Problems paying your tax?
Thousands of people are unable to pay their tax on time, and many have sleepless nights worrying about going bankrupt, losing their home or job, or even going to prison.
The worst thing is to ignore the matter. Your situation may not be as bad as you think, but you should act quickly. If you do nothing at all, you increase the risk of legal action against you.
TaxAid has made some easy to understand films that explain how to handle each stage of your tax debt. To watch them, click here: Talking Tax Debt
Most often, you will become aware that you owe tax in one of the following ways:
• you may receive a letter from HM Revenue and Customs (HMRC) stating that not enough tax was taken off your employment or pension income, and enclosing a calculation of the tax “underpaid”. Many such letters are now being sent out to people who have not previously had much contact with HMRC, and the action to take is explained in the ‘Recovery of underpaid PAYE’ section.
• if you have previously been sent a tax return, then you may receive an HMRC Statement showing that tax is due, or a letter or telephone call demanding payment under threat of legal action. The processes followed by HMRC, and the legal actions they can take, are all explained in sections 2-6.
Do not ignore a letter or demand from HMRC which states that tax is due, as this will usually make things worse. Quite often, a quick response can reduce the size of the problem.
Note on Tax Credits: HMRC also recovers overpayments of tax credits. The procedures are very different and beyond the scope of this guide, but there is some brief guidance in section 7.
A printable version of the following guide can be downloaded here: Tax debt Booklet Nov 2011