Guidance

Individual Voluntary Arrangements ― supporting individuals

Updated 13 December 2024

If you are an insolvency practitioner, this guidance will help you to prepare and submit a proposal for an Individual Voluntary Arrangement (IVA) on behalf of your client that HMRC will likely vote in favour of.

You should always send IVA proposals to HMRC’s Voluntary Arrangements Service.

Their contact details are at the end of this guidance. Sending proposals straight to the team will make it quicker for them to understand whether they can support it.

Before you submit an IVA proposal

Before you submit an IVA proposal you will have:

• considered other possible solutions with your client such as:
  • bankruptcy
  • Debt Relief Order (DRO)
• explained to your client why an IVA is the right solution for their circumstances

When we will support a proposal

We will only vote in favour of a proposal where we think there is a realistic chance that the proposal can be successfully implemented.

Essential conditions for supporting a proposal

We consider IVAs on a case-by-case basis. There are certain conditions that must be met for us to vote to support a proposal.

HMRC is likely to reject a proposal that does not make clear that your client will pay all future debts to HMRC in full and on time. This should be reflected in the statement of income and expenditure in the proposal.

Your client must:

• be honest about their finances in the proposal and understand their responsibility, recognising their obligations under section 262A Insolvency Act 1986
• state in the proposal that they will pay all future debts to HMRC in full and on time
• have up to date tax affairs and have submitted all tax returns — so it is clear how much tax is owed
• have made an optimised and achievable offer (best offer first time) to creditors

What information to include in a proposal

We depend on you to deliver the most appropriate solution and expect you have undertaken sufficient work with your client so you can confirm to creditors:

• the true position regarding assets and liabilities
• that the open market value of assets is not materially different from the proposal
• that the value of liabilities is not materially different from the proposal
• that the proposal is likely to work

Where these points are not clear, we may ask you to provide further details, which can include:

• financial information that may have been excluded
• any other information that influences our decision

If we do not receive this information, we may vote to reject the proposal. If we receive the information later, we cannot guarantee to revisit the original decision.

We will also:

• compare our knowledge of the financial position with what is stated in the proposal
• look critically at projected income and expenditure
• require that provision is made for payment of all future post voluntary arrangement liabilities as they fall due

What will cause HMRC to vote against a proposal

It is likely we will vote against a proposal if there’s evidence of:

• your client failing to meet prior voluntary arrangement obligations
• your client being involved in tax avoidance schemes
• your client having previously paid other creditors while withholding sums due to the Crown
• your client evading statutory liabilities, or past or current association with contrived insolvency
• the proposal trying to remove HMRC’s potential right of set-off against any HMRC debts
• an inability to pay future ongoing tax liabilities while maintaining an IVA
• requiring the sale of HMRC debt or not providing cash dividends
• a proposal that is not effective to maintain
• unusual and hidden supervisor costs

We expect all preferential debt to be cleared in full before any funds are distributed to non-preferential unsecured creditors. HMRC’s secondary preference should be included and detailed in the estimated outcome statement. We will not support a proposal if this is not the case

We will not support a proposal unless there’s full and honest financial disclosure.

How to contact us

You should send all IVA proposals to HMRC’s Voluntary Arrangements Service by email, and must include your client’s:

• National Insurance number
• Self Assessment unique registration number
• PAYE reference number — if your client is an employer
• VAT registration number — if your client is VAT registered

You can email proposals to [email protected].

The subject of the email should state ‘individual voluntary arrangement proposal’ and your client’s name.

If you have an upcoming date for the decision procedure to vote on your client’s proposal, you should also include this in the subject of your email.

You should only post your client’s documents, including the information required, if you cannot send a proposal by email:

Debt Management — EISE
HM Revenue and Customs
BX9 1SE

Make sure proposals:

• satisfy the substance and spirit of our acceptance criteria
• are supported by detailed and reliable financial information
• are clear and unambiguous as to terms, roles and obligations

HMRC may not be able to access online portals due to technical security restrictions, so we may ask for documents to be sent to us in other ways. If this cannot be done, this may delay our response or affect our ability to consider your proposal.

We have introduced electronic banking facilities to help insolvency practitioners and HMRC with the payment of dividends. We expect dividends to be paid through Bacs (Bankers Automated Clearing System) to the correct account details with accurate IVA references.

Discussions with third parties

HMRC may discuss the content of a proposal and supporting documentation with creditors.