Tc & Hmrc

[tonycee]

Wondered if anybody has any experience with HMRC.

 

I had a relatively profitable business until my ex manager and his wife, who was my bookkeeper, decided to waste £60k of my toot.

Couple that with the purchase of a duff franchise in 2003, and i guess im down £100k in 10 years.

 

Anyway. Received a BR petition from HMRC for alleged unpaid VAT of £14.5k going back to 1999. Despite my best efforts to prove to the contrary, with the paperwork that i do have, i can only get this figure down to £20 short of £10k.

 

Have fought off the final decision until now, but im back in court on 19th Nov.

 

I have £5k because i haven't paid the mortgage, who yesterday agreed to accept £250 PCM off the arrears if i resume payment in November.

 

Here's my question.

 

If i give HMRC £5k and offer to pay the rest off at £250 PCM does anybody know what the answer is likely to be.

 

If i cant get them to agree, and am declared bankrupt on 19th November, then i might as well not pay the mortgage anyway.

 

I have a suspended repo order on the house anyway, so eviction wont take to long.

 

I have a £7k PPI claim against Barclays waiting to go into court, but was told to put this on hold for now by an insolvency practitioner.

 

So the bottom line is, im £5k short, cant get a loan for love nor money, and time is running out.

 

Any ideas ?

 

Thank You.

[42man]

In my opinion Tony, it might be worth getting into dialogue with them, as they may well accept, I know somebody who owed about £40,000 and on the day of the BR hearing spoke to them 30 minutes before and came to an arrangement, I think he gave them £20,000 there and then, and paid the rest up over 6 months....

[tonycee]

I have been in dialogue with them for months because i dont believe i owe the money. Because they are who they are, they call the shots.

 

Its already been suggested that they will leave it till the last minute.

 

The judge made it quite clear he will give me no more time.

 

If i cancelled all my Direct Debits between now and 19th Nov, plus getting paid twice more, i could raise another £2k or so, but that just creates more problems.

 

Decisions ? Decisions ?

[gizmo111]

What sort of equity do you have in the house and what debts?

 

I think it is possible they will come to a deal on the morning, but obviously that is not guaranteed, and anything else would just be guess work on our part.

 

Either way you are going to lose the £5k, but if you think you are going to lose the house through bankruptcy then some of it should be earmarked for a deposit and rent on a property.

 

Have you spoke to an IP?

[tonycee]

Hi gizmo111.

 

I am so embarrassed about my meagre problem.

 

This time last year i had £70k equity in the house, i have a secured loan of £13k. And a credit card debt of £450.

 

My interpretation of today's market is that i now have 70 pence worth of equity, but still the same problem.

 

If i lose the house, OK, new start, big hassle, but whatever. What will be.

 

Yes, IP said, why go bankrupt ?. We can save your soul for £7k.

( On Ya bike )

 

I have learnt so much through this site, thank you.

 

Im OK with what is happening, just wondered if MR HMRC was watching and could point me in the right direction.

[gizmo111]

Hi Tony,

 

Don't be embarrassed about your problem, we all have them and however big or small we all need to share them.

 

On the face of it you are not insolvent as your assets (even in the current climate) theoretically are more than your liabilities.

 

I wouldn't even consider bankruptcy unless forced. I think I would pay £3k off the HMRC now and write a letter to them with an offer to clear the debt over however long it will take you to do it. The other £2k can either go to the mortgage co or as part of this debt.

 

If you were up to date with the mortgage could you realistically afford to keep the house?

[tonycee]

Im embarrassed because im so lucky, and others are not.

 

I have thought and thought and, well, you know.

 

I dont wish to sound selfish, but i just dont know if i want to go on like this anymore. I cant cope.

 

I earn so much money, over £4k every month, and every penny just goes whoosh.

 

I agree that BR should be avoided, but, at what cost.

 

Im being selfish again.

[gizmo111]

Don't be embarrassed Tony, whatever you earn I am sure is the result of hard work that you have built up over the years.

 

 

I think you need a plan and need to be in control.

