There is a wider range of enforcement action that HMRC can take. But our superb team can help defend these claims and get you back on your feet.
HMRC has wide statutory powers to enforce unpaid tax liabilities against both companies and individuals.
Enforcement action does not begin with insolvency proceedings. It usually escalates through a series of steps. Understanding those steps is critical because early engagement can often prevent matters progressing to bankruptcy or winding up.
This Blog explains the main forms of HMRC enforcement action in England and Wales and what they mean in practice.
What types of enforcement action can HMRC take?
HMRC has both statutory tax enforcement powers and access to ordinary civil recovery routes under the Civil Procedure Rules.
Enforcement may include:
- Taking control of goods
- Direct recovery from bank accounts
- Attachment of earnings
- County Court proceedings
- Personal Liability Notices
- VAT security requirements
- Accelerated Payment Notices
- Bankruptcy petitions (for individuals)
- Winding up petitions (for companies)
The route chosen depends on the nature of the debt, the history of engagement and the debtor’s financial position.
What happens if you ignore a warning notice?
Ignoring a warning of enforcement action is rarely effective.
Penalties, interest and surcharges may continue to accrue. HMRC may escalate from administrative enforcement to formal court proceedings. Once a bankruptcy or winding up petition is presented, the position becomes significantly more serious.
Early response can prevent escalation.
Are HMRC assessments always correct?
Where returns have not been filed, HMRC may issue estimated assessments based on historic data or industry comparisons.
These figures are treated as legally due unless properly challenged. If the business has experienced downturn, ceased trading or has incomplete records, the assessment may not reflect the true liability.
Challenging an assessment requires evidence and must be done through the correct statutory route.
What if the issue relates to disguised remuneration or avoidance?
HMRC may issue disguised remuneration Accelerated Payment Notices requiring payment before the underlying dispute is determined.
From April 2019, the HMRC loan charge regime significantly increased exposure for those involved in contractor loan schemes and similar arrangements.
Where avoidance schemes are under enquiry, enforcement action may proceed alongside investigations. Representations can sometimes reduce liability or penalty exposure, but cooperation and structured advice are critical.
When does enforcement lead to insolvency?
If enforcement action does not secure payment or resolution, HMRC may escalate to insolvency proceedings.
For individuals, this may mean a bankruptcy petition.
For companies, this may mean a winding up petition.
At that stage, commercial and personal consequences intensify significantly. Acting before enforcement reaches that point preserves more options.
Why early advice matters
HMRC enforcement action follows a structured escalation path.
Responding early allows:
- Correction of overstated liabilities
- Negotiation of Time to Pay arrangements
- Reduction of penalties
- Avoidance of insolvency proceedings
Delay reduces leverage and increases risk.
Francis Wilks & Jones acted with great professionalism, responding quickly to my requirements, leading to an eventual withdrawal of the claim against me and my son. I am extremely grateful.
A client of the firm
