Are HMRC debts time-barred?

Debt from 2001

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I've had an enquiry from a one-off client. 

Her father had a HMRC debt many years ago and in 2001 HMRC tried to put a charge on his property, but couldn't as it wasn't on the Land Registry, so the debt remained unpaid.

Her mother later inherited a property, which they both moved into and sold the original property.

Her mother has now passed away but with no will. The client is concerned if the property transfers to her father HMRC can come after him again.

My thoughts are that HMRC can't as it is time-barred but would welcome any thoughts.

 

Replies (42)

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By I'msorryIhaven'taclue
02nd Jul 2021 11:43

See https://www.stepchange.org/debt-info/can-i-write-off-debt/statute-barred...

Income tax, VAT and capital gains tax debts to HM Revenue & Customs don’t have a limitation period. This means HMRC can take you to court for these debts even if they date back many years

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Replying to Insolvency Practitioner:
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By I'msorryIhaven'taclue
02nd Jul 2021 11:45

Ahha, the power of Superfast 2 broadband ;-)

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Replying to I'msorryIhaven'taclue:
Lisa Thomas
By Lisa Thomas - Insolvency Practitioner
02nd Jul 2021 14:15

What a coincidence we sent the same thing at the same time!

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Replying to Insolvency Practitioner:
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By I'msorryIhaven'taclue
02nd Jul 2021 14:28

Same time, same place, same channel ;-)

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By User deleted
02nd Jul 2021 11:51

Thanks for the answers!

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Replying to User deleted:
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By I'msorryIhaven'taclue
02nd Jul 2021 12:13

Suppose the mother had left a will, naming her husband as the sole beneficiary of her estate, then it would have been be within the father's power to have the will varied (by a solicitor) to the effect that daughter becomes the beneficiary and inherits the house.

So how might that work with the mother dying intestate? Is father still able to legally vary the "inheritance" so that daughter inherits the house instead of him?
(Answer: I don't know; but you'd expect there to be some parallel form of variation for cases where there is no will. One for a solicitor to answer, I guess).

Of course, you'd need to evaluate the IHT cost of daughter inheriting sooner, from late mother, rather than later from Father when eventually he dies. Always assuming of course that father is prepared to risk having his daughter own his bricks and mortar.

I'm not sure it would be wise to put a solicitor in a difficult position by giving him the full rhyme and reason underpinning such a proposal. In the absence of any detail, I'm guessing a solicitor might be inclined to assume such a change to be a simple family succession manoeuvre.

Good hunting!

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By User deleted
02nd Jul 2021 12:26

Many thanks

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Replying to I'msorryIhaven'taclue:
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By Caber Feidh
09th Jul 2021 23:17

If you do ask a solicitor then you would be wise to ensure that the solicitor is a member of STEP (Society of Trust and Estate Practitioners). Visit https://www.step.org

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By More unearned luck
02nd Jul 2021 13:21

Dad had the funds to pay his debt to HMRC when he sold this house. He should have paid then. He should certainly pay now. The way to stop HMRC 'coming after him again' is for him to approach them and settle up.

Why should you help people evade there tax obligations?

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Replying to More unearned luck:
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By I'msorryIhaven'taclue
02nd Jul 2021 13:58

Do you think there's an obligation to report:

(i) if he inherits the house? (probably); or
(ii) if house passes directly to daughter? (Lord knows!)

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By Leywood
02nd Jul 2021 14:08

Country in a mess.

Dad owed.

Dad had assets.

Just get the family to pay.

Moral obligation.

Who pays for hospitals and the rest.

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Replying to Leywood:
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By I'msorryIhaven'taclue
02nd Jul 2021 14:37

Or are father and daughter simply arranging their affairs so as to minimise their tax exposure?

Is there a moral obligation upon a taxpayer to pay tax? I can see there may be a legal obligation to do so, if Dad were to acquire the house.

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Replying to I'msorryIhaven'taclue:
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By More unearned luck
02nd Jul 2021 15:53

"Is there a moral obligation to pay tax?". Yes certainly. Society would collapse if people didn't pay their share or , at least, moral and honest people would have to shoulder an even bigger burden than they currently do. There is no morality in tax itself. A top rate of tax of 98% is just as moral as a 2% top rate. But it's both immoral and a crime to submit returns that fraudulently understate liability or not to make yourself known to HMRC in the first place. ~It's immoral delibartely not to pay tax when you have the funds to do.

Having said that Dad should explore ESC A19, but he knows he owes the money so I don't think we will qualify.

