www.iva.co.uk

When we applied for our IVA in Jan 2010, we owed an amount to HMRC. HMRC hadn't got a final figure for us at that stage, so we were told by our IP to submit a £1 debt amount on the paperwork, sign it, and the final figure would be added later. HMRC then put in an initial 'guesstimate' of £14,360, and they voted against our IVA. Luckily it was passed by the other creditors though. We challenged this amount and HMRC have finally confirmed that the amount is actually just £1,800!
We spoke to the person dealing with our case at the IP, and asked her what could be done - as the amount we were actually made insolvent over is £12,500 less than originally claimed. We assumed that therefore half of that amount would be taken off our total amount owing on the IVA. But we were told that as the extra amount did not take our payments over 40p in the pound, there is nothing that can be done. This just seems so unfair. We are paying over 6 years and have made 22 payments so far. Please advise, thank you.

What was the total of all the other debts you have? and what is the dividend expected?, unfortunately you will always owe the total amount of what you owed when you took the IVA out so if the debt to HMRC has reduced by such an amount this just means that your other creditors will get a better return which is a good thing?

On the other hand, if what you are paying now means you will repay your debts in full before the end of the 6 year period because of the reduced debt to HMRC then this means your IVA will be over sooner than you thought so it's a WIN/WIN surely?

Hi and welcome to the forum.

I agree with lem, sounds as though your creditors will be getting a better dividend which has to be good.

Hi, thank you for your replies.
We would be happy to pay the debt off earlier than expected, but none of our paperwork has changed to reflect the lower amount we owe to HMRC. We asked for it to be amended, but were told that everything just had to continue as originally agreed. It just seems unfair that HMRC put in such an inflated claim originally, and that this amount is still the figure used in our calculations.

My unagreed debts entering the IVA where around 50K and my arrangement was to continue for 5 years or until I achieved 55%.

My agreed debts ended up at about 45K so for me this reduction post approval was a good thing as it means I easily achieved 60%+ return within the 5 years and was never panicking whether I would be short at the end and always nice to think you managed to pay a bigger dividend without increasing your contributions.

You owe the total amount of your debt throughout the iva,not whatever your monthly payment is multiplied by your number of monthly contributions.

Given that your expected return is approx 40p/£ then there is due to be a considerable debt write off.

All that happens with hmrc claiming a smaller amount is that all creditors will gain.

Paul

The thing is, whatever your creditor claims turned out to be, the IVA was agreed on a certain dividend being achieved as a MINIMUM, so the fact that the HMRC debt has now gone down is irrelevant really, having your paperwork amended is, to be honest, asking your IP to do work that isn't required or necessary as it is going to make no difference to what you pay each month.

The inflated HMRC calculation was never used in calculating what you pay, when you propose an IVA, your IP looks at your I&E in detail, deducts your expenditure from your income and what is left is to service your payments, even with a rough idea of the total of what you owe, they can then propose what the dividend will be, but at the end of the day, irrespective of what your debts are, you have to pay across your disposable income so even if for some reason it turned out now that you only owed £10k and you were paying £1k a month, then all that would happen is you would just finish the IVA earlier (I know this is unlikely to happen but it's just an extreme example), you would still have to pay the £1k per month, does that make sense?

At the end of the day, your IP could have delayed your IVA proposal to wait for an accurate figure from HMRC but in that time your other debts would have increased significantly with continued charges and interest and your stress levels would have gone through the roof, you would have possibly been threatened or even court action started, so getting the IVA in place promptly to protect you from that was probably the right thing to do

That makes things a lot clearer. Thanks for all your posts - v helpful

My annual report does actually include 2 columns on the debts. The unagreed and agreed debt so I can clearly see each creditors pre and post acceptance IVA claims, but as others have said, it doesn't impact the amount you can pay. only the final dividend as a percentage may change.

Another reason its important for IVA providers to get as accurate as possible a picture of the detbs owed.

Paul