Help With Outstanding Tax Bills: How to Deal With HMRC Before It Escalates

This guidance is for taxpayers with outstanding tax bills who are unsure whether they should contact HMRC immediately or wait before taking action.

Unpaid tax does not resolve itself. If HMRC correspondence is ignored or action is delayed, interest continues to accrue and enforcement action may follow. This page explains what outstanding tax means in practice and why early, informed action can make a material difference.

Setting Up an HMRC Time to Pay Plan Online

HMRC’s Time to Pay lets eligible taxpayers spread tax bills over time, avoiding immediate enforcement.

If you owe tax to HMRC, you may be able to set up an online ‘Time to Pay’ payment plan depending on the type of tax debt and your circumstances. For self-assessment, you can create a payment plan online if you’ve filed your latest tax return, owe £30,000 or less, are within 60 days of the deadline and have no other debts or payment plans with HMRC.

For employers’ PAYE contributions, online payment plans are available if you’ve missed a payment deadline, owe £100,000 or less, aim to repay within 12 months and have no other debts with HMRC. Additionally, all due PAYE and Construction Industry Scheme (CIS) submissions must be filed.

If you owe VAT, you could set up a payment plan online if you missed the deadline, owe £100,000 or less, intend to pay within 12 months, have filed all tax returns and the debt relates to an accounting period starting in 2023 or later. Businesses on the Cash Accounting Scheme, Annual Accounting Scheme or those making payments on account are not eligible to set up a plan online.

For Simple Assessment debts, online payment plans are possible if you owe between £32 and £50,000, have no other debts with HMRC, and can pay it off within 36 months.

If you are not eligible for an online plan, you must contact HMRC directly. They will ask for details about your income, expenses, other tax liabilities, and any savings or assets, which they may expect you to use toward your debt. In these situations, advice from a qualified tax consultant in London can help ensure discussions with HMRC are handled accurately and proportionately.

HMRC will offer taxpayers the option of extra time to pay if they think they genuinely cannot pay in full but will be able to pay in the future. If HMRC do not think that more time will help, then they can require immediate payment of a tax bill and start enforcement action if payment is not forthcoming.

What Happens If Outstanding Tax Is Left Unresolved

Where tax remains unpaid, HMRC will usually charge late payment interest from the original due date. If the balance continues to be ignored, penalties may also apply depending on the type of tax and how long it remains outstanding.

In more serious cases, HMRC may escalate matters to debt collection or enforcement action. Once this stage is reached, options such as Time to Pay can become more limited and harder to negotiate.

In Practice – When Delay Makes Things Worse

In practice, we often see taxpayers delay contacting HMRC because they feel overwhelmed or hope the issue will resolve itself. Unfortunately, this delay can lead to missed opportunities to agree manageable payment terms and increases the risk of enforcement action.

For practical support, experienced accountants in Farringdon assist individuals and businesses across nearby areas such as Bank and Aldgate when dealing with outstanding tax matters and ongoing HMRC correspondence. At CIGMA Accounting, our team can help you understand which stage your case has reached and advise on the most appropriate next steps to move things forward.

Find out more about our accounting support in London

HMRC explains what to do if you have outstanding tax and cannot pay immediately, including when to contact them, in its official guidance on GOV.UK.

Confirm Your Next Steps Before HMRC Takes Action

If you have outstanding tax bills, the timing of your response matters. A short review now can help clarify whether you should contact HMRC immediately and what options may still be available to prevent escalation.