Archive for the Debt Management Category

Consumers Becoming More in Touch with Finances Due to Bank Crisis

Recent surveys have shown that UK consumers are far more connected and educated when it comes to their personal finances, and the major reason has been the bank crisis that the nation is dealing with right now. However, even though consumers are more aware surveys also showed that fewer citizens are paying down their debt or employing a debt management plan.

A separate survey commissioned by YouGov also noted that many UK consumers are willing to switch banks or move on for better plans, which means that banks are going to have to up the ante very soon. Consumers noted that they are quite scared off locking in their money for a lengthy period of time or putting all their eggs in one basket in terms of banking institutions. While that isn’t much of a debt management plan, it will definitely affect the way banks conduct business in the future.

While consumers are worried about the safety of their bank more than they were in the future, they are quite pleased that they know more about their financial situation than they used to. All of these reactions come on the heels of the collapse and bankruptcy of banking institutions in Iceland, Bradford, Bingley, and Northern Rock, and all the government rescues that have saved other institutions from bankruptcy.

Despite all of the awareness, pollsters noted that UK consumers were still not doing much in terms of protecting their finances. Less than half of the people in the survey said they were paying down more debt than they used to and less than 40% were putting more money aside in terms of their debt management plans.

In all, it does appear that consumers are taking more and more steps to understand their finances, but have yet to make any substantial moves to avoid debt and bankruptcy. It is a clear indication of a big difference in action and inaction but many feel that it will change drastically over the next year or so.

Another note from the survey is the fact that it appears many more UK consumers are comparing banks and contemplating switching their money over. That is good news for policymakers in the government as it means that there will be far more competition in the high end banking world. The government has been forcing certain institutions to divest part of their companies and consistently gives bonuses and rewards to new entrants into the industry.

Over half of the participants in the survey said that they would now consider using a provider that is non-traditional, which is a huge jump from recent years. 54% of consumers also said that they were now far less willing to invest or lock their money away for a long time.

In the end, the survey made light of a number of issues and gave new insight into how UK consumers are dealing with economic struggles, bankruptcy, and potential debt. Whether these trends continue or teeter off remains to be seen, but increased knowledge is always a good thing for consumers.

Debt Management Plans

The debt management plan can do for you as an individual or as a business, it will be good to decide its scope. It is a misconception among many people that debt management plans can only be used for eliminating the existing mound of debts. Nevertheless, debt management plans have an extended scope. As the name suggests, debt management plans may be used with advantage to manage the debts to a particular level. It must be acknowledged that a proper management of debts makes debt consolidation and other methods employed to fight the menace of debts superfluous. Prevention is better than cure. Most of us repeat the adage incessantly. It will be through debt management plans that one can really develop the habits in ones life.

Most budgets are done on a monthly basis. You should record your monthly income and expenses on a sheet that will allow you to subtract your expenses from your income.

The debt can be either fixed or variable, but is different because you do not pay the full amount each month. You can chose how much you want to pay or have a minimal amount you have to pay.

Record for Personal Insolvency Broken in England and Wales

According to the government’s Insolvency Service, over 33,000 personal insolvencies occured during the second quarter of 2009, breaking all previous records for England and Wales. The increase demonstrates a 9% rise over the first quarter of 2009 and is 27% higher than the same period in 2008. Many of these individuals are finding some relief in either IVAs (link) or, in more extreme situations, they are seeking a Bankruptcy (link).
Although the number of companies experiencing insolvency has decreased by 14% compared to the first quarter of 2009, it remains 23% higher than the same period in 2008.
Since the end of 2007, personal insolvencies have been soaring due to the recession and its financial implications on the budgets of average people. During the final quarter of 2007, well over 23,000 people went bust but today the number of people experiencing the same situation has increased by almost 40%. Bankruptcies (link!) accounted for over 18,800 of the overall 33,000 plus personal insolvencies which is lower than in the past, but Individual Voluntary Arrangements (link!) rose to take up 12,225 of that overall number of insolvencies.
For the second consecutive quarter, the number of companies going through administration, voluntary arragements or receiverships decreased, but experts warn that this trend may not continue into the future.

According to the government’s Insolvency Service, over 33,000 personal insolvencies occured during the second quarter of 2009, breaking all previous records for England and Wales. The increase demonstrates a 9% rise over the first quarter of 2009 and is 27% higher than the same period in 2008. Many of these individuals are finding some relief in either IVAs or, in more extreme situations, they are seeking a Bankruptcy.

