HMRC debt recovery

[dangerouswhensober]

There is no equity in tax and no comfort to be derived from logic or natural justice.

My understanding is that if your gross salary is say £6,000 a month and your net £4,000 a month (I've not calculated the tax/NI as a bit busy), then HMRC under a sequestration order may take a maximum of £17k x £72/90/12 = £1.133k, leaving net take home £2.867k.

This is not an area in which I have any practical experience and hence I'm guessing at the result from first principles. I'll look in more detail over the weekend.

Once again - thanks very much Rob.

(That looks suspiciously like a net deduction. And a drop of almost 30% in take-home pay - easily enough to cause severe hardship in a lot of cases, I would have thought).

[ContrataxLtd]

There is no equity in tax and no comfort to be derived from logic or natural justice.

My understanding is that if your gross salary is say £6,000 a month and your net £4,000 a month (I've not calculated the tax/NI as a bit busy), then HMRC under a sequestration order may take a maximum of £17k x £72/90/12 = £1.133k, leaving net take home £2.867k.

This is not an area in which I have any practical experience and hence I'm guessing at the result from first principles. I'll look in more detail over the weekend.

Hi Rob

I've not fully digested all the changes as yet but the way I understand it is that HMRC can collect tax debts (not PAYE underpayments or Self Assessment balancing payments) of up to £17k pa if the primary source of income is £90k pa or more. There is a £3,000 maximum collection from incomes of less than £30k and a graduated scale between £30k & £90k, with an extra £2k collection permitted for every £10k more income. This is a banded scale though not a sliding scale as I understand it as follows:

Earnings p/a £          <30K     30-40K     40-50K     50-60K     60-70K     70-80K     80-90K     >90K
Coding limit £            3K         5K         7K         9K        11K        13K        15K      17K

Thus, in your example of £6k per month (£72k pa) HMRC could collect up to £13k per annum via the tax code. The net pay for £6k per month is £4,075 (assuming standard codes etc.) so HMRC could then take a further £1,083 out of this in additional tax per month to collect the outstanding tax debt.

This is due to come it to effect from April 2015.

This is all how I understand it on first reading and I will need to digest it further before completely understanding the changes but hopefully the above can be used to give an idea of how this will work in practice but if you think this applies to you (take anyone reading this) then please get professional advice as to exactly how it will apply give your specific situation.

Martin
Contratax Ltd

[Rob79]

Hi Rob

I've not fully digested all the changes as yet but the way I understand it is that HMRC can collect tax debts (not PAYE underpayments or Self Assessment balancing payments) of up to £17k pa if the primary source of income is £90k pa or more. There is a £3,000 maximum collection from incomes of less than £30k and a graduated scale between £30k & £90k, with an extra £2k collection permitted for every £10k more income. This is a banded scale though not a sliding scale as I understand it as follows:

Earnings p/a £          <30K     30-40K     40-50K     50-60K     60-70K     70-80K     80-90K     >90K
Coding limit £            3K         5K         7K         9K        11K        13K        15K      17K

Thus, in your example of £6k per month (£72k pa) HMRC could collect up to £13k per annum via the tax code. The net pay for £6k per month is £4,075 (assuming standard codes etc.) so HMRC could then take a further £1,083 out of this in additional tax per month to collect the outstanding tax debt.

This is due to come it to effect from April 2015.

This is all how I understand it on first reading and I will need to digest it further before completely understanding the changes but hopefully the above can be used to give an idea of how this will work in practice but if you think this applies to you (take anyone reading this) then please get professional advice as to exactly how it will apply give your specific situation.

Martin
Contratax Ltd

Thank you for this explanation which has added considerably to my knowledge.

I'll look again at the weekend and may pick your brains some more if I could?

[ContrataxLtd]

Thank you for this explanation which has added considerably to my knowledge.

I'll look again at the weekend and may pick your brains some more if I could?

Yes no problem at all, I'll hopefully be reviewing this further later on in the week so should be more up to speed once I have done.

Cheers

Martin
Contratax Ltd

[creativity]

Just a thank you to all those who are contributing to this and other threads. It's very much appreciated by all of us affected.