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How HMRC collects unpaid tax

HMRC can do things other creditors cannot, some without going to court. Each power has its own rules and safeguards, and you can still agree a plan at almost any point.

Applies to: England & Wales

Written by The My Debt Cleared editorial teamLast reviewed 18 October 2026Next review 18 April 2027Jurisdiction England & WalesEditorial policy
If you do not pay or agree a plan, HMRC can pass the debt to a collection agency, visit you, collect it through your tax code, take control of goods, take money directly from bank accounts if you owe more than £1,000, take you to the county court, or petition for your bankruptcy. It must tell you before taking action, and a Time to Pay arrangement is usually still possible.

What to do now

  1. Reply to HMRC letters and calls — most powers are used after repeated contact is ignored.
  2. Ask for a Time to Pay arrangement.
  3. If illness or other circumstances make this hard, ask for HMRC’s extra support.

Collection agencies

HMRC uses a small panel of private debt collection agencies. They contact you only by letter, text or phone, never visit, and are regulated by the FCA. If they cannot resolve the debt, it goes back to HMRC. You can check an agency against HMRC’s published list before paying.

Field visits

HMRC collectors may visit to discuss your finances and try to agree a settlement, either a single payment or a Time to Pay arrangement. You can ask to see identification. If no agreement is reached, HMRC may move to its enforcement powers. HMRC bailiffs and taking control of goods.

Collection through your tax code

If you have PAYE income from a job or pension, HMRC can adjust your tax code to collect a debt, spreading it over the months left in the tax year. It can take up to 50% of your gross income this way. If the deduction leaves you short, contact HMRC.

Direct Recovery of Debts

HMRC restarted Direct Recovery of Debts in September 2025 and has been extending it since April 2026. It lets HMRC take money directly from bank or building society accounts, without a court order, with these safeguards:

  • Only for established tax or tax credit debts of more than £1,000, where appeal deadlines have passed and you have repeatedly ignored contact.
  • Every individual gets a face-to-face visit first, to confirm identity and the debt, discuss payment and identify anyone needing extra support.
  • HMRC always leaves at least £5,000 across your accounts.
  • After a hold is placed, you have 30 days to object, and nothing is transferred in that time. HMRC must decide within 30 days.
  • If your objection is rejected, you can appeal to the county court on grounds including hardship and the rights of others, such as a joint account holder.
  • If you are identified as needing extra support, Direct Recovery activity is paused and you are referred to HMRC’s Extra Support Team.

County court action

If HMRC thinks you can pay and are refusing, it can sue in the county court. After a judgment it can apply for a charging order (usually over property), an attachment of earnings order, or a third-party debt order taking money owed to you by someone else. HMRC says it considers forced sale only in limited cases, such as where you own more than one property. County court judgments.

Bankruptcy

HMRC describes insolvency as a last resort, usually where the debt will not otherwise be recovered, payment has been deliberately avoided, or it suspects assets are being hidden. A bankruptcy petition is served on you, and there is time to get advice before any hearing. Statutory demands.

Scotland and Northern Ireland

The tools differ. In Scotland HMRC uses a summary warrant and sheriff officers. In Northern Ireland, distraint and charging orders through the Enforcement of Judgments Office apply. Scotland, Northern Ireland.

You can get free, impartial debt advice

You never have to pay for debt advice. MoneyHelper (government-backed), StepChange, National Debtline and Citizens Advice all give free, confidential advice with no obligation.

Common questions

Can HMRC take money from my bank account?

Yes, through Direct Recovery of Debts, if you owe more than £1,000 and have ignored repeated contact. You get a visit first, at least £5,000 is always left in your accounts, and you have 30 days to object.

Can HMRC take money from my wages?

HMRC can collect debts through your tax code, up to 50% of your gross PAYE income, or get an attachment of earnings order through the county court.

Will HMRC make me bankrupt?

HMRC describes bankruptcy as a last resort, usually used where the debt cannot otherwise be recovered or payment has been deliberately avoided. Engaging early and agreeing a plan makes it much less likely.

HMRC debtHMRC Time to PayHMRC bailiffsCounty court judgmentsBankruptcy
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