Inland Revenue and bankruptcy?? no thanks!

biffyfan

Hello, I dont know if I'm on the right section of the website (sooo much info!) but thought I would use here as a starting point.

My partner is being chased up by Inland Revenue for a tax bill that has been left for 5+ years. He was self emplyed for a year and then moved to emplyment and didn't send something back to say he was no longer self employed.

He was summoned to a court hearing (he no longer lives at his mums where the mail was getting sent to, and she hadn't told him that mail had been arriving for him) and his lawyer has advised bankruptcy is the easiest route. On speaking to an accountant he has also mentioned that.

I am trying desperately to get him to see if he can reach an agreement to just pay back the original amount rather than go down this route which I would have thought is an option.

He has gone for the easy way out though and thinks bankruptcy would be better as he wouldnt have the hassle of trying to arrange to pay this back.

I just think for what was a small amount originally this is a bit desperated and was wondering if anybody has any advice or is bankruptcy not as bad as I'm thinking it is? Or maybe I should just stop interfering and let him get on with it, he is a grown man capable of making his own decisions without me interefereing after all!

Any help on this or if somebody could point me in the right direction would be lovely!

Many thanks
Biffy

debtinfo

Has he worked out what he actually owes, including penalties and interest charges and submitted this to HMRC

bat-out-of-hell

You seem to think he may have a choice......where the taxman is concerned, if it is over £750, it is esier to declare him BR, they can then close the file and move on, and show they are hitting there target.

Sorry......did you think it was just about the money owed?

fiveyearplan

I would try to negotiate in the first instance but not get hopes up. If they come to a deal, great if not then bankruptcy would also include all other debt he has too. Does he live in a rented or mortgaged home? If it is mortgaged (even if he is not on the mortgage) it could be at risk.

fiveyearplan

He should contact Business Debtline, National Debtline, CAB or CCCS - all contact details on front page of the BR forum.

biffyfan

Hi everybody, thanks for all your help, your all great and know so much!!

the original amount he owed was £1350 and its gone up to £8,100 with charges and inerest added. It's good to hear from other people what the situation actually is as I have no experience of this at all.

I'll encourage him to negotiate but its so maddening that it looks likely he will be declared bankrupt after what was a relatively small amount of money in the grand scheme of things, it's an amount that together we could pay off relatively easy.

I'll look a bit more into how much bankruptcy will affect him as he doesnt want to know anything about anything!! Thankfully we dont have a mortgage and he doesnt have any outstanding debts, not even an overdraft!

Thanks again for your help

Biffy

andyf1980

I did a lot of sticking my head in the sand myself so am in no position to judge anyone else.

All I can say is that from what you describe it very much looks as though bankruptcy is the next step.

It just seems a pity to me that this is the case for a relatively small amount of money. The effects of a bankruptcy will remain on his credit file for 6 years after discharge date and getting a mortgage or other forms of credit will be very challenging. Even renting a property can be difficult.

Sorry to be a bit down about it but I think it's important that he understands the consequences.

tigerfeet2006

You really, really, really need to talk to some one like Business Debtline and go through all your options with them. They will look at your circumstances and make suggestions on where to go from here.

If they suggest BR then there are people on here who can help with the forms and answer your questions.

Links and no.'s in my sig.

the_bright_side

HMRC will negotiate, and will allow you 'time to pay'. Which is incidentally the name of the scheme you can enter into 'time to pay'. As long as you can prove you have an income they will from my experience, allow you the that time to pay it off and in small increments all so. Try negotiating before finally going BR - what has he to lose?

Raphael

biffyfan wrote: »

He was self emplyed for a year and then moved to emplyment and didn't send something back to say he was no longer self employed.

Could it be that they just assumed he was still self-employed and since he didn't inform them it was no longer the case they estimated his tax liability as if he still had an income from self-employment? Would it not be easier to negotiate with them in that case if he could prove that he had stopped trading, and that the tax itself was not be due in the first place, so neither would the interest, and then the most they could apply is fines. Just making assumptions there as it wasn't entirely clear from the line I quoted from your original post.