying off the taxes. If you somehow violate the time span, then the HMRC will always be ready to take some legal actions against you. But, how long can HMRC chase a debt? They don’t have any kind of time limit amongst themselves. All the respected personnel, check the old and new debts once a day. In addition to that, they go through the list and give a reminder to those people who are yet to pay the taxes on time. 

Slashing Down the Bad Debts 

Bad debts are generally considered as the loss or failures of receiving the taxes. And, wherever the HMRC realizes that there is a possibility of bad debts, they try to collect it. If not at all possible, then they demand some security measures from the former. 

As HMRC is a government organization, the latter has to give security regarding the creation of the bad debts by them. Certain procedures are also there that will show you how long can HMRC chase a debt, and that is considered to have negative consequences. They are here as follows.

  • A Cheque or transfer to the bank
  • Creating a joint bank account with the HMRC
  • Securing a guaranteed bond from a reputed institution. 

The timespan of security is limited to only 24 months. If the debtor company meets all the monetary requirements of HMRC, then the period will be less. 

The Notice regarding Enforcement

Several notices regarding the DMB, DMBX and others come directly from the HMRC. Actually, the management team collaborates with the banking team and works it out, altogether. The taxpayers, who have failed to pay the money will receive a notice from the HMRC and its validity is just 2 weeks. 

When the notice is issued, the taxpayers will be restricted to do certain activities, with their available assets. In addition to that, due to the release of the notice, the taxpayer has to pay an additional amount to the HMRC which is regarded as the outstanding liability. 

HMRC: The Debt Management

The debt management procedure of the HMRC has several parts. Before getting the answer of how long can HMRC chase a debt, you need to know the entire management procedure. And, here it follows: 

The Investigation 

Obviously, if you owe money to the HMRC, several complications arise, and there will be an investigation. It can continue for several months when you get the first letter for initiating the investigation. If the debt amount is a lump sum, then the time will also increase. The minimum time span of the investigation is 3 to 6 months and can extend up to 18 months

Paying a Visit 

Whenever the officials of the HMRC visits you, you might wonder how long can HMRC chase a debt? Yes, they will chase you till you repay the entire amount. After a conversation, you need to know how to repay the amount. 

If you are an employee of a company, then there are procedures where the company takes the responsibility of paying the HMRC. After that, you and your working company can make an agreement of the further repayment done by them. 

When you are self-employed, you need to inform the HMRC during the visit. They will advise you to make a self-assessment file. This file will eventually reflect your earnings. With some sophisticated calculations, the HMRC will set you a payable amount. 

The Assistance of Technology 

Paying the debts, or the Tax, returns some amount of money, back to you, at the end of the year, in the UK. No matter how stressful the situation is, it is better to pay back HMRC from time to time. Taking the help of a kind of software, to calculate the tax return will be helpful. In doing so, you will be convinced that a certain amount will definitely come to your account, 100% guaranteed. 

How Long can HMRC Chase a Debt?

When the chase for a debt begins, it can continue up to 20 years, a long time indeed. Normally, the investigation time period is just 4 years. After the investigation is over, if you think that you are not in the observance of HMRC, you are absolutely wrong. They will not leave you until they get every single penny. 

Pay Quickly to HMRC, Why?

Failure to pay quickly to the HMRC can lead to some serious consequences. So, it is better to work according to the order placed by the former. Consulting with some expert organizations regarding HMRC debt payment will be much helpful for you. They can even guide you on how long can HMRC chase a debt. As the rules of the HMRC are solely based on the UK government, it is better to follow them by avoiding any gaps.