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.
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 2-7.
- you may have received a bill for late filing penalties for a self-assessment tax return. In this case, look at the information on late filing penalties,before reviewing the sections 2-8 below.
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.