If you cant pay an APN, would the judge rule in favour of bankruptcy

**BrilloPad** · 15 April 2015, 14:37

Based on my discussion with NTRT liquidation company, HMRC would have great trouble getting a judge to make you bankrupt.

Have you thought about getting your wife to divorce you and putting the house in her name?

**dangerouswhensober** · 15 April 2015, 14:52

Originally posted by chr16v View Post

Ok so this thread is born out of a converstion started in on http://forums.contractoruk.com/hmrc-...-settling.html

The scenario is:
- you were in an EBT scheme,
- you have an APN, its a lot more than you can afford because you stopped being a contractor years ago and live a normal life again,
- you dont have enough credit to borrow beg or steal the amount required
- BUT you do have a house with some equity, say its in joint names with her in-doors.

I understand the HMRC "time to pay" offer for upto 2 years can only be assumed if you can prove you are able to pay the money back in this time.

My question is: What happens if its clear as day that i cannot afford to pay it back in 2 years?? Would i be exptected by a court to sell the family home, what type of forced action should a now PAYE employee expect to experience in HMRC`s pursuit of this money?

What does HMRC do? push you towards the court judge and bankruptcy? How can they if they have no firm grounds for destroying someone.........

The following is a quote from these boards from the late (lamented) Rob99, who is a tax professional, but who now doesn't post here as it would conflict with his day job:

Quote:
"If you decline to pay the tax due, bankruptcy is not automatic. HMRC may consider that if you have a job and an income, that they will apply for an order effectively docking your income at source to pay the tax. They may take a charge on an asset (usually property) so that on sale they get a cut. They may seize assets (walking distraint order). They have a whole range of weapons and a couple of hundred years of practice in this."

The preferred option for HMRC in each individual case is the option which will - in all probability - yield the most money to them. This does not, therefore, mean they prefer bankruptcy - especially given the uncertainty of the judiciary. I have no experience of HMRC in relation to judicial orders for docking income, or charge on assets, or walking distraint orders - but I suspect that (again) they would have to persuade the appropriate judiciary that a "debt" is in fact owed in order to be granted the appropriate orders.

This is one reason why (IMO) HMRC have been pushing Settlement Offers hard - they don't want the uncertainty of court.

(BTW - Seems to me that a charge on assets would be a good option for most people - that means HMRC only get the money when you sell your property - in 20 years time :-))

Same disclaimers apply - I'm not a lawyer ...

**flamel** · 15 April 2015, 14:57

Originally posted by BrilloPad View Post

Have you thought about getting your wife to divorce you and putting the house in her name?

My ex-wife managed this very successfully!

**flamel** · 15 April 2015, 15:10

Originally posted by chr16v View Post

My question is: What happens if its clear as day that i cannot afford to pay it back in 2 years?? Would i be exptected by a court to sell the family home, what type of forced action should a now PAYE employee expect to experience in HMRC`s pursuit of this money?

What does HMRC do? push you towards the court judge and bankruptcy? How can they if they have no firm grounds for destroying someone.........

That is my question too - my own tax advisor (ex HMRC inspector) can't answer as he says he's never seen this type of mess in his lifetime. His advice is to carry on as normal until all APNs for all years actually arrive and then take it from there.

So to add to the long list of questions:
a) Do I save up a warchest for times when I'm not contracting (as HMRC are going to raid this).
b) Do I bother to continue putting money into a personal pension (HMRC may raid this too).
c) Do I continue paying off the mortgage (HMRC may take my (minimal) share of the house - effectively I'm just saving up to pay HMRC something)
d) Shall I just throw in the towel now, admitting to whatever liability HMRC wants for all years they have a problem with and get it over with (they won't get their money as I haven't got it and wouldn't be able to pay even with 10 years TTP arrangements).

My motto has been "SAYE" - spend as you earn but now I'm on the bench this is not quite as clever as I thought.

Am I doomed to live out the rest of my life in penury?

**webberg** · 15 April 2015, 21:03

Originally posted by dangerouswhensober View Post

The following is a quote from these boards from the late (lamented) Rob99, who is a tax professional, but who now doesn't post here as it would conflict with his day job:

Quote:
"If you decline to pay the tax due, bankruptcy is not automatic. HMRC may consider that if you have a job and an income, that they will apply for an order effectively docking your income at source to pay the tax. They may take a charge on an asset (usually property) so that on sale they get a cut. They may seize assets (walking distraint order). They have a whole range of weapons and a couple of hundred years of practice in this."

