This week's opinion: 30 January 2020

Tax debt raises many issues. Taxpayers who pay their tax on time have a right to expect others to do the same. But people who are trapped in debt can find themselves in a position from which there appears to be no escape. Readers who have heard presentations by our friends at Bridge the Gap will have heard some harrowing stories. 

Is there anything different about tax debt? I think that there is. To begin with the liability – other than for PAYE – arises long after the money has been earned. It is not like taking out a loan. Second, many people have only the faintest idea of how much tax will be due at the end of the year: many readers will have had the ‘how can I possibly have that amount to pay?’ conversation with clients in recent weeks.

HMRC is in a difficult position over this. Somehow debt owed to a faceless government department does not seem as real as money owed to a local trader. In my view, HMRC has made good progress here. Not many years ago there was next to no information about managing debt on the HMRC website, and what there was dealt mostly with enforcement and sequestration of assets. Now there is a greater emphasis on helping taxpayers to meet their obligations, for example as in the recently updated section on time to pay arrangements. My recollection is that these arrangements were originally designed as a short-term measure to help people during the financial crisis but they now seem to be, quite rightly, on a permanent footing.

There is the counter argument that, if time to pay arrangements are too generous, taxpayers will take advantage when they are capable of paying on time. That is a risk but, on balance, I think it is one worth taking to help protect the most vulnerable members of society.