If you owe tax and can’t pay, it’s easy to imagine the worst. But in most cases, enforcement action is only taken as a last resort.
Prison for tax debt is extremely rare. HM Revenue and Customs (HMRC) only prosecute people where there are serious allegations of fraud or deliberate tax evasion. They do not send people to prison just because they’re struggling to pay.
Don’t ignore tax debt.
Although you may want to put your tax demand in a drawer and hope it will go away, the most important thing is not to ignore it. HMRC will usually try to agree a payment plan first, but you need to speak to them about what steps to take.
Enforcement action tends to happen when someone won’t engage, or no agreement can be reached.
Here’s what that can involve.
Taking control of goods (England and Wales).
This is the action many people fear most.
In England and Wales, HMRC can use what’s called the “Taking Control of Goods” process. In Northern Ireland, it’s known as distraint. The aim is to remove and sell belongings to cover the debt.
Here’s what usually happens:
- A visit from an HMRC “Field Force” officer. Their first job is to confirm your address and see if things can be sorted out without enforcement.
- They can check your tax position while they’re with you.
- If the debt isn’t resolved, HMRC will issue a formal Notice of Enforcement.
- You’re given time to pay or set up a payment plan.
- If nothing is agreed, the officer can return to list items that could be sold.
They must give at least seven days’ written notice before goods are removed and sold.
They cannot force entry into your home without a court order. That is very unusual.
What goods can and can’t be taken?
They cannot take essential items. That includes things like:
- Cookers
- Bedding
- Basic household furniture
- Tools of your trade up to £1,350
They shouldn’t take anything that would harm your basic wellbeing or stop a viable business from running. Vehicles are more at risk, so it’s important to get advice if you rely on one for work.
If you don’t agree with the amount HMRC say you owe, tell the officer. You have the right to dispute it.
There are fixed fees for this process, plus extra fees if goods are sold.
If you’re worried about a home visit.
The thought of someone coming to your home can feel overwhelming.
If you genuinely have no valuable assets, you can explain that to HMRC. Sometimes you can:
- Provide a list of your main belongings.
- Arrange to meet somewhere neutral.
- Agree a time when a vulnerable family member won’t be present.
If you’re staying with friends or family and don’t own anything there, tell HMRC. They may decide not to visit a ‘care of’ address.
You do have the right to refuse entry. But if you open the door and allow them in, that’s treated as peaceful entry.
Taking money from your bank account.
In England, Wales and Northern Ireland, HMRC can take money directly from bank and building society accounts if:
- You owe £1,000 or more, and
- Other attempts to collect the debt haven’t worked.
This is called Direct Recovery of Debt.
There are safeguards:
- At least £5,000 must be left across your accounts after any money is taken.
- You must be given 30 days to object.
- An HMRC officer should meet you face to face before action is taken.
In Scotland, money can be taken from a bank account using a Summary Warrant.
If this happens, don’t panic. There are protections in place, especially if you’re vulnerable or would face hardship.
County Court action.
HMRC can take a case to the County Court.
If they do, the court can make different types of orders.
Charging orders.
A charging order places a legal charge on property or other assets. This means if the property is sold, the debt must be paid from the proceeds.
HMRC say they avoid forcing the sale of someone’s home wherever possible. Forced sales have generally been limited to cases involving multiple properties or criminal activity. The decision to grant an order is always made by the court.
Attachment of earnings.
If you’re employed, the court can order deductions directly from your wages. These orders are set at a level that should leave enough for essential living costs.
In Scotland, this is called an Arrestment of Earnings.
What should you do now?
Whatever stage you’re at, there’s usually a way forward. And you’ve taken that first step – finding out more about what you need to do. We know that’s sometimes the hardest part.
Read our step-by-step guide on what to do about a tax debt that you’re struggling to pay.
If you’re able to pay for professional tax advice, find a tax adviser or accountant who can help.
If you can’t afford professional tax advice or have circumstances that make getting tax advice difficult, we may be able to help. We specialise in supporting people who feel out of their depth with tax debt. Find out more about our helpline and the services we offer.