DRO & HMRC Self Assessment

[Deleted User]

I am currently processing my self-assessment tax for when i was self employed last year. Its looking like i will owe around 4000 and i was wondering whether i could include it in my DRO if it isnt technically due by the time i enter a DRO? It will be officially submitted by my accountant to HMRC but wont actually become due until 31st Jan

sourcrates

See 46-14 -

DEBT RELIEF ORDERS - ELIGIBILITY (bis.gov.uk)

it's a grey area, you will need to ask a DRO advisor, or fatbelly may comment on this for you.

ToxtethO'Grady

From my understanding most debts will have to be a liquidated sum due at the date of the application, it would mean the tax bill would have to have been issued before the application is submitted.

If you knew it was going to be issued during the time of the application being put together the debt can added with a nominal amount, until the bill is issued, then the balance updated.

If you submit your DRO and there is no bill at that time it can't be included as it would be classed as a contingent liability, bit like being a guarantor on a loan, until you are asked for payment it is not a liquidated sum and you are not liable. It would be similar to asking for next years council tax to be included even though the bill hasn't been issued.

DRO and Breathing Space moratoriums are very similar, here's what the High Court said about what consitutes a moratorium debt for a Breathing Space.

Among other, the High Court confirmed that an additional debt was not intended to cover future debts that arise after a breathing space or mental health crisis moratorium had begun.

Future debts included contingent liabilities where the debt existed at the time of the moratorium application, but the amount had not been quantified.

Even if a contingent liability became liquidated after a moratorium had started, it could not be added to the moratorium because it would not have been a qualifying debt at the time of the moratorium application.

What that means for a DRO moratorium as well as a breathing space one is that a bill has to have been issued before the DRO moratorium starts. If it has started and HMRC reassess the issued bill that can be included, as it was a liquidated sum before the start of the moratorium, and the balance can be updated, as long as it does not take you over the £30K threshold.