Biting the bullet - tax, bankruptcy and OR

affluenza

Hello all

I have been lurking and I think that this forum is somewhat more friendly than a rival site's as I was flame grilled by a couple of posters, nor did I get very constructive answers at the time.

Probably like a lot of people I am guilty of putting my head in the sand and also having taken bad advice as gospel and I have looked at my life and decided that due to the level of my debt through marriage, divorce and depression and the fact that at 42 I'm pretty much on the scrapheap in terms of career and looks - it is best I declare myself bankrupt and try to live out whatever I have left with some scrap of dignity.

So I am in the process of trying to work out my figures - but one major issue is the tax side of things and how to sort that part out as I am/was self employed but I haven't been paying tax or NI, or accountants since I started the divorce side of things.

I had a limited business with my ex, it never actually ceased trading it just withered away and at the point of separation I started trading on my own - I went to see a business advisor who told me I am likely to face prison as it would be seen as embezzlement, and so I have been paralised into working for myself for almost four years - desperately wanting to take a permanent job but not wanting to suddenly find that the tax office takes my whole salary in one fell swoop.

I don't know if that makes any sense but I have had to tread water until the divorce came through - it took three years of fighting and £6K to divorce my ex as he didn't want to leave the house, my house and I have had to sell it to pay him off and some of the creditors.

I admit I was a doormat, I was at one stage doing well and earning a lot of money but in 2002, I was made redundant and started contracting hence the limited company side of things. My ex was working but he never paid for anything - he was flying under the radar for a long time.

OK - basically I need to add the tax details to the declarations, I don't know if CCJs are to be cleared, etc - does anybody know of a site where I can work it out?

Also, has anybody had experience of Birmingham's ORs, how human are they and are they willing to work with you to try and come to a sensible compromise?

Many thanks in advance.

eklynne

Hi there and welcome to the site
I have no help on your tax issue for you, but someone will be along soon with good advice.
The only bit of advice I will give you may seem trivial, but all I can say is 42???
Honey, your life only began 2 years ago!
Scrapheap my **** !!!!!!

StuntmanBob

Try calling Business Debtline on 0800 197 6026

They're like CCCS and National debtline, but for self-employed people. I found them very helpful. Plus in the info they sent me was a worksheet for calculating tax and NI (in the big booklet they will send you). In fact they were great.

For a quick "back of the envelope" figure you could take one third of your gross SE income and say that's your approx tax and NI liability.

affluenza

Thank you for the responses so far.

No doubt at this time of night everybody is asleep or out on the razzle (we can hope).

I have created the mother of all spreadsheets for all the contracts I had going back to the date I started self-employment, and I have just realised that due to various factors this final tax year until 5th April 2009 - I have only £8K of contracts and ended up using the major part of my divorce settlement for living expenses.

You might think why did I not get a job well two factors namely the fact I had not paid tax for 4 years and I was bl**dy petrified of doing so in case I got into a bigger hole and that I was always on the look out for a major contract.

I now realise that I have to find myself a job and I am trying to organise that as well.

I am wondering how to explain that on the reasons for bankruptcy.

The other thing is that I have a vehicle which I use for work because my contracts can be in different parts of the country and to save money i tend not to stay in hotels because the agencies and businesses I work for tend not pay upfront. There is nothing I can do about this it is simply the way that these businesses run - so I travel down early, do the work and return.

If I am in London I take the train - now my car is R reg VW and I paid £1600 about three years ago; I checked with the book values and it comes up at anywhere between £400 and £1600 - will they take it?

The other thing is that I don't know what is classified as a luxury item - I don't have a tv, so no licence, I don't have a microwave, my washing machine died 2 months ago and I bought an £80 twintub from Argos. I am selling off my furniture to pay my rent and the fees.

I work in IT and I have two computers which I need for my work, I am not sure how to justify to the OR that need also I need to have broadband because I need to download large files from one of the large software vendors.

When I talk to the OR I also need to discuss my professional qualification renewals as I have to pay to be able to consult/train certain products - if they deem this as a luxury then I can not work. Additionally I have to pay for exams to remain certified.

I think this is beyond an IVA but I don't want to end up in a position where I have no means of working. To clarify I have no family and no friendships (unfortunately the people who seem to become friends only hang around if there is something of gain for them).

So, some constructive advice/reassurance on how to explain this, because from what I have read some of the IP/ORs seem to be quite draconian on things like cars, broadband and "personal/professional development", and if anyone has had dealings with Birmingham - what I can expect.

Sorry if this has been a bit rambling but I want to sort this out, and try and rectify the fact that I have had my head in the sand for about 4 years.

Thank you again

Lensman_2

Hi Affluenza. Welcome to the forum.

I am 47 and have been divorced, made redundant and had to move for work and lost my Dad in the last two years. Some of the things you said ring true for me too - especially the scrapheap comment. Logically, I do know that life will improve. But it doesn't feel like it sometimes.

From what I can gather, the OR will take your car (regardless of value) unless you can prove that you need it for work. Then their guidelines state a value of £2,000 for deciding whether to sell it and give you the money for a cheaper one or let you keep it. You seem to have a very strong case for keeping yours.

I would imagine professional membership would be viewed as a tool for your trade. How much is it? It's been a few years but the last time I paid for membership of an engineering institution. it was about £75. I then claimed it back as a legitimate expense from work.

Again, the PCs and internet should be allowed as tools of your trade.

