inland revenue threatening bankruptcy

harvey_bear

Hi, I am new here and need of advice desperately!
My husband is behind on his tax and now we have one day, yes ONE DAY to decide whether to agree to their extortionate monthly payments which even the collector knew we couldn't make, or face a bankruptcy order (the collector suggested 'off the record' that this was our best hope). We have been visited by this tax collector twice in the last two weeks and have today been given an ultimatum, either pay £1000 per month, which we cannot do, or she will be handing over our case for bankruptcy proceedings. The reason, apparently that we must decide tomorrow is that she is going on holiday for a month next week and has to close her cases before then. I feel this is tantamount to bullying but is there anything I can do about it?
Now its not like we have ignored their demands or not tried to make payments. in fact we have made payments of £3000 in the last 4 months which has nearly killed us and have been in constant contact in the hope that we could keep them at bay.
He owes about £12,000 including this years and they want all of it now or else... the debt does go back to 2007/8 but do the payments we have made not bring things more up to date?!
Basically, we have looked at the consequences of bankruptcy and I am worried we will lose our home - we have only a little equity in it but it would cover their debt if nothing else.
Please could someone guide me on how to respond to this? How long does it take them to make a bankruptcy order and will we lose our home (in joint names)?
We only need a bit more time and I think we could make a big dent in this debt but they don't want to listen. The collector even suggested my husband give up his self employed status as it mean debt accruing...he has been self employed for 35 years and knows nothing else.
So sorry for this long and rambling post, am just feeling very panicked.
Many thanks.

intranicity

First off, is it his debt, and is it a joint mortgage? If you don't owe the money and the home is a jointly owned one, then you would be unlikely to lose your home as long as you can keep paying the mortgage, his part of the equity will have to be sorted, but I think you would have the chance to buy his benefical interest.

HMRC aren't very helpful, I was put in a similar position, pay up or we'll make you Bankrupt! Only slight benefit though is if they take this course of action, you won't have to pay to go Bankrupt.

Sorry I can't offer you a magic answer and good luck

patman99

Of course, if they do take that action, then they may lose-out finacialy. It would be interesting to see if the court would grant a B/O given that your are attempting to clear the bill rather than dodging it by going bankrupt.

I assume your oh is self-employed, hence the trouble with HMRC.

harvey_bear

thanks for the replies... yes, it's his debt and a joint mortgage. and yes, he is self employed.

intranicity

patman99 wrote: »

Of course, if they do take that action, then they may lose-out finacialy. It would be interesting to see if the court would grant a B/O given that your are attempting to clear the bill rather than dodging it by going bankrupt.

I assume your oh is self-employed, hence the trouble with HMRC.

HMRC seem to be a rule unto themselves, I tried personally to come up with a payment plan with them, they just weren't interested sadly.

I in the end elected to go BR, but the threats from them didn't stop, so in the end rather than waiting I filled the forms, and it went straight through, that was about 7 years ago, so not sure if much has changed, but I think if you owe them the money, they can and will force it through, in the end it appears that they just want there books to look good!

harvey_bear

forgot to say, if I don't think i have a chance of buying him out as I'm also self employed and broke!

shop-to-drop

Have you a car you could sell obviously not the vehicle he needs for work but perhaps a family car? Or anything else of value to sell?

intranicity

harvey_bear wrote: »

thanks for the replies... yes, it's his debt and a joint mortgage. and yes, he is self employed.

The stigma associated with BR isn't nice, but maybe the best thing for you. If his business is running ok, with the exception of paying taxes, it will give him a chance to start afresh, and the lessons learnt will no doubt help to make sure that the tax money in future is set aside for when it's due, Very hard I know when you're self employed.

Good luck, you'll get through it one way or other though

Buying him out probably would cost you much less than you expect and wouldn't be until several years down the line

silvercar

Basically, we have looked at the consequences of bankruptcy and I am worried we will lose our home - we have only a little equity in it but it would cover their debt if nothing else.

If you were made bankrupt, the Official Receiver would take over your OHs beneficial interest in the home. After 2yrs and 3 months they would look at the value of the equity and want half of it as your OHs beneficial interest. You would have the option of buying this. So if you could raise that money over the next 2yrs+ you could keep the home.

(If your only creditor was HMRC, then they would get this money less bankruptcy costs, but that doesn't really effect you unless it was sufficient to cancel all the debt+interest in which case the bankruptcy may be annulled - not sure on this one.)

silvercar

HMRC seem to make people bankrupt as an example to others, to ensure that everyone is aware of the consequences of not paying their tax on time. They seem to make no acknowledgement that they could get more money if they agreed to repayment plans.

taliz

We could do with knowing some numbers.

How much equity is in your home?
This lets us know if the OR is likely to appoint a trustee to recover your partners equity in the house straight away or if you have 2yrs 3 months breathing space.

Does he have any other unsecured debts, if so what s their value?
From a maths point of view Bankrutcy may make financial sense.

HMRC are notoriously difficut to deal with and they usually like to recover funds within a 12 month period, hence the £1k per month for a £12k debt. The only sure way to stop them petitioning for your bankruptcy is to try and get an arrangement in place with them.
From the tax mans point of view, the problem with remaining self employed is if it takes over 12 months to pay the arrears you will constantly remain in arrears.

It may simply be a case of making sure they recieve your best payment every month. If funds are coming in regularly you may be able to get them onside.