Consultation: Proposals to tackle lower value tax debts

HMRC have published a consultation on proposals to tackle lower value tax debts. 

The consultation sets out proposals to extend an existing HMRC enforcement power to recover lower-value tax debts from taxpayers who have persistently failed to engage with HMRC. The proposals are aimed at taxpayers who have repeatedly failed to respond to HMRC's attempts to contact them and collect what is owed.

Under the proposals, HMRC could recover debts by deducting affordable monthly instalments directly from a taxpayer's UK bank or building society account. HMRC have confirmed that taxpayers would be notified in advance and given a final opportunity to pay the debt or contact HMRC before any deductions are made. Although the upper debt limits have not yet been finalised, HMRC have indicated that they do not expect debts within scope to exceed £10,000, including any interest and penalties.

HMRC are particularly interested in receiving feedback on the scope and safeguards of the proposals, including which debts and taxpayers should be included or excluded, what debt thresholds would be proportionate, how the process should operate in practice, and what protections may be needed for taxpayers requiring extra support or experiencing financial hardship.

The ATT will be responding to the consultation and would welcome feedback from members for consideration as part of our response. Please email [email protected] with your comments before 31 July 2026.