The OR doesn't work on luxury vs necessary items. Advice I have read is that they are only interested in individual items over £1,000. So be prepared to loose your 1958 Les Paul Custom...

Hope it helps.

fiveyearplan

None of the items you described above need to be listed on your forms - they are all everyday domestic items and not of any value - even the 2 computers. Why don't you post up your SOA for comments.

And that was great advice above to ring National Debtline - they are great. I think that is rubbish advice to say that you have embezzled and face prison - I highly doubt it as it was also your company.

I also had a limited co and didn't have any business accounts - I truthfully said I couldn't afford the accountant. It wasn't a problem.

So_Sad_Angel

Quick bump here & heres the SOA link for you Affluenza.

http://www.makingsenseofcards.co.uk/

Hope this helps,

Angiexx

ps....if you`re finished at 42 then there`s no hope for me!!!!:D

affluenza

It is not pretty and I have taken averages over the past year...

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 600
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 300 - mix of divorce settlement and Ebay
Total monthly income.................... 900

Monthly Expense Details
Mortgage................................ 0
Secured loan repayments................. 0
Hire Purchase (HP) repayments........... 0
Rent.................................... 475
Management charge (leasehold property).. 0
Council tax............................. 80
Electricity............................. 80 - payment meter seems to be eating up
Gas..................................... 0
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 10 - could lose this
Mobile phone............................ 10
TV Licence.............................. 0 - no tv
Satellite/Cable TV...................... 0 - no tv
Internet Services....................... 20 - I need this to download work related stuff
Groceries etc. ......................... 125
Clothing................................ 20
Petrol/diesel........................... 40 - variable
Road tax................................ 15
Car Insurance........................... 27
Car maintenance (including MOT)......... 20
Car parking............................. 10
Other travel............................ 10
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20 - no doctor but I can get my meds otc
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0 - I am a tenant
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 0 - cut own hair
Entertainment........................... 0 - ??? I had to give up evening class
Holiday................................. 0 - what is one of those, I'm always on call to see if I can get a contract!
Emergency fund.......................... 10
Total monthly expenses.................. 1012


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1000 - optimistic figure
Other assets............................ 0
Total Assets............................ 1000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
all debts......................45000.....0.........0 - I have not paid anything off for a long time sorry
Total unsecured debts..........45000.....0.........-


Monthly Budget Summary
Total monthly income.................... 900
Expenses (including HP & secured debts). 1,012
Available for debt repayments........... -112
Monthly UNsecured debt repayments....... 0
Amount short for making debt repayments. -112

Personal Balance Sheet Summary
Total assets (things you own)........... 1,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -45,000
Net Assets.............................. -44,000

Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using Firefox browser.

itydntk

Lorem ipsum

affluenza

My company was struck off due to inactivity I can see at Companies House and I am looking and I can not see any disqualification.

Basically, what happened was that I told my husband I wanted a divorce (due a variety of factors including his refusal to help with household both physically and financially), and because he was the MD of our limited company (titular rather than helping) - I simply started working for myself.

With the full intention of doing it legally, paying tax and NI - unfortunately due his behaviour and refusal to move out of the home (to which he paid nothing as now the excuse was he wanted to find a nice place to live - it took him 9 months to move).

I got to a point where I thought of moving to another part of the country and saw a small business advisor. I explained my situation and he bluntly told me that I will most likely end up in prison as I can be seen as embezzling money from the company as I am obviously syphoning it off for myself.

This put the fear of god into me and I felt paralised, because even though I could see very clearly the implications on my future re tax, NI etc - I got it into my head that regardless of what amends I would try and make I would end up doing time.

So essentially I have been working "illegally" not really out of choice, call it desperation for a while - the contracts have been fizzling out; I have wanted on many occasions to take a permanent job BUT the fear that I would be caught as soon as I registered my NI number so that plus a mixture of depression etc has rendered me feeling totally caught in a Catch22 type situation.

I haven't self assessed for several years and owe them circa £600 in fines (which I very much doubt they will write off).

I have avoided registering with the doctor since I moved out of my home (was to be repossed but I managed to sell it in the nick of time) so I wouldn't further burden the NHS.

This is how random my thinking is/was - all I want to do now is just move away from it all - so I tried to run without advising the DCAs (oh and anyone experiencing those guys knows what wonderful morally upright citizens they are!); yes and quite early on in the chaos I had contacted CCCS and they felt I was sufficiently articulate to deal with creditors myself. I contacted Payplan but they needed verified accounts etc.

There is a bit more to it, because the company I originally set up with my husband was a kneejerk reaction to redundancy and the advisor was a friend of his who had run three companies (which all 3 not just one had failed) - I got pushed into using Sage including Payroll (for one employee!), and acquired an accountant who quite frankly was away with the fairies and incidentally didn't use Sage...

Oh just to add that final touch of pathos - my father died two months before the redundancy and my mother seven months into my new business and she needed a lot of assistance.

So there you have it all...

mazzatee

Hi Affluenza

I would reiterate what you've been told already - contact Business Debtline or CCCS who have a self employed team, you need a fresh pair of eyes to review your situation.

Bankruptcy seems to be your best bet and will get rid of your tax debts and you can start afresh, hopefully a bit older and a lot wiser.

You are taking little income from the business but are you working 30 hours or more per week? If so, you may qualify for Working Tax Credit which will increase your income. I'm not sure of the exact figure but believe if you're earning less than about £12800 gross per year you should qualify. Ring Tax Credits on 0845-300-3900 to find out more.

Best of luck!