Although the number of companies experiencing insolvency has decreased by 14% compared to the first quarter of 2009, it remains 23% higher than the same period in 2008.

Since the end of 2007, personal insolvencies have been soaring due to the recession and its financial implications on the budgets of average people. During the final quarter of 2007, well over 23,000 people went bust but today the number of people experiencing the same situation has increased by almost 40%. Bankruptcies accounted for over 18,800 of the overall 33,000 plus personal insolvencies which is lower than in the past, but Individual Voluntary Arrangements rose to take up 12,225 of that overall number of insolvencies.

For the second consecutive quarter, the number of companies going through administration, voluntary arragements or receiverships decreased, but experts warn that this trend may not continue into the future.

Credit Card Cheques Expected to Face Serious Opposition from UK Government

A new post is being created to help consumers recoup losses from unwanted credit card cheques which have become such a huge problem in the UK in recent years. The cheques are from rogue traders and are expected to be banned in the near future, as well, due to the amount of debt they add to the already staggering debt problem in the UK that has seen so many turning to Individual Voluntary Arrangements (link!) and Bankruptcy (link!).
According to the latest figures coming out of the Bank of England, UK citizens owe loans, credit card debt and overdrafts that total to £233bn.
However, the reaction to the current plans to create a Consumer Advocate are mixed, though the White Paper on its creation outlines the Advocate as a means to raise awareness about the severity of current consumer struggles. It would also act on behalf of groups of the public who are seeking refunds or compensation when the case is judged to be of “national importance”, such as against a substantial and unfair debt from a rogue company.
The government is looking for action to be taking in regard to debt levels during this current recession. They want lenders to be held more accountable for irresponsible practices within their industry because UK credit card debt is again standing at £54.4bn after having been reduced for a short time, months ago.
Credit card cheques have proven to be quite controversial because of the handling fees incurred for using them. These blank cheques are often sent to credit card holders along with their monthly statements as a means of enabling the customer with a different way to spend the funds from their card’s account. If things go awry, these cheques do not offer the same protections as the cards themselves and they almost always do not have an interest free period that the card does, leading to confusion for consumers and thus, increased spending.
Since the government has been expected to ban these cheques for some time now, they will be banning them in order to halt companies from sending unsolicited cheques. This means credit card companies may only offer these to those who have opted in to receive them ahead of time rather than eliminating the option to consumers altogether.
This news follows the announcement from Uswitch, a price comparison website, that states 20% of UK consumers have seen their credit limits rise without asking for such an increase.
Consumer groups have been requesting that there be more help for consumers who believe they have been unfairly treated by companies and as a result, experienced significant financial loss.
The person who will be the Consumer Avocate in the coming year will be an individual comfortable with being involved in representing substantial groups of consumers who seek compensation through the courts and also highly public consumer campaigns. These consumers who feel they have been ripped off will be able to perform group actions against the company named by opting in to the group legal action.

A new post is being created to help consumers recoup losses from unwanted credit card cheques which have become such a huge problem in the UK in recent years. The cheques are from rogue traders and are expected to be banned in the near future, as well, due to the amount of debt they add to the already staggering debt problem in the UK that has seen so many turning to Individual Voluntary Arrangements and Bankruptcy.

According to the latest figures coming out of the Bank of England, UK citizens owe loans, credit card debt and overdrafts that total to £233bn.

However, the reaction to the current plans to create a Consumer Advocate are mixed, though the White Paper on its creation outlines the Advocate as a means to raise awareness about the severity of current consumer struggles. It would also act on behalf of groups of the public who are seeking refunds or compensation when the case is judged to be of “national importance”, such as against a substantial and unfair debt from a rogue company.

The government is looking for action to be taking in regard to debt levels during this current recession. They want lenders to be held more accountable for irresponsible practices within their industry because UK credit card debt is again standing at £54.4bn after having been reduced for a short time, months ago.

Credit card cheques have proven to be quite controversial because of the handling fees incurred for using them. These blank cheques are often sent to credit card holders along with their monthly statements as a means of enabling the customer with a different way to spend the funds from their card’s account. If things go awry, these cheques do not offer the same protections as the cards themselves and they almost always do not have an interest free period that the card does, leading to confusion for consumers and thus, increased spending.