 

You can let things take course and let HMRC declare you bankrupt, and go through all that hassle, and most likely lose the house, end up with a bad credit rating etc etc, which will affect you for years.

 

You can put the house on the market at a price that will clear secured debt, HMRC and rent somewhere. You don't have to stay in the house to do this.

 

You could make an offer to HMRC using part of the £5k and stay put.

 

I think it all depends on where you want to live. Once the BR threat is sorted or made real, then you can plan what you want to do with the house and where you want to be.

 

I would hang in there until after the hearing, but unless you can raise the full amount without causing hardship or further risking your home, then offer no more than £3k as a lump sum payment to start.

 

How long do you think it would take you to pay £11.k?

[tonycee]

I appreciate your help. I know what i want to do, and thats pay off HMRC ans stay put.

I have such a bright future if i can get over this.

I have actually submitted paperwork to HMRC proving a reduced balance of £10k.

The possibility of obtaining the paperwork to reduce the debt further, is looking less likely by the day.

I have made an offer of £5k and £250 PCM.

This will effectively wipe me out, but it needs to be done.

It would also be a strange irony if the very people that make me bankrupt, ended up having to keep me through out its period. !!!!!!!!

[gizmo111]

I think for time being to hold off the bankruptcy you plan to pay back the £14.5K. Once the BR is held off and you are paying the arrears then you can get help with the amounts.

 

When you have paid the £5K and are repaying £250 to the HMRC and the mortgage in full and £250 arrears will all that be do able realistically?

[tonycee]

Realistically, it will be a struggle short term, but i think i have to make an acceptable offer to THEM.

 

I can achieve so much next year that i expect to be £ 1500 PCM better off than i am now.

 

Mortgage 9.25% Should be able to reduce to about 7% ( £250 PCM )

 

Currently renting a vehicle at £400 PCM as my old one passed its sell by date. I dont want to buy until i know whats happening.

 

I pay my EX £550 PCM for the 2 girls. We have agreed that when she gets married next year the payments will reduce to £200 PCM.

 

I have planning permission for 2 studios to be built on the side of my house. This will give a profit of £500 PCM after the cost of building.

 

Plus i have a £7k PPI claim against Barclays waiting to go into court. I am 100% confident of winning my claim because of my self employed status for 20 years. But thats another thread.

 

So the future is very rosey.

 

Its the NOW that worries me.

 

Can i get through the next 6 months is the big question.

 

 

Realisticaly ????? I will regret it forever if i dont at least try.

[tonycee]

Thinking Cap on Tony....??????????????????????

 

Just had another phone call from GMAC mobsters who have decided that they are not going to accept my offer of £250 PCM off the arrears after all.

They are, as of now, preparing what is necessary to enforce eviction.

They had great pleasure in telling me that i would be charged another

£50 + £15 PCM until eviction.

 

It never rains But.....

[42man]

Hi Tony...I have to say it is a heck of a dilemma to your situation....follow your gut instinct on what the best thing to do would be.....

[Toulose LeDebt]

Hi Tony.

 

Just been through the mill with HMRC myself not VAt but an imaginary £15k of income tax arrears.

 

HMRC are okay to deal with up to a point but in my experience pretty incompetent in that they have to follow the manual (and their interpretation of it's contents). If it's Shipley you're dealing with good luck but as I've just proven three weeks ago they can be beaten in a head on battle. I know this isn't exactly what you are angling towards but I would apply some of my strategy to your circumstances.

 

Knowing that every HMRC decision is based upon what the manual says, the first thing you should do is get yourself a copy. This gives you a one step advantage over HMRc at all times since you can work out what the answer will be before you ask the question.

It's here.

 

Link.

 

Check out Section DMBM800000

 

Which includes:

 

DMBM800090 – Time to Pay: How to deal with time to pay requests

 

Having determined who is responsible for dealing with the request you must

 

• confirm that all HMRC returns have been filed
  
• find out the total debt, including any non-VAT indirect tax debts
  
• obtain a maximum payment on account
  
• get all the necessary information needed to consider the customer’s proposals for settlement of the debt;
  

and where appropriate

• liaise with your indirect or direct tax colleague to agree
  

 

• the terms of the arrangement
  
• order of settlement and the method(s) and
  
• frequency of payment.
  

