Tax and other debts owing to HMRC

If your tax bill remains unpaid, HMRC will start proceedings to recover the money.

If you do not have the funds to pay your bill, HMRC has discretion to give you extra time to pay, possibly by instalments.

However, if you simply ignore your bill, you are not able to reach an agreement, or you do not keep up the payments you have agreed to make, HMRC has several options:

Distraint order

Most of your possessions (not including the basic things you need to live and the essential tools of your trade) can be taken and auctioned to pay your bill plus distraint costs.

An agent working on behalf of HMRC will visit your home or business and request payment of your bill. If you do not pay on the spot, your possessions will be listed on a form.

If you sign the form, the possessions will not usually be away that day. Instead, you will have five days grace within which to pay.

If you refuse to sign, you will still have five days to pay but HMRC’s agents will take your possessions there and then.

If your possessions are sold for more than the amount you owe you will receive the balance. If they items are sold for less, you will still need to pay the balance outstanding.

Magistrates' court proceedings

HMRC can start proceedings in a magistrates’ court if:

  • You owe £2,000 or less
  • You have owed it for no more than a year

You will receive a summons before the hearing telling you what you owe and where and when the hearing will be.

If you pay what you owe you will not need to attend court. If you disagree with the amount, contact HMRC and seek expert advice as magistrates cannot settle arguments about the size of your bill.

The magistrates can order you to pay the amount owed plus costs. If you fail to pay, bailiffs can be sent to seize your possessions.

County Court proceedings

If HMRC cannot collect the debt using distraint or through the magistrates court they can start County Court proceedings. You will receive a claim form and an information pack explaining your options.

If you pay what you owe, legal proceedings will stop. If you are unable to pay immediately, you can make an offer within 14 days to pay by a certain date or in instalments.

If you disagree with the amount, you can give your reasons why on the form you receive from the court, but you may also be summoned back to court to give your reasons.

If you don't reply or pay what is owed, you can be ordered to pay the bill plus court fees. Your details will be put on the Register of Judgments, Orders and Fines, after which you may find it difficult to open a bank account or borrow money. However, if you pay within one month of the judgment you can ask to have the entry removed.

Bankruptcy proceedings

If you do not pay or your debts exceed your assets, you could be bankrupted and lose your home, business, savings and investments:

  • a statutory demand for payment will be served on you personally at your home
  • if within 21 days you do not pay or agree to settle, a bankruptcy petition will be filed at the High Court
  • the petition will be served personally at your home
  • If you cannot pay, the court can make a bankruptcy order
  • a trustee can be appointed to use your assets to pay bankruptcy costs and contribute towards your debts


If you are faced with a HMRC debt which you are unable to pay, it is important that you seek expert help immediately. We can assist by negotiating with HMRC so that your home and your business are not put in jeopardy. Please contact us now.