skintandsad's BR thread - self employed & being made BR by HMRC

skintandsad

Hi all :hello: and thank you for looking in on my thread.

I'll try and give you a little background so it might help with any future questions:

Hubby is self employed on a CIS basis. He receives payments usually by cheque and he has one main contractor that he does 90% of his work for.

He used to have a business account with HSBC which has a £15,000 overdraft (I was joint account holder for no reason other than I wanted to be able to make payments, but HSBC forced me to become joint account holder).

Due to a massive dip in his income, we opened up a new personal current account with Barclays to pay his cheques into, as the charges on the HSBC overdraft were eating away at all of his income and we just couldn't survive each month. The £15,000 overdraft remains which we are paying off a little each month by standing order from his Barclays personal current account. His Barclays account is in credit and does not have any overdraft.

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So back to the current situation.

Tomorrow, Mr skintandsad is to be made bankrupt in Her Majesty's High Court. The reason for this is that he has a debt with HMRC for VAT which we just cannot pay (this is a very long story so I won't bore you with the details). We knew this was coming for some months now.

Being self employed, we are bound to have a few questions along the way and know that there are some very knowledgeable people on MSE that will be able to offer us some guidance.

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My questions this morning relate to earnings for which he has not yet received payment.

He gets a cheque each week, which is payable to him personally, so will be anticipating receiving a cheque tomorrow, ie. the day of bankruptcy. This cheque will relate to work carried out the week before last, ie. prior to bankruptcy, so any CIS deductions thereon will against his current CIS number.

- I believe he will have to get a new CIS number from HMRC for future earnings?

- I am not sure when his bank account with Barclays is likely to be frozen, but believe this is what happens?

- So, with the cheque that is now "in the post", do we pay this into his existing Barclays account which we assume will be frozen, or, do we wait until he opens a new basic account and pay it into that account?

I am really grateful to anyone that is able to give us some guidance along the way and would also like to offer my personal thanks to Fermi who pointed me in the right direction.

fermi

So the Barclays account he has now is a non basic one, used just for the business use?

I'm not that clued up on the whole sole trading thing with BR, so asked a couple of people to look in if they can today.

skintandsad

Thanks Fermi x

Yes, the Barclays personal account is a full current account with chequebook. It is his only account, ie. he doesn't have a separate business and personal account. ALL earnings go into that account and he has all direct debits set up on it. Not ideal, I know, but he needed to get away from HSBC to survive so just has the one account.

fermi

Well, Barclays may downgrade that, but I would work on the assumption that they will close it to be on the safe side. You can take out any monies needed for personal living costs prior to BR, which would be wise.

If OK to continue trading etc then I think the OR would instruct the bank to release funds required for that even if frozen.

Not sure where to pay the pending cheque, but I would certainly not pay it into that account until you are sure it can be kept (downgraded), or more likely pay into a new/alternative account. Again, not sure if procedure is slightly different with High Court now, but he may well have an initial call from the OR where he can ask what to do with the cheque and about trading between the BR ruling and any interview etc.

As said, take the above ^^^^ with a pinch of salt. Others will know more....

skintandsad

Cheers Fermi.

It's this "in between" stage which is the worst bit, just not knowing. We'll await further information from the OR once they contact us, but any other input from knowledgeable people would be most gratefully received

JCS1

skintandsad wrote: »

Hi all :hello: and thank you for looking in on my thread.

I'll try and give you a little background so it might help with any future questions:

Hubby is self employed on a CIS basis. He receives payments usually by cheque and he has one main contractor that he does 90% of his work for.

He used to have a business account with HSBC which has a £15,000 overdraft (I was joint account holder for no reason other than I wanted to be able to make payments, but HSBC forced me to become joint account holder). Are you still named on this as a joint account holder? THis debt will pass to you in full if you are

Due to a massive dip in his income, we opened up a new personal current account with Barclays to pay his cheques into, as the charges on the HSBC overdraft were eating away at all of his income and we just couldn't survive each month. The £15,000 overdraft remains which we are paying off a little each month by standing order from his Barclays personal current account. His Barclays account is in credit and does not have any overdraft.

---

So back to the current situation.

Tomorrow, Mr skintandsad is to be made bankrupt in Her Majesty's High Court. It is known for creditor petitions to be adjourned, so prepare yourself for it happening and also it not. The reason for this is that he has a debt with HMRC for VAT which we just cannot pay (this is a very long story so I won't bore you with the details). We knew this was coming for some months now.

Being self employed, we are bound to have a few questions along the way and know that there are some very knowledgeable people on MSE that will be able to offer us some guidance.

---

My questions this morning relate to earnings for which he has not yet received payment.

He gets a cheque each week, which is payable to him personally, so will be anticipating receiving a cheque tomorrow, ie. the day of bankruptcy. This cheque will relate to work carried out the week before last, ie. prior to bankruptcy, so any CIS deductions thereon will against his current CIS number.

- I believe he will have to get a new CIS number from HMRC for future earnings? Not sure on CIS number but he will need a new Tax Reference issuing by HMRC

- I am not sure when his bank account with Barclays is likely to be frozen, but believe this is what happens? It is done to the bank rather than the OR. is it a basic bank account?

- So, with the cheque that is now "in the post", do we pay this into his existing Barclays account which we assume will be frozen, or, do we wait until he opens a new basic account and pay it into that account? If you pay into current one and it is frozen then ask the OR to fax a letter to the bank releasing the funds.

I am really grateful to anyone that is able to give us some guidance along the way and would also like to offer my personal thanks to Fermi who pointed me in the right direction.

Hope this helps a little, let me know if you need anything else.

fermi

skintandsad wrote: »

Yes, the Barclays personal account is a full current account with chequebook.

^^^ Not a basic account.

skintandsad

Hi JCS1 and thank you for popping by

Yes, I am still a joint account holder on the HSBC account, although it is now with their "legal" dept. I understand that the debt will pass to me so I will have to deal with that when it happens.

Thanks also for the additional info; I had no idea that they could potentially adjourn the BR hearing; I suppose they let you know either way by letter?

The existing current account is, as Fermi highlighted, a full account, so I am anticipating that they will withdraw this facility and hopefully offer a basic account for future cheques.

If the official receiver were to fax the bank for funds release, do they do this for the purpose of basic living expenses only?

Sorry for so many questions; this is all new to me and whilst I am lucky (if that is the right word!) to have some friends who have "been there and done that" - none of them were self-employed.

Once again, thanks to Fermi and JCS1 for your time; it is very gratefully received xx

fermi

Dis he write to the court saying he didn't oppose the petition? An adjournment would be less likely if he did.

skintandsad

He didn't, no. To be honest he hasn't been home much at all and has been working nights, so he really has had so little time

The little time he has been home (one day a fortnight at the moment) he has wanted to spend with our daughter; we are desperate to keep things as normal as possible for her sake.

debt_doctor

Hi,

My first quick point is that currently that cheque is yours to cash as you are not BR, but when BR as your business will technically end (and may well be allowed to trade on) on the date of your BR, those funds are likely to be seized as an asset of the former business.
It is legitimate to bank that cheque before you are BR - a trip to the bank first thing?

DD