Tax return after bankruptcy

Navigator1

My partner is currently in the process of agreeing an IPA with the OR. Following advice from the forum, we have written to ask what the breakdown is of the amount he has come up with and are waiting for this to arrive. In the meantime, my partner has received a tax assessment form. How do we proceed with this? We understood that following bankruptcy, tax would be nil for one year. The bankruptcy started last July. What do we do?

Dazed_and_confused

Navigator1 wrote: »

My partner is currently in the process of agreeing an IPA with the OR. Following advice from the forum, we have written to ask what the breakdown is of the amount he has come up with and are waiting for this to arrive. In the meantime, my partner has received a tax assessment form. How do we proceed with this? We understood that following bankruptcy, tax would be nil for one year. The bankruptcy started last July. What do we do?

Is/was your partner self employed or employed?

There is no such thing as nil tax for a year after bankruptcy. In some circumstances employees can get a nil tax code for the remainder of the tax year they are made bankrupt in eg in your partners case this could possibly have been applicable July 2012 - 05:04:2013 but can be cancelled if job changes after bankruptcy

Navigator1

He's self employed. Is it only employees that get a nil tax code?
Originally the bankruptcy was due mainly to tax owed to the inland revenue. So do we still calculate tax from April to July? What circumstances are nil codes given?

coolcait

Also, if you are in Scotland, there is no such thing as the 'nil tax code after bankruptcy' - in any circumstances.

I'm not sure if yours is a bankruptcy question, or a tax question - in terms of the best place to ask your question.

alastairq

the NT code is usually given to those BR's on PAYE.


To bring equality with self-employed folk who produce a tax return once a year......and the tax for the BR year goes into the bankruptcy.

I suggest giving HMRC a call....ask?

fiveyearplan

Any tax owed up to the bankruptcy date would have gone into the bankruptcy so tax would start from that date onwards. You could even close out your books and start fresh from post BR date.

arcon5

As self employed the receiver will want you to send them all of your accounts and records pre-dating the BR order anyway.

Navigator1

Ok thanks. So does the nil tax code apply or not for the first year after bankruptcy? There seems to be a difference of opinion regarding this.

Does the IPA include money to pay tax? Or should tax from here on be payed via end of year tax return?

fiveyearplan

No nil tax code. Tax from July should be paid via end of year tax return.