tax debt rising

by **deepindebt** on Mon Apr 13, 2009 5:09 am

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?
http://i450.photobucket.com/albums/qq22 ... et/tax.jpg

Could someone please advise him on how to stop this interest being charged or is there nothing he can do
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by **superdad220** on Sun Apr 19, 2009 1:40 pm

He can't stop interest being added. You state the debt was reduced on bankruptcy to £6084 and there is a charge on his house. Eventually then it seems likely that a sale of the house will be forced and the debt cleared. It is strongly advised that he consult an insolvency practitioner to see if an IVA out of bankruptcy would be preferable as trustees in bankruptcy tend to be very expensive. Also he needs to make sure that his tax returns are up to date as this may further reduce the amount due.

by **deepindebt** on Mon Apr 20, 2009 9:58 am

Thanks superdad there is no charge on the house. What I wanted to know is that the court order only states that he should pay £15 a month thats all. So how can he stop interest being added

by **superdad220** on Mon Apr 20, 2009 11:39 am

You can't stop interest being added. Judgement debts carry interest and tax paid late does as well. If the client has been made bankrupt of much more concern should be the trustee in bankruptcies fees and the possible repossession of the house (usually after a year of bankruptcy). You urgently need to consult an insolvency practicitioner to see whether one or both of these direct consequences can be avoided. Ironically if the client has been made bankrupt and assets are less than liabilities and fees then interest becomes an irrelevance. Come back if you want further advice.

by **deepindebt** on Mon Apr 20, 2009 11:46 am

Thanks again superdad for your advice. My Brother in law was discharged from bankruptcy in 2003. This had nothing to do with HMRC. He was taken to court in March 05 for a tax debt of about £6k. The court allowed him to pay £15 a month.
Is it possible that he files his tax returns for the last six years now, and if he does can it make a difference to the overall debt that he owes bringing the outstanding balance down?

by **superdad220** on Mon Apr 20, 2009 5:39 pm

thanks that has clarfied the issue. if he was made bankrupt in 2003 was that before or after he purchased the house. If it was after then the house is owned by the trustee in bankruptcy. If before then he owns the house but it is still on the line if the revenue decide to enforce their debt. Where are you based - if local to me I might consider trying to help. My web is www.smithkennedy.co.uk if you want to get in touch. Happy to talk after Friday.

by **superdad220** on Mon Apr 20, 2009 5:56 pm

thanks that has clarfied the issue. if he was made bankrupt in 2003 was that before or after he purchased the house. If it was after then the house is owned by the trustee in bankruptcy. If before then he owns the house but it is still on the line if the revenue decide to enforce their debt. Where are you based - if local to me I might consider trying to help. My web is www.smithkennedy.co.uk if you want to get in touch. Happy to talk after Friday.

by **deepindebt** on Mon Apr 20, 2009 9:42 pm

Thanks superdad20, I have i will pass this info on to my BIL. What I would like to say is that he went to his local CAB and they said that he should submit his missing tax returns for the past 6yrs as soon as possible. Is this true, he would love to contact you discuss this only if there was hope that if he submitted his missing tax returns that it would bring down his total balance owing to Inland Revenue. If you can help that would be great.

by **superdad220** on Tue Apr 21, 2009 11:50 am

If your brother in law was made bankrupt in 2003 then the 2003/04 tax debt is covered by the bankruptcy and submission of the return becomes irrelevant to your brother in law unless he is trying to seek annullment of the bankruptcy. You have to send in the returns as either the tax will be lower (in which case your brother in law is better off) or the tax is higher and you are cheating the Inland Revenue (which is a criminal offence). This presupposes your brother in law does not plan to go bankrupt again.

by **deepindebt** on Wed Apr 22, 2009 8:00 am

Thanks superdad for your reply. I would like to contact you. If my BIL sends back his missing tax returns will that make a difference to his overall balance that he owes to HMRC, even after he has been taken to court by them?