HMRC Judgment Debt

oncall

Longggggg story cut short........My friend was fined by HMRC for not filing his tax returns for a a few years. Case went to court.....the original sum on the particulars of claim that HMRC wanted was approx £10,000.00..............but a few days before the hearing he received a letter from HMRC advising that they have reduced the £10k to £6,400.00.....because they took into account that he was made bankrupt a few years ago.

Anyway, judgment was made for £10,528.00 forthwith...in 2006....my friend made repeated offers to pay in installments but each offer was refused by HMRC. Then in 2008 there was another hearing, not entirely sure what that was for....my friend went to the hearing with his wife and did his best to explain to the judge and made an offer to pay in installments. The judge was not happy with HMRC and made a judgment that my friend pay £15 a month...that is all.

HMRC also asked at the hearing if they could apply for a charging order, judge would not allow that either and said as long as my friend continued to pay £15 a month they could not apply for a CO.....But HMRC did put in an application in September 2011 but then retracted their application and the judge made a judgment that Charging Order application be dismissed.

Right here is the problem.....since the judgment was made to pay £15 a month in 2008....my friend has never missed a payment to date. Interest and surcharges are being added on rapidly....

A statement of account which came today said that my friend owes approx £8,783.00. I know that £15 is not a lot.....but what we are wandering is if that the original judgment of £10,528 was not changed to £6,400.00......and from £6,400.00 my friend has paid approx over £1,000.00.....yes I know that the interest and charges are massive.....but I also know that HMRC have made hundreds of mistakes all over the place....but however you look at this...this debt will never decrease......it will only go up.

Only thing I could suggest was that he pay more than £15 a month.....on the CCJ register of judgments it shows that my friend owes £10,528......when he questioned this to HMRC they said it did not make a difference whether he owed the £10k or £6k....as the amount is over £5,000 they are allowed to add interest and charges.

Maybe he should send a SAR to HMRC to find out from the beginning the exact figure and sum of judgment against him...and what has been added on since then?

Appreciate any help or input from people on how to tackle this mess please?

oncall

This was a reply that HMRC gave when the original sum was queried on the judgment order:

Dear Mr XXXXXXXX,

You have quieried with HMRC the entry relating to you on the Register of the County Court Judgments. I need to explain that at the time judgment was given by the court the amount due from you and being claimed by HMRC was £10,528.00. As we explained in our letter to you on March 2008 we later adjusted our claim to £6,400.00 (following the decision to give up amounts relating to the years 1999-2001). The register currently still shows the position as at the time judgment was given. HMRC has no control over the Register and we cannot change that. If you need more information about the operation of the Register and how to query your entry you can find it on their website.

HMRC claim they have no say over the judgment register, fair enough, but do they not have control over the correct amount of owing on the judgment order. An order was made in 2006 for £10,528.00...late decreased in 2008 to £6,400.00. Would a variation order need to have been applied to show the correct amount showing on the judgment?

Because at the moment it is very difficult to know what the initial amount HMRC started with. If the original judgment of £10k was changed in 2008 to £6,400 I assume that interest was being charged between these two dates on the £10k? and if so can this be reclaimed? then again I guess that HMRC would say no....and say there were allowed.

This matter needs a lot of working out to do it seems.

oncall

Letter from March 2008 by HMRC


Dear Mr xxxxxx,

I would remind you that the hearing of your application to vary the order made on 31 July 06 for payment of the sum of £10,528 and costs of £250 originally listed for 7 November 2007, has been re-listed for 17 March 2008 at 12.00 at County Court.

I would advise you that HMRC have amended the amount of the claim redusing it by £4,500. which were the amounts due for 1999-2001 because after being notified of your bankruptcy on 12 May 2000 to £6084 and costs of £250. The amount of £4500,00 should have been claimed in your bankruptcy.

I would advise that HMRC will be opposing your request to pay the installments you have offered and will request judgment remain for payment forthwith, so that further bankruptcy proceedings can be considered or possible enforcement by charging order. The judge however will make a decision on your application.

pelirocco

Actually this is a bit more then being fined for not filing tax returns . Has he now filed the returns , are HMRC working from true return figures or is this sum made up from estimates ?

Tbh I am surprised they haent gone for bankruptcy they dont normally faff around with £15/ month as unsurprisingly i would doubt this covers the interest and surcharges let alone the debt

oncall

The fine he received was made up from estimates......and yes he has been filing his correct returns.

I agree with you about the £15 a month payment.....but believe that HMRC had made many mistakes when they went to court and think the judge was not having a good day with them....and was not impressed. Either this amount is never going to decrease at this rate of payment either.

