HMRC arrangement

moatmeister

Hi I have come to an arrangement yesterday with HMRC to settle my outstanding tax bill of around £11k. A friend of mine arranged it with them on my behalf and I am happy we have addressed the problem before it got any worse.

However, I had to submit an income and expenses statement which showed a monthly surplus of about £620 so they could calculate an affordable budget before they would even begin to negotiate. They went through everything, down to and including including any prescription charges

They insisted on taking my wife's income of about £800/month into account and then said the best they could offer was about £916 a month over 12 months. This leaves me with a further increasing debt of around £300 monthly.

We are struggling already. Is this correct? Surely my wife's affairs should not enter into the calculations? Shs her own bills to worry about.

EssexHebridean

A full household budget should indeed include "everything, right down to and including any prescription charges". The more detailed, the better in fact - otherwise you have financial black holes to fall down.

Have you read any paperwork they have sent to clarify the point about your Wife's income being taken into account? HMRC are dealing with things like this on a daily basis - it's highly unlikely that they would have made a mistake in including her income, but you can always challenge it and see what they say, to set your own mind at rest.

Have HMRC explained why they have set your repayments higher than the amount which your income/expenditure shows is available? If not then you need to ask, as they can't have money you don't have!

The bigger issue here is that you say you are struggling already, yet your income/expenditure sheet shows a surplus of £620 a month - that doesn't sound like struggling to me, and indeed I expect to most on here! Do you actually have this left each month? It totals to over £7,000 a year remember, so if not, you need to track that down, and fast!

Also - have you CERTAIN you have addressed the issues that lead to you accruing the debt to HMRC in the first place? Most commonly this is down to people underallowing an amount set aside for tax if they are Self employed - if so are you now being sure to take the correct amount off for tax/NI contributions each time you receive a payment and setting that aside ready for your next tax bill? Otherwise you are going to be adding to your situation in January. Remember - anything you get paid is a certain percentage yours, and a certain percentage belongs to the taxman.

It sounds to me as though it could be worth you completing your Statement of Affairs (the calculator we use can be found in the link in my signature below) and posting that in here (hit "format for MSE" at the end, and paste into the thread) then we can have a look and see if we can identify any further savings that you could make?

moatmeister

Thanks for your answer, you make some valid points.

However I would be grateful if you could define your criteria for who is struggling or isnt struggling? Surely that relates to your income and expenditure what ever the figures are?

This was set up with an "advisor" over the phone. There is no paperwork although I am expecting a letter to confirm.

I havn't yet addressed the issues fully that have lead to this situation but I know what they mostly are. The full story of that is for another post another time. I have been trying to keep up with all our debts that directly affect credit files in the vain hope of trying to remortgage the house and clear these debts. I've been battling this for some time on my own, and i'm loosing the will to live with it all. I think its time to get some professional help before it takes me down totally.

I was just asking really about the way they had included my wifes income and lumped it in with mine. I had not included her credit card debts in the calculations (hence the surplus) as technically (and probably legally) I am not responsible for them even though I will continue to try and pay them on her behalf.

I will try and have a look at the Statement of Affairs thing properly when I have a bit more time.

WhenIam64

HMRC is a priority creditor. Credit cards are not. Visa has less powers to collect than HMRC so are fully aware of the extent to which they can ask for funds. I'd rather disappoint Visa

There is always the dispute mechanisms if you feel you have been unfairly treated.

moatmeister

Yes thank you a I am aware of priority creditors, I was editing my post to explain my reason for doing that and its possible that our posts crossed at the time. As I said, I was trying to keep my credit file up to date to try and get a remortgage but that is probably now not going to happen short of a miracle happening

EssexHebridean

moatmeister wrote: »

Thanks for your answer, you make some valid points.

However I would be grateful if you could define your criteria for who is struggling or isnt struggling? Surely that relates to your income and expenditure what ever the figures are?

You said you had done an income and expenditure sheet for the HMRC and this showed a surplus of over £600 a month? That is an incredibly healthy surplus.

One alarm bell - you talk about remortgaging your home to clear "these debts" - if you cannot manage any other way of doing it then clearing the HMRC one specifically like that might be an option - but please do NOT take further borrowing against your home to clear any other non priority debt. Turning unsecured debt into secured is a truly terrible idea.

theoretica

HMRC will expect your wife to cover a share of the joint living expenses out of her income, so if you put the whole of household costs into the expenses statement then her income is relevant. If your household expenses are less than £1600 a month you might be able to persuade them that she shouldn't have to pay more than half, but I wouldn't expect them to be keen on you paying more than she does with money you owe them.

Mrs_Ryan

Is this for Self Assessment? And- this is vitally important- are you still self assessed?

moatmeister

Yes self assessment and yes I am

EssexHebridean

moatmeister wrote: »

Yes self assessment and yes I am

And are you now subtracting your allowance for tax & NI off the top of everything you get paid prior to considering the balance as "yours"? This really is vital - it's pretty much the only way of avoiding getting into a hole with tax again in the future. (I speak from experience here - did a good few years on SA myself and ran that method from day 1 because I was utterly paranoid about finding myself owing tax I couldn't then afford to pay).

moatmeister

Yes. But at the expense of other things and particularly one of the card companies who have trashed my credit file to the extent that a remortgage can't happen and also cancelled the cards so I can't even use them to live on. Just can't see the point of lining their pockets any further they have had £1000s in interest off me in the past