IVA Question

Joandmike81

My friend is in the middle of setting up an IVA with CCCS. She is employed but occasionally does some freelance work, although this is not guaranteed or regular work, so didn't tell them about it as she doesn't know if she is going to do any work at all during the year.

She found out that her Debenhams card is actually provided by Santander. Her bank account is with Santander. Two weeks ago she did some freelance work and the money will go into her bank account next week.

Her questions are:

1. Does she need to change banks from Santander?
2. Will the money going into her bank from her freelance work be picked up by Santander and therefore, her IVA not be accepted?

My friend asked me for advice with this, but as I have a DMP, I know nothing of IVA's and I was hoping someone on here might know the answer(s).

Many thanks in advance for your assistance.

FoggyBrain_2

Hi. First of all, if any debt is linked with Santander, it is advisable to change banks to one you have no debt with. In the case of the freelance monies going into the account, this will not be picked up by Debenhams, and I doubt Santander will make the link either. However, draw the money as soon as it hits the account.

Regarding doing this work without telling the IP -- that is a big no-no. If they find out the IVA could fail. Payments for the freelance work will be picked up by the IP from bank statements. We do freelance work while in our IVA and it is treated the same way as overtime ( except you have to retain 33% to cover tax and NIC before splitting the rest with the IVA).

I am assuming, in mentioning that 33% has to be kept back and saved somewhere for tax, that your friend has told HMRC about the freelance work. If not, I would recommend caution there, too. Depending on the type of work your friend does and for whom. HMRC might get to hear about it second hand and come looking for their share. As she is being paid by bank transfer or cheque --- does she freelance for British companies or people who make tax returns on their businesses ? If so her details will appear in their tax records and HMRC might ( just might) make a connection.