Yeah I had pretty much come to that conclusion debtinfo. Was just really hoping that there may be some wiggle room as it seems crazy to me that they have my financial info on their screen and can see how little I am earning and how I have stuck to our agreement but they are going to take it to the endgame as a result of a small error on their part rather than let me include the new amount. I am going to ring my bank in the morning and see if they are feeling very generous in their loan approval department as someone has suggested to me this evening that maybe HMRC can see that I am more loan worthy than I think I am but after that I will be out of options. Cheers

Thanks for the advice so far. Sadly I was a sole trader. I really don't have a problem with paying it so long as they can do it over a couple of years. It just seems crazy to me that they would force me down the bankrupcy route over a few thousand. Does anyone know if they are likely to be bluffing or should I just let it run it's course? Cheers

Hi, Any advice would be appreciated. I had a small business that was never profitable. I had young kids and incredibly stupidly buried my head in the sand about tax returns as (in my crazy mindset) I just needed to hold off for a little while longer and money would start coming in. It never did. I was taken ill in April 2009 and had to give up the battle but it took me until August 2010 to develop some maturity and start dealing with HMRC. I submitted the 3 relevant tax returns on the same day and rang back every week hoping to reach an agreement with them to pay what I owed. In October 2010 I spoke to an advisor who said that everything had been processed and due to my circumstances they would let me make an agreement under time to pay. By this point I was getting better healthwise and working part time PAYE. I made an agreement to pay the c.£6k debt at £256 per month by direct debit and breathed a sigh of relief. This was a lot more than I could afford on £10k income a year but I wanted to pay the debt. I am better still healthwise now and working more hours to make ends meet. I have paid it by direct debit since October with no missed payments. My partner is on £14k a year if it is relevant for advice purposes. I received a letter from HMRC last week saying that our agreement was that I wouldn't create any new debts to them (it was) and that a new debt had arisen of £1350 thus invalidating our agreement if I didn't pay it in full immediately. This was the first I had heard of it and rang them straight away. It turned out that they hadn't captured the smallest of the debts on their system at the time of the agreement and with late fees it was £1350. I have tried to argue that this was their mistake and that I should be allowed to include it in the payment schedule without joy. I tried to demonstrate last week that it wasn't in my interest or theirs to make a partial arrangement that didn't include the full debt and that I had no knowledge of this so could we please alter the payments up by £60 per month so that the full amount was paid off in the same period but they were intransigent. They wanted full payment of the £1350 or the agreement would be cancelled. I asked for them to give me the weekend to try and find the money and they agreed so rang them back this morning. The man I spoke to this morning was not at all helpful and said he would not negotiate the payment plan. He said the £1350 had to be paid and had I tried to take out a loan to pay it? I said that I had not as I didn't think I would be able to get one on my income but that I would try and then ring back this afternoon. I moved every bit of money i could to my current account and begged from my family and rang back to offer to pay half immediately and half on the first of July but the lady that I spoke to (very nice and as helpful as she could be this time) said that I could pay it if I wanted but that the man I spoke to previously had already cancelled the agreement and asked for a letter to be sent out to this effect and that the full amount was now payable (c.£6.5k including the new debt). She answered as many questions as she could but the gist was that they are immediately pursuing me for the full amount and that no agreement to pay in instalments will now be possible as it is against their rules to change the decision of an officer. For what it is worth (and I know I couldn't prove it- he never said to me that he had made this decision and he said it would be ok to try and find the money and ring back so long as it was today). I have tried so hard to rectify my mistakes and never wanted to make the debt go away and go bankrupt but I feel I am left with no choice. The lady told me to wait for the letter cancelling everything and demanding full payment and then take it from there but she suggested that it would not be negotiable. I am not in arrears with anything else and the only other debt I have is a credit card close to it's limit on £3k. I am sorry for the essay and to those who have made it this far could you give me any advice from experience whether this is sortable or if I should just give up and tell them to declare me bankrupt. I wanted to pay the debt but I suspect I am being very stupid in trying. When I fell ill we gave up what bits we had and ended up in a council house and driving a £400 car. I only have the second hand furniture in the house and the car as assets and suspect I am being stupid even fighting to pay it. My concern is that someone is going to turn up at the door and take the kids beds and cancel my partner's bank account if I go for bankrupcy. I don't much care if it causes me big problems but I want to insulate them as much as possible as I was trying to do by paying things. I am morally obligated to pay the tax that I owe but if they are going to pursue me anyway and not accept a reasonable schedule and declare me bankrupt I want to go for bankrupcy as fast as possible so that I can try and move on. Thanks in advance