The preferred option for HMRC in each individual case is the option which will - in all probability - yield the most money to them. This does not, therefore, mean they prefer bankruptcy - especially given the uncertainty of the judiciary. I have no experience of HMRC in relation to judicial orders for docking income, or charge on assets, or walking distraint orders - but I suspect that (again) they would have to persuade the appropriate judiciary that a "debt" is in fact owed in order to be granted the appropriate orders.

This is one reason why (IMO) HMRC have been pushing Settlement Offers hard - they don't want the uncertainty of court.

(BTW - Seems to me that a charge on assets would be a good option for most people - that means HMRC only get the money when you sell your property - in 20 years time :-))

Same disclaimers apply - I'm not a lawyer ...

The above view remains valid. I've been trying to get HMRC to make some public statement as to their policy in relation to how they intend to collect debts from people who are NOT the high and ultra high net worth investors seen in film and similar schemes.

I would though say that this is a specialist area. I know people in this field and they have some good ideas and some great contacts with HMRC and they may have a better opinion. I'll approach one or two and see if they want to review the forum and contribute something.

[Rob79 was a construct that I and a colleague used whilst we were working for a company we were hoping to convince to become involved in the tax side of contractor schemes. That firm declined our plan. One result is that neither of us work for that firm any more. I now run my own tax consultancy specialising in complex tax avoidance schemes. I have certain views on the current contractor settlement opportunity and the likely direction of travel for the litigation and ultimate outcome. If I'm honest (and I like to think I am) there is not much I can do for contractors at the moment. I think once the settlement opportunity has expired and HMRC realise that they need a different analysis, then I may be able to help. In the meantime I offer what help I can.

I am in contact with some members of the forum who run groups etc and some individuals. However in terms of whether my business can offer a cost effective plan that will mitigate the current HMRC view of liability on the slate of EBT/loan schemes, I doubt it. Can I do that in say 6 months? Perhaps. I'm happy to expand on my views but perhaps not here.

So, apologies for Rob79 - his day has gone. My alter ego here though is the same and I hope some find it useful.

**dangerouswhensober** · 16 April 2015, 11:11

Welcome back Son-Of-Rob - or should that be FrankenRob (created out of more than one person) or even DracuRob (then man who can never die or be killed ...) :-)

Never mind Webburg - I for one am glad that you are still monitoring these boards and contributing valuable informed advice.

A couple of quick queries, if you have a spare moment:

(1) You said "The above view remains valid." - Did you mean your quote, or my opinion on the judicial process ?

(2) You said a few days ago (on another thread) that "HMRC are currently about two years behind where they wanted to be ..." - can you clarify that ? Do you mean that HMRC are behind in chasing-up tax avoiders, or in their collections processes, or what ?

**BrilloPad** · 16 April 2015, 11:14

Originally posted by flamel View Post

Am I doomed to live out the rest of my life in penury?

At the very least there is uncertainty. 7 years now and now end in sight.

**chr16v** · 16 April 2015, 12:40

This is a good informative thread guys, lets keep it going because i have no idea what percentage of APN recievers cannot afford to pay, especially if they no longer contract, but it must be sizable percentage.

i have an association with a local magistrate through work contacts and asked him today if any APN cases have filtered down to the dock for non payment and he hasnt heard of any, but he admited he isnt even aware of the whole DOTAS shebang.

I for one (even though i started the thread) havent yet recieved APN although i keep reading it must be on its way because my fellow ex-employees in the Edge/Norla group people are getting them. I guess its just a matter of time for me.

If we could highlight the ins & outs of the debt collection tatics that could be likely used by HMRC then this would surely equip and brace a lot of forum readers.

i for one only have equity in the family house, its in joint names and my wife doesnt want to divorce me

, so can anyone divulge how the APN debt "could" be extracted from me?

**dangerouswhensober** · 16 April 2015, 13:04

Originally posted by chr16v View Post

... i have no idea what percentage of APN recievers cannot afford to pay, especially if they no longer contract, but it must be sizable percentage.

A poll was conducted on this forum over last Xmas/New Year ...

From a very small sample of 50 voters, 34 declared that they would not be able to pay (68%) - i.e. over 2/3 of those who answered.

Extrapolate that proportion to the advertised number of APNs that HMRC initially claimed they would send out (40,000+ to individuals and 10,000+ to companies) and you see another reason why they want to avoid court action (aside from the possibility of adverse judicial rulings) - at present, they just don't have the resources to engage in 30,000+ court cases ...

IMO - something has to give ...

The poll is here:

http://forums.contractoruk.com/hmrc-...-pay-apns.html

If you cant pay an APN, would the judge rule in favour of bankruptcy