Yes they can.  It has always been true to an extent but, since April 2015, HMRC can collect outstanding income tax via your tax code – meaning your employer must pay it to HMRC without you having a say.  This can put a massive strain on people’s finances while HMRC gets paid before the mortgage etc. If you earn less than £30,000 p.a., HMRC will not collect more than £3,000 of unpaid tax per year – above this there is a graduated scale (up to a maximum of £17,000 per year).  Also, the tax collected under PAYE cannot be more than 50% of gross wages or salary.

Previously, you could negotiate a payment plan with HMRC’s debt management team; sadly, for employees, this may no longer be possible.