In recent times, HMRC has been utilising new methods of recovering unpaid tax arrears. If your company has been facing tax problems recently, you may have come across one of the HMRC debt collection agencies. HMRC debt collection aims to close the tax gap. You should understand that:

  • A tax gap is simply the difference between the expected tax revenue and the actual amount received.
  • Lowering the tax gap remains one of the key obligations of HMRC.
  • HMRC have been working with several debt recovery agencies to recover tax debts.

The use of HMRC debt recovery agencies to recover unpaid tax arrears has attracted criticism from some, but has now been in effect for almost 10 years. In most cases, HMRC only uses a debt collection agency as a last resort. If you wish to learn more about HMRC debt recovery methods, you can contact The Insolvency Experts for specialised advice.

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Four Key Questions on debt collection agencies

What should you do if your company has HMRC tax debts?

If you have outstanding HMRC tax arrears, you should contact a financial expert for advice before contacting HMRC. Our financial experts have vast expertise and experience in HMRC debt collection processes, helping clients to agree on a TTP (Time to Pay) or other tax repayment arrangement with HMRC to avert the severe implications of defaulting on HMRC tax obligations, which can include Liquidation.

If you fail to contact HMRC in time, they may decide to take severe measures to recover any outstanding tax arrears, measures like seizing some of your business assets. If the unpaid tax arrears exceed £750, HMRC may decide to commence insolvency proceedings against your company. As a consequence, it is advisable to contact HMRC swiftly, ideally with the guidance of a financial expert.
 

What are the right measures to take if an HMRC debt collection agency calls you?

One of the HMRC debt recovery agencies may contact you if you have not been paying your HMRC tax arrears for some time. Once HMRC passes the debt to the debt collection agency, HMRC requires you to pay the outstanding arrears to that agency directly. You should always take the time to check and verify all the details provided by the HMRC debt collection agency including your name, address, contact and the amount owed. If you suspect an irregularity or error, you should contact HMRC as soon as possible.

You can also contact The Insolvency Experts for specialised guidance and help. We can help you show HMRC, or the debt collection agency, that your company is not in a position to pay the outstanding tax debt immediately. If they are convinced, you may be allowed to settle your unpaid arrears in installments. HMRC debt collection agencies are often aggressive in their pursuit of arrears, so you may not convince them to allow you to pay in installments on your own.

Therefore, you should always consider contacting trusted financial experts as soon as you receive a notification from a debt collection agency. Here at The Insolvency Experts, we know that the process can be quite challenging to you and we are always ready to provide professional and personable support.
 

Which are the certified HMRC debt recovery agencies?

Not every debt collection agency works on behalf of HMRC. You need to ascertain that the debt collection agency that visits your premises is licensed and acting on behalf of HMRC. It is important to be aware that legitimate HMRC debt collection agencies only recover debts related to:

  • PAYE
  • Corporation Tax
  • VAT arrears

The Gov.UK lists 13 debt recovery agencies that currently work with HMRC to collect these outstanding arrears. In some cases, the debt recovery agency seizes some of the company assets which are later sold to recover the HMRC debt, but before you permit the agency to enter your premises, they should provide identification that they are one of the 13 agencies who are licensed at present.
 

What are the main stages of the HMRC debt collection process?

HMRC usually follows a standard procedure while claiming unpaid tax arrears, with key stages including:

  • Payment Reminders: HMRC sends tax repayment reminders in the form of letters. They may also use text messages. If you fail to settle the debt, HMRC escalates the issue to one of its debt collection agencies.
  • Notice of Enforcement: If you still fail to settle your tax arrears, HMRC will send you a “Notice of Enforcement.” The agency informs you of its intention to enforce recovery of the unpaid tax debts.
  • Bailiffs (Enforcement Action): HMRC will inform one of its debt collection agencies at this stage to seize and sell some of the company goods to recover the unpaid tax arrears.
  • Further Escalation: If the enforcement action stage fails to satisfy the expectations of the HMRC, they may decide to start a legal action against your company to recover the unpaid tax arrears.
  • Winding-Up Petition: The HMRC “Enforcement and Insolvency” teams will get involved if you fail to settle your tax debt even after escalating the issue further. At this point, the “HMRC Legal Department” will file a winding-up petition to liquidate your company.

 

What are the time limits for HMRC debt recovery?

Note that the HMRC debt collection process doesn’t have set time limits and can continue for many years in severe cases. However, the practical time limits may vary from one case to another. HMRC VAT and tax arrears have no set time limits, so HMRC reserves the power to recover the unpaid tax arrears from any funds saved in bank accounts or through seizure of company assets no matter how long the process takes.

You need to know the relevant HMRC debt collection methods to avoid VAT late payment issues that may ruin the smooth operation of your business. Once you receive a notification from a HMRC debt recovery agency, you can contact The Insolvency Experts for professional guidance and help. Our financial specialists have worked with HMRC debt collection agencies for many years and they are always ready to assist you when necessary, with our friendly team of experts available by phone, email or online web form.

How we’ve helped others through
rescuing their business

At the Insolvency Experts our sole aim is to rescue, recover and renew businesses that are in difficulty. We are specialists in corporate turnaround and help business overcome cash flow difficulties and other financial problems. Our experts:

  • Help you to take the appropriate steps to meet any impending deadlines
  • Have a long track record in helping companies in similar positions
  • Can help you take the best course of action, often using your assets to help you avoid additional cost

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We helped a struggling Birmingham restaurant from going into administation:

  • Turnover £890K
  • Total Creditors £94K
  • Assets £340K
  • HMRC Overdue £20K
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We helped a marketing agency from going into administation:

  • Turnover £700K
  • Total Creditors £120K
  • Assets £20K
  • HMRC Overdue £30K
  • Profit Now +£80K

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