 

Where the customer is seen personally, action is to be taken immediately. If the request is made in writing every effort should be made to reply by telephone. If this is not possible send a reply within 10 days of receiving the request. The response may be to ask for more information, which in itself is an acknowledgement that we have received the customer’s request.

 

 

 

 

DMBM800160 – Time to Pay: Deciding whether to agree to time to pay

 

Non-accruing liabilities Accruing liabilities - SA cases Accruing liabilities - PAYE/NIC/VAT cases Are the customer’s proposals reasonable?

There is no absolute 'right' decision about whether or not to agree to time to pay. Each case must be dealt with on its merits, using common sense, the customer’s financial situation, case history and the enforcement options available. For example, we would not seek to force a viable business to close down because of short-term cash flow difficulties. All arrangements should take properly into account the interests of the Exchequer, fairness to the customer seeking time to pay, fairness to other customers, and be sustainable.

 

For example, someone with an uncommitted bank balance which exceeds the amount outstanding has no justification for requesting time to pay. Similarly, instalments of equal amounts (say, every month) for the whole period of time to pay are not justified if the customer's income will increase as the result of seasonal effects on trading or when a personal loan or hire purchase commitment clears (see DMBM800230).

 

(This text has been withheld because of exemptions in the Freedom of Information Act 2000)

 

Enforcement and Insolvency Services (EIS) will support any decision you make about refusing or cancelling an instalment arrangement and take appropriate action unless the case circumstances change significantly.

 

As overriding principles we expect customers

 

• in PAYE / VAT/ other Indirect Taxes cases to maintain payment of their current liabilities and in all appropriate cases submit returns on time
  
• to repay their tax arrears at a level proportional to their means.
  

Non-accruing liabilities

 

If the financial circumstances dictate that it will take several years to pay a debt and there is no accruing liability duration is not an issue, and any payment arrangement should be based solely on ability to pay.

Accruing liabilities – SA cases

 

In SA cases you can consider payment arrangements for up to a maximum period of 3 years. It is important that the customer understands and agrees that at the end of this period they must be fully compliant. This will include submission of returns and payments being totally up to date.

 

You should work on the basis that the amount of the future liability will be the same as that for the current year. Once the returns are submitted you should review the arrangement to take into account the actual figures.

 

Where a customer needs more than 3 years to get up to date refer the case locally for approval.

 

• Officer of higher debt manager level or above.
  

Where appropriate, cases should then be referred to the Operational Accountant by the senior debt manager.

 

Current guidance states payment arrangements cannot be given in respect of a determination. Both from a customer and Departmental view it is important that the arrangement covers the actual liability.

 

Exceptionally, where the outstanding return(s) cannot be submitted immediately, you can accept a payment on account of the determination on condition that returns are submitted within a maximum period of 1 month.

 

On the receipt of the return you should review the case to take into account the actual figures.

Accruing liabilities - PAYE & NIC/VAT cases

 

A customer who has, for whatever reason, fallen behind with payment may need assistance to bring matters up to date. It is particularly important that in accruing liability cases current deductions are paid on time and returns are submitted by the due date. When considering time to pay in these cases you should take into account business expenditure, overheads (which include wages), income and turnover.

 

All payment arrangements are based on the principle that current months are paid when they are due. The arrangement itself should not exceed 12 months.

Segmentation 1 employer

 

Under the new rules around Mandatory Electronic Payment cases the granting of time to pay will not take the employer out of the surcharge regime. The employer should be advised that any

 

• future payments should be made on time and in full
  
• failure to make payment on time and in full will result in a default notice being issued and possibly be liable to a (higher) surcharge
  

Interest in large employer (segmentation 1) cases accrues from 22nd April when payment is made by an approved electronic method.

Are the customer’s proposals reasonable?

