Tax Unpaid - What Might Happen?

Taxpayers know well that when tax is unpaid, HM Revenue and Customs (HMRC) can make life difficult. Leaving aside the interest and penalty regimes for non-payment, HMRC are also by no means slow in bringing legal and even insolvency proceedings against tax debtors.

However, it is less well known that HMRC have the power of distraint – the right to take possession of assets belonging to the taxpayer and sell them to settle the tax debt – and that this does not require an order of the court.

Motor vehicles and computers in particular are favourite assets to seize because they are easily sold at auction.

HMRC made 1,488 seizures of assets in respect of unpaid tax debts in 2012/2013.

Distraint is normally only resorted to after other attempts to collect tax debts have been tried without success. However, if you are a tax debtor and receive a notice that an officer of HMRC wishes to visit your premises, you should be aware that this is the likely first step to setting in motion the distraint process.