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HMRC debtors: Teasing out the can't pay from the won't pay...

With 2.4m more taxpayers in debt to HMRC since early 2020, the challenge of working out the 'can't pay' from the 'won't pay' tax debtors commences.  

The assistance that has been provided to businesses and individuals through debt support such as Time to Pay and VAT deferrals has contributed to the debt build up. There is now a clear need for HRMC  to pursue tax debt (which has ballooned by £26 billion during the pandemic) and start clearing the backlog, but there is a balance here.  

The NAO has said "HMRC should develop a revised strategy for recovering tax debt, which would consider the varying impacts of the pandemic on different taxpayers, and identify which are more able to pay and those most severely affected". 

Going forward both individuals and businesses would be well advised to engage in dialogue with HMRC so that their present circumstances and ability to pay can be properly understood and new / realistic arrangements put in place to help them clear outstanding tax debts.  Communication will be key. 

“HMRC now faces a careful balancing act. It must quickly recover the unpaid taxes from those that can afford it, yet support those who are struggling to pay.”


covid-19, dispute resolution, entrepreneurs, personal tax, corporate tax