HM Revenue & Customs (HMRC) expects all customers, both individuals and businesses, to manage their affairs so that they pay their tax on time and in full. However HMRC understands that in certain circumstances this may not always be possible.
This guide summarises the actions you need to take if you know in advance that your payments to HMRC are going to be late or if you know you are going to have problems making a payment.
If you think that you won’t be able to pay in full and on time
If you think that you may struggle to pay the amount due in full and on time you should consider if there is anything that you can do to raise the money to make the payment. You may consider:
- approaching your bank/building society to see if they will support you through the short term difficulty
- looking at your outgoings to see if there is any non-essential expenditure that you can stop or reduce
- approaching people that owe you money to see if they can pay you more quickly
If after considering these options you are still unable to pay you should contact HMRC as soon as possible on the number shown below HMRC may be able to allow you time to pay. If you delay beyond the due date you will be charged interest and you may be charged a penalty or a surcharge.
Who to contact before you receive a payment statement, bill, reminder or demand
You will need to call HMRC’s Business Payment Support Service Helpline on Telephone 0300 200 3835. This service is available for individuals and businesses who have not yet received a payment demand.
Information you’ll need to provide
- your tax reference number
- your name and/or the name of your business
- your/the businesses address including the postcode
- a contact telephone number
- details of the tax that you believe you will have difficulty paying
- If you receive a payment demand or letter but can’t pay
- If you find you have received a payment demand, notice or letter warning you of legal action you must immediately contact the HMRC office that issued it. You’ll find the contact details on the correspondence or demand.
- It’s very important not to ignore the demand. Even if you can’t pay straight away you might be able to come to an arrangement with HMRC. See the section in this guide ‘What will happen when you contact HMRC’ for more information.
- If you ignore a letter or demand
- Interest will always be charged but if you don’t respond to a letter or demand for payment you will face possible legal action and may incur additional penalties, surcharge. Your debt may be referred to a private debt collection agency and HMRC will be using the following agencies to pursue some debts on their behalf:
- Advantis Credit Ltd
Akinika Debt Recovery Ltd
Apex Credit Management Ltd
Bluestone Credit Management Ltd
Commercial Collection Services Ltd (trading as CCS Collect)
Credit Solutions Ltd
dlc (formerly Direct Legal & Collections)
Fredrickson International Ltd
Past Due Credit Solutions (PDCS)
Sigma Red (formerly known as Commercial Credit Services Group)
What will happen when you contact HMRC
You will need to explain why:
- you are unable to pay in full and on time
- what you have done to try and raise the money to pay your debt
- how much you can pay immediately
- how long you think you will need to pay the rest
If this discussion reveals that you are able to pay immediately in full you must do so. The HMRC adviser you speak to will be able take a payment over the phone, either by Direct Debit or debit/credit card, or they can advise you on other payment options available.
If you are unable to pay immediately HMRC will want to ask you a number of questions to judge your ability to pay off your debt whilst paying ongoing liabilities. HMRC will ask questions about your income and expenditure, your assets and the changes you are making so that you can return to making payments on time.
If you have previously been given time to pay you will be asked more in-depth questions.
In more complex cases HMRC may ask for documentary evidence to consider your request for time to pay.
If HMRC allows you extra time to pay
HMRC will only agree time to pay where they believe you are genuinely unable to pay in full.
When allowing extra time to pay HMRC will help people to schedule their debt payments so that they can pay what is owed and return to making future payments in full and on time.
As part of this process you are expected to investigate and seek other sources of finance and/or take action to restructure your business and/or personal affairs to enable you to meet your statutory tax obligations.
When HMRC do agree time to pay they will encourage you to set up a Direct Debit payment plan over the phone to help you make sure that you don’t miss any payments.
HMRC is responsible for making sure that money is available to fund the UK’s public services and expects people to pay their tax in full and on time.
What to do if your circumstances change
If your circumstances change and you become unable to make the payments covered by the agreement, as well as keeping up to date with any new liabilities, then it is important for you to get in touch with HMRC before you miss any payment.
Equally if you find that your financial circumstances improve you should contact HMRC to pay off your debt quicker
If you fail to make the agreed payments or don’t keep your tax affairs up to date HMRC will normally immediately cancel the arrangement and take legal action to recover any outstanding amount.
Interest on agreed late payments
It is important to understand that even when HMRC allows customers time to pay, interest will continue to be charged (where applicable) for late payments.
Your rights if HMRC don’t allow extra time to pay
The dates payments are due are set out in legislation and HMRC haves no power to change them. HMRC does have some limited discretion about allowing time to pay on payments that are due.
HMRC considers each case on its merits and will, in some cases, decide not to allow a time to pay arrangement. Where this is the case HMRC will explain why and what will happen next.
There is no right of appeal against an HMRC decision to refuse a request for extra time to pay.
If you are unhappy with the way you were dealt with or the service you received you can make a complaint.