Tax Collection and Management (Wales) Act 2016 debt recovery: Technical guidance

Most people will pay the WRA any money due (whether on tax, penalties or interest) on time. Some people, however, are either not able to pay the sum of money on time or will choose not to pay it upon demand.

It is important that the taxpayer makes the WRA aware as soon as possible about any difficulties they may have, or expect to have, in paying any money they owe. Where appropriate, and considering each case on an individual basis, the WRA will then seek to work together with the taxpayer to find a payment arrangement which is acceptable both to both parties.

There will however be cases where, given the circumstances, the WRA does not consider it possible or appropriate to enter into such arrangements. In such cases, and where the taxpayer has failed to respond to a demand for payment, the WRA may undertake enforcement action to recover the debt.

If a person owes us money but we do not have their contact details, in certain circumstances we can give a notice requiring a third party to provide us with those contact details.

This guidance only covers civil debt recovery and does not deal with recovery measures following criminal proceedings, such as those provided for under the Proceeds of Crime Act 2002.

If the taxpayer has, or expects to have, difficulties in paying any money owed (such as following the end of an enquiry or investigation), where appropriate (and considering each case on an individual basis) the WRA will seek to work together with the taxpayer to find a payment arrangement which is acceptable to both parties. This is in line with the WRA’s commitment to treat all taxpayers fairly and collect the devolved taxes properly and efficiently. 

One option is a contract settlement. A contract settlement is a legally binding agreement between the taxpayer and the WRA over the taxpayer’s liability to pay a sum of money to the WRA in relation to the devolved taxes. It is not to be confused with a settlement agreement which is a specific agreement reached between the taxpayer and the WRA in relation to a dispute.

The WRA has a degree of discretion in arranging the form a specific contract agreement takes, but this is dependent on the specific circumstances of the case.

If the WRA issues a demand to pay a sum of money owed (whether tax, penalties, interest or a combination of any of these) and, following the demand, the taxpayer has still not paid that sum, the WRA may undertake enforcement action to recover the debt.

The WRA has a range of powers to secure recovery of debt. These include:

• In cases where an outstanding amount (up to £2000) of tax, penalties or interest has not been paid, the WRA may initiate civil proceedings in magistrates’ court to recover the debt. These proceedings must normally be instigated within 12 months of the day following the date on which the tax, penalty or interest should have been paid.
• Enforcement by taking control of goods, using the procedure in Schedule 12 to the Tribunals, Courts and Enforcement Act 2007 (c. 15) (taking control of goods).
• Initiating civil or criminal proceedings, including County Court and High Court.

The WRA may issue a certificate of debt if a taxpayer has failed to pay tax, penalties or interest. A certificate by the WRA (or any document purporting to be such a certificate) is sufficient evidence of that fact until the contrary is proved. The purpose of such a certificate is to provide evidence to the court in support of any debt or action which we administer, avoiding the need for lengthy documentation.

In certain circumstances, the WRA has the power to give a notice to a third party requiring them to provide the WRA with the contact details of a person who owes money to the WRA (section 93 TCMA).

‘Contact details’ means the debtor’s address and any other information about how the debtor can be contacted.

This is not a power which is used to simply find out more about a taxpayer. Other powers are available to the WRA for carrying out more detailed investigations on a person’s tax position, such as powers of enquiry, information notices, and inspection.

The WRA may only issue a debtor contact notice where:

• the WRA reasonably requires the contact details in order to collect the sum of money owed
• the WRA has reasonable grounds for believing that the third party has the required contact details, and

either:

• the third party is a company or unincorporated association, or
• the WRA has reasonable grounds to believe that the third party obtained the details in the course of carrying on a business.

‘Carrying on a business’ includes:

• carrying on any activity for the purposes of generating income from land (wherever situated)
• carrying on a profession
• the activities of a charity, and
• the activities of a local authority or any other public authority.

The WRA cannot issue a debtor contact notice to a third party which:

• is a charity and obtained the contact details in the course of providing services free of charge, or
• is not a charity but obtained the contact details in the course of providing services on behalf of a charity that are free of charge to the recipient of the service.

Complying with the notice

The notice issued by the WRA to the third party must name the debtor and specify or describe the period, means and form in which the contact details must be provided. A third party who fails to comply with the notice in any respect is liable to a penalty. A third party can seek a review or appeal against the giving of such a notice (or any requirement in it) only in specific circumstances.