Since the government has been expected to ban these cheques for some time now, they will be banning them in order to halt companies from sending unsolicited cheques. This means credit card companies may only offer these to those who have opted in to receive them ahead of time rather than eliminating the option to consumers altogether.

This news follows the announcement from Uswitch, a price comparison website, that states 20% of UK consumers have seen their credit limits rise without asking for such an increase.

Consumer groups have been requesting that there be more help for consumers who believe they have been unfairly treated by companies and as a result, experienced significant financial loss.

The person who will be the Consumer Avocate in the coming year will be an individual comfortable with being involved in representing substantial groups of consumers who seek compensation through the courts and also highly public consumer campaigns. These consumers who feel they have been ripped off will be able to perform group actions against the company named by opting in to the group legal action.

Debt for Police Officers

Research as shown us that theses may be some valuable suggestions for managing officers who are experiencing financial difficulties so we created this article to share these suggestions for Forces within the UK who are managing officers who have fallen into such financial troubles. This is in no way meant to be interpreted as a prescriptive document or official financial advice.
While each case should definitely be dealt with based on the unique criteria of that situation, some basic suggestions could provide some uniformity and additional clarity to those who deal with these issues.
According to research, more officers than in prior years are now going through financial difficulties for a wide variety of reasons. Relative pay levels for officers fluctuate at a near constant rate and at the same time, financial institutions are eager to enter into credit agreements with officers. This can even be the case in situations where they would not have done the same for a member of the public who was in a different line of work and in the same circumstances.
How to Determine When an Officer is in Financial Difficulty
Circumstances for each officer will be very different depending upon factors such as: the earning ability of their domestic partner if they have one, children involved in their relationships and how well they are able to manage their own debts. Considering these facts, then we will define ‘financial difficulty’ as:
A situation in which an officer has little or no chance in the near future of being able to meet their current debt.
It is important that Forces are aware that officers who have fallen into financial difficulty are usually in one of three primary situations:
Those officers going through marital troubles
Those officers who have experienced a change in their family’s or their own financial situations
Those recruits who now have unmanageable debts
In many instances a Debt Management Plan or an IVA (Individual Voluntary Arrangement) may be a solution you could advise such officers to look into. It’s always best to intervene early if you can and help them solve their situation before it ever becomes dire.

Research as shown us that theses may be some valuable suggestions for managing officers who are experiencing financial difficulties so we created this article to share these suggestions for Forces within the UK who are managing officers who have fallen into such financial troubles. This is in no way meant to be interpreted as a prescriptive document or official financial advice.

While each case should definitely be dealt with based on the unique criteria of that situation, some basic suggestions could provide some uniformity and additional clarity to those who deal with these issues.

According to research, more officers than in prior years are now going through financial difficulties for a wide variety of reasons. Relative pay levels for officers fluctuate at a near constant rate and at the same time, financial institutions are eager to enter into credit agreements with officers. This can even be the case in situations where they would not have done the same for a member of the public who was in a different line of work and in the same circumstances.

How to Determine When an Officer is in Financial Difficulty

Circumstances for each officer will be very different depending upon factors such as: the earning ability of their domestic partner if they have one, children involved in their relationships and how well they are able to manage their own debts. Considering these facts, then we will define ‘financial difficulty’ as:

A situation in which an officer has little or no chance in the near future of being able to meet their current debt.

It is important that Forces are aware that officers who have fallen into financial difficulty are usually in one of three primary situations:

Those officers going through marital troubles

Those officers who have experienced a change in their family’s or their own financial situations

Those recruits who now have unmanageable debts

In many instances a Debt Management Plan or an IVA (Individual Voluntary Arrangement) may be a solution you could advise such officers to look into. It’s always best to intervene early if you can and help them solve their situation before it ever becomes dire.

