HMRC and an income conversation

toomuch2

woodformoretrees wrote: »

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.

Thanks for your answer, it is always good to get other's experiences. I have already started working weekends and week nights to earn extra money to make up the shortfall. It seemed like a natural reaction. As I read your answer I could see myself writing that exact same post in two year's time. About ten years ago I was working exceptionally long hours "for my career". It was about the time my youngest daughter was born. I barely remember her as a baby, and we still don't have as close a relationship as I do with my other children. I really don't want that distancing from the family to happen again.

My mind is 95% made up, I need to understand the impact on my wife we have a joint loan and overdraft. I need to see if there is a way to avoid her bankruptcy. The problem is she had such a bad experience with NDL she is reluctant to call Step Change or NDL, and they quite rightly will only talk to me in general terms.

If the HMRC require repayment at a rate I can not afford then I really only have one route. The only question is how long do I have to sort stuff out.

Thanks again, your post really hit home

alastairq

Hi.....if a BAnkruptcy petition is seen to be the 'only way forward'...then better to let HMRC pay for, and seek, such petitions?

Bankruptcy is a individual state....and not a joint one.

Sadly, too many people find going down the 'joint account' route to be the morally acceptable thing to do.

The banks encourage it in extremis...and no wonder, since they are doubling the indemnity, so to speak.

If you could clear the overdraft, then close the joint account [to open two separate ones?] then that would leave just the joint loan for her to find?

However, if repaymetns for that loan are a burden, perhaps it might be good for both of you to be bankrupt, to gain that all-important fresh start?

[at least, if HMRC petition your BR,, as a couple you'd only have one set of fees to find? LOok on the bright side?]

What the OP does need to do...now, rather than wishing in hindsight.....is to open a couple of basic bank accounts, either with Barclays, or with Co-op [CAshminders].......don't 'wait & see'....anticipate beforehand.....

toomuch2

Hi Alastairq

Hi.....if a BAnkruptcy petition is seen to be the 'only way forward'...then better to let HMRC pay for, and seek, such petitions?

Insolvency increasingly seems the most likely route. It is not the route I would choose. I am trying to find a way through this that doesn't involve insolvency. Given time I could make all the repayments, it would not be easy, but I could do it. The HMRC has however closed that route down. What I am trying to understand in the process from their perspective. Will they try to go down the distraint route first, or go straight to bankruptcy. For the reasons above I would prefer to avoid bailiffs.

Bankruptcy is a individual state....and not a joint one.

Sadly, too many people find going down the 'joint account' route to be the morally acceptable thing to do.

I understand that it is an individual petition.

I don't understand your second point. But morally or otherwise I don't want to go down this route. My wife doesn't earn (or very little) but the bank insisted it should be a joint loan. If I am forced into bankruptcy the loan and the overdraft will fall upon her. The bank may allow her to renegotiate, but I don't know the answer to that one.

If you could clear the overdraft, then close the joint account [to open two separate ones?] then that would leave just the joint loan for her to find?

.

That was one of my plans, and separate as far as possible our finances. However I have been told that paying off an overdraft would be considered preferential payments and get me into hot water with an OR should I follow that route.

However, if repaymetns for that loan are a burden, perhaps it might be good for both of you to be bankrupt, to gain that all-important fresh start?

I don't mind the burden, but the current situation is that it would be impossible in the time frame. What I need is time from my creditors - particularly the HMRC. Unfortunately, as is their right, they are not providing any.

What the OP does need to do...now, rather than wishing in hindsight.....is to open a couple of basic bank accounts, either with Barclays, or with Co-op [CAshminders].......don't 'wait & see'....anticipate beforehand.....

VERY good advice and I am doing this

[at least, if HMRC petition your BR,, as a couple you'd only have one set of fees to find? LOok on the bright side?]

There is always a silver lining:j

alastairq

Sadly, too many people find going down the 'joint account' route to be the morally acceptable thing to do.

