Annual Review - Disposable Income

UpToMyNeckInIt

I have a question about how my IVA company might review my income.

I entered my IVA in July 2012. I am self-employed (well, technically an employee of my own Limited Company), and my IVA provider used my accounts year-ending March 2011 (a taxable profit of c£35k), to calculate my income (my 2012 accounts were not yet ready by that point).

My profit for y/e March 2012 was about £30k. Technically, I guess these are the accounts I should submit review time.

However, being a bit more organised about my book-keeping since agreeing the IVA, and with a good trading year (abnormally high - boosted by the Olympics, and late payment by one of my customers), I anticipate my profit for y/e March 2013 has increased significantly – to about £40k.

If I get my accountant on the case, I should be able to submit my accounts for both y/e 2012 and 2013 at review time.

My view is that 2013s income was unusually high, but ‘cancels out’ 2012’s not-so-good trading year. (The average of 2012 & 2013 is about the same as 2011’s income).

On this basis, my first thought is to propose keeping my IVA payment roughly the same. (Coupled with the fact that I do not forecast another ‘boom-year’ income wise, and honestly think that the 2011 ‘average’ is about what I will make in 2013/2014).

However, I wonder if that was the view an IP would take regarding future disposable income? Will they just go with the 2013 figures, effectively skipping and ignoring the previous poor year (2012), increasing my IVA payment by c£167 pcm? (My IVA is a straight 50/50 rule with income as far as I can tell), or will they agree to use the average figure of 2011, 2012 and 2013, which would probably mean keeping my payments roughly as they are?

Even though my 2013 books don’t have to be ready until October 2013, I don’t want to reduce my IVA payments based on my 2012 accounts, and then have a big increase the following year.

Sorry for the long-winded post, but any advice would be much appreciated.

FiatFan_2

I certainly hope they'll take the sensible approach of averaging them out therefore your payments would remain the same. Will be interesting to know what happens for when mine comes around.