Do Inland Rev/VAT have rights over partner's capital?

sarymclary

Hi,

I hope some bright spark on here might be able to help my friends with this problem. Does anyone know if the taxman/VAT can seize the assets/capital/savings belonging to the partner of someone who owes the tax/vat money?

If it makes any difference, the partner was not involved with the person owing the money at the time the debt was incurred (8 yrs ago). At present they don't live together, but are worried that if they do what might happen. The person owing the debt has asked to be made bankrupt, but there's been no joy on that front. They've been unemployed for 2 years now due to ill health, with little prospect of ever earning much in the future to clear the debt (in excess of £150k - failed business was the apparent cause, but I imagine lack of business sense was more likely)! The debtor is in rented housing, with little if no capital/assets.

Any advice for them gratefully received. :beer:

Sillychuckie

You need to pay to declare yourself as bankrupt?
Haha
(<-- A complete newbie with bankrupcy issues... fortunately).

sarymclary

I mentioned ts_aly2000's reply to my friends, but the chap with the debt states that about 2 years ago when it was reassessed, the IR refused to declare him bankrupt, even thought he asked, and as it's a debt to the Crown, you can't make yourself bankrupt. The IR/VAT keep reapplying CCJ's, but there's no arrangement to make payments, because he couldn't even afford a token £50.

The VAT man reckoned it was going to take at least 102 years to clear the debt at a nominal rate, but accrued interest would mean it would probably take longer. He thought that the refusal to allow bankruptcy was likely to be because they presumed the guy had a spare £50k hidden somewhere. If he has, it's really well hidden, and his girlfriend said she'd really like him to use it to contribute when they go out!!

I have absolutely no experience of this, and don't know anyone who's been declared bankrupt to ask. However, I've told them about this site, and offered to put a thread in for them.:cool:

WHA

Just a thought - by "partner" do you mean as in two people living together or do you mean "business partner".

If you are referring simply to two people living together, then there is no right for the HMRC to chase the other person for the tax debts of one (unless there is something to suggest they were both complicit in deliberate evasion etc).

However, if they were, at any time, business partners, and it is the business that owes the tax (i.e. the VAT must be a business liability not a personal one), then yes, all business partners are jointly liable for all debts of the business partnership.

sarymclary

Good point, WHA. They're boyfriend/girlfriend, and she didn't know him at the time he ran his business & it then failed.

Just a thought then, since the debt is business related, why won't the powers that be allow him to become bankrupt? It just seems a bit silly to me that they've really no chance of this debt being repaid, so surely the cost of reviewing it every few years or so is a wasted expense in itself.

My mate's boyfriend is more than prepared to become bankrupt, and deal with the necessary consequences of that. He has had health problems over the past couple of years which have prevented him from working at all, and he's going to have to reassess his future career prospects anyway. Any idea how he can pursue bankruptcy, or does he have to wait to be offered it?

Penelope_Penguin

Hi.

You can indeed file for your own bankruptcy. It costs around £500 (or may be less if you're on certain benefits or low income). The form is long, but pretty straightforward, if you have all the information, such as creditor details, income and expenditure figures, and details of your assets.

You can pick up forms from your local County Court, or file online at the Insolvency Service website. You can get further help, and possibly assistance filling in the forms, at CAB.

My experience is that tax debts can be included in a bankruptcy petition. Not sure about VAT, but no reason to see them being treated differently.

Best wishes, Penny.