When I posted the above observation, it wasn't directed at the OP in particular, but to lurkers in general. We see on here so many instances where joint accounts, joint finances turn around and bite us where it hurts in the future. When one marries, or takes up a joint life together, the concept of joint accounts, sharing of financial responsibilities, is overwhelming...it is seen as ''the right thing to do''....

Yet, the odds are stacked against us..... a huge proportion of marriages fail at some point. This is a statistical fact that no-one entering into a domestic relationship gives much heed to, understandably.

The banks love it, they do, love it!

Since you yourself ..at the moment, consider it possible to 're=pay' what is owed to HMRC, you....at the moment, are not considering personal insolvency [bankruptcy].

Therefore, taking immediate steps to pay off the overdraught, [ and subsequently close that joint account] cannot be seen as 'favouring' one creditor over another....or at least, arguably so? [Since it would be HMRC bringing the BR petition, not you?}

After all, it is a different kind of credit? [

For example, if one had an overdraft, which...in effect, is paid off every month by one's pay cheque......yet re-established before the next month's end, & one petitions BR, is that 'favouring?'

If the situation arose, whereby the oP is made BR by HMRC.......that doesn't mean to say the OP's spouse needs to personally petition their on BR at the same time....this can be done [if needs be] months or years later.........if the decision is made that BR is the route for both to follow, then the timing of the personal petition doesn't matter........once that decision is made, there is little any creditor can do to upset matters.......aside from, trying to convert unsecured debt into secured debt by use of a Charging Order......which, if that were suspected to be the case, then an early BR petition stops such action dead in the water.

BR isn't the worse course of action to take by a long chalk...but it does require a good look at one's future life style, to cope.

antonic

toomuch2 wrote: »

Hi Alastairq



Insolvency increasingly seems the most likely route. It is not the route I would choose. I am trying to find a way through this that doesn't involve insolvency. Given time I could make all the repayments, it would not be easy, but I could do it. The HMRC has however closed that route down. What I am trying to understand in the process from their perspective. Will they try to go down the distraint route first, or go straight to bankruptcy. For the reasons above I would prefer to avoid bailiffs.



I understand that it is an individual petition.

I don't understand your second point. But morally or otherwise I don't want to go down this route. My wife doesn't earn (or very little) but the bank insisted it should be a joint loan. If I am forced into bankruptcy the loan and the overdraft will fall upon her. The bank may allow her to renegotiate, but I don't know the answer to that one.

.

That was one of my plans, and separate as far as possible our finances. However I have been told that paying off an overdraft would be considered preferential payments and get me into hot water with an OR should I follow that route.



I don't mind the burden, but the current situation is that it would be impossible in the time frame. What I need is time from my creditors - particularly the HMRC. Unfortunately, as is their right, they are not providing any.


VERY good advice and I am doing this



There is always a silver lining:j

The way the HMRC enforcement process works is that a Field Force agent will call to levy on your assets to obtain full payment of the debt.
If you have insufficient assets to pay the debt in full, then they decide what the next step will be, which as I explained earlier could then include CCP action or personal bankruptcy.

As Alaister said earlier if HMRC petition for your bankruptcy the fees are added to your debt and included in the petition.

However dont get your hopes up that this will happen, because there is no guarantee that it wikl.

woodformoretrees

The field agent called when I was out and I phoned him on the number he left. He never called again and they petitioned my bankruptcy 6 months later.

toomuch2

When I posted the above observation, it wasn't directed at the OP in particular,.........of action to take by a long chalk...but it does require a good look at one's future life style, to cope.

<snipped for brevity>

Thank you AlastairQ. You make some great points.

The way the HMRC enforcement process works is that a Field Force agent will call to levy on your assets to obtain full payment of the debt.
If you have insufficient assets to pay the debt in full, then they decide what the next step will be, which as I explained earlier could then include CCP action or personal bankruptcy.

As Alaister said earlier if HMRC petition for your bankruptcy the fees are added to your debt and included in the petition.

However dont get your hopes up that this will happen, because there is no guarantee that it wikl.

Thanks for explaining the procedure, I can now ask questions with knowledge.

