HMRC & Bankruptcy

BlueIsTheColour

Hi everyone,

I have had a look for this but havent been too successful, but I have had a bad day at work so may be missing it....Anyway, I have a friend who's husband has a business which owes about £20k to HMRC, she is worried they will force them to sell the house as their is equity there, can/do they do this, even though she is in the house mortgage but is nothing to do with the business?

Hope that makes sense and thanks in advance

nervousmother

The HMRC can force him to go BR, they can be very quick to do it too! Once br the equity in the house is available to pay them.

They could only force her husband to go BR though, so only 50% of the equity would be available, she could buy her husbands interest in it once he is BR. It all depends to how much equity is available.

BlueIsTheColour

Thanks NM, I probably havent explained it very well, but there is about 60k in the house, but it has been on the market for at least 6 months with no interest in it.

How would going BR release the equity to them? Surely the house has to be sold for that? There would be no way she could afford to buy his half of the equity....

As the business is a joint partnership, could HMRC force both partners to go BR then? One of the partners has no equity etc.....

Thanks everyone for helping

peachyprice

HMRC will take a chance that the OR will be able to sell the house for enough to cover the debt, or as much as possible.

If they make your friend BR they have the right to appoint an independent IP who will be far more aggressive than the OR in recovering assets.

BlueIsTheColour

Oooh that doesnt sound good, basically its my friends husband who is business with his brother, and they owe the tax man, plus the usuals, so HMRC could force them into bankruptcy in an effort to get their £17k.

What is an independent IP? Sorry for being dim Peachy.

If my friends husband went BR, then presumably she would become liable for any joint debts? If they were up to date, can they demand payment or can she just carry on repaying as she had been doing?

Sorry for all the questions, she is soooo stressed out at the moment, and her husband is burying his head a little, so am just trying to help her out as best I can

Thanks a lot

nervousmother

BlueIsTheColour wrote: »

Thanks NM, I probably havent explained it very well, but there is about 60k in the house, but it has been on the market for at least 6 months with no interest in it.

How would going BR release the equity to them? Surely the house has to be sold for that? There would be no way she could afford to buy his half of the equity....

As the business is a joint partnership, could HMRC force both partners to go BR then? One of the partners has no equity etc.....

Thanks everyone for helping

The inland revenue have more powers than anyone else where debt is concerned, hence the fact that balifs working for the inland revenue have the right to gain entry into property wether invited in or not,

They would persue both business partners for the debt, Im not sure wether they would firstly use alternative methods ie baliffs.

nervousmother

BlueIsTheColour wrote: »

Oooh that doesnt sound good, basically its my friends husband who is business with his brother, and they owe the tax man, plus the usuals, so HMRC could force them into bankruptcy in an effort to get their £17k.

What is an independent IP? Sorry for being dim Peachy.

If my friends husband went BR, then presumably she would become liable for any joint debts? If they were up to date, can they demand payment or can she just carry on repaying as she had been doing?

Sorry for all the questions, she is soooo stressed out at the moment, and her husband is burying his head a little, so am just trying to help her out as best I can

Thanks a lot

yes she would be liable for joint debts, but could carry on paying them as she has been, Ironically we were threatened with bankruptcy last year by the revenue, we managed to sell a buy to let property to pay them, only to end up bankrupt a year later anyway... but if i remember rightly it took about 5 months of threat before the BR was mentioned, just as we had found a buyer....

peachyprice

BlueIsTheColour wrote: »

What is an independent IP? Sorry for being dim Peachy.

Insolvency Practitioner

BlueIsTheColour

nervousmother wrote: »

The inland revenue have more powers than anyone else where debt is concerned, hence the fact that balifs working for the inland revenue have the right to gain entry into property wether invited in or not,

They would persue both business partners for the debt, Im not sure wether they would firstly use alternative methods ie baliffs.

I guess its a question of waiting and seeing, as they just arent in a position to pay it right now, so are really at the mercy of them......

nervousmother wrote:

yes she would be liable for joint debts, but could carry on paying them as she has been, Ironically we were threatened with bankruptcy last year by the revenue, we managed to sell a buy to let property to pay them, only to end up bankrupt a year later anyway... but if i remember rightly it took about 5 months of threat before the BR was mentioned, just as we had found a buyer....

She'll be glad to know that, I think she had versions of being forced to pay the joint debts on demand if he ended up being BR, which she obviously couldnt do, and was scared of being made BR herself....

I hope that everything is much better for you now you have gone BR? Am sure it must be, however tough going BR was, am sure it can be nothing to trying to service insurmountable debts? Am still considering my own BR, just pursuing a coupe of other avenues first but if they dont come off, I will be joining the BR club too

Thanks NM

BlueIsTheColour

peachyprice wrote: »

Insolvency Practitioner

Doh!!

Thanks

nervousmother

It is never an easy route to take, I went over and over things, making myself sick, i knew i could never pay £116k to northern rock with their shortfall, id have had to have paid it for the rest of my life,
Knowing the calls will stop is a good thing, wondering what the OR is gonna say to me next tuesday is nerve wrecking!
will i keep my car? will i get a income payment order... so much to come yet, but yes i feel happier. more secure and safe,