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HMRC internal manual

Debt Management and Banking Manual

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HM Revenue & Customs
Updated
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Debt and return pursuit: foreign cases: Mutual Assistance in the Recovery of Debt (MARD) (EU States): requests for recovery from other member states - disputes

About disputes

We are required under EU law to suspend our recovery action when either the member state or the debtor informs us that the debt we have been asked to recover is under dispute.

If the debtor tells us about a dispute before we have received notification from the other member state, you should not suspend UK recovery if the dispute has either:

  • already been rejected
  • not been properly made.
     

To be properly made the debtor must have raised the dispute with:

  • the appropriate competent body in the applicant member state if the dispute is about the debt or the Uniform Instrument Permitting Enforcement (UIPE). The UIPE contains details of who the debtor should contact
  • the appropriate UK body if the dispute is about the enforcement measures in the UK, or the validity of any notification we have been asked to make on behalf of the applicant state.
     

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{#IDACYMNF}Other member state’s debt disputed {#}

If the debtor tells you that they dispute the debt or the UIPE, check:

  • the dispute has been properly made (in other words, it has been disputed in writing to the tax authority in the other member state, according to the instructions of that state if known)
  • the case papers confirm the dispute has not already been considered and rejected by the applicant member state; if the dispute has been previously considered, deal with under - ‘Continued dispute’ below
  • the dispute is obviously not artificial
  • if any part of the debt is not disputed - we expect them to pay the undisputed amount.
     

Questions to ask

To help you to decide if UK recovery action should be suspended, ask the debtor for the following information.

  • On what grounds are they disputing the debt?
  • What period does the dispute relate to?
  • How have they disputed the debt?
  • Who did they dispute the debt with and when (in other words, name and address of office and the date sent)?
  • Has their dispute been acknowledged by the tax authorities in the applicant member state?
  • If only part of the debt is in dispute, why hasn’t the undisputed amount been paid?
     

Ask for a copy of their dispute letter and the applicant member state’s acknowledgment.

Remember – that in sifting the dispute in this way, you are not looking at whether it has any merit; this is for the other country to decide.  You are only looking to establish that they have followed the correct process for raising a dispute and that it has not already been rejected by the other country.

If the debtor tells you that they dispute the debt, but hasn’t done this in writing, explain that:

  • unless they formally dispute the debt, we have no authority to suspend our action and so therefore we have to continue with it
  • information about how to formally dispute the debt is included on the UIPE.
     

Continued dispute

The outcome of any previous and known disputes will be in the case papers. Where it is clear that the dispute has already been fully considered by the applicant state, but has been rejected, action to recover the debt should continue.

However, where:

  • the dispute has already been rejected but the debtor believes the applicant member state has not fully considered their arguments (and it’s not clear to us from their response that they have)
  • we have a copy of the rejection letter
  • the debtor has written again to the applicant member state to further dispute the debt and we have a copy
     

action to recover the debt should be suspended.

In these cases, the debtor may also have begun legal proceedings to dispute the debt in the applicant member state.

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International Debt Unit, MARD team action {#}

If you decide that UK recovery action should be suspended:

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000) send the updated form to the applicant state
  • write to the debtor using a MARD40 SEES letter
  • BF the case for six months.
     

If you decide that UK recovery action should not be suspended, tell the debtor why and ask them for payment. If they fail to pay the debt, consider the next appropriate recovery action.

Update received from applicant member state

When the outcome of the dispute is known, the applicant member state will send you an updated e-form to tell you what the outcome was and how to proceed.

If the applicant member state rejects the dispute:

  • ask them for a copy of the rejection letter sent to the debtor
  • write to the debtor using a MARD30 SEES letter
  • BF the case for 35 days.
     

If the debtor pays the debt in part or in full, deal with as per the guidance at DMBM560110.

If the debt was disputed before the case was referred for enforcement action and the debtor has failed to contact you at the BF, consider the next enforcement action as per the guidance at DMBM560110. Note(This content has been withheld because of exemptions in the Freedom of Information Act 2000) the outcome of the dispute.

