Sole Trader and Bankruptcy -

JCS1

keen_kat wrote: »

Sole traders business does not cease on the date of bankruptcy. Only partnership businesses become non existent and dissolved on date of bankruptcy. As a sole trader you are free to continue on (with some rules and obligations as beloq).

As a sole trader you are free to carry on trading, just as you were before, with same clients, same contracts, same everything. The only requirement you have to adhere to when you are made bankrupt is that your trading name, must include your full personal name that you were made bankrupt with. Ie Joe blogs trading as meal deals for you. Using your name is showing that if people want to search your name they can and find out you are bankrupt.

As for profits, as it is a sole trader account, they would only take surplus of whatever your income is,less your expenses.

My experience: I work in an insolvency firm

A sole trader business does cease on the date of bankruptcy order. They have to apply for new tax reference numbers but can (an do) start up again the next day with the same name.

debtinfo

keen_kat wrote: »

Sole traders business does not cease on the date of bankruptcy.

My experience: I work in an insolvency firm

I would be really interested to know what your position is and which insolvency firm you work for.

it is really important that people in the industry provide accurate information to the people that post on this board.

You have said as above that sole traders business does not cease on the date of the bankruptcy.

Can you explain why this is in direct contradiction to the official guidance from the Insolvency Service on this matter?

This excerpt is taken from the official publication "guide to Bankruptcy" published on the .GOV by the insolvency service and the whole of this document can be seen at this link https://www.gov.uk/government/publications/bankruptcy

"h. Your business

If you are self-employed, your business is normally closed down and any employees are dismissed. Any business assets will be claimed by the trustee unless they are exempt and you will have to give the official receiver all your accounting records. You are still responsible for completing all tax and VAT returns.

Your employees may be able to make a claim to the National Insurance Fund for outstanding wages and holiday pay, payment in lieu of notice, and redundancy. Employees can claim in the bankruptcy for any money owed that is not paid by the National Insurance Fund.

There is nothing to prevent a bankrupt from being self-employed so you can start to trade again, subject to restrictions. You will be responsible for keeping accounting records for this business and for dealing with the tax and VAT requirements for the new business. You will need to register again for VAT if you meet the registration requirements. You should not continue to use your pre-bankruptcy VAT registration number."

lilybankrupt

I'm a sole trader coming up to declaring BR and am finding this thread very contradictory, as well as advice given by external people (free support and also an IP session via Citizens Advice).

As a sole trader I have various ongoing agreements / contracts etc - with PayPal and eBay for example and with other companies through whom I sell (not one off contracts but signed when joining selling platforms a couple of years ago).

So if the business ceases to exist on the day of BR are the contracts cancelled and I have to agree them again when I start up the next day? Which in reality won't be possible, effectively putting me out of business

Surely if you're a sole trader you and your business are the same thing, so how can 'the business' cease to exist unless I cease to exist??!! :eek:

I was advised that I would need to 'stop trading' for at least a day so the OR can establish what is pre BR and what is post BR, which makes complete sense.

The bit I don't understand is that as a sole trader I signed the contracts as myself trading as, so how does that work?

longtermplanner

The OR will want to be able to clearly distinguish between what has happened pre bankruptcy and post bankruptcy. The contracts that will have to be closed down are those with ongoing obligations for you to supply some services or goods or something like that. the contracts you have with Paypal and eBay are (I am guessing without sight of them) agrements about the standard terms which will be used when a transaction takes place (what the fees will be, what has to be done in dispute etc). Providing there is a break of a few days when you go bankrupt, I can't see these being a problem.

debtinfo

Hi lily, the OR can contact Ebay and paypal and inform them of your bankruptcy. It is then up to Ebay or Paypal if they want to let you use the same accounts just like with a bank account. this is the OR's Guidance

4.146 E-Bay account

The official receiver should send notice to E-bay where the bankrupt is known to have an E-bay account. The address can be obtained by entering “EBay” as a Party Name in ISCIS. An E-bay account may be used to buy or sell household goods, however the level of transactions may show significant activity and indicate that a bankrupt may be trading. The official receiver should follow the advice given in Paragraph 4.144 when realising any credit balance.



4.147 Paypal account

The official receiver should send notice to Paypal Europe Limited where the bankrupt is known to have a Paypal account. The address can be obtained by entering “Paypal” as a Party Name in ISCIS. A bankrupt may use his/her Paypal account like a current bank account for receiving and making payments and it may be in credit. A trading bankrupt may operate a Paypal account to accept payment for goods and/or services provided. The official receiver should follow the advice given in Paragraph 4.144 when realising any credit balance

jcarver007

woodformoretrees wrote: »

""So who tells the client who has a booking with me but has not paid any money, that the contract is dead? Me or the OR?

If a client has paid a deposit, can the booking still go ahead? Or do i have to contact the client and say the booking is void...but can still go ahead and do the job????""



Is there a reason you can't honour the work? I think from your client's point of view the whole transaction can be seamless. There's no reason why your bankruptcy should impact them if you don't want it to or even why they should be informed of it by you or OR.

Hi
No I do want to honour it...my worry was that the orders would be cancelled and i would not be able to honour them - i dont want to take deposits and not finish the jobs