HMRC Income Tax overpayment or underpayment letters – ClearDebt Update.

An update from ClearDebt regarding HMRC and their policy towards people in Individual voluntary Arrangements (IVAs) and debt management plans (DMPs) who receive an HMRC letter saying they must pay more tax or that they are due an income tax rebate.

We asked HMRC yesterday (Wednesday 8 September) about their policy towards people in Individual voluntary Arrangements (IVAs) and debt management plans (DMPs) who receive an HMRC letter saying they must pay more tax or that they are due an income tax rebate.

We were informed today (Thursday 9 September) that HMRC is concerned about this but that they don’t yet have a policy. They did assure us, however, that they are dealing with this urgently and that they will come back to us with guidance as soon as possible. We’ll publish that advice as soon as we get it.

Our concerns are:

  • People in IVAs and DMPs who receive underpayment letters are not in a position to repay much, if anything, as their monthly debt repayment to creditors will take up almost all their disposable income.
  • People in IVAs and DMPs who receive overpayment letters and get a rebate will be required (in an IVA) to pay a high proportion of that to their creditors or (if in a DMP) would be highly recommended to do so.

Questions and answers on these issues are available in the ClearDebt Community (see links below).

1) I’m in an IVA and have received a letter from HMRC which says I owe them money. What should I do?

2) I’m in an IVA and have received a letter from HMRC saying I am due to receive money from them. Will this have to go to my creditors?

3) I am in a Debt Management Plan and have received a letter from HMRC claiming I owe them money. How will this affect my DMP?

These answers will be updated as the situation develops.

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