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Iva tax refund

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Iva- tax refund
A friend has just finished last payment of iva dec. he has done self assessment and has been told he is due for a 1500 refund. (Jan 13) will this be classed as windfall even though iva final payment made. Any advice greatly received

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  • UpToMyNeckInIt
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    ...That's an interesting question.

    My first thought is that, as it is a refund of moneys that rightfully belong to your friend, then it is not a windfall - he has merely been overcharged for a service, and is now being refunded, as opposed to receiving additional unexpected income.

    However, if your friend's IP used his net income (based on this unknowingly high tax), to calculate his disposable income, and thus his IVA payment, then different story: It could be argued that your friend was £125pcm better off for the final year than he actually declared, and the IP may want to recoup some of this under the 10%/50%/50% or 50%/50% rule (dependent on IVA wording), for additional income, or indeed as a windfall.

    If your friend has not received his completion cert, then the IVA is still 'active' (I've even come across examples where pre-existing 'assets' can be claimed by the IP AFTER the issue of the CC).

    Safest bet is to suggest to your friend that he speaks to his IP accordingly to discuss. If he does not, and his IP finds out, they might even suggest that his overpaying tax, was a ploy to keep his IVA payment down in the first place, and the pressing of subsequent fraud charges (I'm sure that's not the case).

    Good luck.
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