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Will HMRC bankrupt me?

14 replies 843 views
g7ivpg7ivp Forumite
6 posts
Third Anniversary
MoneySaving Newbie
Following a failed spell at self employment (now in PAYE work) I have a tax demand for 10k I haven't got.
I have a 12 year old car that I need to get to work (no other significant assets to sell), an overdraft, credit card debts and disposable income of £130/month.
What are my options? I don't want to be bankrupt.
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Replies

  • A_LertA_Lert Forumite
    141 posts
    100 Posts
    If you can't pay within months then it's very likely. HMRC is in general aggressive at pursuing people (and corporations) who owe tax, more so than commercial creditors.
    Since you have other debts and no significant assets, unless you're aiming to work in the financial sector bankruptcy probably won't be especially harmful to you.
  • fatbellyfatbelly Forumite
    14.8K posts
    Part of the Furniture 10,000 Posts Cashback Cashier Car Insurance Carver!
    ✭✭✭✭✭
    Without further detail it's hard to advise. But a DRO is ruled out by your surplus income so I'd say your options are a debt management plan, bankruptcy and (possibly) an IVA

    Tax aid is a good shout re the tax debt
  • RattyIrkRattyIrk Forumite
    58 posts
    10 Posts
    HMRC will be aggressive but if you can propose a time to pay and show that the proposal is realistic and will get them repaid within a reasonable time frame they will likely agree it.  However if you default on a payment ...
  • Bluecar2Bluecar2 Forumite
    58 posts
    10 Posts Name Dropper First Anniversary
    Hi in my case Hmrc would not accept a prolonged payment plan, they were very keen for me to get it all paid well within the year, they were not very helpful at all, If they cant get payment in a reasonable time frame they will go ahead with Bankruptcy to get the case closed regardless of whether you have any assets or not
  • edited 12 February at 4:12PM
    dave1968dave1968 Forumite
    44 posts
    10 Posts First Anniversary
    edited 12 February at 4:12PM
    HMRC will go for bankruptcy in the end yes. But remember if your debt falls below 5k they cant make you BK. I have dealt with them in the past and they will pursue all debts in a very aggressive way. Does not mean they wont listen to reasonable repayment plans but the max time they will give you is 12 months and sometimes not even that. Also while the debt is outstanding they will continue to apply interest and any applicable penalties. Which can really add to the debt. I did not / could not end up with going BK so worked at clearing the debt which I did in the end. But they played hard ball and only started to back off when i was well into clearing the debt.

    Debt management when or if you do get a contact with will actually try work with you but within limited parameters. I ended up speaking to the same 2 people who in were over time helpful and worked with me to get my account back in good standing. But all within those very limited parameters mainly it has to be cleared within 12 months or less and all tax returns need to be up to date and no further debt added.

    Some people I suppose the easier option is to go for bankruptcy. But  not everyone (like me) also a friend of mine found in the end that BK would be a much better option for him. But it can be a long time before they actually do go for BK I know people who have waited a year or more. I started paying amounts at the moment of starting to negotiate a repayment plan with them which in the end helped as they saw I was serious about clearing the debt. Depends though if you want to avoid BK or not.

    Personally they were the toughest creditor I have ever dealt with. Never again will I let it get to that stage. Lesson well and truly learned. But each case individual I know. Best of luck with it all.
  • dave1968dave1968 Forumite
    44 posts
    10 Posts First Anniversary
    Bluecar2 said:
    Hi in my case Hmrc would not accept a prolonged payment plan, they were very keen for me to get it all paid well within the year, they were not very helpful at all, If they cant get payment in a reasonable time frame they will go ahead with Bankruptcy to get the case closed regardless of whether you have any assets or not
    True on the within the year part. They are rare circumstances they will go over that but these are very rare. And at the outset they were not helpful but when you do get a plan in place it does get a little easier each month so long as you keep up repayments. I had to put my life on hold for 12 months. Cancelled all none essentials such as holidays, new clothes and trips to the pub ;-) and stopped things such as sky tv etc. Lived like a hermit on a poverty line budget for 12 months and it was crap! But in the end it got them off my back. But yeah they will go for BK in the end if not just to stop the debt increasing and to get you of there own records/books.

  • Aurora16MagicAurora16Magic Forumite
    6 posts
    First Post
    MoneySaving Newbie
    Hi g7ivp
    1) do not dispair
    2) immediatly contact StepChange (cccs co uk) 08001381111 and go through your finances with them and they will help you to pay off all your debts including HMRC, which will be considered a priority
    3) no HMRC will talk to you about your debt and NOT bankrupt you - then they'd NEVER get their money and so not in their interest!
    There is the moneyadvicescotland org uk and also nationaldebtline co uk
    But you'll find that the cccs or StepChange as they are now called WILL help you and without any judgement towards you or be unkind in ANY way! They don't charge either as they are govenment funded.
    Whilst HMRC might try to push for more by going through Step Change they WILL repsect that they have already and professionally gone through all your income and outgoings and that figure IS all you can afford.
    They are respected by all Credit Card Companies and Debt organisations.

  • luvchocolateluvchocolate Forumite
    2K posts
    Seventh Anniversary 1,000 Posts Home Insurance Hacker!
    ✭✭✭✭
    H.M.R.C do make people bankrupt if the debt cannot be paid within 12 months. 
    They like to close the case as quickly as possible. 
    You have had posts from people on here who have experience of this.please take their advice 
  • Bluecar2Bluecar2 Forumite
    58 posts
    10 Posts Name Dropper First Anniversary
    If you have any way possible, whatever it takes to pay HMRC then do it, I went down the route of burying my head, talking to stepchange, and trying to deal with HMRC on my terms and got no where, It dragged out for about 2 years in the end and the amount of interest and charges applied were horrific, in the end they made me bankrupt knowing there was no chance of recovering anything but just to clear the books, I dont know your personal circumstances but Bankruptcy is not as scary as you imagine, If it is looking invetible that it is going to be the only option i would advise you to consider doing it yourself and saving a lot of hassle and stress with a very prolonged petion by HMRC 
  • Aurora16MagicAurora16Magic Forumite
    6 posts
    First Post
    MoneySaving Newbie
    H.M.R.C do make people bankrupt if the debt cannot be paid within 12 months. 
    They like to close the case as quickly as possible. 
    You have had posts from people on here who have experience of this.please take their advice 
    I'm not saying they can't. I'm saying there are step which you can take and they can work.
    Another thought too is 'do you owe what they claim'? Have you sat down with them and gone through every figure to ensure first of all that that is the final amount ?
    If you haven't then get a copy of their findings, check with with your figures and then ask for a meeting.
    Some online tax accountants can help too, but it'll be hard to find a good one though.
    I'd do anything to not go Bankrupt and that's what they rely on too. So try to take out the 'disperation' and get it more back in control.
    If you can show that you can carry on with a new version of the business, then there are always Voluntary Arrangements to consider (gives all creditors, if they agree) to wait for yu to have further time to develop the business to recover and have a chance of paying people. That too ought to protect your car.
    I'd never ever rush to bankrupcy as you cannot be a Director of Company for a number of years and you'll be surprised the number of forms you fill in when you apply for things!
    And above all remember this isn't the end of everything. This will become the beginning of a new venture for you even though it doesn't feel like it right now (perhaps).
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