The field agent called when I was out and I phoned him on the number he left. He never called again and they petitioned my bankruptcy 6 months later.

Maybe they just wanted the equity, as you mentioned before and just went the motions. I hope you found some peace after the BR - you clearly went through the mill.

toomuch2

I wanted to update you as you all took time to help and advise me.

After six months of being shunted round the houses I have finally come to an arrangement to pay back my tax over three years. They seem prepared to give me more time because I am now on PAYE. Had I stayed a sole trader I am pretty sure the game would be up.

It was a pretty onerous processes to get there. The HMRC lost a very important letter, and on more than one occasion didn't seem to take a record of conversations.

My payments are basically all of my disposable income, based on a Stepchange/National Debtline SOA. It has been made very clear that if I miss payments they will bankrupt me. I have no doubt this will be a difficult journey, and I am not sure if I can make it, but at least I have given myself a chance.

For what it is worth here are the lessons I learnt from the process.

1) Keep talking to them. Once you are past the initial department (the people you speak to when you tell them you can't pay). They are helpful, polite and understanding. In fact one of the reasons they told me I had got such a long payback period was that it was clear I been having a continuous conversation with them

2) Document everything. Write down your own notes as to the conversation's date and time as well as the key points raised. I didn't not do this at first, but soon learned that if I could quote the date of the conversation and what was spoken about it was an easier process.

3) If actions arise as a result of a conversation write to them and confirm. Be aware the HMRC is a very large organisation and letters do get lost. They also seem to have an unending number of addresses. Get proof of postage, or registered delivery.

4) Even better fax them. After they lost my original SOA, which resulted in me being transferred to the field office (the bailiffs section) I asked for a fax number. That way I could be more sure that they would get the information faster. The problem is that no-one apart from banks, solicitors and the HMRC has faxes anymore! I managed to find a computer programme that could fax from my desktop, and I was only charged for the cost of the fax, I used this rather than getting into the monthly payments of e-fax and the like.

5) Be Polite. Dealing with the HMRC can be frustrating. Not because they are rude or unpleasant (they were not to me) but it is a byzantine organisation. Suck it up!

6) Be honest. I don't know for sure, but I suspect they had done a pretty comprehensive check on me. For example they asked me about my car. I didn't know the number plate but I knew the make and year, their reaction was one of confirmation, not new information. They also asked me about my other debts. Again my feeling was they knew exactly what they were.

7) Be thorough, particularly when doing your income and expenses. Talking to the field office they seemed pleased that my SOA was done in the style of the ones you see here, as they explained it was more likely any offer for repayment would be looked at more favourably if I had thought it through. So take the process seriously.

8) Remember it is not their fault you owe tax. Whatever the circumstances that got you to this place, their job is to collect. No point blaming them or telling them they are being unreasonable. I don't think you need to put up with rudeness,and if they are being very difficult there are routes you can take. I would suggest that if you need to vent anger use those facilities rather than blow a fuse with the person on the phone. I did get a "little frustrated" on one call and I promise you it got me nowhere. This is not an equal relationship.

9) Talk to the debt charities, they can offer some really useful advice. I used the business debtline. They were not perfect. Nevertheless they were a useful source of support and information in the early stages. I did see an accountant who was very helpful. For a business debt I think at some point this is essential.

10) Use these forums. If you follow the chain I started thinking about an IVA. The good people here provided options that I could think about. They also gave me the psychological where-with-all to keep going. I was in a bad and dark place when I started this process. I am still not great, but I can see a route out.

Saulb23

Im in a similar position to what you have been. They say I owe them £30000 including fines from 5 years worth of previous years self assesments. I managed to get a payment plan for 3 months but they are saying it would take to long (3 years) to clear the debt. I had a phone call from someone at my property last week to serve me with a 21 day order? Seems like at this stage they are intent on making me bankrupt even though I am paying them back!

jollyme

the update provided by toomuch2 Old 19-07-2014, 12:19 PM is an excellent list of advice points - this should be a sticky or something !