Dealing with Debt

These days, credit in very easy to obtain for those living in the UK. Those looking to led money include small scale money lenders, mail order firms, credit unions, finance companies, insurance companies, credit card companies, building societies and banks. Most of us will eventually require credit in some form or another, whether it is a mortgage to buy a house or a loan to purchase expensive electronics, furniture or a new car. The definition of credit is buying a product or service under conditions that offer you time to pay it off. That credit itself is paid for in the form of interest. Those who borrow money would be wise to check the APR (Annual Percentage Rate) to make sure they are getting the cheapest credit possible.
It’s easier than you might think to end up borrowing more money than you have the ability to repay and when you do that, the resulting money owed is called debt. To word it another way, credit is debt that you have under control while debt is credit that has gotten out of control. Many people end up borrowing even more money against their debts in the hope of clearing what they owe, instead creating an even larger debt for themselves.
When people experience debt problems it is usually due to multiple debts they owe becoming overdue, such as:
Overdue on Holidays (Particularly ‘Fly now, pay later’)
Overdue on furniture payments
Overdue on TV/Video/Stereo equipment
Overdue on car payments
Overdue on electricity, gas or telephone utilities with the result of being cut off
Overdue on council tax with the result of bailiffs or worse consequences
Overdue on mortgage with the frightening result of repossession and subsequent homelessness
Debts have a nasty tendency to ruin lives when they get out of hand so it is crucial that you seriously consider borrowing money each and every time you do so. You and your family’s lives are what will be affected should the situation spiral out of your control. More often than is commonly believed, debt is a cause of the breakdown of a marriage. Your golden rule could be: Never borrow more money than you are absolutely certain you can pay back.
If you do, despite your best intentions, find yourself struggling with debt, take a moment to consider your options for getting your financial life back on track.
A Debt Management Plan or Individual Voluntary Arrangement (IVA) may be exactly what you need to get yourself back into financial health once again.

These days, credit in very easy to obtain for those living in the UK. Those looking to led money include small scale money lenders, mail order firms, credit unions, finance companies, insurance companies, credit card companies, building societies and banks. Most of us will eventually require credit in some form or another, whether it is a mortgage to buy a house or a loan to purchase expensive electronics, furniture or a new car. The definition of credit is buying a product or service under conditions that offer you time to pay it off. That credit itself is paid for in the form of interest. Those who borrow money would be wise to check the APR (Annual Percentage Rate) to make sure they are getting the cheapest credit possible.

It’s easier than you might think to end up borrowing more money than you have the ability to repay and when you do that, the resulting money owed is called debt. To word it another way, credit is debt that you have under control while debt is credit that has gotten out of control. Many people end up borrowing even more money against their debts in the hope of clearing what they owe, instead creating an even larger debt for themselves.

When people experience debt problems it is usually due to multiple debts they owe becoming overdue, such as:

Overdue on Holidays (Particularly ‘Fly now, pay later’)

Overdue on furniture payments

Overdue on TV/Video/Stereo equipment

Overdue on car payments

Overdue on electricity, gas or telephone utilities with the result of being cut off

Overdue on council tax with the result of bailiffs or worse consequences

Overdue on mortgage with the frightening result of repossession and subsequent homelessness

Debts have a nasty tendency to ruin lives when they get out of hand so it is crucial that you seriously consider borrowing money each and every time you do so. You and your family’s lives are what will be affected should the situation spiral out of your control. More often than is commonly believed, debt is a cause of the breakdown of a marriage. Your golden rule could be: Never borrow more money than you are absolutely certain you can pay back.

If you do, despite your best intentions, find yourself struggling with debt, take a moment to consider your options for getting your financial life back on track.

A Debt Management Plan or Individual Voluntary Arrangement (IVA) may be exactly what you need to get yourself back into financial health once again.

Bank Loans and Overdrafts

Bank Loans and Loan Finance
Loan Finance and Bank Loans are generally appropriate for those borrowing for an especially expensive item like a car that costs a great deal of money and will be repaid over a long term period of time such as 10 years. Interest rates are generally lower than they would be on a credit card, but higher than they would be on a mortgage.
Overdrafts
If borrowing for a short term and only in smaller amounts of money then a bank overdraft may be more appropriate. Interest rates on an overdraft are usually higher than they would be with a loan, particularly in instances where the overdraft hasn’t been agreed to by the bank in advance.
If you end up having a permanent overdraft, you may be able to lower your interest payments by taking out a loan of some type in order to repay that overdraft. Sometimes you can take advange of a 0% credit card offer and save yourself money that you would otherwise have paid to a standard loan, in terms of interest. However, bear in mind that once that interest free period ends, the interest owed can rise very quickly and build up debt beyond what you had intended. Also, keep in mind that if you take out a loan and want to repay it earlier than the agreed time table you may owe penalties. An overdraft can be repaid on any time scale without any penalties.

Bank Loans and Loan Finance

Loan Finance and Bank Loans are generally appropriate for those borrowing for an especially expensive item like a car that costs a great deal of money and will be repaid over a long term period of time such as 10 years. Interest rates are generally lower than they would be on a credit card, but higher than they would be on a mortgage.

