NT tax code -- why?

wolfers

In common with most bankrupts (I think) I'm going to be placed on an NT tax code, so instead of paying income tax to the Treasury, I'll pay it to the Official Receiver.

What is the point of this? Isn't this equivalent to the Treasury helping to pay off my debts, since they're no longer getting my taxes but my creditors are instead?

fermi

http://forums.moneysavingexpert.com/showthread.html?t=1064237

wolfers

I'm slightly panicked now. The OR said that I would have to pay £110 per month till April to cover my tax. He said this was not an IPA. Is that right? If it is an IPA, doesn't that mean I can be made subject to one for three years, whereas if it isn't an IPA it means I can't?

fermi

A nil tax code IPA is completely different to one that is based on surplus income.

Paying one on tax DOES NOT allow them to impose the other kind.

To implement one on surplus income, they must get a separate agreement.

wolfers

fermi wrote: »

A nil tax code IPA is completely different to one that is based on surplus income.

Paying one on tax DOES NOT allow them to impose the other kind.

To implement one on surplus income, they must get a separate agreement.

What a relief -- thank you

debtinfo

I just wanted to slightly clear up what fermi has said, although treated differently, they are actually the same agreement, its just that the OR agrees that it will apply only for the tax year. The IPA does not actually collect the tax, it collects the surplus created by you not paying tax and counts towards the 1 IPA that you are allowed during a bankruptcy. This is all a technicality though and they are treated as seperate things.

Of more interest, if i remember correctly i thought you were self employed wolfers, or are you being paid as an employee of a limited company.

wolfers

debtinfo wrote: »

Of more interest, if i remember correctly i thought you were self employed wolfers, or are you being paid as an employee of a limited company.

I was a director of a limited company. I resigned as director and am now a salaried employee.

wolfers

And did I understand that article correctly? That basically the money is going round in a big circle. Sort of. Instead of my employer sends money to HMRC, it's my employer sends money to me, I send it to the OR, he sends it to HMRC? Not quite sure what the point of that is.

Flyright

I recall your predicament with the limited company that you were sole director of..you were seeking to ask a friend to be director while you were in bankruptcy. Did you get a friend to agree to this in the end then?

wolfers

Flyright wrote: »

I recall your predicament with the limited company that you were sole director of..you were seeking to ask a friend to be director while you were in bankruptcy. Did you get a friend to agree to this in the end then?

Yes. It wasn't easy, though. A few of my friends didn't want to do it, which made me a bit sad as it felt like they didn't trust me.

My IP suggested it initially -- he said it was fairly common for people to do this during their year of bankruptcy.

I discussed it with the OR and he said he was happy with the arrangements. The company has no assets, no borrowing and a fairly small turnover. It is now paying me the largest salary it can afford to pay so there is no hiding of assets or anything like that.

Flyright

Glad you got that sorted out, the legislation is something of a minefield as I recall when a friend was in a similar situation.