HMRC Debt Collection Process

If your company has PAYE, Corporation Tax or VAT arrears it is useful to understand the HMRC debt collection Process. You can then anticipate the resulting action that will be taken. It may also make it easier to plan a solution.

  • How is HMRC debt collection escalated?
  • What can a Regional Debt Recovery Officer do?
  • Central Enforcement Unit Actions

HMRC Debt in arrears? Give us a call (0800 180 8440) or complete the form below to speak to one of our experts

HMRC Collection Escalation Levels

If a company is in arrears with VAT, PAYE or corporation tax it will first receive standard reminder letters highlighting the debt. The letters will demand that payments are brought up to date. If payment is still not made the collection will be escalated.

There are three levels to HMRC debt collection:

1 –  Local Collection Officer
2 – Regional Debt Recovery Officer – who also deals with local enforcement and Time to Pay arrangements
3 – Centralised Enforcement & Insolvency Unit

HMRC Local Collection Officer

If payment is not made after reminder letters have been sent they will be followed up by a Local Collection officer. The Officer will contact the company directors by letter and telephone. They may want to agree a convenient time to meet the directors at the company’s premises.

The Local Collection Officer may also try to contact company directors at their home address outside working hours.

The intention of the Local Collection Officer is to come to a mutual agreement for the repayment of arrears. However if this cannot be achieved or directors ignore the contact attempts the account will escalate to a Regional Debt Recovery Officer.

HMRC Regional Debt Recovery Officer

The Regional Officer will try to reach a payment agreement with the company. This is commonly known as a Time To Pay agreement. If this is unsuccessful they may then apply to the court to use a bailiff.

A bailiff will look to seize goods and assets from the company if they can be easily moved. If they cannot be moved they will distrain over assets by taking walking possession.

Generally speaking a bailiff cannot force entry to a company premises. They can only do so if they have been granted a warrant from the Court. As such their attempts to collect debt can lead to nothing if they are prevented from entering by the Directors.

HMRC Central Enforcement & Insolvency Officer

A Regional Debt Recovery Officer may be unable to reach a payment agreement with the company. Alternatively bailiffs may be frustrated or an agreed Time to Pay agreement breaks down. Where any of these situations occurs the collections procedure escalates to an Enforcement & Insolvency Officer (Based in Worthing, West Sussex).

If Bailiff action has not yet been tried the Central Enforcement Officer may consider this option. However they will normally favour sending a final demand letter to the company. If this is not met they will then apply for a Winding Up Petition.

At this stage it is vital for the company directors to take action and get expert debt advice. If the court grants a winding up petition there will be little or nothing that will stop the forced closure of the company.

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