HMRC to Restart Debt Enforcement

Jul 15, 2021

HMRC to Restart Debt Enforcement - ICS

HMRC Update: Businesses put on notice of HMRC restarting debt enforcement from September 2021

On 30 June 2021 HMRC published an article titled “Collecting tax debts as we emerge from coronavirus (COVID-19)”, the full article can be found in the link at the end of the article.

HMRC helpfully acknowledges that many businesses and individuals have been affected by COVID-19 and is aware that as a result, some face uncertain financial circumstances in the months ahead.

HMRC reminds taxpayers of the necessity to collect tax in order that public services can be funded as well as to support economic recovery and growth.

What HMRC say they will do

If a business is experiencing a temporary cash flow problem, HMRC are willing to engage with the business and put in place an arrangement such as a Time to Pay Arrangement in order that the tax debt can be collected through an affordable repayment plan.

However, HMRC have been very clear that if a business has little chance of recovering from the cash flow problem, then they have a responsibility to commence firmer enforcement and insolvency procedures as “it is in no one’s interest to simply allow unsustainable debt to build up unchecked”.

If your business is struggling with meeting its tax obligations, HMRC will seek to make contact via phone, post or text message to understand the business’ financial position with a view to agreeing an amicable way forward. For those fundamentally viable businesses that have a short-term cash flow problem, a Time to Pay Arrangement could be an agreeable way forward. HMRC manages more than 500,000 Time to Pay Arrangements at any one time for businesses who have experienced some form of financial distress and fallen behind on their dues and advises that 9/10 of them successfully complete. It is also possible to seek HMRC’s agreement to defer payment of tax debts which would allow a short period when nothing would be expected to be paid to HMRC, however this would be subject to specific circumstances.

The high completion rate of Time to Pay Arrangements signifies that HMRC will typically only agree to such arrangement when it is a viable and right option to take. Usually, company directors or their accountant are well placed to handle Time to Pay Arrangement negotiations with HMRC, however from time to time we are asked to provide our assistance to businesses when seeking HMRC’s agreement becomes troublesome.

What happens if businesses ignore HMRC or refuse to pay

HMRC warns businesses that should they not respond to their communications or simply refuse to pay when they can afford to, then expect a visit at either the business or home address.

From September 2021 HMRC intends to use their debt enforcement powers to pursue businesses who refuse to pay or engage with HMRC to find an amicable solution to deal with the tax arrears. These include: -

  • Taking control of goods
  • Summary warrants
  • Court action – including insolvency proceedings

What has ICS got to say about this?

We’re all well aware of the financial support measures introduced in the last 18 months to assist businesses through the pandemic. It has been a lifeline to many businesses and protected a significant number of jobs.

Recently, the provisions of the Corporate Insolvency and Governance act 2020 (CIGA) relating to protection from statutory demands and winding up petitions have been extended to 30 September 2021 (see our article on the extensions of CIGA here).

With HMRC recommencing debt enforcement powers from September 2021, together with the extension of CIGA to 30 September 2021, signals that HMRC is gearing up to get its teeth back after 18 months in order to recover as much money into the Treasury as possible, whilst at the same time “cleaning” the economy from failing or “zombie” businesses.

The combination of HMRC becoming more aggressive than it has been since March 2020, CBILS and Bounce Back Loan repayments falling due for many businesses who secured financial support last year as well as the furlough scheme tapering down – culminates in businesses needing to find more cash to keep the doors open whilst servicing their current and historical debt burden, which for many will also include an element of deferred tax debt from 2020 (or even before).

We anticipate that come September, we will start to see a significant increase in the number of businesses which will need professional business rescue and insolvency advice.

If you cannot pay your HMRC debt

If you know that you will struggle to pay HMRC or won’t be able to provide HMRC with a reasonable settlement proposal to consider a Time to Pay Arrangement, it is much better to be in control of the next steps rather than simply ignoring HMRC and leaving your business open to their debt enforcement measures.

By speaking with a licensed and regulated insolvency practitioner, you will be able to understand all options available to rescue or restructure the business, whether within the same limited company structure or through a new limited company. The earlier you speak with an IP the better as the later it gets, the less options become available – particularly if HMRC for example takes control of the business assets or issues a winding up petition.

Here at ICS, our licensed and regulated IPs provide initial advice completely free of charge and without obligation as well as in the strictest of confidence, always.

If you would like to speak with one of the licensed and regulated IPs at ICS, here are their direct contact details, please feel free to get in touch anytime, wherever you are in the UK: -

Tom – 07795 196619 or

Andy – 07812 338252 or


HMRC Update on website outlining the restarting of debt collection procedures against businesses that have outstanding tax debts: -

HMRC webpage explaining more information about Time to Pay Arrangements: -

HMRC webpage explaining enforcement powers against businesses or individuals with a tax debt: -