HM Revenue & Customs

Any individuals who fail to satisfy their debts to HM Revenue & Customs (“HMRC”), including those who are self-employed, sole traders or individuals in a partnership, can have a statutory demand served against them by HMRC if the debt which they owe is more than £750. If the individual fails to pay the sum stated in the statutory demand, HMRC can proceed to present a bankruptcy petition against the individual if the total debt is over £5,000.

  • Once a bankruptcy petition is presented against an individual, even if the individual has the funds to pay the debt in full or can prove that they do not have any tax liabilities;
  • HMRC can also request that the bankruptcy petition continues unless the individual also pays HMRC’s additional costs for preparing and presenting the bankruptcy petition.

What happens when HMRC presents a bankruptcy petition and a bankruptcy order is made?

If the court has made a bankruptcy order against an individual following a bankruptcy petition presented by HMRC, the court will contact the Official Receiver to review the bankrupt’s affairs.

  • A trustee in bankruptcy may be appointed to investigate in detail a bankrupt’s affairs their affairs in the period leading up to the making of the bankruptcy order.
  • If a bankrupt has disposed of any of their assets, such as the matrimonial home, or made payments to specific creditors (which are known as an antecedent transactions), the trustee in bankruptcy may issue claims against the parties to the transaction to recover the asset for the benefit of the creditors.

The trustee in bankruptcy will also arrange to sell a bankrupt’s assets, including the bankrupt’s home and distribute the proceeds to the creditors of the bankruptcy estate.

How we can help you

It can be frightening being on the end of any HMRC enforcement action. The key is not to panic and take expert advice quickly. We can assist with the following

If you believe that you do not owe the tax claimed by HMRC, we can assist by preparing evidence demonstrating why the debt is substantially disputed. In addition, we can also enter in to negotiations with creditors to achieve a settlement outside the court to avoid a bankruptcy order been made.

Should you require any assistance please contact us.

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