Overdrafts

If borrowing for a short term and only in smaller amounts of money then a bank overdraft may be more appropriate. Interest rates on an overdraft are usually higher than they would be with a loan, particularly in instances where the overdraft hasn’t been agreed to by the bank in advance.

If you end up having a permanent overdraft, you may be able to lower your interest payments by taking out a loan of some type in order to repay that overdraft. Sometimes you can take advange of a 0% credit card offer and save yourself money that you would otherwise have paid to a standard loan, in terms of interest. However, bear in mind that once that interest free period ends, the interest owed can rise very quickly and build up debt beyond what you had intended. Also, keep in mind that if you take out a loan and want to repay it earlier than the agreed time table you may owe penalties. An overdraft can be repaid on any time scale without any penalties.

When Your Credit is Refused

You Shouldn’t Panic if You Are Refused Credit
If you find yourself in a situation where you are refused credit, keep in mind that it could be for any number of reasons. Somtimes it is simply because the lender believes that based on the information obtained about you from a credit reference agency, it looks as though you may struggle to repay debts. It could also be due to information that you provided on an application form to the lender that triggered them to conclude the same thing. Also, it may simply be that the lender does not find you to fit the profile of the type person they want to give credit to. This could be due to the type of job you have, your age or a myriad of other specifications that lender has chosen to focus on when selecting candidates for credit.
Keep in mind that no individual has a right credit in the UK. There are rules about refusing people due solely to their race, gender, sexual orientation, address or religion, but a lender can still refuse your application without giving you a reason. However, most lenders will tend to give you an idea of why they rejected your application.
Don’t Feel Bad for Wanting to Know Why
It’s perfectly natural to want to know what you were refused credit as well as wanting to learn what you can do to improve your attractiveness to lenders. That means you’ll want to ask the lender first, but be aware that lenders try to be careful about what they tell people. It’s not uncommon for lenders to score applications by weighing each piece of information with sub score and then adding those together to get an overall score. They normally tell you if this is how your application failed.
If your application was refused due to credit reference information then the lender will give you the name and address of the agency from whom they obtained that information. You can then write that agency to get a copy of your file sent to you along with a guide to what the information means and how you can get it changed or add to it if you need to.
Although credit reference agencies will not be able to tell you why you were refused for credit because they do not know themselves, they generally have quite adept customer service departments that may be able to help you with questions about your credit information.

You Shouldn’t Panic if You Are Refused Credit

If you find yourself in a situation where you are refused credit, keep in mind that it could be for any number of reasons. Somtimes it is simply because the lender believes that based on the information obtained about you from a credit reference agency, it looks as though you may struggle to repay debts. It could also be due to information that you provided on an application form to the lender that triggered them to conclude the same thing. Also, it may simply be that the lender does not find you to fit the profile of the type person they want to give credit to. This could be due to the type of job you have, your age or a myriad of other specifications that lender has chosen to focus on when selecting candidates for credit.

Keep in mind that no individual has a right credit in the UK. There are rules about refusing people due solely to their race, gender, sexual orientation, address or religion, but a lender can still refuse your application without giving you a reason. However, most lenders will tend to give you an idea of why they rejected your application.

Don’t Feel Bad for Wanting to Know Why

It’s perfectly natural to want to know what you were refused credit as well as wanting to learn what you can do to improve your attractiveness to lenders. That means you’ll want to ask the lender first, but be aware that lenders try to be careful about what they tell people. It’s not uncommon for lenders to score applications by weighing each piece of information with sub score and then adding those together to get an overall score. They normally tell you if this is how your application failed.

If your application was refused due to credit reference information then the lender will give you the name and address of the agency from whom they obtained that information. You can then write that agency to get a copy of your file sent to you along with a guide to what the information means and how you can get it changed or add to it if you need to.

Although credit reference agencies will not be able to tell you why you were refused for credit because they do not know themselves, they generally have quite adept customer service departments that may be able to help you with questions about your credit information.

