IVA and Self-employment

dogedlydetermined

Hi, my Husband and I, after years of struggle and stress have finally decided the only way forward is to petition for Bankruptcy and are in the process of preparing the figures for our SOA's. We are both in our early 50's and have worked as partners in a business for many years (consultancy so no staff or fixed assets) and we will continue (or re-start) the business once we have sorted out the BR. Our debts are primarily to HMRC and the bank and we won't have any debt associated with the business so that goodwill will remain.

OH has sourced advice from Step Change and on the forums here but I would like to clarify an issue regarding IVA's. Because I am 'dogedly determined' to find a way through this and start over I have accepted a job for 3 days a week to ensure a certain, guaranteed level of personal income. I'll also continue to work with my OH on a self-employed basis. I understand that my job will attract a nil tax code and that the 'tax saving' will be taken towards an IVA. Our other, joint income will fluctuate from month to month (and year to year) so will an IVA be based on a monthly average calculated from our historical accounts? I have no problem in re-paying what we can - as in spite of quite a lot of bad luck I fully accept we must take responsible for the mess we find ourselves in. But, my concern is to try and ensure that our finances going forward are manageable which they won't be if an IVA imposition is 'punative'.

Any advice welcome on the best way to approach the OR with this.

Many thanks

UpToMyNeckInIt

Might be worth having a chat with your accountant to discuss the most tax-efficient option for you.

If ever you were thinking of forming a 'Limited Company' Bankruptcy is a no-go. But you can still be a company director with an IVA.

Some IVA companies are better than others in dealing with self-employed cases than others. Some will allow you to 'fluctuate' your IVA repayment with known seasonal peaks & troughs in your business, others won't.

But the IVA firm you choose will base your income usually on your most recently available books, and/or a suitable 'profit forecast' from an accountant.

Saying that, if you have no assets worth protecting, and intend to remain a 'partnership' in your new business, then going BR might be a better (and cheaper) option for you.

Also, I have heard that HMRC are notoriously 'awkward', borderline hostile as far as IVA's concerned, often insisting on special/extended repayment terms, the customer lodging a cash 'bankruptcy guarantee' with them (I've seen £2,000 quoted somewhere), and more draconian 'equity release' provisions (if applicable). Seeing as they appear to be a majority creditor, you need to be mindful of this. One thing the Government is good at is collecting money due to them!!!

Good luck.

longtermplanner

dogedlydetermined wrote: »

Hi, my Husband and I, after years of struggle and stress have finally decided the only way forward is to petition for Bankruptcy and are in the process of preparing the figures for our SOA's. We are both in our early 50's and have worked as partners in a business for many years (consultancy so no staff or fixed assets) and we will continue (or re-start) the business once we have sorted out the BR. Our debts are primarily to HMRC and the bank and we won't have any debt associated with the business so that goodwill will remain.

OH has sourced advice from Step Change and on the forums here but I would like to clarify an issue regarding IVA's. Because I am 'dogedly determined' to find a way through this and start over I have accepted a job for 3 days a week to ensure a certain, guaranteed level of personal income. I'll also continue to work with my OH on a self-employed basis. I understand that my job will attract a nil tax code and that the 'tax saving' will be taken towards an IVA. Our other, joint income will fluctuate from month to month (and year to year) so will an IVA be based on a monthly average calculated from our historical accounts? I have no problem in re-paying what we can - as in spite of quite a lot of bad luck I fully accept we must take responsible for the mess we find ourselves in. But, my concern is to try and ensure that our finances going forward are manageable which they won't be if an IVA imposition is 'punative'.

Any advice welcome on the best way to approach the OR with this.

Many thanks

I am not sure if you e=meant to post here at all? You mention an IVA, but the whole of the rest of your post relates to bankruptcy and if I substitute !IPA" for "IVA" it all makes much more sense.

An IVA is totally different from bankruptcy, the tax provisions you talk about are not relevant for an IVA, and there is nor OR in an an IVA.

Can you clarify if you are actually thinking of an IVA as an alternative to bankruptcy? Or have you just got IVAs and IPAs confused?

dogedlydetermined

Thanks for responding. I did indeed get my acronyms mixed up and what I meant was IPA. I realised what I'd done yesterday and have now posted in the Bankruptcy and Living With it forum.