Undischarged Bankrupt - Self Employment

t0mm

Just a quick question regarding setting up a business as an undischarged bankrupt - I am an IT consultant by trade, would I be able to set up as a sole trader called something like T0mm's Computer Consultancy?

Just my job may well be under threat and I am considering alternatives such as self employment, and I'm not 100% sure what the rules are...

Cheers for all your help so far, any help anyone can offer would be appreciated

pjcbuilder

Running a Business as an Undischarged bankrupt is not really a problem so long as you obey the rules of your bankruptcy. As an undischarged bankrupt you would have to declare to your insolvency office the nature of your proposed business. It is likely that they would want accredited accounts every quarter. It is also likely that if you make a profit they will try to take it from you to resolve your bankruptcy.

You would also need a bank account which in today's climate would be limited and as an undischarged bankrupt you are unable to borrow above £500.

It is important that you stay within the rules until your bankruptcy is dissolved as the penalties can be severe and they will extend the time of your bankruptcy if they see you breaking them.

a man is only broke if he loses his dignity

sniggings

I thought it was couldn't borrow over £500 without telling the lender that you'r BR.

philnicandamy

sniggings wrote: »

I thought it was couldn't borrow over £500 without telling the lender that you'r BR.

It is...you have to declare to any lender your bankrupt IF you take more than £500 credit

maxmycardagain

You are most welcome to start S/E whilst undischarged, however you will have to trade in the name by which you were known at the time of bankruptcy, so Joe Bloggs would have to be Joe Bloggs - but can be probably be "T/as Joe Bloggs IT"

It is likely that they would want accredited accounts every quarter.

I very much doubt that one, for a start, how much would it cost, secondly, if your paid 30, 60, 90 days from invoiced some wouldnt even be due, especially if you had an ED...

What are "accredited accounts", never heard that one before



If you started now (tax year 09/10) your self assesment tax forms would be due in October 2010 and the tax payable jan 31st 2011, by which time you would be discharged. You wont Know if your making a trading profit till the end of your first year.

Trading as "Joe Bloggs" and requesting payment in that name by cheque, or by BACS removes the need for a Business account.



Borrowing (any amount) will always involve a credit check, its up to the lender then, under £500 you dont have to tell them about your BR, chances are it wont get missed anyway though.

t0mm

Thanks for all your help guys, much appreciated as usual

fiveyearplan

Most bankrupts who have tried opening a business account have been declined even after years after discharge. You could run it through a personal account though - thats what I do.

Lensman_2

Tom.

For the sake of clarity and a precise response.
Is your current employment the regular PAYE type?
Are you paying an IPA/IPO?
Were you self employed at the time you went BR?

TIA.

Holes_in_my_pocket

If you decided to go self employed you must tell TAXMAN within 3 months of starting or will get fined

t0mm

For the sake of clarity and a precise response.

Is your current employment the regular PAYE type? Yes
Are you paying an IPA/IPO? Yes (£60/month IPA)
Were you self employed at the time you went BR? No

I knew about letting the taxman know within 3 months - but afaik that applies to everyone, not just those that are BR.

nervousmother

t0mm, OH is self employed still carrying on. He cant get a business bank account so runs it through the co op just hope head office does not click on!
Accredited accounts would be done by an accountant but the OR would not require these, they would require at any point they want your 'books' It would be very important to run the business correctly keeping your books up to date.
As for the tax, although this years tax is not due until next year we were led to believe this tax went to the trustee so OH is putting away on a monthly basis any tax due on profit that month. a) so it is there if the trustee wants it or b)incase it goes to the taxman as normal.
To be honest though, i would not pack in your day job, I worked in the IT industry for a number of years there are so many out there who do it now it is very competative, Carry on on PAYE for now, build it up slowly maybe working evenings & weekends.
Being self employed can be a pain in the rear at the best of times but as a undischarge BR it feels like your rear is on fire all the time!
I must say mostly it has not been that bad, OH does not need credit in his business, He is trying to carry on best he can, The business bank account is the worse though, may go LTD after discharge.