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HMRC internal manual

Debt Management and Banking Manual

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HM Revenue & Customs
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Debt and return pursuit: VAT: recovery timetable/indicators: debt recovery

Pursuing immature VAT debts

Tax and default surcharges due

Where there is a VAT debt including both a tax balance and an immature default surcharge, the debt will go through the automatic campaign route, unless an indicator or review code is set. To ensure that distraint/field force action is not unnecessarily delayed, the whole debt should be referred for enforcement (distraint/field force).

The referral form should be noted with the earliest possible distraint date from which the entire debt will be enforceable.

Only default surcharges due

If the debt relates only to an immature default surcharge, this will be advised and a campaign letter issued. However, the debt should not be referred for enforcement until the appeal period has expired. See DMBM950040.

Officer’s assessments and penalties

Where there is a VAT debt including both a tax balance and an immature Officer’s Assessment or penalty, the debt will be advised and go through the automatic campaign.

The immature Officer’s Assessment or penalty should not be referred for enforcement until the appeal period has passed.

Pursuing mature VAT debts

Once a debt has been properly established, either by the acceptance of a correctly completed return or by the issue of a tax and/or surcharge assessment, recovery action can be considered. However, a written demand must be sent prior to any enforcement action, see DMBM530950.

Recovery methods include:

  • telephony
  • campaign letters
  • Time to Pay.

Enforcement methods available are:

  • distraint action
  • county court proceedings in England and Wales. This can be a useful alternative to EIS in the Civil Courts, particularly for deregistered customers and those with a good name to protect.
  • Enforcement and Insolvency Service - recovery of tax through the civil courts, which may result in the bankruptcy of sole proprietors or partners and winding up of companies and partnerships; see DMBM650000 
  • MARD - assistance in the recovery of tax debts from customers permanently resident in another Member State of the EC; see DMBM560010 
  • security - a VAT registered customer is required to provide security for the payment of VAT that is or may become due from him, if there is a risk of potential revenue loss; see DMBM530840 

Debts for continuing customers are referred to the DTO monthly via the main enforcement run. Further debts are referred at the mini enforcement and at the repayment enforcement run and will go through the automatic campaign route.

Debts for deregistered customers are referred to the DTO on the main enforcement run.