- HMRC carried out a call for evidence entitled ‘Modernising Tax Debt Collection from Non-Paying Businesses’ to gather evidence and test their initial thinking. The summary of responses included four proposals where the previous government intended to carry out additional consultation and develop policy and/or new legislation. These are:
- extending taking control of goods to those with no UK assets, or assets at a principal place of business such as a premises where they carry out a trade or business, such as a fulfilment centre or third party warehouse;
- extending taking control of goods to in-house leasing which have historically been used to avoid civil recovery action against debts owed by the main business;
- extending Direct Recovery of Debt to Digital Wallets; and
- security deposits to recurring non-paying businesses. This regime can currently only be used in cases where there is serious non-compliance with reporting the correct tax liability due to avoidance and evasion of tax and not in cases where a business simply does not engage with HMRC.
- Two further areas were also identified (extending taking control of goods to intangible assets and extending Directors Personal Guarantees), however, HMRC believe that these require careful consideration and stakeholder engagement to determine the best way of implementation.
- At the Autumn Budget 2024 the government announced that HMRC would improve their debt management system to ensure tax debt enquiries can be dealt with faster, improving the productivity of the organisation. 1,800 debt management staff will also be maintained and recruited.
- From April 6th 2025, the late payment interest rate charged by HMRC will be the Bank of England base rate plus 4%. This is an increase of 1.5% from its current level.
- Timing: there is no set timeline for implementing any changes. The call for evidence was run by the previous government and at this stage it is not clear how the current government intends to proceed.
Resources (click to open)
- Modernising tax debt collection from non-paying businesses – summary of responses (HMRC, summary of responses, April 2023)
- Call for evidence: modernising tax debt collection from non-paying businesses (HMRC, consultation, November 2021)
