HMRC Application for Charge & Litigation

Baggie66

Good morning. 

We had an offer accepted on a house in July 2023. In September, the vendor was approached by someone from his past staking a claim on the property & they lodged an Application for a Charge with HMRC. 
We understand that he has a litigation solicitor involved but the other party now wants to ‘take him to court’. 

Can anyone help us to understand what the process might be, and more importantly how long it might take to resolve such a situation please?
we are in danger of losing our buyer and just need to understand do we can decide whether to wait or pull out of the purchase 🥲 Any advice greatly appreciated, thank you!

loubel

I presume the application was to the Land Registry rather than the Revenue? Has it been registered?

It's going to be a how long is a piece of string question without knowing all the details of the issue. I would be considering walking away after this long unless the seller's solicitor can reassure that this application is not going to prevent the sale going through in the very near future.

silvercar

I don’t understand why hmrc are involved.

it is all in the hands of the sellers solicitors. If they acted quickly, would it be possible for you to complete before the charge happens, in which case he charge can’t be placed?

otherwise it is for the sellers to negotiate the release of the charge, this generally means paying off the charge holder.

doodling

Hi,

I'm assuming that you mean HMLR rather than HMRC.

If the charge is for a monetary amount (or a sum that can easily be calculated) then other than the seller letting it delay the sale, I'm not sure how it makes a difference to you as a buyer.

The sale of the property is in the interest of someone holding a charge on it as they can get cash now rather than the possibility of cash in the future so they are unlikely to place any obstacles in the way of a sale.

All your conveyancers need to do is to obtain undertakings from seller's solicitor that all charges will be removed on sale (as they would with any purchase).  What that will mean is that the seller's solicitor will probably delay payment to the seller (after you have bought the house) until they can pay off the charge but that isn't your problem and doesn't affect you.

The only issues that might arise are:
1. The charge is for a sum greater than the sale price minus any other charges (e.g. a mortgage), i.e. the house is effectively in negative equity.  In that case you should walk away as unless the seller has a chunk of cash lying around the house isn't going to be sold any time soon.
2. The charge appears unexpectedly during the sale process or is for an unexpected amount and causes someone to stop the job - this can be resolved by communication between all the parties involved.
3. The nature of the charge is such that the value cannot be determined - this is unlikely but in that case (1) above might apply.

All the above ignores the fact that personalities might get in the way - e.g. if the charge is from an ex partner, the seller might stop or delay the sale out of spite to stop them getting their hands on any money, despite the fact that if it has reached the stage of a charge being applied then the odds are that a court has already ordered that the money is due to them.