 

Examine all the information critically and, if necessary, take time to consider the details. Do not be rushed into a decision. If you need advice, consult your manager.

 

Although you should explore with customers whether they have considered other ways to clear the outstanding debts such as borrowing money from the bank, you should not refuse to negotiate or turn down payment proposals because this has not been done, nor should you insist that all efforts to secure a loan should be exhausted before entering a payment arrangement. This will contravene Office of Fair Trading guidelines which we are expected to follow.

 

You will probably form a view fairly quickly of whether the customer's proposals for payment are reasonable.

 

If they are set at an unrealistic level, or apparently more than the customer can afford, it is doubtful whether the customer has given full and accurate information.

 

If they are less than the customer can apparently afford, you should probe deeper. You may suggest a rate of payment that you feel to be fair and acceptable (based on the customer's ability to pay, not office targets or statistics) and suggest how they might make adjustments to achieve this, but be tactful and diplomatic in discussing how they arrange their financial affairs.

Arrangements made on outdoor work

 

If you are on outdoor work and the case is beyond your authority to agree, make a provisional arrangement subject to agreement of the appropriate officer who will confirm their decision in writing (see DMBM800170).

 

 

So in response to your question there's no definitive answer but you are now party to the reasoning process which means you are hopefully better placed to tailor your offer to comply.

 

Good luck!!

[Toulose LeDebt]

Also.

 

DMBM685030 – Transfers to Enforcement and Insolvency Services (EIS): General: Insolvency action selection criteria

 

Before considering insolvency

 

 

• The tax must be overdue and unpaid
  
• Quality Gateway checks must have been completed
  
• The debt must not be the subject of dispute or appeal
  
• There must be no Time To Pay arrangements in place and the option of agreeing TTP must have been considered or is not appropriate, and any failed arrangement must have been cancelled in writing where appropriate
  
• The customer’s address must be in the UK and confirmed, ideally within the last six months. However, if this has not been confirmed within the last six months, consider a distraint or Field Force AO call
  
• If the customer has gone abroad, see the guidance on Mutual Assistance in the Recovery of Debts (DMBM560010)
  
• If we already know there are no assets confirm by telephone
  
• For Limited Companies when thinking about a submission to EIS consider a further Companies House check if it is more than six months since the last one
  
• Consider whether there are any special issues surrounding the customer, for example trust or executors (see DMBM585000 to DMBM585230)
  
• For debts in England, Wales and Northern Ireland that are not tax or interest (for example Contract Settlements or Class 2 NICs) there must be less than six years from the statutory due date of the liability to starting proceedings
  
• Where there is a CCJ in place, we can enforce a debt without time limit, but see DMBM665210
  
• For debts in Scotland, there must be less than twenty years from the statutory due date of the liability to starting proceedings
  
• A Voluntary Arrangement must not have been proposed.
  

If a confiscation order is in place contact Process & Strategy for guidance.

When to take insolvency action

 

Take insolvency action where:

 

• Other methods of enforcement are not appropriate or have been attempted without success
  
• There is no reasonable prospect of business rescue (e.g. time to pay)
  
• (This text has been withheld because of exemptions in the Freedom of Information Act 2000))
  
• (This text has been withheld because of exemptions in the Freedom of Information Act 2000)
  

 

• (This text has been withheld because of exemptions in the Freedom of Information Act 2000)
  
• (This text has been withheld because of exemptions in the Freedom of Information Act 2000)
  
• (This text has been withheld because of exemptions in the Freedom of Information Act 2000)
  

 

 

• This is a phoenix company
  

Note that deregistration for VAT purposes does not mean that the customer no longer has any taxable income for income tax purposes.

Sensitive cases

 

Where there are sensitive factors, such as:

 

• ill health
  
• extreme old age of customer
  
• death of customer
  
• or any cases where insolvency might attract adverse publicity, such as football teams, famous personalities, popular charities, education, healthcare, the public sector or major blue-chip companies
  

you should consider whether alternative recovery action is more appropriate, taking into account the customer’s ability to pay, etc.

