HMRC and an income conversation

toomuch2

I have just spoken to the HMRC about the fact I can not pay my tax debt in one block. They insisted I paid something, however nominal - which I did.

They went through the questions about asking friends family and the bank, none of which are realistic options. When asked how much I could afford to pay back I gave them an amount over three years (I know they rarely accept three years), they said no and asked for three times that. An amount which I couldn't even realistically afford.

They have given me a week to see if I get still get funds from elsewhere and have stated they want a detailed breakdown of my income and expenses.

Has anyone here been through that process, or could offer me some advice.

They also said that a tax debt is a priority debt, is that true?

Thanks

antonic

For which Head of Duty is the debt for ? is it Self Assessment/ VAT ?.

HMRC will consider a reasonable repayment (usually up to a maximum of 12 months) but 3 years is a non starter.

They need to see that you have tried everywhere else to obtain funds before they will consider an arrangement.

If an arrangement IS granted then you have to file and pay every return on the due date and also do the same for other HMRC debts3

The enforcement options open to HMRC depend on your legal enity.

If you are a sole proprietor/ partner then HMRC can try to levy distraint/County Court Proceedings or even bankruptcy.

Hope this helps

longtermplanner

toomuch2 wrote: »

They have given me a week to see if I get still get funds from elsewhere and have stated they want a detailed breakdown of my income and expenses.

Then you should provide this. They are much more likely to listen to a "sob story" if there is some evidence to back it up.

Has anyone here been through that process, or could offer me some advice.

My advice is that you should go to your local tax office if at all possible and ask for an appointment with the manager. They tend to be more receptive to offers face to face than over the phone.

They also said that a tax debt is a priority debt, is that true?

It certainly is! You can go to prison for not paying income tax or VAT. Whilst this is unlikely (or the prisons would be even fuller than they are!) HMRC are also faster to send in bailiffs or make people bankrupt than banks etc with consumer type debts.

If you are making ANY payments to loans, credit cards etc you need to consider stopping these and paying those amounts to HMRC.

pelirocco

longtermplanner wrote: »

Then you should provide this. They are much more likely to listen to a "sob story" if there is some evidence to back it up.



My advice is that you should go to your local tax office if at all possible and ask for an appointment with the manager. They tend to be more receptive to offers face to face than over the phone.



It certainly is! You can go to prison for not paying income tax or VAT. Whilst this is unlikely (or the prisons would be even fuller than they are!) HMRC are also faster to send in bailiffs or make people bankrupt than banks etc with consumer type debts.

If you are making ANY payments to loans, credit cards etc you need to consider stopping these and paying those amounts to HMRC.

prison?link please

antonic

The only people who are likely to get jailed are those who are *serious* tax avoiders.

Someone like yourself may end up being levied on or being made bankrupt, but prison no.

longtermplanner

antonic wrote: »

The only people who are likely to get jailed are those who are *serious* tax avoiders.

Someone like yourself may end up being levied on or being made bankrupt, but prison no.

I agree with this - as I said it is unlikely.

Link? Here is CAB advice: http://www.adviceguide.org.uk/scotland/debt_s/debt_help_with_debt_s/dealing_with_priority_debts_scotland.htm#h_which_debts_are_priority_debts

But it is really important that although prison is unlikely, HMRC are faster to take action against you than other creditors.

And because you can theoretically go to prison, your other non-priority creditors will accept that you can only make them token payments of say 31 a month whilst you clear your tax debts.

toomuch2

Thanks for the responses

For which Head of Duty is the debt for ? is it Self Assessment/ VAT ?.

Self Assessment as a sole trader. No Vat. All this tax year I have been PAYE, and will currently be into the new tax year.

Then you should provide this. They are much more likely to listen to a "sob story" if there is some evidence to back it up.

I have no sob story, just stupidity. I have other debts but manageable. I am just trying to sort everything out out.

My advice is that you should go to your local tax office if at all possible and ask for an appointment with the manager. They tend to be more receptive to offers face to face than over the phone.

Good idea, thanks for that.

It certainly is! You can go to prison for not paying income tax or VAT. Whilst this is unlikely (or the prisons would be even fuller than they are!) HMRC are also faster to send in bailiffs or make people bankrupt than banks etc with consumer type debts.

Whoa, I have been talking to two debt charities, neither have mentioned prison, even in a worst case scenario. That now has me panicking. I thought that BDL said to me they like to think they are priority debts, but aren't (beyond their power on distraint). I am doubting me memory now.

