An HMRC Notice of Enforcement is a formal document issued by Her Majesty’s Revenue and Customs (HMRC) to a taxpayer who owes unpaid taxes. It is a warning that HMRC intends to take enforcement action to recover the debt.
HMRC can issue a Notice of Enforcement without having to obtain a court order. This is because HMRC has special powers to collect taxes, including the power to seize goods and assets.
Once a taxpayer has received a Notice of Enforcement, they have two options:
Pay the debt in full.
Negotiate a Time to Pay (TTP) arrangement with HMRC. A TTP arrangement allows the taxpayer to pay off the debt in instalments over a period of time.
Understanding Your HMRC Notice of Enforcement
A Notice of Enforcement will contain the following information:
HMRC Reference Number: A unique identifier for your case, crucial for any communication with HMRC about the notice.
Outstanding Amount: The total tax owed, including any penalties or interest accrued.
Reason for Enforcement: A clear explanation of why the notice is issued, whether for unpaid taxes or non-compliance issues.
Deadline for Payment: A specific date by which the outstanding amount must be paid to avoid further enforcement action.
Consequences of Non-Payment: Details of potential actions HMRC may take if the debt is not settled, such as asset seizure or court proceedings.
Payment Options: Information on how to pay, including different methods and relevant account details.
Contact Information: Details of how to get in touch with HMRC for queries or to discuss payment arrangements.
Appeal Process: Information on how to challenge the notice if you believe it is incorrect.
Understanding these components helps directors to respond appropriately and take necessary actions to resolve the situation.
Steps to Take Upon Receiving a Notice of Enforcement
If you, as a director, receive an HMRC Notice of Enforcement, it is important to act immediately and decisively:
Read the notice carefully
Thoroughly review the notice and understand the reason for the enforcement action. Pay close attention to the details, such as the deadlines and the specific requirements outlined by HMRC.
Gather supporting documents
Collect all the necessary documents and records related to the issue, including tax returns, payment records, correspondence with HMRC, and any other supporting information that may be relevant to your case.
Respond promptly:
Don’t ignore the notice; it’s essential to respond within the specified deadline. If you fail to respond or make the required payments, HMRC may escalate the enforcement action, which could lead to further penalties, interest charges, or even legal proceedings.
Negotiate a payment plan
If you cannot pay the outstanding amount in full, consider negotiating a payment plan with HMRC. They may be willing to agree to a reasonable installment arrangement, provided you can demonstrate genuine financial difficulties.
Appeal or request a review
If you disagree with HMRC’s decision or believe there are mitigating circumstances, you may have the right to appeal or request a review. Your tax professional can advise you on the appropriate course of action and assist with the appeal process.
How to Challenge an HMRC Notice of Enforcement
Challenging an HMRC Notice of Enforcement is possible if you think there’s been a mistake with your tax details. First, carefully review the notice to understand why you received it and check for any errors in the amount you owe or the tax periods mentioned.
Next, collect any relevant documents like tax returns or past communications with HMRC to support your case. It’s a good idea to get advice from a tax advisor or solicitor who knows about tax laws. They can help you understand if your challenge is valid and how to approach it.
Then, contact HMRC using the details in the notice. Explain why you think the notice is wrong and show them your evidence. If talking to HMRC doesn’t solve the issue, you might need to formally appeal by writing to HMRC and including your evidence. Sometimes, using an independent mediator through Alternative Dispute Resolution can help resolve the issue without going to court.
If these steps don’t work, your last option is to take your case to a tax tribunal, an independent group that will review your case and make a decision. It’s important to act quickly and keep communicating with HMRC throughout this process. Ignoring the notice or waiting too long to respond can lead to more enforcement actions and make things more complicated.
What Will Happen if You Don’t Pay a Notice of Enforcement?
If a company fails to pay an NOR, the consequences can be severe and may threaten the business’s survival. HMRC will escalate their actions to recover the outstanding tax debt, which can include:
Seizing company assets: Enforcement officers can visit the premises to remove goods, equipment, and vehicles to be sold at auction to settle the debt.
County Court Judgment (CCJ): HMRC may seek a CCJ, which can damage the company’s credit rating and make it difficult to obtain financing in the future.
Winding-up petition: In extreme cases, HMRC may petition the court to wind up the company, forcing it into compulsory liquidation.
Get Expert Advice if You’ve Received a Notice of Enforcement.
An HMRC NOR is a serious matter which warrants professional advice to prevent escalation. Our advice is to engage with HMRC promptly and seek professional advice to find a suitable resolution, such as negotiating a Time to Pay arrangement or exploring insolvency options like a Company Voluntary Arrangement (CVA) or Voluntary Liquidation (CVL).
At Company Debt we provide expert assistance to help you negotiate a deal or, if you’re insolvent, discuss your options for closure. If you have received or been threatened with an HMRC enforcement notice, please call our free directors’ helpline today for a free consultation – no strings attached.
References
The primary sources for this article are listed below, including the relevant laws and Acts which provide their legal basis.
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