A query of detail - self employed / tax set aside within BR year

thinkpositive1

This message will not be relevant to many on here, but if anyone who is self-employed and been through / going through bankruptcy and can advise on this, I would be grateful:

In a nutshell it's about a piece of work I did in an intensive 6-7week burst prior to BR but with the majority of the payment coming in post-BR. I had a very full-on assignment for a client that began in mid April and ended a few days after my BR date.

Over 95% of the actual work done on this job was completed before BR, yet 80% of the fees came in after BR (as is normal..do the work, invoice it and get paid retrospectively). My tax returns always account for when work is done rather than when payments clear through my bank.

The question is this - should the tax that would be attributable to this job be placed into the bankruptcy estate and therefore written off (technically almost all the work was done prior to BR)? Or, as 80% of the fee came into my account a couple of weeks after my BR date, will the OR see that as fees within my bankruptcy year and want a slice of it?

I phoned HMRC - helpful but couldn't answer - who passed me onto the Insolvency Unit - helpful but didn't really know...and then spoke to Business Debtline who say it's a matter for the OR to decide. I have left a message with my accountant but he's not come back to me yet.

HMRC did suggest (more as a potential option than specific advice) that I might look at doing a mini tax return that would cover 6th April to my BR date and wrap up that work/associated fee/associated tax into that - then it would be dealt with in BR estate. They said 6th April 2015 will be my next tax year and the year of my BR won't need a tax return but the OR will no doubt check up on business income etc.

Sorry this is a real point of detail for those who have waded through my message, but it is important to me to know if £2k (ish) that would be due as tax gets written off or whether the OR will want it and if so when...or towards the end of my BR year when they look at what business income has come in / what's gone out and what (if any) "surplus" they will want.


Employees get put onto a NT code for BY year but no idea what happens to self employed. HMRC don't expect it but am advised to set aside an amount I would have done if was paying tax and that is something then the OR may (or will) want..?