HMRC tax debt

kim0000

Hello, 
     me and my partner are looking for some advice.
So trying not to drag on too much my partner is self employed and last year after doing his tax return on the same page he seen a PAYE message that said check if your owned a PAYE tax rebate. The message said that he is owed a tax rebate of 6k, now from his previous self employment he took the money guessing it was due from years of PAYE. Last year with covid he was sadly out of work alot and most of the 6k went on a hard financial year for us, plus they stopped our benefits temporarily as well due to the amount we had that month.

Now there was no written demand for the money he just had a message to check his gateway a few weeks back. It said that this payment was a mistake and he has to pay it all back to our horror. He has been in touch with tax aid and basically HMRC are saying that my partner put it through as a tax return, but this makes no sense as his tax return was only £300 for that year. He is up to date with his tax returns. 

He now has to fill out a form and basically re submit a amended tax return for that year and they want him to say he was careless and they can apply a 15-30% penalty charge on top worse case could be fraud at 100% penalty charge. The first call to HMRC he offered £100 a month and they said no, so then he offered £120 a month to get them off our backs temporarily, the thing is he didn't speak to me first and I know all our finances and some months we don't even have that left over after looking at our budget sheet. Our money is so up and down and I am at home with the little kids for now. He has to pay £125 a month for 4 months then they want a substantial increasement and a view to pay it all off. Um yeah right! 

We have spoken to CAB who referred us to tax aid. We have spoken to debtline who have gone over our budget sheet, talked to us about a IVA also about bankruptcy but from what they have said about bankruptcy it's not the right way to go. Now we have been advised to just pay HMRC until the debt is cleared but with our money going up and down and when I say up its still only 1 wage coming in, then how can we make a fixed money agreement. I'm guessing they will just want a regular budget form but from the sounds of HMRC they won't be happy with us taking forever to pay this off.
We have thought about a loan as at least we can pay the minimum amount a month back and not be constantly harassed unlike the HMRC for the next 5 or so years. However with that said I don't think it he will be accepted as his work isn't reliable enough and I've read you shouldn't pay a debt by getting into another debt. With the IVA he has 2 debts but 1 of them finishes in a few months and he can't apply with just 1 debt we been told. Also even when I go back to work we will never be much better off financially sadly. 

As you can read we really don't know the best way for us to deal with this debt and feel like we are banging our heads on a brick wall we want to make sure we go the best and right way forward. We are scared and really worry about future debt collectors and so on that's the last thing we want and need.

We are wondering Is there's anything we haven't thought of? Or what people think is the best option. I know it's our decision but we want to explore all avenues. Thanks in advance for any possible help. 

shaundiamonds

Sounds like you either need to sell some assets, remortgage or borrow from friends or family tbh.

sourcrates

OK, time to calm down and apply some logic to this.
All HMRC will do is farm your debt out to a collection agency, who will be more than happy to accept what is affordable.

HMRC maintains contracts with13 commercial debt collection agencies to collect tax debts on their behalf.

While HMRC continues to target and collect larger liabilities, the majority of their collection is now outsourced.

6K is likely to fall into the outsourced category, (if your unsure, simply ring and ask them).

I would suggest £50 a month is more than a reasonable offer, and where debt collectors are concerned, you don`t go looking for approval to pay that amount, you just pay it regardless.
So no real need to worry here, it should be solved quite easily, and you can put aside all idea`s of bankruptcy and IVA etc.

Mrs_Ryan

Erm- Sourcrates, I would respectfully beg to differ regarding the vast majority of collection being farmed out. That’s not strictly true. 

sourcrates

Mrs_Ryan said:

Erm- Sourcrates, I would respectfully beg to differ regarding the vast majority of collection being farmed out. That’s not strictly true. 

It does depend on the amount outstanding, but 6k, in my opinion, would be the kind of figure that would be passed to a DCA to collect.
HMRC only tend to target larger shortfalls themselves, but I agree, they are a law unto themselves, and have wide ranging, and far reaching powers, which is why I suggested the OP contact HMRC and ask what will happen if payment is not made.

They should be able to indicate whether the debt will go to collections, or if they themselves will pursue them through the courts.
Personally I would think this case is at the lower end of the scale.

If you do not pay your tax bill: Debt collection agencies - GOV.UK (www.gov.uk)