inland revenue threatening bankruptcy

debtinfo

silvercar wrote: »

HMRC seem to make people bankrupt as an example to others, to ensure that everyone is aware of the consequences of not paying their tax on time. They seem to make no acknowledgement that they could get more money if they agreed to repayment plans.

Yes they may be able to get a better return from that one person for that one bill, but if they grant a longer repayment plan, what happens when they get to the next years tax, will there just be a larger bill they lose out on next year or the year after. Now if they do appear to show any leniency then this process could be repeated by a million other people either delayed or no payments from a much larger group of people.

HMRC is at a disadvantage in that they always get paid much later than other creditors because of how the tax system works. If you owe a supplier and dont pay then the supplier just stops supplying you so you dont incur a larger debt to them. HMRC cant do that and so often lose out.

They are only really going to accept payment plans if you can show it can be paid off in a reasonable period and more importantly at the same time you can afford to save for the next tax amount that is due ,and quite rightly so in my opinion

Flyright

You also need to consider that failure to pay HMRC debts can be grounds for a BRO. If your husband is self employed and intends to continue trading after bankruptcy, the restrictions placed on him will mean that his ability to get credit (such as via trade/supplier accounts) will be either severely restricted or require him to declare his status as a bankrupt.

patman99

I can really see the benefits of setting-up a limited company when working for myself. If it all goes wrong you can register a new one and place the old one into bankruptcy.

birkee

silvercar wrote: »

HMRC seem to make people bankrupt as an example to others, to ensure that everyone is aware of the consequences of not paying their tax on time. They seem to make no acknowledgement that they could get more money if they agreed to repayment plans.

I think the truth is rather more mundane.
They (individuals) go through procedures as little automotans, and have absolutely no interest in the consequences to themselves (HMRC) or the individual debtor.

That is the real problem. The system doesn't give a damn.
Get your salary and go home is the only driving force for robots.

silvercar

birkee wrote: »

I think the truth is rather more mundane.
They (individuals) go through procedures as little automotans, and have absolutely no interest in the consequences to themselves (HMRC) or the individual debtor.

I disagree. If they were lenient, many self employed would delay their tax payments. When cash flow is restricted and you need more stock and have an outstanding tax bill, it would be easy to buy the stock and delay the tax bill. If not paying tax risks bankruptcy which can lead to suppliers refusing you credit and the bank calling in loans, you prioritise the tax bill.

So they need to be strict to protect their interests.

milothewestie

could this debt not be put into a IVA or similar some IVA you can make a one off offer to pay it off,that way you get to keep your house and start saving for your tax bill this year,not sure how iva.s work so im sure someone will say wheather its a possibility or not just a thought,hope it works out for you and best of luck

SunshineBear

Mmm, problem with this is that the IR will never get the money.

Could you start a standing order for you estimated CURRENT tax and with what you have remaining pay off the past tax.

I have paid mine weekly for 3 years or so. It helps me no end. This jan I had paid it in full by the 31st now I still pay weekly so that by July 31st the second payment will be paid.

Ask them to put the arrears into a different statement to the current amount.

patman99

As a rule of thumb, when s/e, you should put 40% (or 60% if higher band tax payer) of whatever you earn into two accounts, one being an ISA, the other being the highest interest rate account you can find. That way, when your bill for Tax/NI arrives, you will have the money already set-aside to pay it and £5000+ of it will be earning you a tax-free lump.
Why 40%?, well, if you are sensible, you will be paying class 1 NIC same as PAYE, so when the dries-up you can claim full benefits.

intranicity

Sadly though not everyones that sensible.... ME INCLUDED But great advice to anyone just starting