Tax and Debt: Magistrates’ Courts Proceedings
A basic Guide of Magistrates Court proceedings for the none payment of Taxes to the Inland Revenue. The magistrates have powers to send people to prison.
article keywords: Magistrates’ Courts, Debt, None payment of Taxes, certificates of debt, Taxes Management Act 1970, judgment summons, distress warrant, Bankruptcy.
After a tax bill has become late, the collector may decide to take action against you in the Magistrates’ Court. His purpose will be to obtain an order for payment of the tax that is due.
The magistrates have powers to send people to prison. While this can happen, it would be most unlikely in the case of a tax debt, unless you ignore a summons to appear in court.
Action cannot be taken in the Magistrates’ Courts for individual tax bills that are:
- over £2,000, or
- more than one year overdue.
Being informed of the hearing
You should receive a summons which lists the tax due, and tells you the place, date and time of the court hearing. This will be posted to you at least 4 days before the hearing.
What to do before the hearing
If you pay the tax and costs listed on the summons, before the date of the hearing, no further action should be taken and the collector should tell the court that the action has been stopped.
If you believe that there has been a mistake, and that you do not owe the tax on the summons, you should advise the collector immediately and ask him to contact your tax office. If this will need a little time to sort out, the collector may ask the court to adjourn the hearing to allow this. If it is eventually agreed that you do not owe the tax, the action should be stopped.
The hearing
The collector will present certificates of debt, detailing the amount of tax, interest and/or penalties unpaid, and will ask the magistrates to make an order for this amount plus costs.
While the magistrates will give you a chance to present your case, it will be extremely difficult to persuade them that tax demanded by the Revenue is not due. Under Section 70 of the Taxes Management Act 1970, the Revenue’s certificates must be accepted by the magistrates as sufficient evidence that the tax is due. So you should be prepared for them to make an order for payment of the amount shown on the summons and any costs awarded to the collector.
One situation where you may be able to prevent this, is if you can bring evidence that you have sent a payment which the Revenue says it has not received. In such a case, the magistrates may agree to adjourn the hearing to allow the matter to be sorted out.
If you do not dispute the demand, but will need time to settle the amount due, you may ask the magistrates to order that it be paid by such weekly or monthly instalments as you can afford. It may help to take along evidence of what you earn, such as recent pay slips.
What happens if you do not pay the amount ordered?
If you do not pay an amount ordered by the magistrates, the Collector may enforce the order in one of three ways:
You may receive a copy of minute of order for service which warns you that if you do not pay within seven days the Magistrates' Court will authorise a private bailiff to visit your premises with a distress warrant to seize your possessions to the value of the debt, for sale.
If the Collector has good reasons to believe that a distress warrant will be unsuccessful, you may receive a judgment summons which requires you to attend court to explain why you have not paid. If the magistrates decide that you have been able to pay but have refused or neglected to do so, you may be sent to prison. This is unusual. In practice, the magistrates will suspend such an order, giving you a second chance to pay the tax within a specified period. If you do not appear, the magistrates will send you a further summons to attend court. This is delivered to you by hand, or left with a responsible adult at your home or work, together with money to pay the necessary travel costs. If you ignore this, you may be sent to prison.
If the Collector has exhausted the alternatives of distress warrant and judgment summons, he may ask the Revenue's Enforcement Office, to consider the possibility of taking Bankruptcy Proceeding against you.
Your credit record
Unlike a judgment of the county court, an order of the magistrates will not appear on your credit record and so should not affect your ability to borrow money in the future.
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This material is for general information and only constitutes advice in the broadest of terms. You should not rely on this information to make any decisions. Call our advisors on 0800 043 2444 for professional advice for your own particular situation.