As 1.4 million people around the UK receive income tax demands from HMRC, those in Debt Management Plans (DMPs) and Individual Voluntary Arrangements (IVAs) will be hit worst – according to leading debt solution company, ClearDebt.

Although the income tax demand can be paid back over 12 months, this will jeopardise repayment plans for those in debt, and could cause the collapse of any hopes they had of working towards a debt free future.

ClearDebt believe HMRC has not thought through the consequences of underpayment of income tax on people in debt repayment plans, especially IVAs. Those told they need to pay more tax will not be able to do so, as their disposable income is already pledged to repay creditors. Should the repayment plans need a variation due to HMRC’s demands, the IVA/DMP could fail and some debtors could even be in greater debt than before. Some of those able to work the tax demand around or into their repayment plan will find this now increases the time required to pay back all of their debt.

Andrew Smith, ClearDebt Marketing Director comments,

“More than forty thousand people a year enter an IVA. Demands by HMRC for an average of £125 a month more could put many of these arrangements at risk. We are contacting all our clients to offer them advice and support on this situation in order to help them appeal any tax demands and make clear to HMRC the dire situation they have now been put in.”

ClearDebt have also posted questions and answers to help clients or any other member of the public with worries about this situation on their community site, http://ask.cleardebt.co.uk

Notes to Editors:
For full details on this research or further comment, please contact:
Andrew Smith – ClearDebt Group
0161 968 6825 / 07912 407 532
Andrew.smith@cleardebt.co.uk
www.cleardebt.co.uk