Ask the Experts: Can HMRC collect old unpaid tax?

AMS Accountancy explains whether HMRC are able to collect old unpaid tax or not.

I’m employed now but still owe tax on my ex Self-employed business. Can HMRC collect old unpaid tax?

Yes they can. It has always been true to an extent but, from April 2015, HMRC could collect outstanding income tax via your tax code - meaning your employer must pay it to HMRC without you having a say. This could put a massive strain on people’s finances while HMRC gets paid before the mortgage etc. If you earn less than £30,000 p.a., HMRC will not collect more than £3,000 of unpaid tax per year – above this there is a graduated scale (up to a maximum of £17,000 per year). Also, the tax collected under PAYE cannot be more than 50% of gross wages or salary.

Previously you could negotiate a payment plan with HMRC’s debt management team; sadly this may no longer be possible.