H bankrupt. OR pursuing ME for rent he paid on our house!!!!

bobbingalong123

My income has gone up (luckily) so will now be able to pay everything (i couldnt have done over the last 6 months though). we have obviously also cut back hugely.

debtinfo

its because it is not income it is from the sale of an asset, it would be the same if say he had a shop, at the date of the bankruptcy the stock would be sold as an asset and be part of the bankruptcy, the business would have ceased anyway because of the bankruptcy

silvercar

bobbingalong123 wrote: »

It was from selling a house - he was a self-employed property developer so it was his income/earnings. This was fully set out in petition and stated that he intended to use it for rent/household expenses. He obviously isnt going to earn anymore money because as I said, he's a house-husband.

I understand where you are coming from.

For people who make a living buying, refurbishing and then selling houses it is often difficult to distinguish between trading and investment. I know there are arguments to be had with the inland revenue as to whether a gain on the sale should be classes as liable to capital gains tax or whether someone is "trading" and therefore the gain should be considered for income tax and the expenses allowable against this.

Has your H had this discussion with the HMRC? If it is al;ready established that he is "trading" and his profits are put against the expenses and charged as an income tax liability rather than a profit for CGT, you may have better luck convincing the OR that it is income.

Other "evidence" could be VAT returns, showing costs incurred etc.

Also if his hours worked have effected tax credits, you could again use this as evidence that he was working.

bobbingalong123

but it was is INCOME - it's how he earnt money - buying and selling houses. he bought personally, not in the name of a comapny. so there's really no hope? are they likely to come to some sort of arrangement given the circumstances?????

bobbingalong123

Thanks for your post silver. Yes he worked "hours" that effected our tax credits and i believe he set tax deductable expenses against turn-over etc.

surely they have to have this argument with him though? why are they having it with me??!! i had no control over the money it was just in my account. i did exactly what he told me to do with it!! it was HIS money!

silvercar

debtinfo wrote: »

its because it is not income it is from the sale of an asset, it would be the same if say he had a shop, at the date of the bankruptcy the stock would be sold as an asset and be part of the bankruptcy, the business would have ceased anyway because of the bankruptcy

The inland revenue accepts that people trade in houses and sell the houses in order to provide an income. They then class the profit to income tax rather than CGT. So any profit from this sale should be classed as income. The fact he went bankrupt after the date of sale, gives further weight to the money being his income.

debtinfo

But as you say he had already ceased trading and the OR is not allow him to keep 6 months worth in savings

bobbingalong123

thank you this is helpful. so it looks there ARE arguments to be had then.

bobbingalong123

he ceased trading BECAUSE of the bankruptcy. self employment is obviously rather fluid. its not like a job he was sacked from the day he went bankrupt.

silvercar

bobbingalong123 wrote: »

surely they have to have this argument with him though? why are they having it with me??!! i had no control over the money it was just in my account. i did exactly what he told me to do with it!! it was HIS money!

The argument is with you because you now have the money.
They can try to claim from a third party if they feel that it is a transaction that shouldn't have taken place due to the bankruptcy.

They can ask for its return, you can set out why it shouldn't be returned and go from there.