{"id":11928,"date":"2011-02-16T15:16:46","date_gmt":"2011-02-16T15:16:46","guid":{"rendered":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/?p=11928"},"modified":"2021-05-12T15:49:16","modified_gmt":"2021-05-12T14:49:16","slug":"tax-credits-in-an-iva","status":"publish","type":"post","link":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/tax-credits-in-an-iva\/","title":{"rendered":"Tax Credits in an IVA"},"content":{"rendered":"\n

If you are insolvent and are considering entering into an Individual \nVoluntary Arrangement (IVA) you should check whether you have been \noverpaid Tax Credits in the past. Any such overpayment may be entered as\n a debt in your IVA proposal provided the overpayment has been \u2018determined\u2019\n prior to the date of approval of your IVA. If you think you have been \noverpaid contact HM Revenue & Customs (HMRC) at its nearest tax \noffice and bring your concern to the notice of officers. Request a \nStatement of Account (SOA) as soon as possible based on your latest \nincome information.<\/p>\n\n\n\n\n\n\n\n

For Tax Credit purposes, \u2018determined\u2019 means that the overpayment was included in a Final Award Notice (FAN) or an SOA.<\/p>\n\n\n\n

If such a determination has not been made HMRC are unlikely to include any overpayment as a debt in your IVA regardless of whether any overpayment is being recovered (or could be recovered) by restriction of an ongoing Tax Credit award. The reason for this is that HMRC has no means of readily determining the balance (of overpayment) due. <\/p>\n\n\n\n

\"Tax<\/figure><\/div>\n\n\n\n

HMRC will claim to rank for dividend all (overpayment of) Tax Credit \ndetermined prior to the date of approval of the IVA. Furthermore, HMRC \nwill not claim to rank for dividend any (overpayment of) Tax Credit \ndetermined after the date of IVA approval, regardless of whether it \nrelated to a period prior to IVA approval or not. Such overpayment will \nbe recovered from the debtor by HMRC as a post approval debt. It is in \nthe debtor\u2019s interest to have any such overpayment entered as a debt in \ntheir IVA rather than have to deal with it separately.<\/p>\n\n\n\n

Where the debtor is married or co-habiting and the other party is \nsolvent and is therefore not entering into an IVA, it is important to \ndistinguish whether the Tax Credit overpayment was made to the insolvent\n debtor or the solvent partner or to both partners jointly. If made \njointly to both parties and if the required determination as to the \nquantum of the overpayment was made prior to the date of approval of the\n IVA, HMRC will enter a claim for the full debt into the IVA and will \nrank for dividend with the claims of the other unsecured creditors. The \nsolvent partner continues to be liable for repayment of the debt as a \nwhole in accordance with the principle of joint and several liability \nand HMRC will pursue repayment from that source, mitigated to the extent\n of any dividend paid from the insolvent partner\u2019s IVA.<\/p>\n\n\n\n

Following the approval of the IVA and again provided the quantum of \noverpayment of Tax Credit was determined prior to the approval of the \nIVA then any restriction of an ongoing award of Tax Credit should cease \nand payment of the debtor\u2019s Tax Credit award should revert to normal \nlevel without any deduction in respect of prior overpayment. This is in \ncontrast to Bankruptcy where restriction of ongoing award may continue \nafter the debtor is made bankrupt.<\/p>\n\n\n\n

If these HMRC rules and practices are unclear to you, the Insolvency \nPractitioner who is acting for you in the preparation of your IVA \nproposal, should clarify all of these matters well in advance of your \ndecision to proceed (or not) with your IVA. Entering into an IVA should \nnot leave you any worse off financially as far as tax credits go and in \nmany cases you will be better off, particularly if you have been \nsubstantially overpaid tax credits in the past.       <\/p>\n","protected":false},"excerpt":{"rendered":"

If you are insolvent and are considering entering into an Individual Voluntary Arrangement (IVA) you should check whether you have been overpaid Tax Credits in the past.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"none","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[7],"tags":[],"class_list":["post-11928","post","type-post","status-publish","format-standard","hentry","category-iva-articles"],"_links":{"self":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/11928","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/comments?post=11928"}],"version-history":[{"count":3,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/11928\/revisions"}],"predecessor-version":[{"id":13579,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/11928\/revisions\/13579"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=11928"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=11928"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=11928"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}