Tax Debts : Can’t Pay Or Won’t Pay?

When a taxpayer falls behind on the debt they owe to the tax man, HM Revenue will begin the process of collection by classing the debtor into one of two groups: those who can’t pay, and those who won’t pay.

People classed as “Won’t Pays” will, as you’d expect, have little sympathy shown towards them, and the debt recovery process will proceed with all the legal options that are available, eventually in some cases even leading to imprisonment.

People who can’t pay, however, can expect a much more lenient and flexible approach from the tax collectors, with arrangements and delayed payments often available depending on the individual circumstances. Naturally, if you have a tax debt, you’d much rather be put into this second group than the first, giving you more time to sort matters out. But how can you convince the Revenue that you’re a genuine Can’t Payer?

Contact The Tax Man

Firstly, people who bury their heads in the sand and don’t contact HMRC about their debt are automatically classed as Won’t Pay, and recovery action will proceed apace.

If you contact HMRC and explain what the circumstances are that have lead to you being unable to pay your bill, you have a fair chance of having your case accepted. Possible acceptable reasons include failure of a business, loss of a job or other source of income, or any other situation which could reasonably be classed as unfortunate rather than negligent.

Get Debt Advice

Approaching a debt advice charity before speaking to HMRC, or even having a charity contact them on your behalf, is usually taken as a strong sign that you’re genuinely unable to pay rather than hoping to ‘get away with it’.

Nonetheless, even if you can convince the tax man that you genuinely can’t meet your bill, he’s not going to write off your debt under almost any circumstances. You’ll need to show that the situation is temporary, and that you can come to some arrangement that lets you clear your debt in a reasonable timescale, whilst also being able to cover your future tax obligations at the same time.

If you can’t show this, recovery action will begin, leading to distraint, court orders, and even bankruptcy. Imprisonment is unlikely however, as it is only an option to be used against those who plainly have the wherewithal to clear their tax debt and yet refuse to do so.

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Tax Debt: Can’t Pay Or Won’t Pay?
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