Get Relief from HMRC Income Tax Arrears with These Solutions

Dealing with Unpaid HMRC Income Tax Arrears: Explore These Payment Options | difficulties paying hmrc

Get Relief from HMRC Income Tax Arrears with These Solutions

Dealing with HMRC income tax arrears can be a daunting experience for anyone. If you find yourself in this situation, you may feel overwhelmed and unsure about what steps to take to resolve the issue. The good news is that there are solutions available to help you deal with your HMRC income tax arrears.

In this article, we explore some of the payment options you can consider to deal with unpaid HMRC income tax arrears.

IVA (Individual Voluntary Arrangement)

An Individual Voluntary Arrangement (IVA) is a formal agreement between you and your creditors, including HMRC, to repay your debts over a fixed period of time. It is a legally binding agreement that can help you avoid bankruptcy and prevent your creditors from taking legal action against you.

If you have income tax arrears with HMRC, an IVA can help you consolidate your debts and make manageable payments. With an IVA, you will make a monthly payment to an insolvency practitioner who will distribute the money to your creditors, including HMRC. The payment amount will be based on your income and expenses, so it is affordable for you.

An IVA typically lasts for five years, after which any remaining debts are written off. However, you must make all the agreed-upon payments during the IVA period, or it will fail, and you will be back to square one. It is essential to get professional help from an insolvency practitioner to set up an IVA and make sure it is the right option for you.

Bankruptcy Option

Bankruptcy is a legal process that can help you get rid of most of your debts, including income tax arrears, if you cannot afford to pay them. However, it is usually considered a last resort option as it can have serious consequences on your credit score and future financial prospects.

If you declare bankruptcy, HMRC will be treated as a creditor, and any outstanding income tax arrears will be included in the bankruptcy estate. You may need to sell some of your assets to pay off your creditors, including HMRC. If you have any disposable income, you will be required to make payments towards your debts for three years, after which any remaining debts will be written off.

Bankruptcy can be a daunting process, and it is crucial to seek professional help from an insolvency practitioner or solicitor. They can guide you through the process and help you understand the implications of bankruptcy on your financial situation.

difficulties in paying hmrc

Consolidate your debts

If you have multiple debts, including income tax arrears, consolidating them into one manageable payment can be an option. Debt consolidation involves taking out a loan or credit card with a lower interest rate than your current debts and using it to pay off your existing debts.

Consolidating your debts can help you reduce your monthly payments and make them more manageable. You will only have to make one payment each month, which can simplify your finances and make it easier to keep track of your debt repayments.

However, debt consolidation is not suitable for everyone, and it is essential to understand the terms and conditions of the loan or credit card you are considering. It is also crucial to make sure you can afford the new payment plan and avoid missing any payments, which can result in additional fees and interest charges.

Full Settlement

Settlement is an option that involves negotiating a reduced amount with HMRC to settle your income tax arrears. If you are struggling to pay your income tax arrears, HMRC may be willing to accept a reduced payment amount as a settlement.

To settle your income tax arrears, you will need to contact HMRC and provide details of your financial situation. HMRC will review your case and consider whether a settlement is possible. If HMRC agrees to a settlement, you will need to pay the agreed-upon amount within a set timeframe, usually within three months.

Settlement can be an effective option for those who cannot afford to repay their income tax arrears in full but can manage to pay a reduced amount. However, it is crucial to understand that settling your debts can impact your credit score and future financial prospects.

Time to Pay Arrangements (TTP)

If you are struggling to pay your income tax arrears, you may be able to set up a ‘Time to Pay’ (TTP) arrangement with HM Revenue and Customs (HMRC). A TTP arrangement is an agreement between you and HMRC that allows you to pay your debt in instalments over an agreed period.

To be eligible for a TTP arrangement, you must meet certain criteria, including:

  • You must owe less than £30,000 in tax
  • You must not have any other outstanding tax debts
  • You must not have missed any tax payments in the past
  • You must be able to demonstrate that you cannot pay your tax bill in full and on time

If you meet these criteria, you can contact HMRC and request a TTP arrangement. HMRC will review your request and may ask you to provide additional information, such as your income and expenses.

If HMRC agrees to your request, they will set up a payment plan with you, which will include the amount you owe, the frequency and amount of payments, and the date by which you need to pay your debt in full. You must stick to the payment plan and pay your instalments on time to avoid defaulting on the arrangement.

Professional help

Dealing with unpaid HMRC income tax arrears can be stressful and overwhelming, especially if you are not familiar with the options available to you. Seeking professional help from an insolvency practitioner or solicitor can make a significant difference in understanding your options and finding the best solution for your situation.

An insolvency practitioner or Debt Advisor can guide you through the process of setting up an IVA or bankruptcy and help you negotiate with HMRC. They can also provide advice on debt consolidation and settlement, ensuring you have a clear understanding of the implications of each option.

A solicitor or Debt Advisor can assist you with legal advice and representation, especially if HMRC is taking legal action against you. They can also help you negotiate with HMRC and ensure that your rights are protected throughout the process.

Acme Credit Consultant may be able to help you manage your debts and improve your financial situation, it is important to seek professional advice if you are struggling with unpaid income tax arrears. They can help you understand your options and guide you through the process of dealing with HMRC. With the right help and guidance, you can take control of your debt and work towards a better financial future.


  • Rajnish Tyagi

    Rajnish Tyagi possesses certification as a qualified debt advisor and specializes in writing about debt management and related topics. His aim is to assist individuals in comprehending and effectively managing their debts and credit issues. Additionally, Rajnish Tyagi holds the position of managing principal at "Acme Credit Consultants Ltd," an FCA regulated firm that provides tailored debt solutions to both individuals and businesses facing financial challenges.

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