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I am trying to help my brother in law who has got himself in a pickle any advice would be very much appreciated

 

He has a tax debt and it is getting bigger and bigger. Inland Revenue got a judgment against him in Jul 06 for £10,500. This was because he did not fill in his tax returns for self employment. Because of his bankruptcy it was reduced to £6084.00 in March 08. Due to severe financial difficulties he could only afford £15 a month. Inland Revenue wanted to put charge on his house. Execution on the judgment was stayed as long as he continued to pay £15 a month, which he has been doing.

The problem is that the order does not state that interest is allowed and his debt is rising higher and higher. Inland Revenue have asked for interest to added in their particulars of claim, but the problem is he will never be free of this debt, how can he stop interest being charged?

 

Could someone please advise him on how to stop this interest being charged or is there nothing he can do

Edited by sweetnsour
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Quite honestly I can't see that the interest makes a blind bit of difference, he's never going to pay it of at £15 a month. The situation as it is helps no one so why not write and tell them that. Put the ball in their court and explain this in writing and ask what suggestions they have to help you clear this debt. You may even get a F&F.

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Some questions: Did the judgement/court order say interest could be charged ? (what you've posted is the claim). Is their any equity in his property and was this amount taken into consideration as part of BR.

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Thanks mozzat6,

 

his tax debt was not included in his bankruptcy. The Inland revenue chased him for his tax debt after he was discharged from bankruptcy. The claim from posted in thread one is from the inland revenue and they have asked the court to allow them to get interest on top of his debt.

 

All it says in his judgment/court order is that:

 

IT IS ORDERED THAT

 

Save that the claimant may apply for a Charging Order

 

Execution on the Judgment is stayed, for so long as the Defendant pays the claimant the sum of £15.00 per month the first payment to be made on or before 31st March 08, or until further Order.

 

That's all it says

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his tax debt was not included in his bankruptcy. The Inland revenue chased him for his tax debt after he was discharged from bankruptcy. The claim from posted in thread one is from the inland revenue and they have asked the court to allow them to get interest on top of his debt.

 

 

When did he go BR?

Consumer Health Forums - where you can discuss any health or relationship matters.

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The charging order was surely the result of a second court application? HMRC would have needed the original judgment prior to applying for a CO. Does he have or can he get a copy of the original judgment?

 

Was he a subcontractor in the Construction Industry?

 

Did he file any returns after being taken to Court the (04 year is still in time).

You have the right to food money.

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I know that he has filed in only last years returns and nothing before that. HMRC did not manage to get a charging order because the judge said that if he pays £15 a month it would be ok, and the charging order is stayed until he defaults.

 

He was self employed delivery driver. TL when you say original judgment would you mean the court order where he has to pay £15 a mth or is it something else, he has a copy of the original judgment shall I post it up?

 

Hi giz he was discharged from bankruptcy in 2003

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He was self employed delivery driver. TL when you say original judgment would you mean the court order where he has to pay £15 a mth or is it something else, he has a copy of the original judgment shall I post it up?

 

HMRC would have obtained a judgment against him and then when no/insufficient payments were forthcoming they would go back to Court to attempt and obtain a charging order.

Looking at the dates of the missing tax returns I spot 1999 so HMRC would have had to make sure they obtained an order whilst this year was still collectable (tax years go out of date 5 years after the first 31st january after the year to which it relates). They would have had to bring proceedings for the year 1998-1999 by 31st January 2006 to be within time so I suggest the original claim against your B-I-L was made at or around this time. A 2008 order could not be made on a 1999 debt unless an earlier order was in place. It's the terms of that judgment we need to see but from bitter experience I can tell you that a Judge wet's his stockings when he gets HMRC in his Court as they claim Crown prejudice under TMA 1970 and CPR so normally whatever is on the certificate of debt is to be taken as legally owed. The interest should not IMO have been added after judgment but it depends on the judge and what was originally ordered.

