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It’s easy to be caught out by tax debts, you can find yourself facing personal tax debts for a variety of reasons. It may be, for example, that you have had a loss of income or are self-employed and have lost a contract or not budgeted enough for it. Or it could be that you have received a cash windfall, and an unexpected tax demand.

Personal tax debts can take many forms.  One of the most common is tax credit overpayments. These are tax credit payments that you apply for; payments are worked out by HMRC based on your projected income over the coming year.

If at the end of the tax year, you have earned more than was originally projected then HMRC could well demand a tax repayment from you.

At TC Debt Solutions, we are experts at helping people in all of these situations, and in many more too.

Dealing with personal tax debts

We can help you with HMRC

What should I do if I have personal tax debts?

If you have HMRC tax arrears or personal tax debts and do not have the means to pay your debts, you should get in touch with HMRC without delay.

It is possible to negotiate a payment schedule with HMRC as long as you are ‘upfront’ and quick to contact them: failing to do so, could lead HMRC to take quick, decisive and ultimately damaging action against you. If this happens, the situation will be well and truly out of your control.

The good news is that it does not have to be this way, and at TC Debt Solutions we can help you to formulate your negotiation strategy.

Check all the options

Potential solutions to personal tax debt

Here are some quick and effective things to do if you are facing personal tax debts:

  • Check the accuracy of your tax bill and the money that HMRC claims it is owed
  • Draw up a budget that is based on affordable personal tax debts repayments
  • Get in touch with HMRC with your offer (that needs to take account of all your living and household expenses)
  • Start making payments; you should do this whether or not your offer has been accepted by HMRC: you need to demonstrate that you are willing to pay!
  • Communicate with HMRC and let them know immediately of any changes in your circumstances
The final sanction that HMRC has is to put you before a court

HMRC debts are priority debts

What powers does HMRC have to force repayment of tax debts?

HMRC are available to recover personal tax and business tax debts.  If you owe HMRC more than £5,000 they can start bankruptcy proceedings.  Other debt recovery options open to HMRC include:

  • Applying for a Court Decree against you
  • Issuing you with a court summons to appear before a court
  • Arrest your wages (by changing your tax code and taking more tax)
  • Take money from your savings (under certain conditions)

Don't panic

What if I am dealing with other unmanageable debts as well as personal tax debts?

It is quite often the case that people struggling with personal tax debts are also trying to deal with a range of other unsecured debts too.

This simply reflects general financial difficulties that anyone can find themselves in, given the right set of circumstances.  If this is you, don’t panic, there are ways of dealing with such situations.

Debt Arrangement Scheme

One way, if you live in Scotland, is a Debt Arrangement Scheme (DAS).  Set up by the Scottish Government, the Debt Arrangement Scheme is a useful alternative to insolvency.

It is an effective way of preventing aggressive court actions being taken by creditors including HMRC,  banks, etc. and it allows you to manage your unsecured debts and work your way to a debt-free and much happier future.

Protected Trust Deed

Other options we can explore with you include a Protected Trust Deed if you are dealing with unsecured debts of £5,000 or more, and you live in Scotland.

A Protected Trust Deed will help you pay off your debts while making life much easier for you and those close to you.

Although it is a form of insolvency, it is really simply a formal agreement between you and your creditors.


If you are a resident in Scotland and have over £3,000 of unsecured debts that you cannot pay back, then bankruptcy may be an option for you.

It gives you a way out of what can be seemingly overwhelming debt. Filing for bankruptcy in the right circumstances, can be the correct thing to do.

It is best to take expert advice before considering bankruptcy.

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If you are dealing with personal tax debt problems and are struggling to find a way forward, complete our short form and we will contact you straight back.

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