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HMRC Outstanding debt, interest and charges

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Over 15 years ago I was self employed for three years, in the last year I earned £57k which created a tax liability.

I was hit by a car and broke my back two months before the tax return was due which wasn't submitted or paid.

 

It took 5 years to recover and in that time I earned nothing,

I sold everything I owned and moved in with my sister to survive.

I was also entitled to nothing from the state as I had a war pension of a few hundred a month

after serving in the military for 10 years, slightly confused what the tens of thousands I paid in tax and NI was for during that time, anyway.

 

Between 2008 and 2010, I was paying £250 a month back, until the crash came and I lost everything again,

I've not been able to pay anything since.

 

I have £2.5K left to pay and I will pay it, but I have a question reference the interest and charges which is nearly £17k.

 

HMRC have given me until June 1st to start paying again....

I can give them £10 per month once my debts are gone,

but I'll never be able to clear the interest and charges,

which I feel is unfair taking my genuine circumstances into account.

 

Any advice on how to approach this issue?

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I am no tax expert but i did find the following which may be helpful:

 

HMRC successfully argue late payment interest is statutory

31st August 2012

The Upper Tribunal allowed the appeal in the case of Revenue and Customs Commissioners v Gretton (FTC/82/2011 published on 20 August 2012), which concerned a decision by the First-tier Tribunal (FTT) not to apply late payment interest and penalties on the tax payable.

 

HMRC relied on the wording of Section 86 TMA 1970 that any income tax or capital gains tax ‘shall carry interest…from the relevant date until payment’ and that the word ‘shall’ indicated that there was no discretion as to whether interest is applied. There was also no right of appeal against the interest charged, which further supported this assertion. The Upper Tribunal accepted HMRC’s submissions and confirmed that the FTT had made a clear error of law.

 

On the penalty point, however, the Upper Tribunal did not overrule the FTT as Section 100 TMA 1970 allows the penalty to be set aside.

 

It is not surprising that HMRC challenged the decision of the FTT not to apply interest to the tax payable. HMRC will automatically charge interest under Section 86 when tax is paid late and the FTT decision would have opened the floodgates for taxpayers to appeal or at least challenge any interest so charged. The impact could have been far reaching, as Section 86 interest is charged where taxes are assessed and where HMRC reach a negotiated settlement following a compliance check (enquiry).

 

Advisers may be interested to know, however, that there is still scope to mitigate interest charges as the Debt Management and Banking Manual sets out the circumstances in which HMRC will consider giving up interest. The majority of the decisions in this area rest with the Interest Review Unit based in Cumbernauld and the manual sets out the general principles where interest may be conceded – such as where recovering the interest would seem to be penal, would ignore an error on HMRC’s part, or where it is simply implausible for the client to find the funds to pay the interest on top of the tax.


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I am not legally trained or qualified, any advice i offer is gleaned from experience and general knowledge, if you are still unsure after receiving advice please seek legal advice.

 

 

 

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thank you for that, some reading to be done I feel and I will come back once I've pulled something together in response

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Thank you for your help, after some research after your post, I sent a letter to HMRC, I've received nothing back, but my HMRC account has now changed.

 

All interest on the account has now been deleted and all charges suspended, I now owe nothing according to HMRC online.

 

I'm extremely grateful for your help and whoever was at HMRC who also helped me, the slate is now wiped clean.

 

thank you

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