HMRC’s 2026 “Support vs Enforce” Strategy: What It Means for Directors in Arrears

HMRC Support vs Enforcement in 2026: What Directors Need to Know

For company directors dealing with tax arrears, understanding how HMRC approaches unpaid tax can make a significant difference to the outcome. 

HMRC does not treat every taxpayer in the same way. Its approach can involve support and negotiation where a business is genuinely struggling, but stronger enforcement action may follow where HMRC believes a taxpayer can pay but is refusing or failing to engage. 

In 2026, this distinction is particularly important as HMRC continues to modernise its compliance and debt collection processes. Its latest transformation programme is designed to improve tax collection while making greater use of modern systems and data. 

HMRC Support Does Not Mean Tax Debt Can Be Ignored 

HMRC can work with businesses that are experiencing temporary cash-flow difficulties. 

For example, a company may be able to negotiate a Time to Pay arrangement if it can demonstrate that the proposed payments are realistic and affordable. 

HMRC may ask directors about: 

• How much the company can afford to pay 

• Current and future cash flow 

• Other outstanding taxes 

• Company assets 

• Whether assets can be released 

• Whether directors can introduce funds 

• Whether other sources of finance are available 

HMRC’s guidance specifically states that company directors may be asked to consider personal funds, lending or extended credit when assessing how a company’s tax debt can be paid. 

When HMRC Moves Towards Enforcement 

The position becomes more serious when HMRC believes the company can pay but is deliberately refusing to do so, or when repeated attempts to contact the business have been ignored. 

HMRC has a range of enforcement options, including distraint and court-based recovery procedures. It has also restarted the use of Direct Recovery of Debts. 

Under Direct Recovery of Debts, HMRC can require a bank or building society to transfer money directly from a customer’s account, subject to safeguards. HMRC began expanding the use of this power from April 2026. 

Why Directors Need to Engage Early 

A company in arrears should not assume that silence will make the problem disappear. 

Unpaid VAT, PAYE, Corporation Tax or CIS liabilities can continue to accumulate while HMRC considers enforcement options. 

For directors, the issue can also become more complicated if the company approaches insolvency. Questions may arise around how tax debts were handled, payments to creditors, director loan accounts and whether company funds were used appropriately. 

What Should Directors Do If Their Company Is in Arrears? 

Directors should establish exactly what the company owes, which taxes are outstanding and whether HMRC’s figures are correct. 

A realistic cash-flow forecast can then help determine whether the business can recover through a payment arrangement or whether restructuring or insolvency advice is required. 

The key is to demonstrate that there is a credible plan rather than simply asking HMRC for more time. 

For specialist advice, speak to one of our advisers. For official HMRC guidance, visit the HMRC official website. 

FAQs 

Can HMRC refuse a Time to Pay arrangement?

Yes. HMRC will assess whether a proposed payment plan is realistic and affordable. 

Can HMRC take money directly from a company bank account?

 Yes, HMRC’s Direct Recovery of Debts powers allow it to recover certain established tax debts directly from bank or building society accounts, subject to safeguards. 

Does being in tax arrears make a director personally liable?

Not automatically. However, personal liability can arise in certain circumstances, including specific penalty and insolvency situations. 

What should directors do when HMRC contacts them about arrears?

They should establish the amount owed, understand the available options and respond promptly rather than allowing correspondence to accumulate.