Policies: Recovering Tax in Default

	Recovering Tax in Default
	What You Can Help in Tax Recovery
	Enquiries

Recovering Tax in Default

Tax should be paid on or before due date as stipulated in the notice of assessment. If tax is not paid on the due date, tax is deemed to be in default. The Inland Revenue Department will take immediate actions to secure tax payment and recover the tax from the tax-defaulters which include :-

1.	Imposition of surcharges

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5% will be imposed on the total amount of tax in default including the second instalment amount which will be immediately due if first instalment is not paid by due date

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10% will be further imposed on all unpaid amount (including 5% surcharge) after the expiry of 6 months from due date

2.	Issue of recovery notice to third parties including the employer, banker, tenant, debtor and customer etc. who owes or holds money due to the defaulting taxpayer

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Recovery notices to third party are normally issued if the tax inclusive of any surcharge imposed remains unsettled.

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The person to whom recovery notice is issued must pay over money, if any, not exceeding the amount of tax in default held on account of the defaulter to the Inland Revenue Department within a stipulated time. Failure to do so will render the person personally liable for the whole of the tax which he was required to pay.

3.	Institution of recovery proceedings in the District Court

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The Department may apply to the District Court to institute civil jurisdiction action against tax defaulter in respect of the overdue tax. The defaulter will be liable to the court fee, fixed costs and interest on the judgment sum from the date of commencement of proceedings to the date of full settlement in addition to the outstanding tax due upon entry of judgment.

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For further information about judgment interest rate, please see the Judgment Interest Rate.

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If the outstanding judgment debt remains unsettled, the Department will issue a writ of fieri facias to levy execution against the movable property of the defaulter, or apply for charging order on the immovable property belonging to the defaulter. In warranted cases, bankruptcy/liquidation proceedings will be pursued.

4.	Application to the District Court for Departure Prevention Direction

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If a person has not paid all tax assessed upon him and that he/she intends to depart or has departed from Hong Kong to reside elsewhere, the Commissioner may apply to the District Court for a direction to prevent the person from departing Hong Kong.

What You Can Help in Tax Recovery

You, as a taxpayer should

1.	pay tax on time to avoid penalty

2.	pay tax before the due date even if you object or appeal against the assessment unless we agree to hold over the tax

3.	make tax clearance before departures from Hong Kong for any period exceeding 1 month

4.	apply for instalment payment before the tax due date in case of genuine financial difficulties.

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We will consider realistic and reasonable repayment proposals supported by documents such as bank statements, commitments etc. Please take note that surcharge remains payable for all unsettled tax after the due date.

5.	inform us your new address within 1 month upon the change of your address

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This enables you to receive all tax returns and assessment notices issued by this Department in good time.

Enquiries

For further information, please approach our Collection Enforcement Section.