Call for Evidence: Modernising Tax Debt Collection from Non-Paying Businesses

The Call for Evidence focusses on two areas where changes in business practices have caused HMRC’s existing debt collection procedures to be less effective.

Changing nature of the economy

HMRC state that their debt collecting powers are becoming outdated as the growth of e-commerce makes it easier to conduct business in the UK without a presence or physical assets.

HMRC are seeking views on the extent to which companies use various methods which could prevent tax debts being collected and how procedures could be changed to mitigate those risks.  

The methods that HMRC are focussing on are:

• UK businesses which hold minimal UK assets.
• Leasing assets from connected parties.
• Intangible assets.
• Digital wallets.

Businesses deliberately failing to pay

HMRC are also seeking views on how changes to their procedures could help collect tax debts from the minority of taxpayers who fail to pay their liabilities and engage with HMRC.  Their goal is to prevent costly and time consuming enforcement action by seeking views on:

• The mindset of defaulting taxpayers and whether additional steps should be taken by HMRC.
• Whether expanding security deposits to taxpayers who were intentionally non-payers would change behaviour.
• Whether director personal guarantees could be used to incentivise payment of tax debt.
• What opportunities are there to further engage agents and intermediaries in the debt collection process.

Useful guides on this topic

Time to Pay agreement
Business and self-employed taxpayers with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

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

External Links

Modernising Tax Debt Collection from Non-Paying Businesses

Summary of Questions

Question 1: To what extent do businesses not hold any UK assets at their principal place of business, and do you think this will increase?

Question 2: What are your views on whether and how HMRC should modernise to adapt to the increase in businesses who do not hold any UK assets, in order to minimise non-payment of tax debts?

Question 3: To what extent do businesses make use of in-house leasing, is it more popular in certain industries/sectors than others and do you think this model will increase?

Question 4: What are your views on whether and how HMRC should modernise to adapt to the use of in-house leasing, in order to minimise non-payment of tax debts?

Question 5: To what extent do businesses make use of intangible assets, and do you think this will increase?

Question 6: What are your views on whether and how HMRC should modernise to adapt to an increased use of intangible assets, in order to minimise non-payment of tax debts?

Question 7: To what extent do businesses use digital wallets, and do you think this will increase?

Question 8: What are your views on whether and how HMRC should modernise to adapt to an increased use of digital wallets, in order to minimise non-payment of tax debts?

Question 9: Do you have any views on how often businesses who can pay their tax debt repeatedly choose not to, and whether HMRC should take steps to tackle this issue?

Question 10: To what extent do you think expanding security deposits to include repeated, intentional non-payment would incentivise businesses to pay their future tax liabilities on time?

Question 11: To what extent do you think using director’s personal guarantees for businesses with a history of repeated, intentional non-payment would incentivise businesses to pay their tax debt?

Question 12: What opportunities are there for agents and intermediaries to play a greater role in helping their clients engage with, and pay tax due, to HMRC?