Where Taxpayers and Advisers Meet

Debt collection

Brightonian
Posts: 77
Joined: Wed Aug 06, 2008 3:31 pm

Debt collection

Postby Brightonian » Fri Mar 02, 2018 10:46 am

My client is having financial problems and was unable to pay the income tax due on 31 January. The amount is £17,000. I suggested that he call HMRC himself before 28 February in hope that he could make a 'time to pay' arrangement and avoid
a 5% penalty but they told him that it had already been passed to a debt collection agency and he would have to talk to them. This seems a bit sudden to me - I do not believe that he received any warning of this move. He says they also told him that the debt was accruing interest at up to 3% a day. Can that be right? I suggested it was per annum but he is sure they said per day. I have tried to call HMRC today but the bad weather has caused more delays than usual on their helplines.
Has anyone else encountered this situation?

robbob
Posts: 2545
Joined: Wed Aug 06, 2008 4:01 pm

Re: Debt collection

Postby robbob » Fri Mar 02, 2018 11:04 am

I think hmrc are reasonably consistent, the due date for payment of tax is 31/1/2018 that's when it should have been paid. They always advise ring up before it's late (with total on the system)and a sensible conversation can be had without the complications of having to decide why someone has decided to ignore/miss the original deadline.
He says they also told him that the debt was accruing interest at up to 3% a day.
Yeah that's nonsense - if he rings them back they will confirm if he was told that they were telling porkies.

It's hard pass any useful comment as to whether hmrc are taking to hard a line without the relevant discussion, if its one of the normal disorganised brigade they should get short shrift from hmrc, these bods cost a fortune to service with the hassle they cause before they ever pay anything. However if there is a genuine reason why the funds are not there i would expect top quality help from hmrc - although by acting like one of the disorganised brigade they will have hmrc thinking they probably are one of those type.

All IMHO - perhaps as ever i am being a little judgemental again, not a good trait of mine :(

Brightonian
Posts: 77
Joined: Wed Aug 06, 2008 3:31 pm

Re: Debt collection

Postby Brightonian » Fri Mar 02, 2018 12:11 pm

Thanks, robbob. That's very helpful. It's the interest issue that really upset him. He is disorganised but he has always paid on time before. There's been some unfortunate family circumstances which seem to have derailed him. It didn't help that he sent me his tax return information on the afternoon of 31 January - only the third time that's happened to me since self assessment started!

AdamS93
Posts: 75
Joined: Tue Sep 26, 2017 6:28 pm

Re: Debt collection

Postby AdamS93 » Fri Mar 02, 2018 12:20 pm

With regards to interest, it will be charged daily at an annual rate of 3% - 3% a day would give an annual interest rate of almost 1000% :lol:

If he is struggling to pay I take it his income has significantly dropped? If so you can look at reducing the payments on account which will helpfully reduce the burden.

SteLacca
Posts: 349
Joined: Fri Aug 07, 2015 2:17 pm

Re: Debt collection

Postby SteLacca » Tue Mar 13, 2018 4:21 pm

At the current rates, interest on £17k accrues at around £1.40 per day, which even at today, is peanuts compared with the tax debt. Depending on the family circumstances, is there a "reasonable excuse" appeal against the late payment penalty available?

Brightonian
Posts: 77
Joined: Wed Aug 06, 2008 3:31 pm

Re: Debt collection

Postby Brightonian » Tue Mar 13, 2018 4:29 pm

Thank you all for your replies. There is indeed a hard luck story behind all this. The taxpayer's wife died in her Forties a few years ago and he has not been the same since. I think it may have affected his work, with the result that he has earned less than in the past. However, I began acting for him the year after his wife died, when he was facing penalties of £3,000 for a late return. HMRC cancelled the penalties when the circumstances were explained to them. I don't see them taking the same attitude again. It is very sad, though, that it has come to this. His savings are now depleted - he will use the last of them to pay a part of this bill.

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