 

I only ask about construction as I have found a little loophole which HMRC are currently bending over backwards to stop me getting into Court.:-|

224 days in breach of my DPA 1998 SAR to date, they can't disclose because it proves my case. ICO and MP and Parliamentary Ombudsman on the case, Court forewarned of HMRC frustrating proceedings.:roll:

 

Anyway back to topic if your B-I-L would have a loss or no tax to pay for 2003-2004 it is still okay for him to submit that tax return, which would reduce the debt, obviously if it would show the amount owed as greater there's no benefit for him.

 

Since the debt has been drastically reduced I wonder if a variation order might be made as HMRC are wrongly deducting interest on the greater sum (£10k+) when it should now be on the lesser sum a reduction of approx 40%.

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You have the right to food money.

If you don't mind a little investigation, humiliation, and if you cross your fingers rehabilitation..............

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Thank you for your very well and detailed reply TLD. My BIL has not filed his tax return for years 03,04,05,06,07, please don't ask me why as I know he is quite a bit dippy when it came to filling in forms, but I offered to help him out if he done my garden for me :D

 

Should I ask him to fill in all the years he didn't fill in tax returns or just they year you said? Even though the debt has been drastically reduced at the moment it stands at £7,100. HMRC are adding about £45 a month interest.

When he went to court in March 08 the judge was not happy at all with HMRC because my BIL had been trying for over a year to get them to agree a payment plan and they always refused. He initially was offering to pay £100 a month and the judge said that because they did not agree to accept payments he was letting my BIL pay £15 a mth. At that time my BIL was very happy with the judge'd decision but it bit him in the bum when he got statement from HMRC and his debt is rising so much, at this rate he will never be able to reduce it, if you get what I mean.

 

What we need to do is for the interest to be stopped

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The original judgment was made on the July 06 for £10,500.00

This is what it says

 

Judgment for Claimant (in default)

 

To the Defendant

 

You have not replied to the claim form

It is therefore ordered that you must pay the claimant £10,500.00 for debt (and interest to date of judgment and £250 for costs)

 

You must pay the claimant a total of £10,750.00 forthwith

 

that's all it says

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Thank you for your very well and detailed reply TLD. My BIL has not filed his tax return for years 03,04,05,06,07, please don't ask me why as I know he is quite a bit dippy when it came to filling in forms, but I offered to help him out if he done my garden for me :D

 

Should I ask him to fill in all the years he didn't fill in tax returns or just they year you said? Even though the debt has been drastically reduced at the moment it stands at £7,100. HMRC are adding about £45 a month interest.

When he went to court in March 08 the judge was not happy at all with HMRC because my BIL had been trying for over a year to get them to agree a payment plan and they always refused. He initially was offering to pay £100 a month and the judge said that because they did not agree to accept payments he was letting my BIL pay £15 a mth. At that time my BIL was very happy with the judge'd decision but it bit him in the bum when he got statement from HMRC and his debt is rising so much, at this rate he will never be able to reduce it, if you get what I mean.

 

What we need to do is for the interest to be stopped

 

I'm sorry but I have some bad news for your brother.

You say above

'My BIL has not filed his tax return for years 03,04,05,06,07,

well add to that the years 08 and 09 which are now due take off what he's already been taken to Court for and it leaves him with the following:

tax years 05,06,07,08 now all overdue.

Tax year 09 due as of 6th April 2009 though some months grace still available yet.

 

The massive worry is that now HMRC have litigated for enforcement they will not be so slow to act the next time.(First time they normally wait right until the deadline) I can see by about christmas this year your BIL receiving another summons just like before citing 05,06,07 and 08 and going by the figures from the original determination he's likely to get another bill in the region of £10,000 from them before the tax year is out.

I base this on a nett taxable assesment of approx £1200 pa, surcharges, penalties (I express surprise only one penalty attached to original claim it could and should have been2X £100 for each year they can then apply tothe commisioners for daily penalties of up to £60 per day in cases of persistent negligence (like your BIL and myself:mad:)).

So 4X£1200+ 8X£100 + 2Xsurcharges (approx £700) + 4 X £250 class 4 NIC's + Daily penalties probably capped at £60 per day up to £1800 maximum and then if they really wanted to screw him 5 years class 2 NIC's though these do not count as tax for the purpose of collection. Add the interest to that pile and he is in a lot of trouble again.

