Undischarged Bankrupt - do I have to inform about new job

Mohitjayan

I was declared bankrupt start of this year. I have now found a contracting job paying me well. I am going to use an umbrella company which says it will not declare my pay and will pay only basic tax & NI against my name. After taking a share, it will give me remaining as cash. I will be using the money to pay friends who have been helping me after I went bankrupt.

Do I have to inform OR that I have found the contract job or is it enough I say I am employed with the umbrella company on basic pay?

debtinfo

yes you do need to declare all of your earnings to your OR. You signed to confirm that you know this at the start of your bankruptcy on form NTB2. The penalties for not declaring this include anything up to and including imprisonment

Mouse1812

And prison is not a nice place!

The basic (minimum wage) pay is designed to avoid National Insurance. The "balance in cash" should be a dividend which is also income. Both have to be decalred to the OR and HMRC. Anything else is also illegal as tax fraud.

Lou67

Mohitjayan wrote: »

I was declared bankrupt start of this year. I have now found a contracting job paying me really well. I am going to use an umbrella company which says it will not declare my full pay and will pay only basic tax & NI against my name. After taking a share, it will give me remaining as cash. I am now using the money to pay friends who have been helping me after I went bankrupt.

Do I have to inform OR that I have found the contract job or is it enough I say I am employed with the umbrella company on basic pay? Can the OR find out who my employer is? Also, what are the ways an OR know that I have started working if I don't inform at all?

If your overall pay is quite a bit higher (say more than 10% higher) than the figure you gave the OR, you need to declare it yes. But I have to say that this company sound well dodgy if they are secretly 'hiding your salary,' and not paying your full tax and N.I.

debtinfo

even if you were earning the same or less than you were before you would still need to declare a new job to the OR

PippaGirl_2

Absolutely, there is no "10% or quite a bit higher" rule, you need to declare any change of income at all and that includes pay received via payroll and cash received.

Mohitjayan

Thanks all. I was not sure what decision to take but I guess I best avoid all this trouble. I have read that if I start earning then a share of my earning will be taken and will continue for 3 years. I will be discharged in January; is it best that I start work only after january as 3 years seems to be long.

PippaGirl_2

That's up to you Mohitjayan. Many people do wait to start work until after discharge rather than risk getting an IPA and there is nothing illegal in that, whereas what you were originally proposing is against the Bankruptcy agreement which is not allowed.

There is nothing to say that you would get an IPA though, many people work full time and don't it would all depend on whether you had any left over income once your expenditure had gone.

Pennywise2012

Agreed with the others.

This umbrella company sounds very dubious. As I understand your post, what they are proposing is that they take your decent earnings, keep some for themselves, declare that they've paid you a portion, and then give you a portion in cash?

The problem for you is that you legally have to declare that last portion, and pay tax and NI on it. It sounds like they're trying to encourage you to not do that. In essence, you're paying them money to allow you to commit tax evasion.

If you've been through a bankruptcy, then it's quite likely that leading up to it you had your fair share of stress, worry, dreading the post, robbing Peter to pay Paul, etc etc etc. I know the rest of us have!

For the sake of two months, isn't it worth it to do things legally, legitimately, stress-free? You're on the home stretch now, so I really don't think its a good idea to start a tax-evasion plan.

I see your point with the IPA, and if that's something you want to avoid, I think you should delay this contract work for 8 weeks or so, get your discharge, and then work properly. No dodgy umbrella companies, just earn your money, pay your tax, and you should have a reasonable amount left over to reward your friends for being there for you.

Doing it your way, at best you've got the stress of knowing you're doing something illegal, and at worst you could end up in prison. Just sit tight and wait for discharge!

Lou67

PippaGirl wrote: »

Absolutely, there is no "10% or quite a bit higher" rule, you need to declare any change of income at all and that includes pay received via payroll and cash received.

This is what the OR told me, when we went bankrupt.

I wouldn't have thought you would want to give the OP any more advice anyway, as a couple of days ago, I am sure I saw you declare that he is a troll. Maybe I am mistaken, but I am sure it was this thread. The post in question has been removed though, not surprisingly.

Lou67

Pennywise2012 wrote: »

Agreed with the others.

This umbrella company sounds very dubious. As I understand your post, what they are proposing is that they take your decent earnings, keep some for themselves, declare that they've paid you a portion, and then give you a portion in cash?

The problem for you is that you legally have to declare that last portion, and pay tax and NI on it. It sounds like they're trying to encourage you to not do that. In essence, you're paying them money to allow you to commit tax evasion.

If you've been through a bankruptcy, then it's quite likely that leading up to it you had your fair share of stress, worry, dreading the post, robbing Peter to pay Paul, etc etc etc. I know the rest of us have!

For the sake of two months, isn't it worth it to do things legally, legitimately, stress-free? You're on the home stretch now, so I really don't think its a good idea to start a tax-evasion plan.

I see your point with the IPA, and if that's something you want to avoid, I think you should delay this contract work for 8 weeks or so, get your discharge, and then work properly. No dodgy umbrella companies, just earn your money, pay your tax, and you should have a reasonable amount left over to reward your friends for being there for you.

Doing it your way, at best you've got the stress of knowing you're doing something illegal, and at worst you could end up in prison. Just sit tight and wait for discharge!

Good post! Especially the bits I have bolded. It's not worth being saddled with an IPA for THREE YEARS, where every last scrap of 'surplus income' is take from you. Your life won't be your own!

Nobody I know has any darned surplus income anyway! I know WE didn't after we had gone bankrupt! (Not til about 15 to 18 months after anyway...)