Class |
Description |
| 1 | GONE UNKNOWN
Used for individuals where a new address has not been traced. Used when taxpayers go abroad and the overseas address is not known. Arrears can be reinstated when the whereabouts of the taxpayer becomes known and collection action is resumed. |
| 2 | INSOLVENCY
Used for individuals (including deceased estates). Used when it is apparent that there are no assets left for distribution and there is no point in referring the case to the Insolvency Section to monitor HMRC’s claim in the estate. |
| 3 | IMPRISONMENT FOLLOWING HMRC LEGAL PROCEEDINGS
Used to write-off arrears when imprisonment follows court proceedings for non-payment of tax. |
| 5 | HARDSHIP
Used in deceased estates where the payment of the outstanding tax would cause hardship. Factors considered are the size of the debt in relation to the net estate, the age and financial position of the remaining dependant relatives and whether assets are easily realisable. |
| 7 | GONE ABROAD
Used where legal proceedings are not possible or ineffective. (No identifiable UK assets, difficulty in serving court documents.) Arrears can be reinstated if the taxpayer returns to the UK in which case collection action may be resumed. |
| 4 | MISCELLANEOUS
Used where the amount involved does not justify the cost of legal proceedings. Cases that may come into this category include those where
|
| 10 | OTHER CASES
Used for cases that do not fit into any of the other remission categories above including a statutory bar to a claim. E.g. where the taxpayer has a continuing liability and HMRC decides to draw a line under the arrears to encourage the taxpayer to keep up to date with current liabilities. Used also for |
Remissions within classes 1 to 3, 5 and 7 must be authorised by
a member of Debt Management & Banking (
IHTM38491). If you are unsure which
category the remission falls into, it can be referred to DMB with a
covering note explaining the situation, and asking them to place
the remission into the correct category. It is important for audit
purposes that all remissions are recorded under the correct
category.
If the remission is under classes 4 or 10 (or remission of
interest under the Code of Practice), then the caseworker (or their
manager, depending on the amount - see limits below) should
authorise the remission. Form Enf 12 still needs to be completed
and returned to Business Administration Team.
Please note there are separate instructions where the tax or
interest is treated as irrecoverable due to departmental error (
IHTM30541), where re-opening the IHT
liability (
IHTM30411) may cause embarrassment or
because the taxpayers claim they were given misleading advice (
IHTM30541).
| The monetary limits for classes 1, 3, 4, 7 and 10 are: | |
| HO & above | Up to £50,000 |
| Grade 7 | Over £50,000 |
| The monetary limits for class 2 is: | |
| HO & above | Unlimited |
| O & above | Unlimited as long as liable person is subject to formal liquidation |
| The monetary limits for class 5 is: | |
| HO & above | Up to £2,000 |
| SO & above | Up to £10,000 |
| Grade 7 | Over £10,000 |
The person discharging the claim should report it by completing form Enf 12 ( IHTM30507).
