HMRC Debt - Bankruptcy/IVA Concerns

ppguy

Hi everyone,

I have been a frequent visitor to this forum over many months and have taken on board the great advice many post on here. I’ve managed to pick up advice from different posts but nothing really fully covers my current situation and I’m hoping some of you guys can offer your input/advice.

To cut a long story short the HMRC have issued me with an Estimation of just under £100,000 for unpaid tax. This stretches back some years. The estimation is incorrect and the HRMC agree but state because they haven’t received recent tax returns they have no option to estimate which I fully understand. In total there are three outstanding tax returns which are now almost ready for submission. The correct total is around the £30k mark. HMRC are threatening bankruptcy proceedings against me and I’m dealing with the “Late Stage Resolution” department. My questions/concerns are these......

Once the HMRC receive the outstanding returns and the true figure is confirmed will they be open to an IVA to clear the balance or will they just force through with the bankruptcy?

Either way I understand that I will be under an IPA or such like for some time to come be it with an IVA or through bankruptcy. This is where my bigger concerns come in. As a sole trader my income/profit changes greatly per month, it can be £500 one month and nearer £3,000++ the next. It’s never the same month by month. I presume it would become a monthly occurrence to notify the trustee/IP?

I live at home and pay housekeeping (I guess technically rent?). I also contribute by paying one utility bill as well as some other household bills. Would this still be possible under the restriction of an IPA etc or would my entire income (whatever it may be that month) go into it? Would the fact that I don’t own the home come into it?

In terms of assets, I have none to protect but I don’t want the stress of this hanging over me for much longer. I admit a lot of the problems are of my own making, burying my head in the sand, putting things off, and not managing things better. I want to get this sorted out once and for all. This brings me onto my final question (apologies for the length of this post!). It may be possible that my income during the bankruptcy period covers the original bankruptcy debt. If for example I am bankrupted for the £30k debt to the HMRC and let’s say in the first three months my income comes to £30k does the bankruptcy carry on even though I have paid the debt to the trustee (allowing for associated fees I guess). I’m basically concerned that if I am made bankrupt I will be tied it for the twelve months+ even if my income has covered the original debt.

Thanks very much in advance for any advice you guys can offer!

tigerfeet2006

Sorry PPGuy, I'm in and out of meetings so haven't got time for a full answer, hopefully someone will be able to advise you later today.

The one thing I will say though is please make sure you get some free, professional advice from Business Debtline as well.

Www.bdl.org.uk

arcon5

I suspect they will base it on your average, say over the preceding 3 or 6 months maybe

Flyright

The OR may well consider a BRO against you for the HMRC debt.

antonic

Please see my comments in RED

Which Heads of Duty are included in this debt ? (VAT/SA/PAYE/CT/CIS).

ppguy wrote: »

Hi everyone,

I have been a frequent visitor to this forum over many months and have taken on board the great advice many post on here. I’ve managed to pick up advice from different posts but nothing really fully covers my current situation and I’m hoping some of you guys can offer your input/advice.

To cut a long story short the HMRC have issued me with an Estimation of just under £100,000 for unpaid tax. This stretches back some years. The estimation is incorrect and the HRMC agree but state because they haven’t received recent tax returns they have no option to estimate which I fully understand. In total there are three outstanding tax returns which are now almost ready for submission. The correct total is around the £30k mark. HMRC are threatening bankruptcy proceedings against me and I’m dealing with the “Late Stage Resolution” department. My questions/concerns are these......

Once the HMRC receive the outstanding returns and the true figure is confirmed will they be open to an IVA to clear the balance or will they just force through with the bankruptcy?

HMRC will make you bankrupt for either the estimated amount of £100k OR the true debt of approx £30K, bit will NOT consider a repayment arrangement while ANY type of tax return is outstanding.

If you try to enter an IVA you may find that it fails because HMRC object to it, especially if they are your biggest creditor, in which case bankruptcy might be your best way forward, especially if HMRC petition for it they will pay the fees for you and include it in your debt to the Crown.
Either way I understand that I will be under an IPA or such like for some time to come be it with an IVA or through bankruptcy. This is where my bigger concerns come in. As a sole trader my income/profit changes greatly per month, it can be £500 one month and nearer £3,000++ the next. It’s never the same month by month. I presume it would become a monthly occurrence to notify the trustee/IP?

I live at home and pay housekeeping (I guess technically rent?). I also contribute by paying one utility bill as well as some other household bills. Would this still be possible under the restriction of an IPA etc or would my entire income (whatever it may be that month) go into it? Would the fact that I don’t own the home come into it?

In terms of assets, I have none to protect but I don’t want the stress of this hanging over me for much longer. I admit a lot of the problems are of my own making, burying my head in the sand, putting things off, and not managing things better. I want to get this sorted out once and for all. This brings me onto my final question (apologies for the length of this post!). It may be possible that my income during the bankruptcy period covers the original bankruptcy debt. If for example I am bankrupted for the £30k debt to the HMRC and let’s say in the first three months my income comes to £30k does the bankruptcy carry on even though I have paid the debt to the trustee (allowing for associated fees I guess). I’m basically concerned that if I am made bankrupt I will be tied it for the twelve months+ even if my income has covered the original debt.

Once your made bankrupt your bankrupt for 12 months before your automatically discharged, unless the OR thinks your behaviour was so bad or you havent cooperated and they suspend your AD.

Thanks very much in advance for any advice you guys can offer!

JCS1

Do you have any other debts? If HMRC make you bankrupt for £30k, there are then various costs and fees added, so even if you pay £30k into an IPA it won't cover the original debt

Saulb23

Would love to hear what the outcome of this was OP? Im in a very similar situation with the HMRC chasing me for £30k of debt and petitioning for bankrupsy. Its frustrating though as I can probably pay it back within a year but they want it NOW!

alastairq

I live at home and pay housekeeping (I guess technically rent?). I also contribute by paying one utility bill as well as some other household bills. Would this still be possible under the restriction of an IPA etc or would my entire income (whatever it may be that month) go into it? Would the fact that I don’t own the home come into it?

In Bankruptcy {BR], , from your income, you are allowed to deduct [claim for] 'reasonable living expenses'......

After these expenses are deducted, anything left over is 'surplus income'....and may be claimed by the OR under an IPA [which is an agreement, not an imposition.]

If this occurs, the IPA can be varied throughout its term, dependant on the BR's financial circumstances [up, down, or zeroed altogether].....and it lasts 3 years from date-of-agreement.

[An IPA/IPO isn't about paying a fixed amount to creditors..its about the OR releasing whatever assets they can, for the BR etsate.]

longtermplanner

Saulb23 wrote: »

Would love to hear what the outcome of this was OP?

people rarely return to their old threads I am afraid.

Im in a very similar situation with the HMRC chasing me for £30k of debt and petitioning for bankrupsy. Its frustrating though as I can probably pay it back within a year but they want it NOW!

How will you be able to repay it in a year? Are you planning at that point to sell some assets, eg your house? If so, you could consider offering HMRC a charge over the house now.

Have you spoken to TaxAid? http://taxaid.org.uk/

Saulb23

longtermplanner wrote: »

people rarely return to their old threads I am afraid.



How will you be able to repay it in a year? Are you planning at that point to sell some assets, eg your house? If so, you could consider offering HMRC a charge over the house now.

They are not interested on my property as it has fell into negative equity.


I work in the construction industry and work has really picked up almost to pre recession days so hopefully I can pay it back each week through my earnings.


Thanks for the link,iwill give them a call.