HMRC Debt Management 

Author: John A Waller. Reviewed: June 25th, 2024.

Debt Management Plans

Picture a solution to your debt woes that not only works but also benefits you and your creditors. This is precisely what a Debt Management Plan offers. It’s a structured agreement that enables you to clear all your debts in a manageable way, usually benefiting from diminished interest rates and waived fees. Making your monthly payments more affordable accelerates your journey to a debt-free life.

The use of a Debt management plan is needed when:

  • You can only pay creditors a reduced monthly payment
  • if you have debt problems. However, you can start to repay in a few months.

You can negotiate a plan with your creditors or appoint a licensed debt management company for a fee.

When you opt for a debt repayment plan with a company, you commit to making regular payments to the company. In return, the company distributes these payments among your creditors per the agreement’s terms. This helps you manage your debt more efficiently and ensure that your creditors receive their payments in a structured and organized manner.

HMRC Debt Management, Help & Support.

Her Majesty’s Revenue and Customs remain responsible for the collection of Tax debts relating to UK tax, including:

  • Income Tax;
  • National Insurance;
  • VAT arrears;  
  • overpayments of a tax credit. 

Owing any tax requires immediate attention when arrears occur. Suppose a Tax is considered a Priority Tax. Then, failing to rectify any arrears has a grim outcome.

If your company has outstanding HMRC debts, whether VAT, Income Tax (Pay As You Earn) or National Insurance arrears, then deal with them as soon as possible. These classes of TAX are deemed as ‘Priority Debts‘. The result of failing to pay them is severe and will trigger HMRC to commence court action or for enforcement officers to collect the Tax. So Act Fast!

So do not delay. The situation will not get better. For further reading, please click “Why do directors delay taking insolvency advice“?

Taking control of arrears of Tax.

Taking control of your HMRC liabilities is not beyond anybody.

Ensure that demands are then checked carefully.

Then ask yourself:

  • Ensure the figures provided are accurate and up to date:
  • Include all legitimate allowable expenses;
  • Respond to points raised by HMRC in full.
  • How may I clear HMRC debt?

Suppose any of this information then isn’t exactly correct. In that case, it can lead to miscalculations and sometimes over-estimations of what you should pay.

If you are unsure about your tax obligations, contact an accountant who will advise you. Do not take risks or mislead HMRC.

Once you have established your Tax liability, produce a budget to assist. 


Establish accurate monies you receive from your business. Perhaps use an accounting package or a spreadsheet to maintain your business records.

Disposable income 

Once you have established your income, you can determine your disposable income by subtracting those essential expenses. The remaining sum is your disposable income.

Ensure the accuracy, as it reflects your available money to repay HMRC.

They understand the requirements needed to live. So it is important not to panic!

HMRC Debt Management – Determining essential costs

Expenses you or your business incur monthly, mortgage, rent, food, medical support, work and rates remain crucial outgoings. You may further have costa you are legally obliged to pay such as leases, HP, Loans, and Mobile Phone Contracts.

HMRC Debt Management & Communicating with HMRC

Once you have established an affordable monthly payment, advise HMRC accordingly while agreeing on a repayment plan.

Your agent may contact HMRC Debt Management on

0300 200 3887.

They accept calls between 8 am and 6 pm, Monday to Friday,

Closed Saturday, Sunday and Bank Holidays.

HMRC operate on tax years and, as such, collects taxes yearly. So, work with them and set up a payment plan ensuring closure on each tax year.

They may request an amount that is not affordable. However, maintaining the intent to repay is essential. Do not avoid your other creditors, though. Perhaps it would be wise to let them know in writing about your income and necessary living costs.

Remain in Contact

Ensure you maintain contact with the HMRC Debt Management department at all times, ensuring you note dates, the person you spoke with and the subject matter.

Contacting HMRC in advance of missing any payment helps. Making overpayments further improves your situation as it demonstrates to HMRC your intent to resolve tax arrears.

Please note: Avoiding HMRC will only cause them to proceed to collect. Your silence will not help your or your business’s situation.

What transpires if you don’t pay your Tax?

HMRC arrears are often collected differently from that of an ordinary creditor. They act fast when collecting arrears and are structured in their approach. 

Consider, are PAYE arrears pulling your company down.? If so, what are the options for paying PAYE arrears? are available

HMRC recovery:

  • You are taking savings.HMRC may take money straight from your savings accounts if you have £5,000 left.
  • Applying for a County Court Judgement (CCJ)
  • Issuing a magistrates’ court summons;
  • Commencing bankruptcy proceedings when debts total more than £5,000;
  • Use an attachment of earnings when you’re employed.

External support you with Tax arrears?

Available support handling your HMRC arrears:

HMRC Debt Management and Acting promptly on HMRC priority arrears

Never use money that you are required to pay HMRC. Keep paying monthly, avoiding substantial arrears while communicating with HMRC.

While other personal creditors may allow you to pay less formally than avoiding legal action, HMRC debt management is assured in its approach, collecting Taxrdue Tax.

For further help and support from HBG Advisory:

Request an Essential Directors liability Review.

Please telephone FREEPHONE 0330 056 3120 and Arrange a FREE Confidential VIRTUAL meeting safe and private online.

Book a Virtual Meeting - Free Confidential Advice
If you need help understanding the best way forward for your company, we can provide confidential free initial advice. You can book a free virtual meeting or call us on 0800 612 5448..
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