IVA and Self Assessment

IVArelief

Hello

I have been browsing the site for a while and have recently entered into an IVA.

The relief was somewhat tempered the next day when our landlord rang to give us notice as he was returning to the area. We've found somewhere now, and just made the first payment so moving on.

One element that our IP commented on was the HMRC. Up until April they are wanting us to pay the amount that was shown within our income and expenditure into the IVA.

The IP then commented that normally they would ask for the following years payments as well, but seem to have overlooked this and we should look at this as a bonus to allow us to get the business onto an even keel.

Now I am confused as I understood that the current tax year was wiped out, but then it continues as normal. So income earned 2011/2012 would still 'earn' tax to be paid at the end of 2013. Surely in that case I need to put it to one side and it would never have been payable into the IVA.

I'm confused and wondering what I have missed. Just to clarify, I am self employed so under the Self Assessment rules.

FoggyBrain_2

AFAIK -- and this is how our IP is dealing with our SA income , the tax and NI due on the current years income ( current year being the year we entered the IVA -- in our case 2010/ 11) is deemed a debt and is included in the IVA (HMRC being a creditor). They worked out the amount we had earned up to the IVA and included that in the debt amount, anything earned since then up to April we have to deduct expenses, then the net figure is divided three ways ( 33% tax, 33% IVA and 33% our share). The tax amount and the IVA amount all goes to the IP and we get to keep our third. From April (so the 2011 / 12 tax year) , we have to put aside the tax ( roughly 3rd) for payment as normal direct to HMRC when the time comes. The rest is split 50/50, half paid into the IVA and half we get to keep.