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HMRC payment plans - anyone any experience?

I have a client who has an outstanding SA tax bill of some £10,000. The clients business failed and they made payment plans with all creditors including HMRC. The client is now working full time as an employee.

HMRC agreed a payment plan last year whereby the client could repay the debt over 15 years based on all they could afford to pay and this was confirmed in writing. All agreed payments have been paid on the due dates and I have no doubts whatsoever that the client will pay the debt in full.  

They are now harassing the client and suggesting the payment plan must be reviewed and may be cancelled.

It seems a very unusual way to deal with someone to suddenly re-open the case and seek to amend an agreed plan. 

Its causing the client a huge amount of stress - any suggestions?

I am considering a complaint but am uncertain of the best way forward.


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10th May 2012 12:31

We've been here before...

From a personal perspective, I am very surprised that HMRC ever agreed to a settlement over 15-years, a more typical settlement would be to have payments spread over 2 or 3 years.

It may well be that someone from HMRC has dropped the ball and they are trying to back out of the existing settlement. Based upon my back-of-a-fag-packet calculations your client is repaying about £55.55 per month, whereas I would have expected a repayment of something closer to £300-£400 per month depending upon the settlement end date.

All of this is dependent upon the amount of spare cash your client has at the end of each month. If £55.55 is all he can afford then that's that really, even HMRC can't get blood out of a stone - doesn't stop them trying though. 


Since your client has already negotiated a payment plan with HMRC and continued to pay upon the agreed basis, this should be sufficient to illustrate to a court that HMRC have previously accepted a situation that they now find untenable.

You should ensure that you have reviewed all the documents between HMRC and your client to confirm this is the case (as clients do sometimes lie or at least stretch the truth somewhat).

You should continue to act as an 'honest broker' between HMRC and your client and point out to your client that HMRC are no longer happy with the arrangements and that you are in a position to negotiate a revised settlement if they are in a position to increase the payments to bring the settlement of the outstanding debt sooner.

I would strongly recommend reviewing your clients income / outgoings to determine the amount available for the settlement of debt each month.

If your client cannot afford to pay any more than he is currently doing, then you should point this out to HMRC and also point out that if they pursue this matter further and your client ends up in court, he will simply offer settlement on the same terms and conditions as they are presently.

HMRC would be idiotic to pursue this and in the circumstances described would likely have costs awarded against HMRC for wasting the courts time.

I would also write to HMRC lodging an official complaint and asking that this matter be escalated to internal review by a more senior member of HMRC staff.

In your official complaint you should point out to HMRC that your client considers the continued communication on an already agreed settlement of debt to be harassment in contravention of section 40 of the Administration of Justice Act 1970 and also under The Protection from Harassment Act 1997. Make sure you have a written confirmation from your client supporting this claim.

Are you sure this is HMRC and not one of their triumvirate of appointed debt collection agencies?

Thanks (2)
By happy
10th May 2012 12:38

Thank you very much - your detailed reply is really helpful and very much appreciated.

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10th May 2012 13:51

Has your client considered Bankruptcy to get rid of all the creditors and the worry? It might be worth them talking to the CAB

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By happy
10th May 2012 14:00

Not an option

bernard michael wrote:

Has your client considered Bankruptcy to get rid of all the creditors and the worry? It might be worth them talking to the CAB

Yes he did and its not an option for him. 



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10th May 2012 14:02

If HMRC are going down that route...

bernard michael wrote:

Has your client considered Bankruptcy to get rid of all the creditors and the worry? It might be worth them talking to the CAB

If HMRC are going down that route already and there genuinely is no room for movement (possibly other creditors), it might actually be worth considering such options. Don't just look at bankruptcy, also look at things like IVA's.

Equally, if HMRC are considering the bankruptcy route and this is justified based upon other debts, income, outgoings, etc. then it might even be worthwhile pushing them into it so that they pick up the costs.

I am not advocating this route, but it is worth considering.

It would be just punishment for their unreasonable attitude.

[EDIT - Apologies, posted this at the same time as your response above. Please ignore]

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