Can HMRC Debts Be Included in an IVA?

Yes — HMRC Is an Unsecured Creditor

HM Revenue & Customs (HMRC) is an unsecured creditor like any other, and debts owed to HMRC can be included in an IVA. This includes:

• Income tax arrears
• Self-assessment tax debt
• VAT debt
• National Insurance contributions (Class 2 and Class 4)
• PAYE underpayments
• Tax credit overpayments (in some cases)

HMRC as a Creditor — What to Expect

HMRC can be one of the more challenging creditors in an IVA. They have in the past used their voting power to block IVA proposals they considered unfair — particularly where they are the largest creditor. However, HMRC has become more cooperative with IVA proposals in recent years, especially where the proposal offers a better return than bankruptcy.

What HMRC Looks For

HMRC tends to look at whether:

• The proposed monthly contribution is genuinely the maximum you can afford
• The IVA offers better value to creditors than bankruptcy would
• All tax returns are up to date — HMRC may require outstanding returns to be filed before approving
• Any ongoing tax obligations (e.g., self-assessment) will be met going forward

Excluded HMRC Debts

Some HMRC-related debts cannot be included in an IVA — these include student loans (administered through the Student Loans Company) and, in most cases, tax debts arising from fraud. Your IP can advise on the specific position of each debt.