IVA living expenses versus BR

ascot64

RichOneday wrote: »

the less you pay to HMRC in the IVA the more you will be able to pay to HMRC in future.

Are you saying payments under an IVA are tax deductible? Surely not! If they are then that's an even greater reason to go for it!

I appreciate completely what you are saying but I am not using an IVA company. I am using an IP who has masses of experience with HMRC. Actually they have said that they will draft the proposal to offer less than I suggested. If they can get that accepted I would be happy.

fermi

ascot64 wrote: »

HMRC will be 80% of the debt so I am not even sure we will get their agreement but for the sake of the business I have to try. They stand to get a lot lot less if they make us BR. I stand to lose credibility and a good viable business.

This is what HMRC claim there attitude to IVA proposals are (according to taxaid):

'We will treat any proposal for a voluntary arrangement as sympathetically as we can. We will take account of your past tax history and the likelihood of sending future payments and tax returns on time. Whether or not we can accept an arrangement will depend on the particular facts, but our main concerns will be:

• whether we think the proposal will work, including the likely future trading position and the business's ability to pay future tax debts
• that we are not disadvantaged compared with other creditors in a similar position
• that you are not entering into the arrangement just to avoid paying tax
• how the arrangement compares with what we would be paid in bankruptcy...'

It will be interesting to see if they live up to that.

ascot64

Fermi - I read that too - I am hoping they see sense and don't feel inclined to punish me for my mistakes. This is going to be ongoing over the next few months as the assesment is yet to hit the doormat as it were but I'll keep you informed.

deedee_3

Your IP sounds as if he knows what he is doing and is guiding you in the right direction.

Can I be nosey and ask how much your IP will be paid for his services? Will he be paid first before any creditors? Will he put a bankruptcy contingency fund in place? Sorry to be nosey but interested in the differences between an IP and an IVA factory.

RichOneday_2

ascot64 wrote: »

Fermi - I read that too - I am hoping they see sense and don't feel inclined to punish me for my mistakes. This is going to be ongoing over the next few months as the assesment is yet to hit the doormat as it were but I'll keep you informed.

Ascot, what I was saying earlier was that the less you pay in IVA payments the more will be left for the business to flourish and therefore generate more revenue for HMRC in the future.

Having been through the process I can give a little hint that they are more likely to refuse an IVA proposal for being too high rather than too low, however odd that may seem.

If it's too high they are increasing the risk of having to petition for your bankruptcy in the future. The guiding principle is to try to maximize HMRC revenue in the long term. They know how many of these arrangements fail and it gets messy.

My own arrangement lasted 4 months before collapsing because the CVA company forgot to advise a couple of details that killed the company.

ascot64

deedee wrote: »

Your IP sounds as if he knows what he is doing and is guiding you in the right direction.

Can I be nosey and ask how much your IP will be paid for his services? Will he be paid first before any creditors? Will he put a bankruptcy contingency fund in place? Sorry to be nosey but interested in the differences between an IP and an IVA factory.

He has asked for £1k up front to cover cost of making proposal. If that is not accepted there is nothing further to pay. Balance is £2k and will be paid out of the IVA. I need to ask about a BR contingency fund - not heard of that before.

He needs to do an IVA for me and OH so he will basically get a total of £6k for 2 IVA's.

ascot64

RichOneday wrote: »

Ascot, what I was saying earlier was that the less you pay in IVA payments the more will be left for the business to flourish and therefore generate more revenue for HMRC in the future.

Having been through the process I can give a little hint that they are more likely to refuse an IVA proposal for being too high rather than too low, however odd that may seem.

If it's too high they are increasing the risk of having to petition for your bankruptcy in the future. The guiding principle is to try to maximize HMRC revenue in the long term. They know how many of these arrangements fail and it gets messy.

My own arrangement lasted 4 months before collapsing because the CVA company forgot to advise a couple of details that killed the company.

That is really helpful thank you. I'll bear this in mind.

RichOneday_2

£6k is not bad.

The supervisor will not pay anything to creditors for 12 months and will always retain the bankruptcy money in reserve.

deedee_3

ascot64 wrote: »

He has asked for £1k up front to cover cost of making proposal. If that is not accepted there is nothing further to pay. Balance is £2k and will be paid out of the IVA. I need to ask about a BR contingency fund - not heard of that before.

He needs to do an IVA for me and OH so he will basically get a total of £6k for 2 IVA's.

Definatly a good IP, especially if he does his job properly for you. When I set my IVA up with DFD they were looking at £6000 just for me. That is quite low they can get up to £9000.

In the beginning the IVA factories used to have a contingency fund build in to the IVA in case of failure and bankruptcy but as they got bigger and more money grabbing and offering IVA's to all and sundry even if it was not in the persons best interest it some how seemed to get dropped. But if you can it might be an idea to ask if it would be possible to build it in.

blind-as-a-bat_2

RichOneday wrote: »

£6k is not bad.

The supervisor will not pay anything to creditors for 12 months and will always retain the bankruptcy money in reserve.

I had to add to this ,the questin is a BR clause is included is important as they are not always included with IVA,s, so insist it is, or at least make sure you know its not so if it fails you know where you stand

Most decent IVA companys will include it but not all, and it will only be valid IF you pay enough in to cover the costs of the IVA AND the BR so be carefull;)