Income Tax and VAT arrears

TaxAid.org.uk is a charity that helps people on low incomes with their tax affairs.

Not surprisingly, Her Majesty's Revenue and Custom (HMRC) has more power than any other institution to pursue you for arrears and to enforce payment. They issue more bankruptcy petitions than anyone else. Many small business owners and the self employed use money ear marked for tax payments to keep themselves afloat. When time comes to pay – they are unable to.

If you're facing tax payment problems, you should speak to HMRC before you start to incur fines. A good place to go for specialist advice is taxaid.org.uk.

HMRC tax debts and DMPs (Debt Management Plans)

Tax arrears can be included an a Debt Management Plan only as en expenditure item once a repayment schedule has been agreed with HMRC. They can’t be included as a creditor.

HMRC tax debts and IVAs

Tax arrears can be included in an IVA as a creditor.

Generally speaking, HMRC tends not to vote at the meeting of creditors* when they are owed less than £25,000. If their share of the debt is greater than £25,000 the normally vote in favour if tax-return documentation is up to date, unless there are exceptional circumstances.

The meeting of creditors*: this is when all creditors detailed in the IVA proposal have the opportunity vote on whether to approve it or not. 75% of creditors who choose to vote need to vote in it's favour for approval.