HMRC is beginning a drive to collect tax debts from people living outside of the UK. They are asking their European equivalents to chase up expats who have bills for unpaid tax.
HMRC is planning to use existing treaties to enforce the accelerated payment notices, which are seen as somewhat controversial as they are issued to participants of contested arrangements, outside of HMRC’s jurisdiction. It’s not yet clear whether collecting debts in this manner would be in line with the current agreements from the European Union. Last month, a HMRC debt management officer wrote to a UK expat living in Spain to say that the agency would be able to pursue debt collection if the full amount owed- £680,000- was not paid within the next month. The letter warned the expat that if he didn’t pay, HMRC ‘may’ ask the ‘competent authority’ in Spain to collect payment using national debt recovery procedures, meaning that he would have to communicate with them about the debt directly.
One accountant said that the above instance was the first time that he had seen HMRC threaten to enforce debt collection to it’s European counterparts. EU policy is kept relatively quiet, but member states can ask that debts relating to tax and duties, with the exception of student loans and tax credits, are recovered by defaulting tax payers by the local tax authority. He said that enforcement of these requests could ‘potentially bankrupt’ taxpayers. As the debts remain contested, there is legal doubt over whether HMRC can ask tax authorities to pursue the sums. According to the HMRC website, before the agency can make a request for debt recovery, the debt must not be disputed or in an appeal state. The debt also shouldn’t be anymore than five years old. The majority of disputed debts go back to more than a decade. In this instance, the letter to the Spanish expat related to debt from 2008-9 tax year.
HMRC has confirmed that arrangements are in place to collect UK tax debt outside of their jurisdictions. They said that anyone who cannot pay their accelerated payment notice should speak to HMRC as soon as possible so that the agency can do ‘all we can’ to help.
To find out more about tax debt, contact HMRC.