Income Tax Debt Help & Advice


If you fall into debt with your income tax, VAT, National Insurance or have a tax credit overpayment, this will usually be dealt with by Her Majesty’s Revenue and Customs (HMRC). Ignoring this type of debt can have serious consequences, so it’s important to deal with them as quickly as possible.

In this guide we’ll look at income tax, from what it is and how you pay it, to what you do went your fall into arrears with HMRC.



What is HMRC debt?

HM Revenue and Customs are the biggest creditor in the UK, responsible for collecting taxes from millions of UK citizens up and down the country. One of HMRC’s main responsibilities is collecting income tax.

Income tax is exactly what it sounds like – a tax on your earnings. Every working person in the UK who earns above a certain threshold will be taxed on their income each month (if you’re the salaried employee of a company) or each year (if you’re self-employed and have to complete a tax self-assessment).

HMRC debt relates to any debt you owe to revenue and customs. Taxes are considered to be priority debts, and not paying them can lead to court action, bailiff visits and can even lead to imprisonment. This can understandably cause high levels of stress, especially since action from HMRC can escalate rather quickly.

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How do HM Revenue and Customs collect debts?

If you owe money to HMRC, they don’t collect debts in a traditional fashion. They have formal processes that need to be followed, and more often than not they go straight to legal action.

A common route they will take is to apply to the court for a CCJ to be taken out against you in an attempt to force you to pay back the balance owed.

This will normally outline what repayments you will have to make and will show on your credit file, which will have an adverse effect on your credit score.

They will also commonly apply to your employer to take payments from your wages before they reach you. It’s important to contact them before this happens as it can often be a significant amount taken.

How do I make sure I pay my tax on time?

It’s often the case that people fall into this type of debt by accident, but there are ways to help you avoid this:

Check what tax you owe

Many of us assume that HMRC’s calculations are correct, but this isn’t always true.

Double check the figures you provide them and that all the information is correct before submitting it. This way you can avoid any miscalculations or over-estimations.

For those that are self-employed, you can check this with your accountant.

Create a budget for your tax return or self-assessment

Once you’re sure you have the right calculations, create a budget with this worked in. That way you will be less likely to be caught short.

Keep HMRC updated

If you’re worried about falling into debt with HMRC, contact them as soon as possible and keep them up to date with your situation.

You can find their contact details, including the HMRC email address and phone number, on the gov.uk website.

They will have ways to help you to avoid running up a bill that you can’t pay.

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Can HMRC take court action against me for income tax arrears?

It is possible to come to an arrangement with HMRC to repay the money you owe.

If you cannot afford to pay your tax bill at once, you can try to organise an alternative arrangement to pay.

This might mean paying what you owe over time, through a series of monthly installments.

If you are unable to come to an arrangement, or continually fail to pay what you owe, their are several legal avenues HMRC can take in an attempt to recover the money you owe and the situation can escalate pretty quickly.

Enforcement action

Like any other creditor, HMRC will eventually begin the debt collection process if you continually fail to pay.

They may attempt to collect your tax debt by taking money directly from your earnings or pension.

If that fails, they may send an enforcement agent to your home in order to seize your goods, sell them at auction, and recoup the money that way.

Court action

Another route they will take is to issue a magistrates’ court summons.

This will require you to attend a court hearing with details of all your finances to decide a payment plan.

If you do not stick to the plan agreed, you will be called for further court appearances and can even end up in prison. It is also an offence not to attend court when summoned.


Falling into debt with HMRC can also lead to them petitioning for your bankruptcy.

This is generally done if your debt is over £5,000 and will mean that any assets you own will be seized and sold to pay the balance.

This will have a severe impact on your credit score and, if you are self-employed, you could lose your business.

What happens if I still can’t afford to pay my tax bill?

If you cannot pay your income tax bill and are worried about enforcement action or the prospect of debt collection agencies coming to your home, there are a number of debt solutions that can help you repay what you owe while offering you protection from legal action.

Trust Deed

Scotland’s answer to an IVA, a Trust Deed allows you to enter a ‘protected’ arrangement with your creditors – including HMRC.

You’ll usually make monthly debt repayments for a total of four years during which time HMRC will be unable to hassle you.

Once you reach the end of your arrangement, any remaining debt to HMRC will be written off.

Debt Arrangement Scheme (DAS)

The Debt Arrangement Scheme (DAS) is another formal debt solution, which means it’s legally binding.

Under a DAS, your DAS provider act as your representative in negotiations with your creditors, and help you work out a repayment programme with HMRC based on what you can reasonably afford.

Find out if you qualify to write off up to 70% of your unsecured debt!

Where can I get debt advice and support for tax debts?

Living with any form of debt can be stressful, but particularly so when you owe money in income tax.

As the biggest creditor in the UK, HMRC has a unique ability to force you to pay what you owe, from taking money directly from your earnings, to petitioning for your bankruptcy.

If you owe money to HMRC or are worried about an unpaid tax bill, talk to Carrington Dean today.

As Scotland’s debt specialists, we have years of experience dealing with HMRC, and can make sure you have the advice and information you need to take action on tax debt.

For free debt advice and guidance, speak to a Carrington Dean adviser today on 0800 043 1320.