If you are making ANY payments to loans, credit cards etc you need to consider stopping these and paying those amounts to HMRC.

This was mentioned in the thread I started in the IVA forum. I will get some further advice.

HMRC will consider a reasonable repayment (usually up to a maximum of 12 months) but 3 years is a non starter.

.

I realised that, the advice from BDL was to offer it, it is not unheard of, but unlikely.

Thanks all, I will speak to BDL after the weekend - when they are open again. Like longtermplanner in my other thread they also think the best/likely route will be bankruptcy.

woodformoretrees

Prison relates to people criminally avoiding paying tax - not to people in financial difficulty who are in communication with HMRC. They are definitely a priority debt though.

antonic

Please see my answers in RED

toomuch2 wrote: »

Thanks for the responses



Self Assessment as a sole trader. No Vat. All this tax year I have been PAYE, and will currently be into the new tax year.



I have no sob story, just stupidity. I have other debts but manageable. I am just trying to sort everything out out.



Good idea, thanks for that.



Whoa, I have been talking to two debt charities, neither have mentioned prison, even in a worst case scenario. That now has me panicking. I thought that BDL said to me they like to think they are priority debts, but aren't (beyond their power on distraint). I am doubting me memory now.

BDL are wrong.
As a sole proprieter the enforcement options open to HMRC are
1) Distraint
2) County Court Proceedings or
3) Bankruptcy.

The most likely enforcement route they will take is 1).

Option 2 is hardly ever used and option 3 if your a repeat offender OR have a serious amount of tax outstanding.


This was mentioned in the thread I started in the IVA forum. I will get some further advice.

.

I realised that, the advice from BDL was to offer it, it is not unheard of, but unlikely.

Thanks all, I will speak to BDL after the weekend - when they are open again. Like longtermplanner in my other thread they also think the best/likely route will be bankruptcy.

toomuch2

BDL are wrong.
As a sole proprieter the enforcement options open to HMRC are
1) Distraint
2) County Court Proceedings or
3) Bankruptcy.

The most likely enforcement route they will take is 1).

Option 2 is hardly ever used and option 3 if your a repeat offender OR have a serious amount of tax outstanding.BDL are wrong.
As a sole proprieter the enforcement options open to HMRC are
1) Distraint
2) County Court Proceedings or
3) Bankruptcy.

The most likely enforcement route they will take is 1).

Option 2 is hardly ever used and option 3 if your a repeat offender OR have a serious amount of tax outstanding.

Thanks for the information.

My research suggests that HMRC distraint is far reaching in that there is only a small list of what they will leave, but will take electrical goods and furniture etc irrespective of value.

I don't owe in the hundreds of thousands or millions as I have heard of others. It is in the mid-thirties. I am not sure of that counts as a serious amount of tax. However, it is more than I can afford in one go. Having read the thread last night I got onto my spreadsheet, and even I stopped all other debt payments, mobile phones, and cable/internet I could not afford what they are requesting.

I am probably more worried about distraint than about Bankruptcy. I had a mate many years ago whose father was subject to bailiffs. He was still having nightmares about it 10/15 years later. There comes a point when you own credit score etc becomes secondary to the well-being of your family.

Do you have any feeling how long they will take before they start knocking on my door? The website says they will start legal proceedings as soon as possible. http://www.hmrc.gov.uk/factsheets/ef1.pdf

I have been doing an inventory, most of our stuff is more than three years old. Even if they were to auction all of it wouldn't even begin to cover the amount owed. So I would still be liable for the rest.

To be fair to BDL they did say restraint makes them different, but the other options are also available to other creditors. It is an academic question though!!!

woodformoretrees

I was in a very similar position to yourself and paid back £2000 a month for 24 months. I suffered from stress, depression and eventually was unable to go out. I was working over 80 hours a week, ever week for those two years and was unable to see that I needed to 'give in' and admit defeat. It completely destroyed me - eventually I became to ill to work and HMRC applied to make me insolvent. They bypassed everything else and went straight to bankruptcy. (I'm guessing because they knew I had equity in the family home) I had nearly paid back everything I owed but, due to my mental state, hadn't comprehended that I also needed to be putting tax away on the earnings I was using to pay back.
I could never have succeeded. I had wasted those two years of my life.
if you KNOW you will not be able to pay them then please don't put yourself in the same horrendous situation.