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HMRC internal manual

Debt Management and Banking Manual

Enforcement action: county court proceedings: administration orders: repayment available for set-off against AO debts

Previously where an AO was in force and a repayment became due to the debtor, there was no automatic right to set off the repayment against HMRC’s debt. It was necessary to seek leave of the court to use any set-off exclusively against HMRC debt included in the AO.

FA 2008 now gives you the ability to set-off repayments against AO debts where the repayment relates to the period before the AO was set-up.

Where the repayment relates to a period after the AO was set up you should still write to the court (and send a copy to Customer Ops) along the following lines:

‘A repayment of tax amounting to ………….. is due to …………… and I request the court’s permission to set off this sum against HMRC’s claim as scheduled in the Administration Order.’

If the court agrees, or alternatively fails to respond within 21 days, you should ask Customer Ops to deal with the set off as soon as possible. When the set-off has been made you should write to the court confirming the revised amount outstanding.

If the court asks that the repayment be paid into the court for the benefit of all creditors, you should write to the court (and send copies to the debtor and Customer Ops) as follows.

‘Thank you for your note of …………. . The repayment of tax due to ………………. can only be paid to you with the debtor’s written authority.

Unless you are aware of a statutory authority to the contrary, or you can obtain written authority for this sum to be paid into court within 28 days, I will have no alternative but to repay ……….. direct.’

You should B/F the case for 35 days and make repayment as appropriate depending on the reply (if any).