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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
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Debt and return pursuit: Foreign cases: Mutual Assistance in the Recovery of Debt (MARD) (Social Security Debts): requests for reimbursement of costs

General

Normally, the requested country will not charge the applicant country costs for taking a recovery action. However, where the requested country has incurred recovery costs for a social security debt, such as court costs, but has been unable to recover these costs from the debtor, it can either:

  • deduct any outstanding costs from any payments it has recovered and only remit the balance to the applicant country
  • ask the applicant country to reimburse any outstanding costs.

In addition, where either:

  • recovery poses a specific problem or concerns a very large amount of costs
  • recovery action is deemed unfounded (action is not considered unfounded, however, where claims were valid when the request was made and which, on receipt of new information from the debtor, may prove to be unfounded; in such cases, reimbursement of costs is not appropriate)

both countries may agree for the applicant country to pay the recovery costs / losses of the requested country, if they can’t be recovered from the debtor.

Recovery costs incurred by the United Kingdom in recovering a foreign debt

Where we have been unable to recover the debt in full (in other words, the other country’s debt and the UK enforcement costs) the action you take to claim reimbursement of the UK enforcement costs from the applicant country will differ depending on how much money (if any) has been recovered from the debtor.

The amount recovered at least covers the UK enforcement costs

  • Deduct the UK enforcement costs from the amount recovered and remit the balance to the applicant country.
  • Show the detail of the amount deducted in the R018.
  • Attach evidence that the costs have been incurred.

The amount recovered does not cover the UK enforcement costs entirely

  • Deduct the UK enforcement costs from the amount recovered.
  • Show the details of the amount deducted in the R018.
  • Send a request to the applicant country to ask for reimbursement of the unpaid UK enforcement costs, following the procedure below “No or insufficient payment recovered from the debtor”.
  • Attach evidence that the costs have been incurred.

No or insufficient payment recovered from the debtor

Send a completed R028 to the applicant country to request reimbursement of the unpaid UK enforcement costs.

Tick the option ‘reimbursement of costs is requested under Decision No R1 of 20.06.2013 Point 5’ and provide details of the costs incurred. Attach evidence that the costs have been incurred.

The applicant country will send you an R029 or equivalent to confirm that they will reimburse the costs. They will send you an R004 or equivalent to let you know when the money has been transferred.

Recovery costs incurred by another country in recovering a UK debt

Where another country has been unable to recover the debt in full (in other words, the UK debt and their enforcement costs) the action they will take to claim reimbursement of their enforcement costs from the UK will differ depending on how much money (if any) has been recovered from the debtor.

The amount recovered at least covers the other country’s enforcement costs

The other country will deduct their enforcement costs from the amount recovered and remit the balance to the UK. They will show the detail of the amount deducted in the R018 or equivalent and attach evidence that the costs have been incurred.

The amount recovered does not cover the other country’s enforcement costs entirely

The other country will deduct their enforcement costs from the amount recovered. They will show the details of the amount deducted in the R018 or equivalent and will attach evidence that the costs have been incurred. They will also send an R028 or equivalent to the UK to ask for reimbursement of their unpaid enforcement costs.

On receipt, deal with as below ‘No or insufficient payment recovered from the debtor’.

No or insufficient payment recovered from the debtor

The other country will forward you a request for reimbursement of unpaid enforcement costs on an R028 or equivalent. They will explain that the reimbursement is requested under Decision No R1 of 20.06.2013 Point 5 and provide details of the costs incurred. They will attach evidence that the costs have been incurred.

On receipt check the paperwork to ensure the:

  • request has been properly completed
  • evidence supports the amount being requested
  • UK has not already refused liability to reimburse the costs, following a request under ‘Recovery poses a specific problem or concerns a very large amount in costs’ below.

If you are satisfied that the request is valid, send a copy of the R028 and the evidence to (This content has been withheld because of exemptions in the Freedom of Information Act 2000) immediately. (This content has been withheld because of exemptions in the Freedom of Information Act 2000) will review the case and liaise with (This content has been withheld because of exemptions in the Freedom of Information Act 2000) as appropriate. They will also provide you with instructions on how to proceed.

Recovery poses a specific problem or concerns a very large amount in costs

If a requested country anticipates that it will incur extraordinary costs in recovering another country’s debt, it can ask the other country to agree to reimburse these costs if they cannot be recovered from the debtor. It should seek to get this agreement before the costs are incurred.

Extraordinary costs are defined as those incurred when a particular type of procedure, which is not ordinarily used in the requested country, is used at the request of the other country, or supplementary costs of experts, interpreters, or translators. In some countries it may also refer to costs of judicial and bankruptcy proceedings.

Requests to other countries

Send an R028 to the applicant country requesting agreement for reimbursement of costs under Article 85(2) of Regulation (EC) No 987/2009. Provide details of actual costs or losses incurred to date, estimated costs or losses that could be incurred if recovery action was to continue and the recovery action proposed.

The applicant country will send you an R029 or equivalent to confirm whether or not they agree to the reimbursement. If the applicant country:

  • If the applicant country accepts liability to reimburse actual and estimated costs or losses, proceed with the suggested recovery action. Once all costs and losses incurred are confirmed, send a further R028 to the applicant country with the details. The applicant country will send you an R004 or equivalent once the reimbursement has been made
  • If the applicant country does not accept liability to reimburse actual and estimated costs or losses, send them an R018 explaining that no further recovery action is possible and close your case.

Requests from other countries

A request will be made to you on an R028 or equivalent.

If you think we should not agree to reimburse the costs or losses, respond to their request on an R029 advising that we do not accept liability to reimburse the costs or losses.

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

Action deemed to be unfounded

Requests to other countries

Send an R028 to the applicant country requesting reimbursement of costs and losses under Article 85(3) of Regulation (EC) No 987/2009. Explain why you consider the action was unfounded.

The applicant country will send you an R029 or equivalent to confirm whether or not they agree to the reimbursement.

  • If the applicant country accepts liability to reimburse costs and losses, they will send you an R029 or equivalent. They will also send you an R004 or equivalent once the reimbursement has been made.
  • If the applicant country does not accept the action to be unfounded and so does not accept liability to reimburse the costs or losses, they will explain why the action is not considered to be unfounded. On receipt, close your case.

Requests from other countries

A request will be made to you on an R028 or equivalent. The applicant country will explain why they consider the action was unfounded. Respond to their request on an R029 advising whether or not liability to reimburse the costs or losses is accepted. (This content has been withheld because of exemptions in the Freedom of Information Act 2000) .

If reimbursement is accepted, advise the other country of the transfer of the payment using an R004.