What's the best way to protect yourself from bankruptcy?

Frank_Martin_2

I kind of asked this question before on here but it was amongst a lot of other stuff and got overlooked. I've had some useful advice via PMs but wanted to put this 'out there' to see if anyone has anything else to add.

I'm soon to be changing jobs and going back to being self-employed as a consultant. Problem is, I have over 30K of tax arrears owed and have recently received the letter from HMC threatening me with bankruptcy. I've had this letter before, about two years ago, and they did nothing - I'm in a fairly unique situation as I have absolutely no assets whatsoever: I rent my home, I don't own a car, I have no savings or credit facilities of any kind, and nothing of any value that could be sold on. This is absolutely nothing to be gained from the IR bankrupting me, and everything for them to lose. I understand, however, that they work in mysterious ways.

My new job is in finance and if I get declared bankrupt, and it comes out, I'm toast, at least on paper.

Here are my questions:

1. If I was to set up a new company in my wife's name, and work for her as an employee on some kind of minimum wage, with her billing the firm I'm actually consulting for each month - if I went BR could the IR touch her company in any way?

2. Does the OR write to your company to let them know you are BR? Or is it a case of them finding out themselves? If I was employed by my wife, who then billed the company I'm consulting for, would that give me a degree of anonymity?

3. As a consultant, as opposed to an actual employee, am I further distanced from the regulations of working in the financial industry?

4. Is there anything that can be done legally in setting up a private company that can protect me from either the risk or fallout from bankruptcy?

5. Does the FSA monitor The London Gazette for news on bankruptcies?

Note that in all cases this is a BR that will be enforced upon me - I have no interest in doing it myself. It's really something I want to avoid, but I'm trying to protect myself in the worst-case scenario.

Thanks!

skylight

With regards to setting up a company with your wife etc, I think you need to discuss this with an accountant who knows more about the setting up of co's. On the face of it, I personally could not see a problem with your wife heading a company - it should not be touched as it has nothing to do with you. BR is a personal thing, and unless you were listed as director/secretary etc or something then there should not be a problem.

But, with regards to you working whilst BR, is a different kettle of fish. I have no idea what you are a consultant for, but there are certain jobs you are not allowed to do at all whilst BR. Full stop. There is no getting round that. Its law. Trying to hide it would be stupid, you would be kicked out of whatever association you need to be part of etc. Being an employee or consultant is no different in the eyes of the law. You are working in an area that is not permitted and thats it. The gazette and all BR details are public record, and therefore available to anyone who wants to look. Whether or not the FSA search though, is a different matter and is anyones guess.

Nothing can protect you from BR. If its going to happen, then its going to happen. You cannot put your tax bill into a new company unless you can find yourself a very creative accountant...... etc.......

maxmycardagain

Frank_Martin wrote: »

I kind of asked this question before on here but it was amongst a lot of other stuff and got overlooked. I've had some useful advice via PMs but wanted to put this 'out there' to see if anyone has anything else to add.

I'm soon to be changing jobs and going back to being self-employed as a consultant. Problem is, I have over 30K of tax arrears owed and have recently received the letter from HMC threatening me with bankruptcy. I've had this letter before, about two years ago, and they did nothing - I'm in a fairly unique situation as I have absolutely no assets whatsoever: I rent my home, I don't own a car, I have no savings or credit facilities of any kind, and nothing of any value that could be sold on. This is absolutely nothing to be gained from the IR bankrupting me, and everything for them to lose. I understand, however, that they work in mysterious ways.

My new job is in finance and if I get declared bankrupt, and it comes out, I'm toast, at least on paper.

Here are my questions:

1. If I was to set up a new company in my wife's name, and work for her as an employee on some kind of minimum wage, with her billing the firm I'm actually consulting for each month - if I went BR could the IR touch her company in any way?

NO

2. Does the OR write to your company to let them know you are BR? Or is it a case of them finding out themselves? If I was employed by my wife, who then billed the company I'm consulting for, would that give me a degree of anonymity?

a) - NO b)- YES

3. As a consultant, as opposed to an actual employee, am I further distanced from the regulations of working in the financial industry?

(guess) - YES

4. Is there anything that can be done legally in setting up a private company that can protect me from either the risk or fallout from bankruptcy?