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Replying to More unearned luck:
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By I'msorryIhaven'taclue
02nd Jul 2021 17:06

Well Dad doesn't have the funds with which to pay tax, at least not yet until probate is done and dusted.

And neither will he ever have the funds if he is able to elect to vary his wife's legacy in favour of his daughter.

Would employing such tactics constitute avoidance, or amount to evasion?

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Replying to I'msorryIhaven'taclue:
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By Hugo Fair
02nd Jul 2021 17:17

You may have just invented 'avasion': an action that in itself avoids a liability for tax, but which results in evasion of an existing (different) liability?

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By I'msorryIhaven'taclue
02nd Jul 2021 17:21

Ha! Just playin' Devil's advocate.

I managed an entire chapter of Mein Kampf this morning, and it's left me in rabble-rousing mood. So I say no, no, and no again to such bourgeois idealism!

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Replying to I'msorryIhaven'taclue:
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By Hugo Fair
02nd Jul 2021 17:45

Whereas I've been exploring an alternative history by reading a book that I picked up whilst walking back from the dentist ... well I didn't just pick it up, I paid a whole £1 for it.
Published in 1960, it's called "The Tax Gatherers" and its fly-leaf declares:
"Along with sport, sex and the weather, income tax is a subject guaranteed to loosen most Englishmen's tongues."
I suspect the author is not excluding the Scots or Welsh (who were apparently still English in those days) ... so, treading carefully, I will seek enlightenment therein.

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By I'msorryIhaven'taclue
03rd Jul 2021 11:37

What a splendid advertisement for Poundland!

Sport, sex and the weather... and income tax? I might have believed cars; or holidays, or rationing, or winklepickers. But who would have thought income tax could ever turn an Englishman garrulous? (present company excepted, of course).

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Replying to I'msorryIhaven'taclue:
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By More unearned luck
02nd Jul 2021 18:24

What's Dad done with with the proceeds from selling his house (the one HMRC couldn't attach a charge)?

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Replying to I'msorryIhaven'taclue:
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By Leywood
03rd Jul 2021 10:41

I believe there is a moral obligation to pay the debts you have racked up, to anyone. You incurred the debt /you spent someone else's money, so pay it back.

He sold the house HMRC wanted to take a charge over. What happened to those funds? He then benefitted from living in the second property, yet still made no effort to pay back what was due.

OK, reducve further exposure if thats what they want, but pay the debt back as well. I wouldnt touch someone with such a moral deficit.

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Replying to Leywood:
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By I'msorryIhaven'taclue
03rd Jul 2021 12:15

I imagine the proceeds of sale from the first house will have ended up in the wife's coffers, given father's reluctance to appear wealthy.

But I must say I don't see father's income tax debt as being all that different to:

(i) a corporation tax debt, from which which directors regularly walk away Scot-free;
(ii) an unsecured creditor of a person who files for bankruptcy or makes a composition arrangement;
(iii) an unpaid student-tuition-fees loan; or
(iv) a business failing to pay its premises rent to its landlord (and there's a lot of that about!)

Yours truly always tries not to be judgemental on such matters. Regardless of whether I get picked for the blue team or the red team, I try to play the best hand I can. Sport, debating, cow-tipping - you just have to play the hand you are dealt for the side that fate chooses for you.

So if this were real for us, and we were drawn on opposing sides over the matter, I can see you would hold, on this particular occasion, all of the moral high ground cards. I might be tempted to counter with the tongue-loosening argument that a frail and elderly widower is being forced out of his home and onto a park bench by rapacious tax gatherers. Just to argue my side's case objectively, you understand; doesn't necessarily mean it accords with my personal view.

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Replying to I'msorryIhaven'taclue:
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By meadowsaw227
09th Jul 2021 10:55

Can you minimise yourself to tax exposure on an amount already owed to HMRC ? .

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By Paul Crowley
02nd Jul 2021 14:58

Problem is that these debts can rest unpersued.
An employee became a subbie
Got his first refund
HMRC snaffled the next two refunds to pay a liability from the past

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By Tax Dragon
02nd Jul 2021 20:41

A one-off you say? My thought is that might be one too many.

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By Hugo Fair
02nd Jul 2021 21:21

Oh I don't know ... someone's got to pick up the clients that Sanjay won't touch.

