Budget 2013: HMRC to increase use of charging orders

Among the raft of tax evasion and avoidance crackdowns announced in this month’s 2013 Budget speech, it was revealed that HMRC will be making more extensive use of ‘charging orders‘.

 

These allow unsecured debts – unpaid taxes, in the case of HMRC – to be secured against your assets, such as your home or other property.

 

But critics object to their use, because they effectively mean unsecured debts can be transformed into secured debts retrospectively.

 

The plan to use them more extensively falls under HMRC’s Debt Recovery provisions in the 2013 Budget, with more detailed information due to be published later in the year.

 

At present, HMRC simply states: “HMRC will increase the use of charging orders, used to secure a tax debt against a debtor’s assets.”

 

Charging orders do not necessarily mean you have to sell your home; however, they can give creditors more confidence that they will receive what they are owed when assets are disposed of.

 

This may mean that you are not allowed to sell your home without notifying the creditor – in this case, HMRC.

 

You may be specifically required to pay HMRC what you owe when you sell your home, but again a charging order should not mean you are forced to sell immediately.

 

In some cases, however, HMRC may apply for a separate order with the power to force you to sell your home, and if this is granted you will be required to sell at the earliest opportunity.

 

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