 

As far as HMRC are concerned he's owed them roughly £1400 per year for the last 10 years now without paying and they will not treat him kindly at all.

 

You sound like you have your head screwed on sweetnsour you really do have to not only help him deal with whats gone before but also get him prepared for what inevitably will come. If you are able to get him to sit down with you and go through all those missing returns for a start that would be immense help to him. If they do not get filed they will without doubt start applying daily penalties and surcharges, you need to stop this happening or it will spiral out of control by £1000's.

 

If they get two CCJ's on him for 10 years income tax and he's struggling to even pay the interest on the first one then they will hand it to the distraint team and that's not nice and might lead not only to a charging order but another bankruptcy, this time with an 'order of sale' on his house if he has equity.

 

As your brother has an annual nett liability to tax (unlike me who was always overtaxed at source) then HMRC will by now classify him as a tax evader and they are not particularly tolerant of them, especially when they've already been hauled into Court in the past.

 

Sorry for the bad news but you need to be aware if your BIL is to be helped in any way. You/he needs to take some action fairly quickly to stop the next wave of penalties, interest and litigation from HMRC.

 

I will pm you over a little snippet of information I have made use of personally several times in the past concerning those outstanding tax returns it came directly from HMRC's Head of Debt Management and Banking Legal team and has been confirmed (inadvertantly ;))by a QC who does HMRC work down at Somerset House.

You have the right to food money.

If you don't mind a little investigation, humiliation, and if you cross your fingers rehabilitation..............

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The original judgment was made on the July 06 for £10,500.00

This is what it says

 

Judgment for Claimant (in default)

 

To the Defendant

 

You have not replied to the claim form

It is therefore ordered that you must pay the claimant £10,500.00 for debt (and interest to date of judgment and £250 for costs)

 

You must pay the claimant a total of £10,750.00 forthwith

 

that's all it says

 

 

and interest to date of judgment

 

Is the important bit.

he should not still be getting charged interest after this judgment IMO.

You have the right to food money.

If you don't mind a little investigation, humiliation, and if you cross your fingers rehabilitation..............

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Thanks TLD, that's very good advice there but I was under the impression that the judgment that was made against him was for all the years he did not fill in his tax returns. He has filled in this years tax return already and sent it off and HMRC have confirmed this. So why we he he be taxed another great lump at the end of the year? As I said he is paying £15 each month according to the court order.

If he fills in his tax returns now for the missing years would that reduce his debt according to the court order?

You have been very good with your advice so far, and I can understand why people get angry with tax evaders, but he lost his wife and two children in a car accident years ago and just buried himself in to work and in the sand. I am trying my best to help him but have limited knowledge on what his best options.

Should he fill in his tax returns for the missing years or any other advice you suggest that would help please?

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The Court judgment covered years 1999-2004 inclusive. I didn't spot earlier that he'd filed 2008 already but the reason he faces another action if he's not careful is that tax years 05,06 and 07 have not been submitted (and they weren't included in the original action).

 

Even if you just get 2004-2005 submitted that will buy him some time but at the moment they just look on him as a serial offender. (Believe me I've been there and had the **** treatment from them myself).

 

Sorry to hear about his losses I would be the Worlds worst at coping with something like that, strangely my own tax problems stemmed from a similar incident involving my employers family in 1999 and no matter the problems he caused me (and they have been immense and still are) I just don't have it in my heart to despise him for his behaviour at the time so I for one certainly would never judge another in these matters and I'm sure none of the other Caggers would either.

 

The only year covered under the judgment for which a return might still be submitted is 2003-2004.

That is still in time and could actually supercede the determination technically. If the tax return shows a smaller liability than the determination for that year it would be in his interests to submit it.

Don't forget that a lesser amount affects the lump sum, the surcharges (which are charged as a percentage of the lump sum) and the interest.

£500 less on the return could equate to £800 off the amount claimed but you might need a commisioners hearing (not very daunting) and to push HMRC to amend the judgment which they would have to do.

Obviously if the tax return shows a greater amount due there's no benefit in submitting it and no further punishment for failing to do so.

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You have the right to food money.

If you don't mind a little investigation, humiliation, and if you cross your fingers rehabilitation..............