If enforcement action had already begun before the debt was disputed:

  • send a further enforcement letter if appropriate
  • update the relevant enforcement office
  • if the debtor fails to pay, ask the enforcement office to continue their action to recover the debt.
     

If the dispute was accepted in part or in full and no further debt is due:

  • write to the debtor to confirm that the applicant member state has accepted their dispute using a MARD20 SEES letter
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • update the relevant enforcement office
  • close your case.
     

If the dispute was accepted in part or in full and part of the debt remains outstanding the applicant member state will send you an updated request form and Uniform Instrument Permitting Enforcement for the revised debt. On receipt:

  • write to the debtor using a MARD20 SEES letter asking for payment of the balance
  • BF for 35 days.
     

If the debtor pays the outstanding balance in part or in full, deal with as per the guidance at DMBM560110.

If the debt was disputed before the case was referred for enforcement action and the debtor has failed to contact you at the BF, consider the next enforcement action as per the guidance at DMBM560110. Note(This content has been withheld because of exemptions in the Freedom of Information Act 2000) the outcome of the original dispute.

If enforcement action had already begun before the debt was disputed:

  • send a further enforcement warning letter if appropriate
  • update the relevant enforcement office
  • if the debtor fails to pay, ask the enforcement office to continue their action to recover the debt.
     

No update from applicant member state following six-month BF

Ask the applicant member state for an update by sending an updated e-form to them(This content has been withheld because of exemptions in the Freedom of Information Act 2000) . BF the case for seven working days.

If the applicant member state tells you that the outcome of the dispute is not yet known, BF the case for a further six months.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

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Field Force action

Consider whether or not UK recovery action should be suspended following the guidelines under ‘other member state’s debt disputed’ above.

UK recovery action should be suspended

If you decide that UK recovery action should be suspended:

  • return the papers back to the International Debt Unit, MARD team with your report(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • close your case.
     

UK recovery action should not be suspended

If you decide that UK recovery action should not be suspended, explain to the debtor why and continue with your recovery action.

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{#IDAXENNF}EIS Bradford action {#}

Consider whether or not UK recovery action should be suspended following the guidelines under ‘other member state’s debt disputed’ above.

UK recovery action should be suspended

If a county court claim form has not yet been issued:

  • suspend your action
  • notify the International Debt Unit, MARD team of the dispute and send them a copy of the dispute letter from the debtor plus the applicant member state’s acknowledgement
  • transfer ownership of the (This content has been withheld because of exemptions in the Freedom of Information Act 2000) record back to the International Debt Unit, MARD team
  • close your case.
     

If a county court claim form has been issued but judgment has not been entered:

  • notify the International Debt Unit, MARD team of the dispute and send them a copy of the dispute letter from the debtor plus the applicant member state’s acknowledgement
  • ask the court to stay the proceedings, with liberty to restore once we have confirmation of the outcome.
     

If we have already obtained judgment:

  • notify the International Debt Unit, MARD team of the dispute and send them a copy of the dispute letter from the debtor plus the applicant member state’s acknowledgement
  • suspend enforcement of the CCJ.
     

If the applicant member state rejects the dispute in full or in part, the International Debt Unit, MARD team will contact the debtor again and ask for payment. If the debtor still fails to pay, they will update you and ask you to continue with your recovery action for the outstanding debt.

If the debt is amended following the dispute, the International Debt Unit, MARD team will provide you with an updated Uniform Instrument Permitting Enforcement for the revised debt.

If the applicant member state withdraws the debt entirely and the county court claim form has been issued, the International Debt Unit, MARD team will update you.

UK recovery action should not be suspended

If you decide that UK recovery action should not be suspended:

  • explain the reasons to the debtor
  • continue with your action to recover the debt.
     

If you consider that it’s appropriate to apply for Summary Judgment, do this after issuing the claim and after the debtor has filed either an Acknowledgment of Service or a Defence.

