Tax Arrears – What Treatment Can You Expect From HMRC

A debt solution may not be suitable in all circumstances. Fees may apply and will affect your credit rating

In November 2020, HMRC updated its policy page around how it will continue to support taxpayers and the economy going forward into 2021.

Provided by Kevin Still from The Debt Managers Standards Association, “DEMSA

Covid support to date

Through the Coronavirus Job Retention Scheme (CJRS), 1.2m employers have claimed around £41.4 billion to protect their furloughed employees. The Chancellor also helped around 2.7m self-employed people claim £13.7 billion in grants, and helped employers by reimbursing some of the costs of statutory sick pay (SSP) for COVID-related absences. They also reimbursed restaurants for the customer discounts they gave under the ‘Eat Out to Help Out’ scheme.

The government also provided much-needed cash flow support to those in Self-Assessment by allowing them to defer Income Tax payments on account due on 31 July 2020 to 31 January 2021 and to UK businesses by allowing them to defer VAT bills due between 20 March and 30 June to 31 March 2021. They introduced a new scheme allowing the deferred VAT to be spread over 11 equal monthly installments. Businesses across the country deferred a total of £28.2 billion of VAT.

As well as CRJS, SEISS and SSP, HMRC has implemented more than 60 other temporary policy changes or clarifications to respond to the impact of COVID-19. These included measures to:

  • reduce the demands placed on our customers, for example a 3-month extension to appeal deadlines where the customer has been affected by COVID-19
  • keep goods flowing at UK borders (e.g. operational measures to allow businesses to carry out some customs clearances from their business premises to remove the need to present goods in other locations)
  • ensure the tax system continues to operate effectively during lockdown

HMR & C’s Key principles they are deploying

  • HMRC’s approach will be to collect the tax due in a way that recognises the very real needs and challenges that businesses and individuals face
  • HMRC will communicate openly and transparently, to give people as much certainty as possible.
  • It is more important than ever that HMRC (and other central government agencies) are professional, fair and even-handed in the way they interact with their ‘customers’
  • Where HMRC has introduced temporary administrative arrangements that have improved the customer experience or created operational improvements, they will try to build on these changes to deliver long-term sustainable solutions. Hopefully, this will link into the Cabinet Office work around central and local government debt collection practices
  • HMRC will continue to prioritise tackling serious fraud and criminal attacks on the tax system, while increasing wider activity to make sure individuals and businesses pay the right tax

HMRC Debt management

As lockdown measures relaxed in some areas, HMRC has restarted debt collection activities with taxpayers. They have claimed that they are taking a compassionate and common-sense approach to dealing with people with debts or who are concerned about their ability to meet tax obligations. HMRC will keep the situation under review to ensure they aren’t moving too quickly, particularly as different areas face higher levels of public health restrictions. There are many areas in Tier-3, including most cities with meaningful numbers of commuters.

Focus on collecting tax debts from those least affected

They will continue to focus on collecting tax debts from customers who are least affected by COVID-19 and most able pay their debts, ensuring they stay in touch with all taxpayers who have missed payments to offer support. They are doing this gradually to make ensure they have enough experienced advisers available to take calls and give them the attention they need.

Time to Pay Plans

HMRC has contacted small businesses where they have agreed payment deferrals, so they can support them into Time To Pay (TTP) arrangements. HMRC has also started to contact small businesses with new debts that have arisen since March 2020.

HMRC has stated that they have tailored taxpayer communications to reflect the current exceptional circumstances and they will signpost the extra support available. However, if taxes are not paid on time, taxpayers will incur late payment penalties and debts will incur interest, so HMRC encourage people to get in touch if they don’t think they will be able to pay.

If taxpayers are worried about payment, they should call the dedicated Payment Support Service as soon as possible.

HMRC work with debt advice services to improve their processes and make sure their support is easily accessible. For example, if a customer works through a Standard Financial Statement (SFS) from a debt advice provider, they can use that to assess how much they can afford to pay in when negotiating a Time to Pay arrangement.

Link: COVID-19: how HMRC will continue to support customers and the economy – GOV.UK (


Help for Business and Individuals owing tax

Before your call HMR & C to ask for help or a Time to Pay Plan, its sensible to work through your budget. The type of budget depends on your trading style. For a business this needs to be a cash flow forecast covering the next 12 months. If you are self employed, it will also be necessary to pull together a personal Income and Expenditure budget using the Standard Financial Statement model. This will allow you work out how much money you need to live on and what surplus is then available to be able to pay towards your taxes.

The Business Debt Advisor team can help you work through these budgets and offer advice on the likelihood of HMR & C agreeing your Time to pay plan.

You call us on 03339999689 or text us on 07506939680 or email us at

Find out how we can help your business

We provide the most comprehensive debt advice and support for individuals and business owners. Our experienced team offers a personal approach to finding solutions to your debt challenges.