Why HMRC is different
HMRC represents the public interest — they are effectively collecting on behalf of taxpayers. They do not have commercial discretion to write off debts the way a bank might.
Their formal position is that all tax owed should be paid. Departures from this require justification — either through the formal insolvency framework, or through very specific hardship-based relief.
IVA proposals
In an IVA, HMRC votes on the proposal like any other creditor. Modern IVA proposals often include HMRC debt, and HMRC accepts many such proposals.
Historically HMRC objected to most IVAs. This has changed significantly since 2015 — HMRC now accepts a majority of well-constructed proposals.
A proposal that repays 25-40% over 5-6 years is often more attractive to HMRC than pursuing bankruptcy (which might return much less).
Bankruptcy outcomes
In bankruptcy, HMRC receives whatever the Official Receiver distributes from the estate. This might be nothing, or a small percentage.
HMRC accepts this outcome once the bankruptcy is granted — they have no choice.
Hardship-based relief
HMRC has a Special Relief provision that can write off tax in cases of exceptional and genuine hardship. This is not routine — most claims are refused.
It requires evidence of extreme hardship, no realistic prospect of paying, and that ordinary Time to Pay would be impractical.
Applications require specialist advice — a regulated debt help specialist familiar with HMRC hardship claims can help structure them.