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EIS Summary Warrant action

Consider whether or not UK recovery action should be suspended following the guidelines above.

UK recovery action should be suspended

If the case has not yet gone to court:

  • suspend taking Summary Warrant action
  • notify the International Debt Unit, MARD team of the dispute and send them a copy of the dispute letter from the debtor plus the applicant member state’s acknowledgement
  • transfer ownership of the (This content has been withheld because of exemptions in the Freedom of Information Act 2000) record back to the International Debt Unit, MARD team
  • close your case.
     

If we already have a Summary Warrant, do not seek to enforce it. Notify the International Debt Unit, MARD team of the dispute. Send them a copy of the dispute letter from the debtor plus the applicant member state’s acknowledgement.

If the applicant member state rejects the dispute in full or in part, the International Debt Unit, MARD team will contact the debtor again and ask for payment. If the debtor still fails to pay, they will update you and ask you to continue with your recovery action for the outstanding debt.

If the debt is amended following the dispute, the International Debt Unit, MARD team will provide you with an updated Uniform Instrument Permitting Enforcement for the revised debt. A fresh Summary Warrant should be obtained.

If the applicant member state withdraws the debt entirely and the Summary Warrant has already been obtained, the International Debt Unit, MARD team will update you.

UK recovery action should not be suspended

If you decide that UK recovery action should not be suspended:

  • explain the reasons to the debtor
  • continue with your action to recover the debt.
     

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EIS {#IDAUKNNF}Worthing or EIS Edinburgh action {#}

Consider whether or not UK recovery action should be suspended following the guidelines under ‘other member state’s debt disputed’ above.

UK recovery action should be suspended

If the petition has not yet been issued (England, Wales or Northern Ireland), or lodged at court (Scotland):

  • suspend your action
  • notify the International Debt Unit, MARD team of the dispute and send them a copy of the dispute letter from the debtor plus the applicant member state’s acknowledgement
  • transfer ownership of the (This content has been withheld because of exemptions in the Freedom of Information Act 2000) record back to the MARD team
  • close your case.
     

If the petition has been issued (England, Wales or Northern Ireland), or lodged at court (Scotland):

  • notify the International Debt Unit, MARD team of the dispute and send them a copy of the dispute letter from the debtor plus the applicant member state’s acknowledgement
  • ask for an adjournment / do not object to an adjournment for a period of six to eight weeks in England & Wales. In Northern Ireland, the debtor may ask for an adjournment of four weeks. Do not object to this. In Scotland, because the debt is in dispute, you should arrange to have the petition dismissed.
     

If the dispute has not been finalised after the adjournment period for England, Wales or Northern Ireland and there is no indication of when it is likely to be resolved:

  • if there is no other tax debt in the petition, seek dismissal of the petition. Explain to the judge that:

    • the reason for the withdrawal is because a lengthy dispute period is anticipated
    • if the taxpayer is unsuccessful in their dispute we intend to re-petition if the debt still remains unpaid
  • if there is another tax debt in the petition, continue for the reduced petition debt subject to the de minimis limit.
     

If the applicant member state rejects the dispute in full or in part, the International Debt Unit, MARD team will contact the debtor again and ask for payment. If the debtor still fails to pay, they will update you and ask you to continue with your recovery action for the outstanding debt. They will also transfer the(This content has been withheld because of exemptions in the Freedom of Information Act 2000) record back to you if appropriate.

If the debt is amended following the dispute, the International Debt Unit, MARD team will provide you with an updated Uniform Instrument Permitting Enforcement for the revised debt.

If the applicant member state withdraws the debt entirely and the case has already gone to the insolvency court, the International Debt Unit, MARD team will update you and ask for any court action to be withdrawn or dismissed as appropriate.

UK recovery action should not be suspended

If you decide that UK recovery action should not be suspended:

  • explain the reasons to the debtor
  • continue with your action to recover the debt.
     

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(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

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  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
     

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(This content has been withheld because of exemptions in the Freedom of Information Act 2000)