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Replying to Hugo Fair:
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By Tax Dragon
03rd Jul 2021 07:59

Good point humorously made. But it's no laughing matter if, at the end of your free meeting with a potential, a) you are left wondering whether you need to make a SAR and b) if not, you then decide to take on the one-off assignment before you know whether you have the knowledge and capability to complete it. Accountants can fail take-on questions just as much as potentials. On this occasion it sounds as if both potential and accountant may fail.

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Replying to Tax Dragon:
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By Leywood
03rd Jul 2021 10:46

You are probably banging your head on a wall with this one.

All the Accountants who should submit SARs and dont, all who shouldnt take on clients because they dont have the capability but carry on regardless are not the ones who read regular posts on here. Those sort mostly do not even do a search for prior answers.

Not that Im saying you should stop trying.

Sanjay - do you read other people's questions, out of interest?

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Replying to Leywood:
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By I'msorryIhaven'taclue
03rd Jul 2021 12:28

Why's everyone gaslighting Sanjay?

He's not in on this thread (so where's the fun in doing it here!)

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Replying to I'msorryIhaven'taclue:
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By Hugo Fair
03rd Jul 2021 13:34

Actually I've got a lot of respect for Sanjay's commitment and dedication ... I just worry from time to time that he'll take on one too many potentially 'lost causes' - hence referencing him in response to TD's post.

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Replying to I'msorryIhaven'taclue:
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By Tax Dragon
03rd Jul 2021 16:04

Sanjay? I was thinking of Adam. Because this client this time is so expressly for a one-off assignment. It's bad enough all the other new-client-don't-what-I'm-doing questions we see. When it's for a one-off, somehow the biscuit being taken seems just that little bit bigger. (Also, I'm not sure it's even tax or accountancy services the client needs. But that's more about chocolate-coating on the biscuit, rather than the size of the biscuit itself. Hm. I think this metaphor has run dry. That's what's goin' on. Nothing's fine I'm torn.)

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By Hugo Fair
03rd Jul 2021 16:26

Yeah, I got (and agreed with) your comment regarding Adam's situation.
I was merely responding to I'msorry's suggestion that my humour could be interpreted as gaslighting Sanjay!

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Replying to Hugo Fair:
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By I'msorryIhaven'taclue
05th Jul 2021 12:12

No such suggestion! Yours truly was replying to Leywood's comment, Hugo.

Mine too was an attempt at levity, though evidently misplaced. Just tryin' to make light of matters so that Sanjay doesn't think anyone was alluding to him particularly with other of the comments. Way to go, Sanjay!

However, after re-reading the thread, I've decided to switch from the blue to the red team: I do so hope Adam hasn't got the solicitor to vary the beneficiaries, and am very sorry to have suggested such an immoral course of action. Evidently I haven't a clue how to operate a moral compass ;-)

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Replying to I'msorryIhaven'taclue:
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By Tax Dragon
05th Jul 2021 12:36

Hugo and I were both so full of ourselves we thought you must have been including us in your

I'msorryIhaven'taclue wrote:

everyone

(And in my case I hadn't even mentioned or commented on Sanjay! Puffed up or what, this magic dragon!)

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Replying to Tax Dragon:
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By I'msorryIhaven'taclue
05th Jul 2021 12:48

Ha ha! And I was shocked to learn recently that when Peter, Paul and Mary were singin' us kiddies Puff, The Magic Dragon they were in fact singin' about weed.

And, having my newly reconditioned moral compass fully operational this morning, I feel quite outraged by that. Grrr!

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By bernard michael
05th Jul 2021 10:16

Don't forget the interest and possibly penalties that will be added

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By User deleted
05th Jul 2021 12:33

I wasn’t advising the person enquiring either way on how to plan their affairs, I don’t like tax avoidance either. I was purely answering their enquiry as to whether or not hmrc debt is time barred

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By Tax Dragon
05th Jul 2021 12:43

Oh.

It's not.

Hope your fee for telling them that covered your admin.

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By I'msorryIhaven'taclue
05th Jul 2021 12:50

Adam, you should write off any fee and give them Sanjay's number ;-)

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Donald MacKenzie
By Donald MacKenzie
09th Jul 2021 12:36

The client's father owed a debt. He still does even - if HMRC failed to get a charge on the property. He should have paid it when he came into funds on selling their then property.

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By Nebs
09th Jul 2021 14:24

There should be a central register for people like this, that can be checked prior to engaging a new client.

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By I'msorryIhaven'taclue
10th Jul 2021 11:30

I wonder whether Experian and Equifax and the like keep a record of such permanent debts.

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