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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
, see all updates

Debt and return pursuit: foreign cases: Mutual Assistance in the Recovery of Debt (MARD) (non-EU countries): inbound cases - requests for recovery - MARD Team action

General

Another country may seek assistance in recovering a tax or duty debt where the debtor lives in the UK. In such cases, treat it as if it were a UK income tax debt for recovery purposes.

The instrument of recovery

All requests for recovery from another country will include an instrument permitting enforcement, which allows us to recover the debt on their behalf. This may be

  • an administrative document or decision issued in the applicant country relating to the debt (such as a distress warrant) or
  • a decision by a court etc in the applicant country allowing recovery of the debt (such as a judgment order).

Grounds for refusing a request for recovery

You should not normally refuse a request for assistance from another country to recover a tax debt under these international agreements. However, you can refuse any requests

  • that are out of time (that is a new case more than 5 years old unless there are exceptional circumstances e.g. a fraud case) (see DMBM560230)
  • if the recovery of the claim would, because of the situation of the debtor, create serious economic or social difficulties in this country. If such cases arise, inform the applicant country in writing of the reasons for refusing to comply with the request. However, had it been a UK case, and under the same circumstances we would have legally been required to recover the debt, then we take recovery action.
  • if the total amount of debt to be recovered is below the threshold agreed with that country (including interest, surcharges, penalties and costs)
  • if it appears to you that the other country has not pursued all reasonable means available under its laws or administrative practice to recover the debt prior to seeking assistance from HMRC. You may however accept the request if the other country can demonstrate that recourse to such means would give rise to disproportionate cost or difficulty
  • if it appears to you that the debt relates to a tax or duty that is either not covered by the relevant arrangement or has been imposed by the other country contrary to the generally accepted taxation principles.

Request for payment

At all times you must update:

  • the Applicant Country as applicable
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • Action sheet as appropriate
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Initial action

Check HMRC systems to confirm that the debtor is at that address.

If debtor is not at the address, trace a contact number on directory enquiries or take tracing action as appropriate. If debtor is at the address, issue papers to the address as below.

Further address traced

If alternative address is traced,

  • write to the applicant country to request permission to continue recovery action at the new postal address (if applicable).
  • reset B/F
  • await reply and deal with as appropriate. If permission is given, issue the papers to the new address as below.

No alternative address

If there is no trace nor any response from the debtor, review the case to check if suitable to be referred to the DTO.

Case unsuitable (for example, customer missing)

  • notify applicant country (via letter) that the debtor can’t be traced
  • (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)

Case suitable (for example, customer believed to be at address)

  • refer the case to the relevant DTO to consider enforcement options
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • B/F for acknowledgment from the DTO(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

On B/F check if an acknowledgment has been received.

If no acknowledgement from the DTO

  • send a reminder letter and
  • (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)

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

Initial request for payment

  • (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)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • prepare payslip(s) (using Print Payslip) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • issue the letter MARD (Non EU) 2 request for payment and the payslip(s) to the debtor
  • (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)

Payment received in UK

Deal with any payment according to the normal rules.

Once payment has cleared

  • notify the applicant country by post and (if applicable) the DTO or other DM unit dealing with the case by telephone of the payment made and
  • close the case.

If part payment is made,

  • write to the debtor requesting the remaining payment plus the additional interest
  • advise the applicant country of the receipt of the part payment
  • B/F the file for further payment
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

On B/F review to check that the payment has cleared.

Payment made direct to Applicant Country (AC)

If the AC notifies you that payment has been made in full directly to them by the debtor; or the amount cannot be collected,

  • (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)
  • advise the DTO to cease any enforcement action and
  • close the case.

Time to Pay

No prior authorisation from AC

If the debtor requests time to pay and the AC has not already specified this can be authorised, contact them before you agree any arrangements with the debtor.

If the AC agrees, advise the debtor of the arrangements (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Prior authorisation by AC

If the AC has already authorised time to pay and the debtor puts forward a proposal for payment, consider the proposal carefully and accept/reject or negotiate as appropriate. (This content has been withheld because of exemptions in the Freedom of Information Act 2000) .

If the debtor defaults, issue a warning letter.

Debtor can’t pay

If the debtor advises that they can’t pay

  • ask them to provide evidence to support this claim such as Income and Expenditure (I&E) form, bank statement etc. and
  • if there is no effective means of recovering the debt, inform the applicant country accordingly and close case.

Liability disputed

If the debtor disputes the liability

  • issue MARD (Non EU) 3 to the debtor
  • send a copy of the letter received from the debtor with the stencil to the AC
  • advise the DTO (if appropriate) to suspend their action until the appeal has been finalised.

If the debtor appeals for repayment of any amounts already recovered and transferred to the AC or for compensation in relation to recovery of a contested claim, advise the AC. If the debtor’s appeal is successful then the AC will be liable for any repayments or compensation due.

When the dispute is settled, proceed with recovery action or close the case as applicable.

Amount reduced

If the AC notifies you that there is a reduction in the amount to be collected

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • advise the DTO or other DM unit dealing with the debt of the reduction and
  • request they continue their action, but limit it to the reduced amount outstanding.

If they have already recovered an amount that now exceeds the reduced claim, then provided this amount has not already been transferred to the AC, arrange to repay the excess amount to the debtor.

Amount increased

If the applicant country notifies you that there is an increase in the amount to be collected, as far as possible, deal with the request at the same time as the original request. If this is not possible, then only agree to recover the additional amount if it exceeds the threshold for recovery. You will need to

  • (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)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • advise the DTO or other DM unit dealing with the debt of the increase.

Claim cancelled or terminated

If the applicant country notifies you that the claim has been cancelled or terminated

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • advise the DTO or other DM unit dealing with the debt to cease any enforcement action
  • close the case.

Action following DTO / EIS action

If following recovery action any of the debt remains due:

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • notify the foreign country that the remaining debt is not recoverable
  • update the details on the Non EU MARD database and
  • close the case.