Recovery of debts under PAYE
The Finance Bill 2009 includes provisions to allow HMRC to collect small debts from employees under new PAYE regulations. HMRC have now issued the draft regulations.
These rules are aimed at taxpayers who owe small amounts of tax or other debt to HMRC (small is currently defined as less than £2,000). Taxpayers will be aware that at the moment it is possible to agree with HRMC to repay small underpayments of income and capital gains tax as well as overpayments of tax credits using an adjustment to PAYE coding.
The new planned legislation will increase HRMC powers to collect other small debts using the PAYE tax coding as well as allow HMRC to proceed without a taxpayer’s agreement once a debt is properly established and payment is overdue.