Charging Order HMRC Tax bill

projone

Any help appreciated

National_Debtline

Hi projone


Short answer - yes, your partner (and/or any other relative/friend etc.) can make an offer to buy out your beneficial interest from your trustee in bankruptcy, thus dealing with their interest in the property. This could be done at any time during the process but it would be in your interests to make enquiries at as early a stage as possible.


Dennis
@natdebtline

Cobalt77

projone,

Be careful though. In the past HMRC happily made people BR if they owed a fair amount of money in taxes.

However, it seems HMRC are becoming particularly sneaky (or clever, depending on your perspective) and in some cases are going to Court for a CCJ instead of pursuing the bankruptcy option.

Once the CCJ has been granted, they then secure it against the property - knowing they will either be repaid when the property is sold, or have a tangible secure debt they can sell on.

This may or may not apply in your case, but is something to be aware of.

HTH

Cobalt77

projone wrote: »

ok thanks for the advice on this...im guessing once i receive the tax bill i can make myself bankrupt and not run the risk of the CCJ

Yep, totally correct.

But remember that as HMRC are involved and you owe outstanding tax, you may well find you end up with a BRU/BRO into the bargain (which would extend your BR obligations beyond the normal 12 month period)

Cobalt77

projone,

Just a thought here. If you are certain you'll be going BR (and from what you've written, this seems to be the case) there is no need for you to wait for the tax investigation (which could take months to complete) to be completed before going BR.

The probability is that you'll end up with a BRU/BRO anyway, but this can be put in place at any point by the OR during your 12 months' BR.

However, the sooner you go BR, the sooner your 12 months will be up and you'll be (relatively!) free to start rebuilding your life again.

If you haven't already done so, I would suggest giving Business Debtline a call: https://www.businessdebtline.org/

FWIW, I personally wish I'd not delayed filing my paperwork, as my own BR would be clear by now.

HTH

newuseron

Hi projone,

I was in a fairly similar situation to yours and was declared BR by the HMRC in late 2014. I had outstanding tax returns which had been "determined" by HRMC (they had overestimated them by 4x+ but I had to accept that given the returns were missing through my own fault - long story but ultimately I was of course responsible for ensuring my returns were in on time). During my twelve months I had one face to face interview with a very pleasant lady which lasted around 3-4 hours. I then received a couple of emails over the following months mainly relating to an IPO and that was it. I didn't receive a BRO/BRU. There are far more qualified people on here who can correct this but I suspect that if it's your first bankruptcy as mine was and that you admit your failings as I did (be open and honest with everything - the OR people don't judge you in my experience) then you may just have to go through the twelve months. As I was in a similar situation I won't lie and say that it was easy, It was a stressful twelve months and I dreaded the post and phone going every day but believe me (everyone say's it on here but it's true) the twelve months does pass quickly and the weight that is removed from your shoulders is immense. My advice is to bite the bullet and either declare yourself bankrupt now (once you have your house affairs in order) or contact the HMRC, explain your situation and that whatever the final calculation is you won't be able to pay and put the onus on them to bankrupt you.

I don't know what the "recovery" period is like going forward (cleaning credit scores etc), this forum is a wonderful resource for that kind of thing. I can only offer what I hope is some useful information based on a similar situation and hope it offers you some help.

I wish you all the best.

Cobalt77

projone,

Having slept on this, there is another option which requires "balls" (metaphorically speaking) but may be worth your consideration (bearing in mind you said HMRC is your only creditor, you have no other debt and no adverse credit history)

1. Do you have a vague idea of how much tax you owe? Most self employed people know roughly what their annual turnover is, and have a vague idea of their monthly expenses. Do you see yourself as someone who has been earning, say, 10K, 20K, 30K, 40K or more a year?
2. What is/was your occupation or business type?
3. How many years are HMRC going back and investigating you over?
4. What triggered this investigation? [it will generally either be (a) random (b) focused - because your accounts look odd, and they suspect you of under-declaring income or over-inflating expenses, or (c) because someone has tipped off HMRC you are skimming cash, or you've been honey-trapped]
5. Is there any hint HMRC suspects fraud? (or, purely hypothetically, might HMRC be likely to find any evidence of deliberate fraud?)

Obviously, don't post anything here which could be used to personally identify you or any business you are involved with (just comment in very general terms, like "I'm a plumber".)

The reason I ask is that it appears HMRC are your only creditor and you have no material assets. It could also be fairly argued that the £7K equity in your property is not material and should be ignored anyway (if you had to sell the property, you'd likely pay £3K - £4K in estate agents fees plus say £500+ in legal fees. Plus, all valuations are approximate and any buyer would likely knock you down a bit)

So, another alternative to BR or IVA would be to formally approach HMRC and make them a "take it or leave it" one time offer in full and final settlement of any tax liability you may have.

