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Engage early with HMRC on tax debts, says ICAEW

18 August: Two new publications from HMRC outline its approach to collecting tax debt and highlight the importance of early discussions with debt management when problems are anticipated.

Early 2021 will be a critical period for many taxpayers as deferred income tax self assessment and VAT liabilities become due. HMRC debt management has published two policy papers: How HMRC treats customers who have a tax debt and How HMRC supports customers who have a tax debt, with guidance for taxpayers who find themselves having difficulty paying their tax.

This guidance provides a useful overview of HMRC’s approach, both in terms of the support that it can offer (such as time to pay arrangements) and the enforcement action it may take where payment is not made. 

The Tax Faculty has also published guidance on negotiating time to pay. Early contact is important as it establishes that the taxpayer is unable to pay and in need of support rather than simply refusing to pay. HMRC typically has more than half a million arrangements in place at any one time, and nine out of ten of them complete successfully. The arrangements are tailored to the needs of each taxpayer.

If you would welcome further guidance on tax debts, either from HMRC or the Tax Faculty please contact caroline.miskin@icaew.com.