How does HMRC debt collection work?

Dealing with HMRC debt collection agencies

If your company is struggling with HMRC arrears, such as non-payment of VAT, corporation tax and/or PAYE, you may be finding yourself under increasing pressure to bring your account up to date. HMRC will typically chase for payment by sending you reminder letters, urging you to repay the money you owe. If payment is not forthcoming, however, you could well be issued with a ‘final opportunity letter’, after which your company may receive a visit from a HMRC debt collector.

When it comes to recovering money owed by companies, HMRC is tenacious in doing so. As a large organisation, they have a huge number of resources which can be directed towards chasing later payers and those who have fallen into arrears. As part of this process, HMRC may decide to use the services of a debt collection agency or send their own officers in to recover the money owed.

Understanding HMRC debt collection

HMRC debt collection is typically undertaken using one of two routes. In some instances, you may be visited by a Field Force or Distraint Officer; this is a trained collection officer employed directly by HMRC. Alternatively, HMRC also enlist the services of a number of third-party debt collection agencies and companies to carry out tax debt recovery work on their behalf.

According to Gov.uk, HMRC currently use 8 different debt collection firms to recover monies owed in unpaid taxes. The aim of HMRC debt collectors is to seize assets from the company premises which will then be sold off with the proceeds going towards paying down the debt, however, during a visit from a field force or distraint officer, you can also make payment towards the debt if you are able to do this, or alternatively set up a Time to Pay (TTP) arrangement if you need more time and space to settle the money owed.

The debt collection agencies HMRC uses are as follows:

Once HMRC has asked a debt recovery firm to chase the debt, it is often the case that you must make payment to the HMRC debt collection agency rather than to HMRC themselves, although you should always check this by speaking to HMRC directly before parting with any money.

If you have already been visited by a HMRC debt collection agency and you wish to make a payment or contest the amount owed, you will need to contact the debt collection agency being used and enter into a discussion with them directly.

Concerned about HMRC debt collectors?

It is common for HMRC to make numerous attempts to recover this debt themselves, either by calling you or by sending letters to notify you that the tax is overdue.

Being faced with a letter threatening action from a HMRC enforcement officer is usually the result of a sustained period of time in which your company has failed to meet tax liabilities on time and following a series of alternative collection efforts on behalf of HMRC; however, in spite of this, it is still an often very distressing experience when you receive a visit from a debt collection officer.

If you have been threatened by a visit from a HMRC debt collection agency or a field force officer, you should take swift action to remedy the situation and prevent it from going any further. Ignoring the situation will not make it go away, in fact in the vast majority of cases you will only make the problems worse by refusing to seek advice.

Taking expert company debt advice from a licensed insolvency practitioner will allow you to understand your options, and work out a plan for the future. At Real Business Rescue, we help company directors facing financial distress and most of the time, this distress includes tax debts owed to HMRC for unpaid VAT, PAYE or corporation tax. It is often the way that HMRC are last to be paid when directors are struggling balancing the books; it is easy for directors to shelve their tax payments and, instead, pay trade creditors first and foremost. It is only further down the line that directors then realise they do not have the means to meet their company tax liabilities when a HMRC debt collectors turns up at their door.

What to do if you are threatened with HMRC debt enforcement action

The best advice when dealing with the threat of HMRC company debt collectors is to seek swift professional advice. There are a number of options out there which could help, even if you don’t have the money to clear the balance owed in full at this time.

At Real Business Rescue, our team of business rescue and recovery experts can help you put forward a convincing proposal to HMRC asking for additional time to pay the money you owe through a Time to Pay (TTP) Arrangement. We can liaise with HMRC on your behalf, using our vast experience to present your case in the best light possible, maximising your chances of having a payment plan put in place.

Alternatively, if your debts to HMRC are just the tip of the iceberg, we can explore the possibility of a Company Voluntary Arrangement (CVA) which would allow you to enter into formal negotiations with all of your creditors – including HMRC – to lower your monthly repayments into a more achievable and sustainable amount.

How Real Business Rescue can help

If you are struggling with HMRC tax or PAYE arrears, we offer a free initial consultation to all company directors, shareholders, and sole traders. We can provide expert independent advice whether you're at the early stage of HMRC sending you an overdue tax letter or the more critical stage where HMRC enforcement officers are knocking on your door.

Contact us today on 0800 644 6080 for immediate help and advice, or to arrange a no-obligation consultation from a licensed insolvency practitioner.