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HRMC have published its policy document, 'Collecting tax debts as we emerge from coronavirus (COVID-19)'. It warns that should companies or individuals ignore HMRC, the agency would initiate enforcement action after a September 2021 deadline.

The policy document outlines its process in handling Outstanding debt to HMRC. It takes a sympathetic tone on individual and company debt but ultimately warns it will take enforcement action should nothing be done by 21 September 2021.

HMRC warn that where businesses have little chance of recovery it may have to take action, "We do have a responsibility to act, not least to protect their competitors and viable businesses in their supply chains. It is in no one’s interest to simply allow unsustainable debt to build up unchecked."

Process

Should an individual or business have an outstanding debt with HMRC, it will begin a Process to regain it.

HMRC warns that ignoring these communications means that it cannot differentiate between those in genuine need of support or those simply refusing to pay.

For those with financial difficulties HMRC undertakes to discuss:

Refusal to pay

Where customers do not respond to any HMRC communications or refuse to pay when they can afford to, they will be visited by HMC officers. 

HMRC will only consider collecting tax through insolvency proceedings where customers have been found to be:

Useful guides on this topic

Compliance
This section covers HMRC powers, anti-avoidance measures, overpayments and special regimes.

Tax debts and insolvency
This guide looks at the treatment of tax debts to HMRC in insolvency cases.

Direct recovery of Debts (enforcement by deduction from accounts)
When can HMRC recover debts directly from persistent non-payers?

Information powers
How does HMRC gather information? What information do they already hold? What rules should you be aware of?

COVID-19: Loan funding
From 6 April 2021 companies can apply for loans to support their businesses under the Recovery Loan Scheme. In preparation for non-essential retail and outdoor hospitality reopening next week can access loans.

External links

The Insolvency Service: Debt Respite Scheme (Breathing Space) guidance


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