Don’t put off sorting out paperwork when it comes to income tax arrears.
If you have arrears of income tax, you should contact HM Revenue and Customs as soon as possible.
If you don’t pay your income tax, or come to an arrangement with HMRC to pay off the arrears, the consequences could be very serious. If you pay tax under PAYE, in many cases HMRC will try to collect the debt by an adjustment to your tax code, but they may also: use a private debt collection agency to recover the debt; apply to the magistrates’ court if your arrears are £3,000 or under. The court will usually order you to pay the arrears and costs. If you disagree with the amount of the arrears, it is important you contact HMRC before the hearing because the magistrates cannot consider any dispute about the amount; come to your home to take away your belongings and sell them to raise money for the arrears. HMRC officers are not allowed to force their way into your home but if they can’t get in without force, they may apply to the magistrates’ court for a warrant which will allow them to break in. This is very unusual; make a claim in the county court against you. If you don’t pay, this will make it difficult for you to get credit in the future and also they can then take further steps against you, so you could end up losing your family home; issue a statutory demand if you’ve been in arrears for some time and owe £750 or more, although they won’t usually do this unless you owe more than £2,000. This is the first stage of making you bankrupt. If you’re made bankrupt, you could lose your family home. If you get a statutory demand from HMRC, get help from an expert debt adviser straight away.
If you need further help contact: Citizens Advice Bureaux who give free, confidential, impartial and independent advice.
TaxAid: If you’re on a low income, you may be able to get advice from TaxAid – the helpline is 0345 120 3779. Download ‘Tax debt? Can’t afford to pay?’ at taxaid.org.uk