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How long can HMRC chase a debt? 2022

hmrc chase debt

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

The HMRC can chase a debt that is 20 years old. If you own the HMRC money, they won’t forget about it. They can take you to court to reclaim a debt that you owe, and this can result in you owing even more money.

If you owe the HMRC money you might be wondering how long HMRC can chase a debt. It’s important to understand what it means to owe HMRC, what you can do about debts, and what you should do if the HMRC is chasing you for repayments. I hope to answer the questions below.

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How Many Years Can I Be Legally Chased for A Debt?

Some debts become statute-barred after 6 years. I go into these types of debts in greater detail in my Statute Barred Debt, All You Need to Know article. However, the HMRC is different, and some will never become statute barred. You can legally be chased for longer if you owe money to HM Revenue and Customs.

Wondering what you can do if you’ve been contacted about an HMRC debt? The first thing to do is start acting as soon as possible. Ignoring the debt won’t make it magically disappear. Ignoring the problem will only make things worse and can have major implications.

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How Will I Know I Owe HMRC Money?

The HMRC will let you know you owe them money by writing to you. You may also receive phone calls or even text messages, depending on the contact information they have for your account. If you fail to contact the HMRC the letters will continue. Furthermore, as time passes you may hear a knock on the door.

The HMRC will inform you if they intend to call at your home or place of business. However, it might come as a surprise if you miss this communication. I recommend you open all letters from the HMRC to prevent an unexpected visit.

A Letter from Debt Collectors about an HMRC Debt

The HMRC can pass on your account to debt collectors If attempts at contacting you fail. This is uncommon and only used for desk-based recovery. The debt collectors will make contact using letters or phone calls. You can avoid debt collectors by contacting the HMRC directly.

The HMRC Can Take Your Belongings

Debt collectors don’t have enforcement powers, but the HMRC does. They can come to your home to take your belongings. The money raised from the sale of your belongings will go towards clearing the debt that you owe them. Taking your possessions also increases the amount of money you owe to the HMRC. They will charge you for the costs involved in seizing and selling your goods.

The HMRC will give you notice if they’re due to arrive and take your possessions. You will still have time to clear the debt providing you contact them and arrange a repayment plan. Please read my article about how to deal with bailiffs if you fail to come up with a repayment plan or are concerned about dealing with bailiffs.

What is HMRC Direct Recovery?

One of the options the HMRC can use to recover the debt is known as Direct Recovery. This allows them to take money directly from your account or benefits. The HMRC can use this option regardless of how long the HMRC has chased the debt, depending on the type of debt it is. Direct Recovery is used if you owe the HMRC more than £1000, providing you have enough money in your bank to clear the debt. The HMRC needs to ensure you have enough funds available to live on when using the Direct Recovery option. Therefore, there’s no need to worry about not having enough money left to live on.

How Long Can HMRC Chase a Debt for Tax Credits?

Wondering how long can HMRC chase a debt for tax credits? While some investigations can take place up to 20 years later, four years is the standard time limit for tax credit debt. However, it is important to know that while four years is the standard time the HMRC can chase tax credit debt, there is no formal time limit. So, the HMRC can chase a debt for many years should you fail to repay it.

Can My Tax Credit Debt Become Statute Barred?

The Limitations Act 1980 prevents old debts from taking you to court for certain types of creditors. They can include debts such as loans, credit cards, and even repayment arrears. While tax credits can be included, it is highly unlikely for an HMRC debt to become statute-barred. That doesn’t mean it’s not possible. I have more information on statue barred DWP debts available to read if you’d like to learn more.

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How Long Can DWP Chase a Debt?

If you don’t pay the HMRC debt it might get passed on to the DWP. The usual length of time the DWP can chase a debt is 6 years. The DWP can use enforcement action to ensure the debt is repaid. This repayment is taken directly from your benefits or wages.

A change made to your tax code will ensure the money owed is recovered. The DWP may even send bailiffs to your home to recover your possessions that can be used to raise the money needed to recover the debt if it goes unpaid.

Paying Back Your HMRC Debt

After discovering how long the HMRC can chase a debt for, you may now wish to repay them sooner rather than later. The good news is that the HMRC will be open to discussing an affordable repayment plan. You could contact a debt advisor to assist you in working out your financial budget. Alternatively, use my simple budgeting tool that will help you get a good grasp on your incomings and expenditure. It’s free and quick to download and use. You now have the answer to the question ‘how long can HMRC chase a debt.’ Please check out the articles I’ve linked below if you have further questions regarding your specific debt and the options you have available to you regarding repayment. Alternatively, learn more about debt solutions such as an IVA or bankruptcy.

Are you struggling with debt?

Affordable repayments

Reduce pressure from people you owe

Stop interest and charges from soaring

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Are you struggling with debt?
Are you struggling with debt?
  • Affordable repayments
  • Reduce pressure from people you owe money to
  • Stop interest and charges from soaring