Inland Revenue and Bankruptcy

doggydaddy

Hi All,
been reading a lot on here lately and the advice and knowledge being shared is amazing.

So to my problem. I'm not terrifically in debt - I have credit cards and a personal loan which together total about 18,000. My problem is that although I am now PAYE, prior to that I was self employed and through a combination of complacency and laziness, I neglected to put my tax returns in for the last 3 and a half years of that time. IR has recently been intouch with a threatening letter and I have therefore been motivated to get the returns done using the services of an accountant. They are in the process of being completed now, but my accountant says I am looking ballpark at 20,000. I don't have any money saved at all.

My concerns are this: I have looked into borrowing some money to pay this amount but it seems slim that I will be able to raise it as I am not a home owner and I already have the existing debt. From what I have read, the IR want payment quickly and will only enter into a payment plan that would extend at most until the end of the current tax year ie. end of march 2008 - which I could not possibly pay off 20,000 in that time. Therefore I was wondering what is likely to happen? I know that the IR use bankruptcy. Are they likely to follow this route? Am I better off filing for it first? Just one other thing, does anyone know about distraint - where they come into your home and sell off your possessions - and how likely are they to use this (they wouldn't make anywhere near their money following this route)?

I don't really feel that bankrupty is a path a want to follow in that I could afford to make repayments on the total owed, just that I would have trouble (or no chance) to raise the necessary money. Any advice greatly appreciated.

Richard_S

doggydaddy wrote: »

Therefore I was wondering what is likely to happen? I know that the IR use bankruptcy. Are they likely to follow this route? Am I better off filing for it first? Just one other thing, does anyone know about distraint - where they come into your home and sell off your possessions - and how likely are they to use this (they wouldn't make anywhere near their money following this route)?

I don't really feel that bankrupty is a path a want to follow in that I could afford to make repayments on the total owed, just that I would have trouble (or no chance) to raise the necessary money. Any advice greatly appreciated.

Hi dd,

Your best bet is to keep talking to the I.R and offer a monthly payment that you can afford and hope that they'll accept it, there's not much else you can do. They do petition for bankruptcy but I've never seen any guidelines as to how much has to be owed and/or for how long. The only time you'll have baliffs knocking on your door is when they've pursued you through the county courts and got a CCJ against you. This doesn't happen overnight and you do get the chance to defend yourself in court and make an offer of payment.

There's no benefit in you declaring bankruptcy first unless you just want to draw a line under things sooner rather than later. It's a long while since I've had any dealings with the I.R but I always found them willing to listen to any genuine offer of repaying a tax liability and again, I think your best course of action is to keep in regular contact with them and try to negotiate a repayment plan that you'll be able to stick with.

Richard

doggydaddy

Thanks Richard.

I will speak to IR as much as possible and try to come to an arrangement. Bankruptcy raised it's head because my accountant mentioned it when he did a summary calculation of what I owed.

I'll wait until I get my statement from them and see what they say I owe and deal with it then.

Cheers