Your Job and How Debt Affects It

Employment and How Debt Problems Affect Your Job
With this article we want to address the ways in which serious debt troubles can affect your ability to work and keep your job or even your career. Our hope is that you may learn information here that can help you if you or a loved one faces serious debt that has begun to affect your or their ability to work. It is never a positive experience to have your job at risk due to a terrible debt struggle.
Debt solutions are available for those who do not wish to have their work life interrupted or even ruined do to debt. The effects can be much more long lasting than you might imagine. For example, a bankruptcy can have effects that last a decade.
Here are a few solutions that may suit your needs:
An IVA, the Individual Voluntary Arrangement
- An IVA is an agreement for those who owe £15,000 or more. With an IVA, the advantage is that it will not affect your job or ability to keep working for almost all employers.
A DMP, the Debt Management Plan
- If your job is on the line due to debt then a Debt Management Plan may be for you. This popular solution has the advantage that it takes your unique individual circumstances into account.
A Bankruptcy
- Since your job may be impacted if you undergo a bankruptcy, particularly if you work in the legal sector, banking or finance, you will want to get sound advice before you consider this step.
Once you have already lost your job due to debt, it is too late to do anything constructive about it. However, if you’re struggling with debt and you need answers, then you will want to act quickly because as we all know, debt piles up quicker than we hope it will.

Employment and How Debt Problems Affect Your Job

With this article we want to address the ways in which serious debt troubles can affect your ability to work and keep your job or even your career. Our hope is that you may learn information here that can help you if you or a loved one faces serious debt that has begun to affect your or their ability to work. It is never a positive experience to have your job at risk due to a terrible debt struggle.

Debt solutions are available for those who do not wish to have their work life interrupted or even ruined do to debt. The effects can be much more long lasting than you might imagine. For example, a bankruptcy can have effects that last a decade.

Here are a few solutions that may suit your needs:

An IVA, the Individual Voluntary Arrangement

- An IVA is an agreement for those who owe £15,000 or more. With an IVA, the advantage is that it will not affect your job or ability to keep working for almost all employers.

A DMP, the Debt Management Plan

- If your job is on the line due to debt then a Debt Management Plan may be for you. This popular solution has the advantage that it takes your unique individual circumstances into account.

A Bankruptcy

- Since your job may be impacted if you undergo a bankruptcy, particularly if you work in the legal sector, banking or finance, you will want to get sound advice before you consider this step.

Once you have already lost your job due to debt, it is too late to do anything constructive about it. However, if you’re struggling with debt and you need answers, then you will want to act quickly because as we all know, debt piles up quicker than we hope it will.

