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HMRC internal manual

Appeals reviews and tribunals guidance

Reviews and appeals for indirect taxes: Payment of tax pending the outcome: Assessing hardship applications

It is for the customer to demonstrate that payment of the disputed tax would cause them to suffer financial hardship.

Each case should be considered on the basis of the facts. The review officer who assesses the application should not make any decision until they have all the evidence and information, such as bank statements, audited accounts etc they need to form a complete picture of the customer’s financial position.

There are no hard and fast rules for dealing with a hardship application. But we should obtain as clear a picture as possible of the customer’s financial position.

The following table gives a number of questions which will help in doing this. In complex cases the review officer assessing the application may wish to consult an HMRC accountant.

If the review officer does not think that the customer has provided enough information to enable them to reach a decision on hardship, or they do not think that the application is acceptable they should write to the customer and refuse the application.

They should explain that if the customer wants to pursue the matter they should apply to the tribunal. They should also tell the Solicitor’s Office and send a copy of the letter they sent to the customer and release the suspended tax for collection.

If the review officer decides that the application is acceptable they should write to the customer to tell them their hardship application has been accepted. They should also warn that if their appeal is not successful they will be charged interest on the amount of the tax that has not been paid. The review officer should also tell the Solicitor’s Office and send a copy of the letter to the customer.

  Hardship question Information to obtain
1 Are annual accounts available for the customer’s business? If yes, a copy of the latest accounts (plus any in draft) plus monthly management accounts and cash flow forecasts if available
2 Does the customer hold a business / personal bank, building society or National Saving Bank account? If yes, up to date statements
3 Does the customer hold any stocks and shares/ If so , details of stocks and shares
4 Are the customer’s business premises freehold or leasehold? If freehold - date of purchase and approximate value, are premises subject to any charges. If leasehold - length of term, date of lease, rent payable and approximate value, details of any charge outstanding
5 Does the customer own the house they live in? If yes, approximate value, date of purchase, also amount of any mortgage, amount paid off and name of lender
6 Does the customer hold any insurance policies? If yes, approximate surrender value, date(s) taken out, amount of the policy, amount of the premiums and the number of premiums paid
7 Does the customer have any other assets or liabilities? If yes, details
8 Has the customer tried to take out a loan to pay the amount in dispute? If yes, a copy of the response
9 Has HMRC begun insolvency or bankruptcy proceedings? If yes, on the face of it the customer’s application is acceptable