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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
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Summary Proceedings (Sc): Claims for costs in sequestration cases

Section 251 of the Enterprise Act 2002 abolished preferential status for PAYE, SC and NICClasses 1, 2 and 4.

The following tables detail what should be claimed as a “secured” or“non-preferential” debt for costs where the relevant date is prior to 15 September 2003.

Cases where you have executed diligence within the 60-day period prior to sequestration

Earnings arrestment laid but see DMBM676660

Claim any outstanding costs as non-preferential.

Arrestment in execution laid (following on Decree)

Claim as “secured” the lesser of the total costs incurred in your action or the sum caught by the arrestment and claim any balance of costs as “non-preferential”.

Action of Furthcoming complete

  • Retain all the costs of your action as the “secured” element of your claim.
  • Pay the remainder of the proceeds to the Permanent Trustee.
  • Claim the tax and so on that is outstanding in the normal way.

If the proceeds of the action are insufficient to cover all the expenses:

  • retain all monies as the “secured” element of your claim
  • claim any balance of costs as “non-preferential”
  • claim unpaid tax and so on in the normal way.

Cases where you have executed diligence outwith the 60-day period prior to sequestration

Earnings arrestment laid

Claim any outstanding costs as non-preferential

Arrestment in execution laid (following on Decree)

Claim as “secured” the total costs incurred in your action or the sum caught by the arrestment and claim any balance of costs as “non-preferential”.

Action of Furthcoming complete

Do not lodge any claim for costs. Your diligence is complete – the proceeds no longer form part of the debtor’s estate.

Claim any unpaid tax and so on in the normal way.