Thanks for you reply.

oncall

It was not up to HMRC to accept £15 a month,,,,that was the order the judge gave.

dori2o

What HMRC are saying is correct, they submit their papers to the court which state how much the owed balance is. The judge them makes the order based on the evidence put before him.

HMRC have no powers to amend this order, it has been made by a higher court.

Idf your friend believes the judgement is wrong, or the incorrect figures have been used in the judgement then you need to look into how you go about querying/appealing this.

HMRC have advised you where to find the information.

For the amounts to have gotten so high there must have been a significant number of years tax returns missing.

Your friend had 4 years in which to submit the returns and have them accepted by HMRC.

It is very unlikely that your friend was unaware that he had outstanding tax returns as reminders, penalty notices, statements, distraint letters will all have been issued to advise the returns were outstanding. The Determinations will have been issued at the appropriate time and interest will have been charged on all the outstanding balances.

When an individual has 4 years in which to submit a return from its date of issue to ensure that the correct figures are used in the calculation of any liabilities, they really have absolutely no excuse to a) object to the determined liability and b) offer such derisory repayment terms. Your friend is afterall choosing to avoid paying that which the majority of taxpayers have no choice but to pay, they have it taken from them at source before it is seen.

at £15 per month it would take your friend 58 years to pay off just the tax owed, nevermind the additional interest etc.

Whether or not mistakes were made by HMRC in the run up to the court hearing HMRC are not responsible for the Judgement. You need to follow the advice HMRC gave in respect of querying the judgement.

chrismac1

Does it matter?

Your friend is paying less than 2% interest per year. As long as he or she sticks to the 15, tough luck HMRC.

From a purely financial view it's a great deal for your friend unless it seriously affects his or her ability to borrow in future, and he or she wants to borrow in future.

They can add £1m in surcharges and interest if they like, they are stuck with the £15. However, I am not a lawyer and he or she might want proper advice, but I'd have thought that ANY variation in the payments up or down could lead to a re-opening of old wounds and an attempt by HMRC to set the judgement aside in favour of a new judgement. By which time the £10k could be £20k.

If it was me, unless I had the £10k in loose change to pay HMRC off and tell them to get lost, I'd make sure nothing got in the way of the £15 payment order each month.

oncall

Thank you dorio2 & chrismac1 for your helpful replies.

I have been looking through some of the paperwork.....of my friend's and the correspondence he has been having and had with HMRC. This is far from simple and I agree that opening up old wounds may create more problems than he already has.

Maybe I am simple minded but I can just see by reading a few of HMRC letters that there are a lot of inconsistencies.

What I was wandering, may or may not make a difference is that:

Original judgment was made for £10,528 in July 2006 (this was a forthwith order)

Then my friend put in a application to vary the order....in July 2006. He also kept in touch with HMRC to try and negotiate lower payments, no luck at all there.

This went on for a few months, a hearing was set for November 2007....but relisted again for March 2008. From the date of the original judgment July 06 and March 08 no payment was made to HMRC by my friend.

In August 2007 my friend received a letter from HMRC which said:

I am returning the certificate of discharge from bankruptcy. As this debt did not form part of the bankruptcy, the debt remains due and payable.

Then a few days before the March 2008 hearing HMRC wrote another saying that they were deducting the sum of £4,500 as this should have been claimed in bankruptcy.

In May 2010 my friend wrote to complain about this matter, and that the original judgment should not have been made at £10,528....but the lower amount of £6k'ish.

HMRC wrote their response as follows.

Dear Mr XXXXXXX,

I write further to my letter of May 2010 because I feel the point I made about Mr Gwen not being aware of your bankruptcy was slightly inaccurate.

In your letter of April 2010 you said HMRC were advised of your bankruptcy on May 2005. However, I can confirm that Mr Gwen's notes of your meetings with him in March 05 and April 05 do clearly indicate that you told him you had been made bankrupt. What I intended my letter of May 2010 to express was that Mr Gwen seems to have been unaware of the tax years that would have been covered by your bankruptcy when he issued the assessments in July 2005. I am sorry for this inaccuracy.

I know this is a complicated matter, and not really sure where my friend is hoping to go with this, but what he feels is that at present the amount owing stands at £8k'ish and rising daily.

Would it have made any difference if the original judgment was for only £6k'ish as HMRC advised in March 2008 they had reduced? not sure.....

to date total payments of approx £1,035 have been paid....at £15 a month.

They have added £1,689.00 in the £8k'ish saying that 2009 tax returns were not submitted, but they clearly were...as my friend has copies of them.