Tax Debt in the UK

When You Can’t Pay Your Tax
In this article we want to explore the primary aspects of an inability to pay one’s tax.
Some terms to better help you understand this article are as follows:
Collector – The person who purses those who have not paid tax. Today these individuals are part of the RMS (Receivables Management Service). However, before a collector will pursue you, an initial application for payment is sent from one of the two Accounts Offices in either Cumbernauld or Shipley. If, instead local enforcement action must be taken for payment not having been made, the Recovery Office will deal with this matter. Usually, the Recovery Office is named after the city or town where it is located and this office has jurisdiction for the area in which you live or trade. In cases where a bankruptcy is involved, the EIS (Enforcement and Insolvency Service) in Worthing will get involved. Those employed by the RMS may contact you if your returns are outstanding, but they do not process your return themselves.
The issuing and processing of returns is handled by RMS offices which in this article will be called “tax offices” because that is what they are traditionally called in an unofficial sense. It’s important to realize that different people within the RMS have different roles so the “collector” who contacts you is usually a different person from the RMS who does not deal with your specific tax return – that would be the “tax office”.
Warning Signs of Impending Problems
Each year, thousands of individuals get into arrears with their tax. Normally, the individual is made aware of this situation when they see a debt on their Statement of Account. After a short time, a collector will generally get in touch via letter or telephone and ask for an immediate payment. It is important to remain calm and fight any sense of panic you feel.
The RMS can frighten people by threatening them with legal action, but it is still crucial that you don’t panic if this happens because the situation may not be as dire as it seems. Remain calm as you work through the situation and consider your options, as well as how you got into the situation.
The first thing to remember is that you should never ignore a statement of account or a demand from a collector because that is the worst action to take. If there is any chance that you can resolve your situation then you will want to act quickly because if you do nothing then you are inadvertently raising the risk that you will face legal action.
Remember, the amount being demanded could be incorrect. You may find that you disagree with what either the collector or the Statement of Account state is the amount of tax owed. In some instances your statment may include what is called a determination, which is an estimate and made because the tax return (or tax returns) have not been completed. If this is the case it can be corrected.
Unfortunately, the collector who is paid to pursue you for upaid tax may or may not be trained in how to understand the tax so you could well be wasting effort if you try to persuade them that the figure is incorrect. Generally you will need to contact your tax office to make the needed adjustments because they are the ones who deal with your tax return.
You will end up liable for penalties, surcharges, interest and tax charged on determination if you have not completed your tax return (or tax returns) which is not only correct, but enforceable until you have submitted a completed return. Once you have submitted the return the amount of tax will be revised so that they reflect the amounts shown on your return. Then you will only need to pay the revised debt plus interest and any outstanding penalties or surcharges that are still due in respect of the revised debt.
In cases of ‘non-return’, outstanding debts are pursued until the required return is submitted, so even if you pay all that is demanded, they will continue to take action in order to get that return submitted. Generally this means daily penalties. Therefore, it is not in your interest to always submit your returns in a timely manner.
There are some instances where, if you do owe tax, you are allowed to pay it over time. Although tax should always be paid when it falls due, the RMS allows some people to pay their tax over a period of weeks, months or longer, in certain circumstances. This does mean, however, that interest will be added to the total amount due, but it’s possible this interest will be small. Generally  in these instances the RMS will keep reminding you that interest is being added to the total because they have no discretion and are unable to freze interest in order to help you clear the debt quicker.
Interest rates on unpaid tax is actually lower than is commonly believed, right now it is set at 6.5% per annum. As an example, being one month late on a tax bill of £2,000 means you are charged £11.
Many people are afraid that failure to pay tax in a timely manner leads to criminal prosecution and imprisonment, but this rarely happens. The RMS does prosecute a few people each year, but these are mostly cases where the person is alleged to have been seriously dishonest or trying to evade the tax. The RMS won’t take this course of action simply because an individual has not paid tax on time or if they are having trouble finding money to settle. Yet, at the same time it is important to be aware of the risk that the RMS may try to obtain a court judgment against you for the unpaid tax. If you fail to pay the tax after this you may receive a judgment summons which requires you to attend court and explain why you haven’t paid. Ignoring a judgment summons and not attending court could result in a prison sentence.
It is important to understand that you have rights when you are a taxpayer. The RMS must hold to a Service Commitment and under this, it promises to treat taxpayers fairly and with courtesy. When you have clear evidence that the person who has dealt with your case was rude, unfair or overly harsh then you have a right to complain and ask that another person be assigned to your case.
After you have been contacted regarding unpaid tax, you will want to consider what to do next:
- Do you believe the amount being demanded is incorrect? If you do then do not hesitate to take action in order to get the figure corrected
- If you believe that you do owe tax, but you can’t pay immediately then you want to work out an agreement with the RMS
- In the instance that you are unable to work an agreement out with the RMS you may face enforcement action so it is important to understand each of those procedures and which defences could help you most.
There are people who have never declared their income and as result do not receive any demands from the RMS because it is unaware that the person has earned any taxable income or has been misled regarding the total amount earned. This situation is dangerous because the person may end up receiving a penalty for failing to report their income and that means the risk of potential prosecution.
If you are dealing with tax arrears, the situation can be stressful due to the complexity so you may benefit from outside counsel. You could benefit from help getting things straightened out through either a Debt Management Plan or, in more severe instances where you owe fifteen thousand pounds or more, an Individual Voluntary Arrangement (IVA).
Get started today sorting these issues out because waiting only makes your life more stressful than it needs to be.

When You Can’t Pay Your Tax


In this article we want to explore the primary aspects of an inability to pay one’s tax.


Some terms to better help you understand this article are as follows:


Collector – The person who purses those who have not paid tax. Today these individuals are part of the RMS (Receivables Management Service). However, before a collector will pursue you, an initial application for payment is sent from one of the two Accounts Offices in either Cumbernauld or Shipley. If, instead local enforcement action must be taken for payment not having been made, the Recovery Office will deal with this matter. Usually, the Recovery Office is named after the city or town where it is located and this office has jurisdiction for the area in which you live or trade. In cases where a bankruptcy is involved, the EIS (Enforcement and Insolvency Service) in Worthing will get involved. Those employed by the RMS may contact you if your returns are outstanding, but they do not process your return themselves.


The issuing and processing of returns is handled by RMS offices which in this article will be called “tax offices” because that is what they are traditionally called in an unofficial sense. It’s important to realize that different people within the RMS have different roles so the “collector” who contacts you is usually a different person from the RMS who does not deal with your specific tax return – that would be the “tax office”.


