Will HMRC accept my IVA proposal?

Generally, all arrears in compulsory revenue contributions to the state such as VAT debts should be included in an IVA proposal. Based on the criteria used by HMRC in calculating personal tax returns, everyone has the potential of owing personal tax to the HMRC.
Nevertheless, majority of sole traders are also likely to have VAT or Tax debt.

In the past reasonable IVA proposals have been agreed to by the HMRC. But in recent years it has proved that it’s becoming more and more difficult to have IVA’s approved. In some situations the HMRC don’t even bother to ask for the IVA, but it is by no means possible to predict if your IVA proposal can be accepted.

Usually if your outstanding tax debt is not greater than £15,000 and your tax returns are up to date, HMRC will often choose to vote for your IVA proposal. In this regard they will not disallow your IVA absolutely, but would allow a fair decision to be made by other creditors on their behalf. On the other hand, the HMRC tends to become aggressive in circumstances where you owe tax debt greater £15,000 and your personal tax returns are in a mess.

HMRC may have a detailed review of your proposal on the condition that you intend to run a business offering continual trading. A proposal of an IVA based on continual trading is concerned on two stages.

Firstly, the concern is on the ability of the business to support IVA payments.

Secondly, another HMRC concern in continued business trade is the new tax debt which accumulates and must be paid up. However, if the HMRC believe that you may not be able to meet the new tax payments they may reject your IVA proposal.

Although there is no assurance that an IVA proposal would be acknowledged or dismissed, it is your duty to have a better proposal and then forward it to your creditors.


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