Continuing my business

jcarver007

debtinfo wrote: »

Hi, Then it mostly seems good, car is of low value and seems that it is needed, and they do let you have tools so no problem there either. The one sticking point may be the chocolate fountain as that is not really a tool but equipment. Is that the new price or its value now, guess they are difficult to value. Even if they dont exempt it though you could probably buy it back for a percentage of its value as the cost of its removal and sale would not leave much for the bankruptcy estate.

Just a technical point i wanted to mention although it makes little difference to you. Technically you do not carry on trading, the old business comes to an end on the day of the bankruptcy and you are free if you wish to start trading again the next day but that is fundamentally a new business.

I came across this post from before. Action Jackson seems to suggest you can carry on. But not sure what the BR restrictions are?

Action Jackson Old 07-11-2013, 5:47 PM
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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.

jcarver007

Also I am slightly confused about money owed on self assessment. If I go bankrupt- do I still have to pay any outstanding self assessment owed? Or is this dealt with in same was as other creditors?

debtinfo

I think you are confusing the fact that you are allowed to trade which you are with it being the same business which it is not. The old business dies along with its debts. You are allowed to open a new business and you can use the same name but it is a different business.

Also worth noting
Your website and address can be an asset in the bankruptcy depending on its worth.
Your ongoing contracts are null and void from your point of view as the business is closing so you will need to start new contracts with your new business.
Any money owing to your business will be a bankruptcy asset
Any tax owing will be a bankruptcy debt even if it has not been calculated and submitted to HMRC
Even your client list can be an asset but most of the time the OR doesn't bother as most are not worth much.

jcarver007

So would I still be able to honour the existing contracts?
And money owed on self assessment will be a debt that is cleared on bankruptcy?

debtinfo

The existing contracts should be scrapped and you can start new contracts with the same customers.

Yes money owed on self assessment will be cleared by the bankruptcy

jcarver007

Looking at my situation then, I will go bankrupt. But funds are drying up quickly - my bank wont lend any more. Not sure what options are avialable if cannot get the £700 to go bankrupt.

Are there loan companies out there which dont charge astronomical apr?

Custard_Pie

jcarver007 wrote: »

Hi All,

Looking for some advice and have looked through the forum but could not find anything definitive

What is the chances of me carrying on my business after being made bankrupt or is it always the case its wound up (I'm a sole trader);

What can I do to help me keep the business going and the OR not wind it up?


The business is profitable year on year - I dont have my own premises, tools are hand tools, use a car for business and personal travel...But not enough to keep on paying the debts I have and run the business and day to day costs.

But due to some issues I had with an ex, stress, spending on her, garage conversion on her property for my kids to stay blah blah....I have found myself in dire straits.

Money owed on self assesment, some bank loans and overdrafts totalling 29k, a couple of credit cards totalling 5k.

Its a shame as my credit has always been great - never missed payments even now....but worried that it may get to the point where I cannot afford the rent, drop kids at school etc

I have also made changes to reduce outgoings - moved into renting a room (not good with two sons staying part of week), and moved into another businesses premises where I rent for a lot less than before - would these actions be looked on favourably?

Without the payments on loans, I would be able to afford to rent a flat or similar and put money aside to cover tax etc.

Any advice on the business would be greatly appreciated....

Similar to you, no business assets, only debt. I created a new company and liquidated the last one. The IP done this for me and became the owner of the business debt. As mine was mostly HMRC debt, it was transfered into an IVA, along with credit card debt, etc. This enabled me to continue to trade with a clean deck and not go bankrupt.

jcarver007

Custard_Pie wrote: »

Similar to you, no business assets, only debt. I created a new company and liquidated the last one. The IP done this for me and became the owner of the business debt. As mine was mostly HMRC debt, it was transfered into an IVA, along with credit card debt, etc. This enabled me to continue to trade with a clean deck and not go bankrupt.

Would this work with money owed on self assesment tax as well?

egrescrimp

jcarver007 wrote: »

Are there loan companies out there which dont charge astronomical apr?

I would not recommend taking out finance to assist with going bankrupt, that is likely to get you into a lot of trouble.

You could just not pay your self assessment and wait on HMRC to make you bankrupt if you cannot find a way to pay for it.

Custard_Pie

jcarver007 wrote: »

Would this work with money owed on self assesment tax as well?

For me, I was behind on company HMRC debt and my accountant put it down as Directors loan. HMRC wouldn't enter into a CVA, so the IP Company Dept liquidated the company, hence they were the creditors for the outstanding HMRC tax. They became a creditor for the IVA. They also added the SA tax debt into the IVA. HMRC never vote as they don't have the resources to attend creditors meetings.

So, in answer to your question, yes. As far as I am aware, it's any unsecured debt such as credit cards, tax, loans, etc.