Does anyone can know about Debt Negotiation Tax poblems?
I'm posting this on behalf of a colleague who has an Income Tax
problem (UK).
Basically, a few years ago, whilst self-employed he was not paying his
Income Tax contributions properly - this led to a debt of about
£30,000 UK Pounds. He has since been in (PAYE) company non-self
employed employment and has been paying the debt off at £350 each
month for the last couple of years or so.
The tax office have now demanded that he isn't paying enough off the
debt and they have informed him they may seek a County Court Judgment.
The debt keeps accruing more and more interest and surcharges.
What happens if the Tax Office are successful in gaining a CCJ (?) -
can they enforce bankruptcy, etc? What are the benefits for the tax
office? How can he stop this happening?
Is bankruptcy an option and will this mean they will have to sell the
house they have mortgaged (that has some equity)?
Can anyone advise as to possible options for him and if there is a way
to prevent the debt carrying more interest and surcharges? He is also
looking at borrowing the money to pay off the debt against equity in
the house, but this will obviously be a debt to settle a debt, even if
it's cheaper in the long run.
-Very serious answer: Read books on negotiation.
-Since you state that the debt is accruing interest and surcharges he
isn't, in fact, paying it off at all, or is only doing so very slowly.
There is no way to prevent a debt accruing interest unless the creditor
decides not to charge interest. Why should the taxpayer grant him a free
loan?
I would suggest that the cheapest option is to face the fact that the IR
can take his house, sooner or later, and therefore the best option would
be to extend the mortgage to clear the tax. Doing it later will probably
end up with the same result, but with extra legal costs on top.
He can then simply reduce the mortgage as and when funds become
available to minimise lifecycle interest charges.
The IR can and will make him bankrupt if they begin to suspect that he
is can pay won't pay, rather than honestly paying as much as he can
afford.
-The Inland Revenue is not a free loan service for your freind, if he has
enough equity in his house, then he should pay the debt off immediately.
The inland revenue is well within its rights to charge intrest on the
outstranding amount, in fact it is duty bound to do so.