The Government is to our £16.3 million into HMRC Debt Collection, raising efforts to recover £4.67 billion in unpaid taxes over the next six years.
According to Treasury estimates, the injection of cash will help HMRC’s debt management team recoup £515million in taxes in 2024-25. By 2025, over £1billion worth of unpaid taxes will be recovered according to the announcement in last week’s Autumn Statement.
Improving HMRC debt management resource
The Treasury says it wants to resolve the tax gap between what is owed to the national coffers and what is being collected. The government is investing in HMRC’s ability to support individuals and businesses who are unable to pay their tax debts by increasing HMRC’s debt management resource.
This will allow HMRC to better target their HMRC debt collection activity, pursuing those with tax debts that can afford to pay, and providing support to those that are temporarily unable to pay.
The government is also taking action against those who continue to bend or break the rules, by reducing opportunities for tax fraud in the construction industry and taking strong action against promoters of tax avoidance.
Recent Debt figures from HMRC
Recent figures from HMRC show the amount of tax owed but unpaid totalled £45.5billion at the end of September. This comprised £7.8billion of ‘managed debt’, while the debt available for pursuit reached £37.7billion, according to accounting group BDO. The majority of this tax debt was owed by small and medium-sized businesses, but the numbers also included personal tax debt.
Dawn Register, Head of Tax Dispute Resolution at BDO, said “While this additional investment in HMRC’s debt management capability is very welcome it’s long overdue and probably insufficient to tackle the eye-wateringly high levels of tax debt currently owed to the Exchequer. What’s clear is that HMRC is likely to get much tougher against those who can pay but are trying to manage their cashflow by dragging their feet.”
“For individuals who are struggling to pay tax bills, it’s always worth getting in touch with HMRC to discuss your situation. If you have debts of up to £30,000 you can apply online for a Time to Pay arrangement. Businesses too are able to set up Time To Pay arrangements for certain taxes online. For example, instalment plans can now be set up for some VAT and employers payroll liabilities.”
“However, these online facilities don’t yet apply to some important taxes such as corporation tax so, in time, we would hope to see these extended.”
Being chased by HMRC Debt Collection Team?
If you owe money in unpaid taxes then it is better to contact the HMRC Debt Collection team to discuss. The HMRC Debt Collection team will be able to help you come up with an arrangement that suits both parties.
This could involve setting up a repayment plan or working out a budgeting solution that will allow you to better manage your finances and pay off the debt over time. It is important to keep in mind, however, that if you do not make payments as agreed then the HMRC can take legal action against you.
It is also important to remember that when dealing with any type of tax-related debt, it’s best to seek advice from a qualified accountant or financial adviser who can provide tailored advice for your individual circumstances.
HMRC Debt Collection Strategies
HMRC Debt Collection actions are designed to ensure that taxpayers can pay back what they owe in a way that suits both parties. It’s important to be aware of the options available and work with HMRC to find an agreement that is suitable for you.
By working together, you can minimise the debt as much as possible and prevent any further legal action from taking place.