IPA – The big question -When??

dalip

debtinfo wrote: »

Hi everyone, just thought i would explain the IPA procedure for you all (please bear in mind that forms do get misplaced, lost in the post and ORs do get busy but this is the normal procedure.)

First of all you may only have 1 IPA per bankruptcy and this includes Surplus or Nil Tax,Wrong NT code is totaly seperate from surplus income IPA once the IPA starts it can last for a miximum of 36 months from the date the OR signs it.

The Examiner will assess your income and expenditure and decide on a surplus amount and a Nil Tax amount(no). He/she will then send an agreement to the bankrupt. If you get just a NT one it is because you do not have enough surpluswhat!!!. You then sign and retrn this agreement. Then The OR signs it and it is officially in force. Te OR sends the details to Moonbeever who are responsible for collecting the money. The IPA can and must start at any point prior to discharge. The OR will send out a new I/E form prior to discharge to see if anything has changed as this is their last opportunity to enforce an IPA.

If an IPA surplus or NT is in already in place and circumstances change the the "NEW" IPA is nt new at all and is an alteration to the original one and should only continue for the remaining part of the 36 months.

Officially the NT IPA is not actually collecting tax, it is collecting the surplus that arrises in your income from the NTcode.

It is possible in law (although virtually unheardoff in practice) to keep the Nil tax money if you can prove real hardship to he judge.

hope that clears things up

OK sorry about this but not sure where you get your infor but......

1) NT CODE is just that.It is the collection of your income tax that would normaly have gone to HMRC. The OR will sometimes collect this direct from HMRC at the end of tax year,this is if you have either gone bc close to the end of the tax year or if you change employment during your year as a bc. As your tax code will revert to normal if you change jobs during your year as a bc. This type of IPA ,if it should really be called that,only last until the end of the tax year with which you went bc.

2) Surplus income IPA's are based on any surplus you may have AFTER tax,NI,and household expenditure has been taken.This lasts for 36 mths from the date set up/first payment. It can be suspended,lowered or increased at any time in those 36 mths.

3) BC's can and do get both a NT code and a IPA and they are both collected in the same way by moonbever.
Dx

debtinfo

Hi Dalip, I get my information from the technical manual which is the basis of examiners decisions, i have provided the relevent paragraph below, have a good read, If you would not mind me asking but where do you get your information from

The monies refunded as a result of the application of the NT code are a direct consequence of the making of the bankruptcy order and should therefore be available for the benefit of the bankruptcy estate. Where the NT code is expected to be applied before the end of the tax year, the additional income arising as a result of the application of the NT coding can be included when calculating thebankrupt's surplus income from which contributions can be collected under an IPA.
It also possible that the increased income available to the bankrupt as a result of the application of the NT coding can in itself provide the basis for an IPA/IPO, even where the bankrupt does not have sufficient surplus for an IPA/IPO from his/her usual net income. Where the bankrupt has signed the TNIDIS form an IPA should be sought in preference to an IPO to claim the surplus income. In this instance an IPA would be agreed based solely on the additional income created by the NT coding, where the bankrupt agrees to IPA contributions equivalent to the amount of tax that he/she would otherwise have paid.
In all cases, Section 310(2) [note 10] must still be taken into account when considering whether an IPA is viable to cover the period of the NT tax coding, to ensure that the bankrupt and his/her family are left with sufficient funds for their reasonable domestic needs. It may be that in very rare circumstances it will not be appropriate to require the bankrupt to consent to an IPA to collect the additional income resulting from the NT coding, if the bankrupt can demonstrate that this would cause him/her to experience financial hardship.
The IPA which includes the income arising as a result of HMRC applying the NT coding should be drafted so that when HMRC recommences tax deductions from the bankrupt's income, the amount payable can be reduced accordingly or the agreement can be made such that the NT element of the IPA will only be collected during the period during which the NT coding takes effect

fiveyearplan

You can have a nil tax code and a surplus IPA though!

debtinfo

Yes you can, the point that i was trying to make is that they are two aspects of the same agreement not two seperate agreements, sometimes you get one or the other or sometimes both. and that if the OR changes the agreement it is variation not a new agreement. so for instance the OR could not put you on an agreement then after 5 months give you a new 36 month agreement. because it is a variation of the agreement, and not a new one, the varied agreement could only last for the remaining time,31 months

JCS1

Technically a surplus IPA and a NT Tax Code IPA are part of the same agreement. However, it is far easier on this forum to think of them as 2 seperate things, both payable to Moonbeever.

I've not known of NT Tax Code not being collected due to hardship, but have known them not to be collected when it was under £50 a month and therefore not worth the administration expenses of collecting.

JCS1

debtinfo wrote: »

Yes you can, the point that i was trying to make is that they are two aspects of the same agreement not two seperate agreements, sometimes you get one or the other or sometimes both. and that if the OR changes the agreement it is variation not a new agreement. so for instance the OR could not put you on an agreement then after 5 months give you a new 36 month agreement. because it is a variation of the agreement, and not a new one, the varied agreement could only last for the remaining time,31 months

So. if person had a IPA for Tax for say 6 months and then had a big pay rise which resulted in a surplus, the surplus IPA would only by for 30 months? My understanding is that the surplus IPA would run for 36 months from that time but would it now be considered a variation and run for less?

debtinfo

yeah, its very rare, and most people dont know that its even possible and so dont ask, It has to be real hardship though, sort of cant afford to feed the kids rather than cant afford the sky TV

dalip

I get my info from being a Discharged bc with an IPA(albeit for a short period) and was pointing out that the way you had worded your explanation was totally confusing. Luckily i have been on this forum for a while so understood what you were trying to say but for a newbie......mindboggling!.
Dx

liquidbutindebt

Can I clarify something? When I go bankrupt I will certainly get an IPA as I have a decent income. Between the BR date and the date the IPA starts what happens to the money you have earned in the meanwhile? Is it yours to keep? In all cases?

debtinfo

Hi dalip, being in the insolvency industry i do tend to get a bit involved in the technical aspect, but was trying to give all the possible outcomes as each person may have different circumstances (although obviously some are much more comman than others). sorry if it was confusing, i can see how it could be.

Hi Liquid, you can keep the money until the IPA starts as it will last for 36 months from when the IPA is signed