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Thanks TLD, you are one top guy on here, Like I said before is it not better if I am to help him that he fills in all his tax returns together, save me going through it again with him.

After he has filled them and returned them then would it not be wise to have a commissioners hearing and get the judgment amended?

 

One more thing may not be that interesting is that my BIL checked his credit file last week and there is no mention of any ccj entered against his name either

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Like I said before is it not better if I am to help him that he fills in all his tax returns together, save me going through it again with him.

 

If you can then get the years 2004-2005, 2005-2006, 2006-2007 filled in and do the year 2003-2004 too.

 

I think then you'll have to play it on the fly as your actions really should depend on the bottom line of those returns.

 

Remember gross income-expenses-personal allowance= taxable income.

 

until 2009 the first £2k ish was chargeable at 10% the rest at approx 20% (give or take)

 

The killer is that you then have to take Class 4 NIC's from taxable income at approx 8%

Which really means that taxable income X 30% is appproximately the amount due to HMRC for each year. Call that (£x)

Now in the years that appear on the original claim HMRC determine circa £1200 pa income tax and £300 pa Class 4.

 

So if £x >£1500 for year 03-04 don't submit it or his liability will go up.

 

Remember that on submission the figure of £x for any other of the years 05,06,07 will become payable so if it's £1500 pa he will only give himself an extra liability of £4500 and save HMRC the trouble of doing a determination for each year.

Might be better if this is the case to do them all but only submit 2004-2005 which will increase his liability by £x (small problem) but avert any Court enforcement action for these years (big problem).

 

Of course if £x is very small or even -£x if your BIL had a lot of expenses one year this would reduce his liability.

 

After he has filled them and returned them then would it not be wise to have a commissioners hearing and get the judgment amended?

 

 

"2004 is still live on the system any earlier returns will not be processed you just get a one sentence letter saying thanks but nothing we can do with them.

Upon submission the 2004 return should automatically supercede the determination for that year as it's still live. The computer should make the adjustments automatically so it shouldn't need a commisioners hearing. (Unless they mess up). You will need to get them to amend the judgment though they are not very good at doing this without prompting.

 

 

One more thing may not be that interesting is that my BIL checked his credit file last week and there is no mention of any ccj entered against his name either

 

Some only show with experian not equifax and some only with equifax.

 

I think you need to contact HMRC and ask for a statement as the judgment does not allow for interest to be added after the judgment.

 

Has he dealt with his local office or did it go to Shipley?

 

(Thanks for your kind words).

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You have the right to food money.

If you don't mind a little investigation, humiliation, and if you cross your fingers rehabilitation..............

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Yes he did deal with his local office and those plonkers made a right mess of it, he fully co-operated with them and gave them all the details they wanted, he also wanted to pay £100 a month and that was a few years ago. If they had agreed then non of this mess would have happened.

 

Your advice is very reassuring and I will ask him to fill out the returns that you have advised. Should he contact HMRC about the statement and tell them that the judgment does not allow for interest to be added. Should he do this before of after sending his tax returns?

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I'm not surprised they made a mess of it. For the first few years I honestly belived HMRC were being malicious in their treatment of me but after a while it became patently obvious that they are just utterly incompetent.

 

And I would get in contact for a statement asap. The only law they know is TMA 1970 so they will just assume that the interest is being added under this. The sooner you put them straight the better, send them a copy of the judgment as they're bound to have lost their copy.

You have the right to food money.

If you don't mind a little investigation, humiliation, and if you cross your fingers rehabilitation..............

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Will do as advised promptly. I have just downloaded the tax returns for all BIL's missing years, ( he owes me a lot of ink).

 

I will try and help him fill them in this evening. Who do we write to ask about the copy of judgment, the court or HMRC?

 

thanks in advance again! :)

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You can get it from the Court but where did you get the info in post 12 from, I thought that would be from the original judgment?

 

If you need any sums done/checked let me know. Would be very useful if you knew exactly what liability lies where prior to submitting them to HMRC.

You have the right to food money.

If you don't mind a little investigation, humiliation, and if you cross your fingers rehabilitation..............

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