Introduction »

HMRC get tough on overdue taxes

HMRC are adopting a new, targeted approach to the collection of overdue taxes. This started under the previous government and continues to yield rewards. HMRC’s purpose is to make sure that money is available to fund the UK’s public services and, to do this, they need people to pay taxes in full and on time.

However, HMRC are also keen to emphasise that if businesses find themselves in financial difficulty, they should contact HMRC as soon as possible. It may be that HMRC can arrange time to pay, for example, by an instalment arrangement.

If businesses do not contact HMRC before payment is due, HMRC’s strategy is to segment customers according to their previous behaviour, payment history and risk.

HMRC then try to tailor their debt letters and direct interventions according to the characteristics of each of those segments e.g. their letters will be stronger in tone if customers have a history of non payment and are ignoring their attempts to contact them.

This segmentation will also determine which interventions are appropriate, so debts will be referred to a debt collection agency for a visit or court action on the basis of risk and customer behaviour.

The best way of avoiding a visit or court appearance is for businesses to respond to HMRC letters. Under current procedures, any debt referred to a debt collection agency will have been sent a letter from HMRC giving them a ‘final opportunity to pay’.

There is no doubt HMRC are becoming much more aggressive with debt collection. The moral of all of this is contact HMRC before debts arise to explain if there are potential issues regarding future payment.

Introduction »