Finance Bill 2017-18 V HMRC DR Settlement Terms

[ChimpMaster]

If you know that you have no way of paying any bill, is it even worth going down the CLS02 route, surely that would just mean that your failure to pay will come sooner and so would the impending bankruptcy? The only benefit, if you can call it that, of going down the CLS02 route is that your bankruptcy will end sooner and you can go about trying to repair the car crash of your life caused by ruthless scheme promoters, experts who gave bad advise, HMRC that can make up the rules as they go along and make changes retrospectively, media and public who will show no sympathy and greedy and/or gullible contractors.

If you know you're going bankrupt for sure, then put your affairs in order (read into that however you will...) before contacting HMRC for settlement.

Bear in mind that HMRC might offer you a long (up to 7 years?) Time to Pay agreement.

On loans of £500k, assuming no open years, then you should probably estimate ~£250k tax at a wild guess.

[burnside]

If you know you're going bankrupt for sure, then put your affairs in order (read into that however you will...) before contacting HMRC for settlement.

Bear in mind that HMRC might offer you a long (up to 7 years?) Time to Pay agreement.

On loans of £500k, assuming no open years, then you should probably estimate ~£250k tax at a wild guess.

Obviously if repayment could be agreed then that would be the preferable option, but £35k a year is well out of reach, I recently took a permanent role and £3k a month would mean handing over 90% of my salary over to HMRC for 7 years...ouch!

I've got a bit of homework to do to calculate all the loans received, and get the ballpark estimate on what the bill would be. Interestingly looking at my loan agreements only the early ones were with a trust, the majority were from the employer who no longers exists, what impact does this have?

[phil@pmtc]

Obviously if repayment could be agreed then that would be the preferable option, but £35k a year is well out of reach, I recently took a permanent role and £3k a month would mean handing over 90% of my salary over to HMRC for 7 years...ouch!

I've got a bit of homework to do to calculate all the loans received, and get the ballpark estimate on what the bill would be. Interestingly looking at my loan agreements only the early ones were with a trust, the majority were from the employer who no longers exists, what impact does this have?

There isn’t a limit on how many years a time to pay can be arranged for. Just this week I saw one agreed for over 20+ years.

[luxCon]

There isn’t a limit on how many years a time to pay can be arranged for. Just this week I saw one agreed for over 20+ years.

Hi Phil

Does HMRC charge interest in the length of the repayment years? So if say it to be paid over 20 years, do they charge interest over this period for the outstanding amount? If so what is the rate?

[burnside]

There isn’t a limit on how many years a time to pay can be arranged for. Just this week I saw one agreed for over 20+ years.

That would change things a little, obviously bankruptcy wouldn't suit either party, HMRC would only receive a small percentage of total debt and the consequences for me could be far reaching, i.e. losing home and any other possessions that are deemed of value, potential to lose my job but certainly could no longer contract in the finance industry any more, then there's the mental strain of it all. I want to ensure that my wife is clear and then I will take any penalty coming my way, if that means paying £1k a month for the rest of my working life then so be it.

And let's face it, if my career is ended due to bankruptcy then it would double penalise HMRC, as not only would they not receive full payment they also would not receive any future income tax and NI, or at least a vastly reduced rate when I have to retrain into a new career

[phil@pmtc]

Hi Phil

Does HMRC charge interest in the length of the repayment years? So if say it to be paid over 20 years, do they charge interest over this period for the outstanding amount? If so what is the rate?

In theory yes, though i've also seen where they have agreed not to. On the whole ive always been somewhat surprised that there aren't any set guidelines for TTP agreements though to be fair I suppose HMRC would say they look at each case individually.
late payment interest current set at 3% I think (but happy to be corrected as I'm working from memory)

[phil@pmtc]

That would change things a little, obviously bankruptcy wouldn't suit either party, HMRC would only receive a small percentage of total debt and the consequences for me could be far reaching, i.e. losing home and any other possessions that are deemed of value, potential to lose my job but certainly could no longer contract in the finance industry any more, then there's the mental strain of it all. I want to ensure that my wife is clear and then I will take any penalty coming my way, if that means paying £1k a month for the rest of my working life then so be it.

And let's face it, if my career is ended due to bankruptcy then it would double penalise HMRC, as not only would they not receive full payment they also would not receive any future income tax and NI, or at least a vastly reduced rate when I have to retrain into a new career

Fully understand, ive had many a negotiation with HMRC where ive pointed out that it can be a win/win or a lose/lose.
You would hope that they would always work with the person to avoid bankruptcy and to ensure they got paid the full amount. Not always the case sadly but I find they are slightly more flexible nowadays on TTP than perhaps have been in the past. Certainly on larger scale, newsworthy cases so I'm hoping will be the case with the LC/Settlements.

[burnside]

So I guess the next step for me then is to enquire with HMRC re CLS02 to get a settlement figure and then see where that takes me?

[burnside]

Is anyone able to provide any information or clarity around differences between loans received from a trust compared to loans received from the employer who no longer exists, unlike a trust they are gone so how can you pay a loan back. wouldn't these have been effectively written off?

[phil@pmtc]

So I guess the next step for me then is to enquire with HMRC re CLS02 to get a settlement figure and then see where that takes me?

My general advice is exactly that, there’s no harm in asking for the settlement figure so worth getting that and then considering options once you have the full details.