Impact assessment

Debt Respite Scheme - Breathing Space: initial equality impact assessment

Published 18 August 2021

Project objectives

From 4 May 2021, new government scheme has been implemented which aims to give people in problem debt the opportunity to take control of their finances and put them on a sustainable footing.

This is called the Debt Respite Scheme and there are 2 elements to it:

• Breathing Space
• Statutory Debt Repayment Plan

Breathing Space

From 4 May 2021:

• Standard Breathing Space: period of up to 60 days where no creditor action can be taken to pursue or enforce qualifying debts, and all interest and penalties will cease to accrue on those debts
• Mental Health Breathing Space: as above, but any customer assessed by an Approved Mental Health Practitioner as being in a mental health crisis can benefit from a Breathing Space with no strict time limits until after the customer has recovered from their mental health crisis

Statutory Debt Repayment Plan

A new payment solution due to be available in 2024. This is not covered by this equality impact assessment.

Administration

The Insolvency Service administers this scheme, which covers England and Wales, and it has introduced an electronic service which debt advisers use to notify creditors of individuals entering and exiting the scheme. These individuals could have numerous debts eg loans, credit cards, catalogue debts etc including HMRC debts.

Almost all personal debts can be included, as well as some business debts incurred by sole traders who are not VAT-registered at the time of entering Breathing Space.

Scotland already has its own Debt Arrangement Scheme in place, and Northern Ireland is currently not included in this change.

Those seeking to enter the scheme must meet specific criteria and comply with scheme rules whilst in it. In order to enter an individual will have to:

• access free debt advice from a Financial Conduct Authority (FCA) accredited debt adviser
• be assessed as being in problem debt by a debt adviser
• not have already been in a Standard Breathing Space period in the previous 12 months (those in mental health crisis will be exempt from the 12 month restriction)

Debt advisers are responsible for determining debtor eligibility.

Customer groups affected

The customer group impacted by the change is individuals with personal debts, including some business debts incurred by sole traders who are not VAT-registered at the time of entering Breathing Space.

What customers will need to do

What customers need to do as a result of the change

A customer will need to seek free debt advice from an FCA-accredited debt adviser (external to HMRC). Under the Mental Health Breathing Space, an application can be made to the debt adviser on behalf of the debtor by an approved mental health practitioner.

If the debt adviser determines that an individual meets the criteria to enter the scheme and the individual has a debt(s) with HMRC, the debt adviser will advise HMRC via the Insolvency Service electronic service.

Once notification is received, HMRC has a responsibility to identify all outstanding debts held for the customer, communicating with the debt adviser where this differs to the information they hold (within an agreed tolerance). No action will then be taken to pursue or enforce qualifying debts, and all interest and penalties will cease to accrue on those debts during the Breathing Space period (excluding Self Assessment late filing penalties).

How customers will access this service

This service is external to HMRC – the customer will need to engage with an FCA accredited debt adviser.

When customers need to do this

When they feel they need support with their problem debt.

Assessing the impact

We assessed the equality impacts on all the protected characteristic groups in line with the Equality Act and Public Sector Equality Duty and section 75 of the Northern Ireland Act:

• racial groups
• disabled and not disabled
• gender
• gender reassignment
• sexual orientation
• age
• religion or belief
• pregnancy and maternity
• marriage and civil partnership
• people with dependents and those without
• political opinion (for Northern Ireland only)

There is no evidence to suggest specific impacts on customers within these protected characteristic groups.

People who use different languages (Including Welsh Language and British Sign Language)

Proposed mitigation

Correspondence will be issued in the Welsh Language where requested.

Opportunities to promote equalities

We have considered opportunities to promote equalities and good relations between people in each of the protected characteristic groups and those outside of that group. None have been identified within the scope of this change.

A full equality impact assessment is not recommended.