If you don’t pay your tax bill
If you ignore your tax bill
1. Overview
HM Revenue and Customs (HMRC) will take ‘enforcement action’ to get the money - you may be able to avoid this if you contact them.
There are a number of enforcement actions HMRC can take to get the tax you owe. They can:
- ask debt collection agencies to pursue the money
- collect what you owe through your wages or pension (if you owe less than £3,000)
- take things you own and sell them (if you live in England, Wales or Northern Ireland)
- take you to court
- make you bankrupt or close down your business
If you don't pay your tax on time, you'll probably have to pay interest on the outstanding amount. You may also have to pay a penalty or surcharge.
Avoid enforcement action
Contact HMRC as soon as you can - you may be able to either:
- get more time to pay
- pay in instalments
2. Debt collection
HM Revenue and Customs (HMRC) can collect your debt through a debt collection agency or by taking money from your pay or pension. They can also take you to court.
Through a debt collection agency
Your debt may be sent to a private debt collection agency who will collect the debt on HMRC’s behalf. The agency will write to you and you should pay them directly.
Through your earnings or pension
HMRC can collect your debt by deducting it from your salary or pension if you owe less than £3,000. They'll write to you before the start of the tax year in April explaining that your tax code has changed.
If HMRC thinks that you or your business aren't able to pay your debts, they may apply to have you made bankrupt or close down your business.
3. Taking control of goods (distraint)
If you live in England, Wales or Northern Ireland, HMRC can take things that you own and sell them to pay your debt. This is called ‘taking control of goods’ (or ‘distraint’ in Northern Ireland). If you live in England or Wales, you’ll also be charged certain fees.
Enforcement action fees (England and Wales)
| Action | Fee | What else you need to pay |
|---|---|---|
| Issuing a notice of enforcement | £75 | - |
| Visit by HMRC to take control of your goods | £235 | 7.5% of the proportion of the main debt over £1,500 |
| Goods taken and sold at auction | £110 | 7.5% of the proportion of the main debt over £1,500 |
What happens when HMRC visit
An officer from HMRC will visit you and ask you to pay your tax bill. If you don’t pay, they will list your possessions to the value of what you owe and ask you to sign the list. If you sign, you'll have 5 days to pay the demand before your possessions are taken away by bailiffs.
If you don’t sign, you’ll still have 5 days to pay before your possessions are sold off, but your possessions will be taken away immediately.
If your possessions are sold off for more than the amount you owe, you’ll be paid anything left over. If they’re sold for less, you'll have to pay the difference.
4. Court action
If HMRC takes you to court, you may have to pay court fees and HMRC's costs as well as the tax you owe.
Magistrates court (England, Wales and Northern Ireland)
HMRC can start magistrates court proceedings against you if:
- you have separate debts of £2,000 each or less
- you’ve owed the money for less than a year
You’ll get a summons before the hearing explaining what you owe and where and when the hearing will be. If you pay, you won’t have to go to court.
If you disagree with the amount on the summons, you'll need to contact HMRC before your case goes to court.
If you don’t pay, HMRC can ask the court to:
- send bailiffs to take and sell things that you own to cover the debt
- make you bankrupt or close down your company
County court (England and Wales)
The court will write to you explaining how much you owe and what you need to do.
If you disagree with the amount you're being asked to pay, you may need to go to court to explain why.
If you don’t pay, HMRC can ask the court to:
- send bailiffs to take and sell things that you own to cover the debt
- take the money directly from your earnings
- make you bankrupt or close down your company
- order someone who owes you money to pay your debt
- place a charge on your property
Sherrif court (Scotland)
HMRC will apply to the court for a warrant to collect your debt. You'll have 14 days to pay from the date of the warrant.
If you don’t pay, HMRC can ask the court to:
- take the money you owe directly from your pay or from your bank account
- take and sell certain goods from your business premises or which are kept outside on your property
- make you bankrupt or close down your company