BR & sole trader

Island1

Hi, have got some valuable tips from this site but this is my first post. I am going BR in a couple of weeks, I have had a business as a sole trader, but have been winding it down over the past 3 months, however I would like to start it again after BR, how does that work from a tax point of view? And how would the OR view such a move? Thanks in advance.

Action_Jackson

I was/am in exactly the same situation.

If you are a sole trader, you can carry on trading (subject to the usual BR restrictions). The OR won't mind - you have to be able to make a living.

If you have a lot of valuable stock, they might want that, but you will be allowed to keep tools of trade.

You will get a letter from HMRC informing you that they will want a paper tax return for your year of bankruptcy. This will be under your pre-BR self assessment number. They will also inform you of a new self assessment number to use after BR which you can file online as normal.

Aside from that, nothing changes regarding your taxes, NI etc. so you need to put aside a proportion of your income to pay the tax man as normal, and the OR has to take that into account if assessing you for an IPA, as they do legitimate business expenses.

ontrack

I hope you are spared the joy of having HMRC sending endless demands for tax returns and not filing the ones you do return because your tax reference has changed. I managed to run up nearly£900 in penalties before they admitted their mistake and credited me back to zero.. My tip
All correspondence with tax office copy and send by recorded delivery
6 months after discharge you will be able to open a business account but watch out for mobile phone companies and utilities, they can be tricky for a bit longer. If you can get a mobile contract and basic bank account before you become bankrupt.
Good luck