 

Where you decide that such a case is suitable for insolvency, include these facts in the referral.

When not to take insolvency action

 

Do not take insolvency action where:

 

• part of the amount in CCP is subject to a suspended committal order or charging order, unless the out-of-court arrears (including interest) exceed the EIS minimum level; or
  
• the debt is not rising and there are no assets or property.
  

[tonycee]

Fantastic information.

 

Thank You.

 

the debt is not rising and there are no assets or property.

 

It will be worth me mentioning that i am being evicted on the 24th Nov, and sale by auction could generate a serious shortfall.

 

Both eviction and bankruptcy can be avoided if i am given the time necessary to pay.

 

However, the ball in now in HMRCs court.

 

Lets hope they drop the case, and not the ball.

 

Thanks again.

[Toulose LeDebt]

great glad you saw the post TonyCee.

 

I think you've got some real leverage regarding banktruptcy proceedings insofar as the amount is in dispute. they claim £14.5k you can prove £10k If you read the manual you'll see what their strategy is in such circumstances. They will apply for an interim ruling on the undisputed amount pending determination of further liability. If you can convince them with a large enough payment up front that you can clear the rest in 12 months they should accept your offer imo.

I would get on the phone straight away and make an appointment at your local office to discuss this. (Where the customer is seen personally, action is to be taken immediately) If you can't then write a letter and post it asap.

They will be in breach of at least two of the pre-requisites for insolvency action if they proceed with the hearing without addressing the dispute and your offer.

I wouldn't offer them £5k up front first offer though, if you try for 1/3rd that might buy you time with the house. They will try and make an agreement of no longer than 12 months though so £3300 still leaves you at £550 per month. If you were offering £250 pm you'll have to find that £250 plus take £300 from the £1700 you've kept hold of which would buy you 6 months grace at the higher rate of monthly payment without costing you any more from your budget.

5K plus £250 per month is a 24 month plan £3,300 plus £550 per month is a 12 month plan which is within their guidelines.

They could reject your offer but the other being within their instructions is acceptable. 6 months takes you to May 09 which if your business is anything like mine is a much more lucrative time of year.

[tonycee]

I cant do another 12 months @ 14 hours a day 6 days a week.

 

I love my job, but at what price my health.?

 

I am both physically and mentally exhausted.

 

If they wont accept my offer over 3 years, then i think its time to accept the inevitable.

 

Its just bricks and mortar and the end of the day. It was meant to be my pension, but one cant go on like this.

[gizmo111]

How does the interest rate decrease affect you?

[tonycee]

It dosent.

 

Fixed at 9.2% or there abouts until March 2009, with an almost £12k redemption penalty.

[gizmo111]

Will it go down in MArch? What is your deal?

 

I am just thinking you may have more to throw at the debts then and a decent forecast based on the interest rate will be persuasive to both HMRC and a judge.

[tonycee]

I fear that GMAC will do me no favours regarding a better rate.

I will look up the terms tomorrow.

I have to be up at 6 to go to work. I must try and get some sleep.

 

Thank you for your help.

[gizmo111]

I fear that GMAC will do me no favours regarding a better rate.

I will look up the terms tomorrow.

I have to be up at 6 to go to work. I must try and get some sleep.

 

Thank you for your help.

 

You are welcome tony and there is still time to get a plan together, hopefully.

[tonycee]

Will it go down in MArch? What is your deal?

 

I am just thinking you may have more to throw at the debts

 

Quite the opposite i am afraid.

 

On 01/05/09 my 3 year fixed rate ends, and my rate will be LIBOR + 5.95%

OMG. It gets worse.

This means my repayments are likely to increase by about £150 PCM.

 

Im begining to think its time to throw in the towel. ( Or the keys )

[**Tilly**]

 

Im begining to think its time to throw in the towel. ( Or the keys )

 

 

Hiya Tony

 

You know you can only fight, for so long you have to draw a line somewhere

when to stop, im sure you will make the right decision, and everyone is right behind you.

 

 

Tilly x