Can HMRC write off tax you cannot pay

Q: What does this look like in practice?

Illustration only. Dan, a former self employed decorator, owes £2,400 of Self Assessment tax and penalties from a business that closed. He now lives on benefits, rents his home and has no savings. He explains his position to the Payment Support Service and provides an income and expenditure statement. HMRC concludes that enforcement would cost more than it could recover and stops pursuing the debt. Three years later Dan inherits £20,000. The liability was never cancelled, so if HMRC becomes aware of the money it can reinstate the debt and ask for payment.

Q: What mistakes do people make?

Treating silence as a write off. No letters for a while does not mean the debt has gone. It may simply be awaiting the next enforcement step. Asking for a write off instead of a plan. HMRC's first step is almost always an affordable payment arrangement. Using ESC A19 language for a hardship case. The concession only helps where HMRC failed to use information; hardship requests are a separate conversation. Ignoring penalties that can be appealed. A late filing penalty with a reasonable excuse should be appealed rather than left to be written off. Under paragraph 23 of Schedule 55 to the Finance Act 2009, no penalty arises if HMRC or a tribunal accepts the excuse. Assuming bankruptcy clears everything. Section 281 keeps some debts alive after discharge, including those incurred through fraud. If HMRC opens a check into your return, tax investigation insurance pays your accountant's fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

HMRC can decide to stop pursuing a tax debt, either because collecting it is not worth the cost (a remission) or because there is no practical way to collect it at all (a write off). This is an internal decision, not a right you can apply for, and it does not cancel the liability: HMRC can start collecting again if your circumstances change. That is different from ESC A19, where tax is formally given up because HMRC failed to act on information in time.

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What do remission and write off actually mean?

HMRC’s annual report and accounts for 2025 to 2026 defines the two kinds of “revenue loss”:

Remissions are debts HMRC has decided not to pursue on value for money grounds, where further recovery would not be cost effective because the customer has no ability to pay, holds no realisable assets, or the cost of enforcement would be disproportionate to what is likely to be recovered.
Write offs are debts considered irrecoverable because, for example, the entity no longer exists.

In the year to 31 March 2026 HMRC recorded total revenue losses of £12,779 million, made up of £3,097 million of remissions and £9,682 million of write offs. The report says the vast majority are driven by individual and business insolvencies. It also describes bulk remissions, including £284 million of Self Assessment penalties for people who were no longer liable for Self Assessment or had stopped trading, which HMRC chose not to pursue on value for money grounds.

When does HMRC treat a debt as irrecoverable?

HMRC’s Debt Management and Banking Manual has a “Revenue losses” section (DMBM725000 onwards). Most of its detail is withheld from publication, but the headings show the categories HMRC uses (DMBM735020 to DMBM735090):

the debtor has gone away and cannot be traced;
insolvency, death, a county court administration order or a ceased limited company;
imprisonment, in England and Wales only;
uneconomic cases, including a small remission procedure for low value debts;
hardship;
the debtor has gone abroad and a foreign address is known;
non statutory concessions and other miscellaneous cases.

One page in the section is headed “alternative rights of recovery” (DMBM730040), and the caseworker considerations at DMBM735015 refer to it, which indicates that other ways of collecting are looked at before a debt is given up. HMRC’s public guidance describes several, including using overpaid tax to clear other debts and adjusting a PAYE tax code to collect what is owed.

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Can I ask HMRC to write off what I owe?

There is no form or statutory claim for this. HMRC’s discretion comes from its general responsibility for the collection and management of revenue under section 5 of the Commissioners for Revenue and Customs Act 2005, and its power under section 9 to do anything it thinks necessary or expedient in connection with its functions.

What you can do is tell HMRC the truth about your finances. Its guidance on what will happen if you do not pay your tax bill asks anyone who cannot pay to contact the Payment Support Service, and says HMRC will try to agree a way to pay that is as quick as possible and affordable, for example through a Time to Pay arrangement. If HMRC can see from your income, spending and assets that there is no realistic prospect of payment, a remission becomes a possibility. If you have equity in property or other assets, it will expect them to be used.

If your debts as a whole are unmanageable, the formal routes are insolvency procedures. These involve an insolvency practitioner or the Official Receiver and are covered in IVA or bankruptcy and debt relief orders.

Why is a written off debt not formally cancelled?

A remission or write off is an accounting and management decision. The tax charge, and your legal liability for it, remain. Several things show this:

HMRC’s 2024 to 2025 annual report describes remissions as debts “capable of recovery” that HMRC has decided not to pursue;
HMRC’s manual has a full section on cancelling remissions and write offs (DMBM760010 to DMBM760050), including what happens when a payment is received or the charge is amended after the debt was remitted, and how remissions interact with later Self Assessment repayments; and
in England and Wales, section 37(2) of the Limitation Act 1980 disapplies the Act for Crown proceedings to recover tax, so an old tax debt does not simply expire through age. See is there a time limit on HMRC collecting a debt.

By contrast, a bankruptcy discharge does release the debt. Under section 279 of the Insolvency Act 1986 a bankrupt is normally discharged one year after the bankruptcy starts, and section 281 says discharge releases them from all bankruptcy debts, with exceptions such as debts incurred through fraud. That release is the main way a tax debt is legally extinguished without being paid.

How is this different from remission for HMRC delay?

Extra Statutory Concession A19 is about HMRC’s own failings, not your ability to pay. The text, reproduced at PAYE95005, says arrears of income tax and Capital Gains Tax “may be given up” if they result from HMRC’s failure to make proper and timely use of information supplied by you, your employer or the Department for Work and Pensions. Tax will normally be given up only if you could reasonably have believed your tax affairs were in order and you were told about the arrears more than 12 months after the end of the tax year in which HMRC received the information.

GOV.UK confirms the concession covers Income Tax, Capital Gains Tax and Class 4 National Insurance, that you should apply before paying, and that HMRC may refund payments already made. Where ESC A19 applies, the arrears are given up, not merely parked, and your ability to pay is not part of the test. The full conditions are on remission of tax when HMRC delays.

	Value for money remission or write off	ESC A19
Trigger	Debt cannot realistically be collected	HMRC failed to act on information in time
Who starts it	HMRC’s debt staff	Usually the taxpayer, by asking
Effect on liability	Remains; collection can resume	Arrears given up
How to seek it	Explain your finances to the Payment Support Service	Ask HMRC by phone or in writing; review, then complaint, if refused

What does this look like in practice?

Illustration only. Dan, a former self employed decorator, owes £2,400 of Self Assessment tax and penalties from a business that closed. He now lives on benefits, rents his home and has no savings. He explains his position to the Payment Support Service and provides an income and expenditure statement. HMRC concludes that enforcement would cost more than it could recover and stops pursuing the debt. Three years later Dan inherits £20,000. The liability was never cancelled, so if HMRC becomes aware of the money it can reinstate the debt and ask for payment.

What mistakes do people make?

Treating silence as a write off. No letters for a while does not mean the debt has gone. It may simply be awaiting the next enforcement step.
Asking for a write off instead of a plan. HMRC’s first step is almost always an affordable payment arrangement.
Using ESC A19 language for a hardship case. The concession only helps where HMRC failed to use information; hardship requests are a separate conversation.
Ignoring penalties that can be appealed. A late filing penalty with a reasonable excuse should be appealed rather than left to be written off. Under paragraph 23 of Schedule 55 to the Finance Act 2009, no penalty arises if HMRC or a tribunal accepts the excuse.
Assuming bankruptcy clears everything. Section 281 keeps some debts alive after discharge, including those incurred through fraud.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.