Your advantages are that you have no material assets, so the very best result for them would be a nominal charge against your property (which would cost them additional money and work to secure) or a CCJ. The worst case is you go BR and they may get some money, but in all likelihood you could juggle your income to avoid an IPA so they would get nothing. Plus, tax investigations are very expensive for HMRC to run - especially where there is no realistic prospect of them recovering any money at the end of it.

If you still have a reasonable credit history, you may be able to get a low interest rate personal loan (or similar). So, another option to going BR or IVA is to consider what you could realistically afford to repay over say the next 5 years and then work out what amount of loan this would support.

As an example, let's say you have a monthly surplus of £200 after paying all your bills. This means that in 5 years, this equates to £200 x 60 months = £12,000.

If it were possible to get a personal loan for £12K, you could approach HMRC with a simple proposition. Since you have no material assets and no realistic chance of repaying the huge tax bill & penalties, if they wish to continue with the tax investigation you will go bankrupt immediately.

However, as an alternative, you are prepared to write them out a cheque today for £12K in full and final settlement of all outstanding taxes & penalties. This gives them some money without all the hassle and cost of an IVA, or the BR route and risk of getting nothing.

Provided you are open and honest, HMRC are becoming increasingly commercially aware and will always consider deals in exceptional circumstances (as they have done with Google). In fact, they always have done - provided there is no suspicion of fraud or dishonesty.

Plus, if a deal can be agreed, your credit rating should remain unblemished and you won't have all the adverse issues associated with an IVA or BR.

However, this is one of those situations where it is essential to get advice from a qualified accountant or tax lawyer. In addition, any offer proposal should always be made on a "Without Prejudice" basis (ideally by your accountant on your behalf) and be affordable to you.

So, in summary, this option may or may not be right for you - but I've mentioned it because it may be suitable in your own unique situation (only 1 creditor, and no other credit problems)

HTH

Cobalt77

projone,

Let's say the police randomly grabbed you off the street and said they wanted to charge you with something serious, but would accept a guilty plea to a lesser criminal charge instead provided you cooperated. Would you get advice from a solicitor? It's no different here.

It is very unusual for HMRC to go back 19 years on a random investigation, unless they suspect fraud or a serious amount of money is involved. In fact, to even get permission to go back beyond 6 years, an HMRC investigator would have to prove they had reasonable cause.

The reason for this is simple - most businesses and banks don't keep any records beyond the statutory 6 year period, so it is virtually IMPOSSIBLE for HMRC to accurately establish what you should have paid - all they can do is make an "educated" guess, which you can guarantee will be on the high side in their favour.

Given that in a "previous life", I may have had some accountancy experience, I cannot ever recall HMRC undertaking a totally random historical investigation going back 19 years when they knew they had little (or no) prospect of ultimately recovering the outstanding tax & penalties. The only exception I can think of is if they suspect fraud or wilful dishonesty - have you been told if it is a code 9 (COP9) investigation?

My advice is to contact a specialist tax lawyer or qualified accountant ASAP. Ring around a few in your area, and ask if they offer a free initial consultation to discuss your situation - most firms will give you at least 30 minutes for free if you ask for it.

Having looked at your situation, my gut says there are probably only a couple of outcomes:

1. They will tell you to go BR immediately (if you are 100% certain the tax & penalties owed are substantial and unaffordable), or more likely
2. They will propose writing a strong letter to HMRC on your behalf to formally request the reasons and scope for your investigation. In this letter, they will also usually state there is very little chance of recovering 19 years worth of outstanding tax from you, and that you will likely go BR.

If you get a lawyer/accountant to do this for you, it shouldn't be that expensive. In most cases, they have standard letter templates for this and won't really be doing any other work - so it shouldn't cost more than a hundred quid or two tops (you can even try to agree a fixed fee if your feeling brave).

When you receive the reply from HMRC, your lawyer/accountant will either:
1. Confirm you are stuffed (but at least you have confirmation), or
2. Tell you HMRC are acting unfairly/outside their scope/against their own guidelines and get your investigation dropped (which happens more often than you'd think), or
3. Be able to negotiate a reasonable settlement with HMRC on your behalf (again, quite possible)

To summarise in plain English: if you are being investigated and talk directly to HMRC, there is a very high probability of you ultimately being kippered up. In contrast, if you have a lawyer/accountant there is far less chance of HMRC taking the proverbial - in fact, you'll almost always get a better result.

Usual caveats apply: all the above is general information, your circumstances may differ so get your own independent professional advice.

HTH