Responses to 'Modernising tax debt collection from non-paying businesses'

HMRC have published a summary of the responses to the 'Call for Evidence: Modernising tax debt collection from non-paying businesses'. Feedback acknowledged that HMRC's powers needed to adapt to the changing economy and that care was needed around identifying deliberate non-payers.

The Call for Evidence was published in November 2021 and closed in February 2022. In it, HMRC asked for views on how its powers could be modernised or adapted to address the following:

• The changing nature of the economy:
  • Increasingly businesses are operating online and there is not always a physical presence in the UK to allow for traditional methods of debt collection such as ‘Taking Control of Goods’ (TCoG). Even where overseas businesses send goods to the UK, these are often held in a fulfilment warehouse that HMRC does not have the power to enter in order to seize goods.
  • More and more businesses hold intangible as opposed to tangible assets or use digital wallets to make online payments instead of using debit cards and bank accounts.
• Deliberate non-payers: not to be confused with businesses that cannot pay, these businesses have the means but choose not to pay, whether consistently or as just a one-off.

The responses received were generally:

• In favour of modernising HMRC powers including extending the scope of TCoG to allow entry to third party premises.
• Of the opinion that it would be difficult to take ownership of intangible assets, as separating them from the business would affect the value.
• In agreement that the Direct Recovery of Debts (DRD) should be extended to cover digital wallets.
• In favour of HMRC utilising existing powers to tackle non-payment where possible. There was general agreement that upfront security deposits for high-risk businesses could be a good idea, subject to safeguards and maybe a pilot scheme.
• Not in favour of a director’s personal guarantee (unless certain that non-payment was intentional) and having agents play a greater role in encouraging payment.

In response, the government have set out the four areas that they will consult further on:

• Extending TCoG to those with no UK assets, or assets at a principal place of business.
• Extending TCoG to in-house leasing.
• Extending Direct Recovery of Debt to Digital Wallets.
• Security deposits to recurring non-paying businesses.

Useful guides on this topic

Call for Evidence: Modernising Tax Debt Collection from Non-Paying Businesses
HMRC have opened a Call for Evidence, 'Modernising Tax Debt Collection from Non-Paying Businesses'.  The paper is seeking views on how HMRC can adapt its approach to debt collection.

Time to Pay agreement
Business and self-employed taxpayers with outstanding tax liabilities may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

Direct recovery of Debts (enforcement by deduction from accounts)
When can HMRC recover debts directly from persistent non-payers?

External link

Consultation outcome: Modernising tax debt collection from non-paying businesses – summary of responses