Warning Signs of Impending Problems


Each year, thousands of individuals get into arrears with their tax. Normally, the individual is made aware of this situation when they see a debt on their Statement of Account. After a short time, a collector will generally get in touch via letter or telephone and ask for an immediate payment. It is important to remain calm and fight any sense of panic you feel.


The RMS can frighten people by threatening them with legal action, but it is still crucial that you don’t panic if this happens because the situation may not be as dire as it seems. Remain calm as you work through the situation and consider your options, as well as how you got into the situation.


The first thing to remember is that you should never ignore a statement of account or a demand from a collector because that is the worst action to take. If there is any chance that you can resolve your situation then you will want to act quickly because if you do nothing then you are inadvertently raising the risk that you will face legal action.


Remember, the amount being demanded could be incorrect. You may find that you disagree with what either the collector or the Statement of Account state is the amount of tax owed. In some instances your statment may include what is called a determination, which is an estimate and made because the tax return (or tax returns) have not been completed. If this is the case it can be corrected.


Unfortunately, the collector who is paid to pursue you for upaid tax may or may not be trained in how to understand the tax so you could well be wasting effort if you try to persuade them that the figure is incorrect. Generally you will need to contact your tax office to make the needed adjustments because they are the ones who deal with your tax return.


You will end up liable for penalties, surcharges, interest and tax charged on determination if you have not completed your tax return (or tax returns) which is not only correct, but enforceable until you have submitted a completed return. Once you have submitted the return the amount of tax will be revised so that they reflect the amounts shown on your return. Then you will only need to pay the revised debt plus interest and any outstanding penalties or surcharges that are still due in respect of the revised debt.


In cases of ‘non-return’, outstanding debts are pursued until the required return is submitted, so even if you pay all that is demanded, they will continue to take action in order to get that return submitted. Generally this means daily penalties. Therefore, it is not in your interest to always submit your returns in a timely manner.


There are some instances where, if you do owe tax, you are allowed to pay it over time. Although tax should always be paid when it falls due, the RMS allows some people to pay their tax over a period of weeks, months or longer, in certain circumstances. This does mean, however, that interest will be added to the total amount due, but it’s possible this interest will be small. Generally  in these instances the RMS will keep reminding you that interest is being added to the total because they have no discretion and are unable to freze interest in order to help you clear the debt quicker.


Interest rates on unpaid tax is actually lower than is commonly believed, right now it is set at 6.5% per annum. As an example, being one month late on a tax bill of £2,000 means you are charged £11.


Many people are afraid that failure to pay tax in a timely manner leads to criminal prosecution and imprisonment, but this rarely happens. The RMS does prosecute a few people each year, but these are mostly cases where the person is alleged to have been seriously dishonest or trying to evade the tax. The RMS won’t take this course of action simply because an individual has not paid tax on time or if they are having trouble finding money to settle. Yet, at the same time it is important to be aware of the risk that the RMS may try to obtain a court judgment against you for the unpaid tax. If you fail to pay the tax after this you may receive a judgment summons which requires you to attend court and explain why you haven’t paid. Ignoring a judgment summons and not attending court could result in a prison sentence.


It is important to understand that you have rights when you are a taxpayer. The RMS must hold to a Service Commitment and under this, it promises to treat taxpayers fairly and with courtesy. When you have clear evidence that the person who has dealt with your case was rude, unfair or overly harsh then you have a right to complain and ask that another person be assigned to your case.


After you have been contacted regarding unpaid tax, you will want to consider what to do next:


- Do you believe the amount being demanded is incorrect? If you do then do not hesitate to take action in order to get the figure corrected


- If you believe that you do owe tax, but you can’t pay immediately then you want to work out an agreement with the RMS


- In the instance that you are unable to work an agreement out with the RMS you may face enforcement action so it is important to understand each of those procedures and which defences could help you most.


There are people who have never declared their income and as result do not receive any demands from the RMS because it is unaware that the person has earned any taxable income or has been misled regarding the total amount earned. This situation is dangerous because the person may end up receiving a penalty for failing to report their income and that means the risk of potential prosecution.


If you are dealing with tax arrears, the situation can be stressful due to the complexity so you may benefit from outside counsel. You could benefit from help getting things straightened out through either a Debt Management Plan or, in more severe instances where you owe fifteen thousand pounds or more, an Individual Voluntary Arrangement (IVA).


Get started today sorting these issues out because waiting only makes your life more stressful than it needs to be.