It wouldnt be YOUR company, BR is personal, its all yours!

5. Does the FSA monitor The London Gazette for news on bankruptcies?

probably, but would only find YOU, if the Ltd comp was regd elsewhere (as it can be legally) it wouldnt show

Note that in all cases this is a BR that will be enforced upon me - I have no interest in doing it myself. It's really something I want to avoid, but I'm trying to protect myself in the worst-case scenario.

HMRC will go via a CCJ , in some ways thats worse than BR, they send their own collectors round first, no CCJ needed.

Thanks!

hope that helps

Geordie_Mick_2

You really can't get away from it, it would be a perfect world if we could all earn enough money to generate a £30K tax bill and walk away without some sort of scar.

If you've earned enough to generate that amount of tax bill than they'll go through your spending over the previous years to see just what's happened to them and how come you've earned so much and not gained any assets out of it.

I know someone who is under investigation and has been for several years, his legal bill is soon going to cath up with the original bill, so they have other ways of making you pay.

They'll put you under investigation and as soon as you do earn money they'll have it back thanks.

I'd personally declare yourself, wipe out the HMRC debt and sit tight for twelve months and re-enter your industry discharged, the HMRC can take as long as they want to drag this one out, they're going nowhere!

maxmycardagain

as a paye employee on £80 a week he wont pay tax....

Frank_Martin_2

skylight wrote: »

But, with regards to you working whilst BR, is a different kettle of fish. I have no idea what you are a consultant for, but there are certain jobs you are not allowed to do at all whilst BR. Full stop. There is no getting round that. Its law. Trying to hide it would be stupid, you would be kicked out of whatever association you need to be part of etc.

That's very much six of one, then, isn't it? Resigning because I'm bankrupt or being fired for the same reason is pretty much the same thing - either way, I couldn't work in the industry!

Assuming it's not a criminal offense, I think I'd rather take my chances. As said, I'm not sure how closely anyone monitors things like The London Gazette.

Frank_Martin_2

Geordie_Mick wrote: »

If you've earned enough to generate that amount of tax bill than they'll go through your spending over the previous years to see just what's happened to them and how come you've earned so much and not gained any assets out of it.

That tax amount grew when I was self-employed between 2002-06. The number is too high - even though I stopped working SE at the end of 2006 and told the IR as much, they continued to 'roll over' the next year's six-month in advance payments, despite being well aware that I've worked PAYE since March 2007. It's closer to £25,000, in my estimation, but even so as said was basically earned over three years. I paid about £5K of it before getting completely wiped out at the tail-end of 2006 and losing everything I had.

I'd personally declare yourself, wipe out the HMRC debt and sit tight for twelve months and re-enter your industry discharged, the HMRC can take as long as they want to drag this one out, they're going nowhere!

It's not an option, really. Again, as above, I'd rather take my chances - why declare bankruptcy and definitely kill my chances with this new career? HMRC have sat on this for several years now. They know I have zero assets and I think that's why they're not moving on it.

My concern is if I suddenly start making large monthly payments - which with this new job I could - they'll do something stupid like then decide to bankrupt me.

Frank_Martin_2

maxmycardagain wrote: »

hope that helps

It does, thanks. They've already sent the distraint baliff round, about two years ago. He was as powerless as any other baliff.

Frank_Martin_2

maxmycardagain wrote: »

as a paye employee on £80 a week he wont pay tax....

If my wife pays me that way, does anyone know how much extra she (or, really, we) will pay in NI, employee tax etc?

diablobear

Currently, there is nothing to pay for Employees (EE's) & Employers (ER's) NIC's if you earn up to £105pw. if you are not a director of the company and just a straight PAYE employee.
However, what your wife pays you weekly depends on what your current individual tax code, which will determine what your "free pay" is for the tax year. I certainly advise you employ the services of a very good accountant/bookkeeper who specialises in business start up if you decide to go down this route.
Shop around & go by referrals of happy clients, not all accountants are good accountants, regardless of qualifications and memberships, etc. :rolleyes:

Frank_Martin_2

I think that's going to be essential. Does anyone have a rough idea of what the setup of all of this kind of thing will cost?