Bankruptcy and HMRC

sdsquartz

My business failed in 2008, partly due to fraud constituted by my co- director (separately being dealt with by police). The HMRC sent bailiffs to my home address in 2009 to collect tax & PAYE totalling circa £11000 which I was unable to pay. I was, and still am, unemployed now aged 63 and receiving Pension Credit and rates paid via benefits.My wife was made redundant approx 5 years ago and has become a foster carer which is her sole income. My wife had no responsibilty for the business. We sold our house to our son in Feb 2008 before the business collapsed in the following August. The house sale was due to being taken to court by Bradford & Bingley for non-payment of mortgage. The house was being built from scratch and was incomplete when sold. We have lived in it continually and have paid the mortgage, interest only, since our son bought it.

1) I have had repeat visits from HMRC bailiffs annually.

2) I have an income from a pension from a previous employer which is taxed at source BR code. This has amounted to approx £1000 per annum tax overpayment as I do not earn anything besides this. For the first 5 years I tried to get Job Seekers assistance and was refused any payment. We lived on my wifes' income.

3) My accountant has continually supported my tax returns and dealings with the HMRC. He is totally frustrated by their incompetence. The HMRC received tax from my pension, would not repay this over payment due to my debt and agreed to use this to offset my debt and then lost it!! Misplaced it in another department and kept adding interest.

4) We have been paying by default through my pension tax, this is not reducing my debt and I am being threatened with bankruptcy again. I am presently paying 72p per day interest and apparently owe circa £16000.

5) I do not have £700 to pay for a bankruptcy petition, I do not own anything and have a bank account with £12.50 in it. I have my pensions, PC £580 per month & Co pension £385 net of tax.

How can I be made bankrupt when I am paying a £1000 per year to the Bankruptor!

Should I let them make me Bankrupt? What will happen to my home, and pension income? Will I be able to keep a bank account?

Johno100

sdsquartz wrote: »

5) I do not have £700 to pay for a bankruptcy petition, I do not own anything and have a bank account with £12.50 in it. I have my pensions, PC £580 per month & Co pension £385 net of tax.

How can I be made bankrupt when I am paying a £1000 per year to the Bankruptor!

Should I let them make me Bankrupt? What will happen to my home, and pension income? Will I be able to keep a bank account?

Which is it? Do you rent or own your property, if the latter how much equity is there?

dancingfairy

I don't know, is the answer, it's not entirely straightforward.
You say your son owns it so on paper it's not yours but then on the other hand you say you've been paying the mortgage on it. It *could* potentially be argued that you have an interest in the property which the official receiver could seek. Is there any equity in the property?
It doesn't appear to be a clear cut situation to me, I *think* you would be o.k but it doesn't appear to be clear cut.
df

dancingfairy

Are you paying rent to your son who then pays the mortgage or are you paying the mortgage directly?
Who's name is the house in?
Who's name is the mortgage in?
df

sdsquartz

Johno100 wrote: »

Which is it? Do you rent or own your property, if the latter how much equity is there?

Hi and thanks for the response.

In answer to your query, I do not own the property, my son does. We pay a private agreed rental to him to cover his mortgage costs. We have no equity.

The house was sold to him @ £225000 in Feb 2008 in an incomplete state and I have personally completed the build.

If sold today it would be worth circa £350000, probably less!

sdsquartz

Hi Dancingfairy,

Thanks for your interest. If you view the reply made to Johno you will see my position.

The property is in my sons'name and he pays the mortgage, we pay him the interest.

Equity is approx £100 - £ 125K

Cheers.

chasingfreedom

If the house is in your son's name and he pays the mortgage then essentially you are just paying him a rental income. If you were to go BR then only debt in your name would be considered. Be careful though because there are I believe some exemptions for government tax bills so they might not be included.


In your position personally I would call one of the national debt helplines and they will be able to advise you on your exact circumstances. I'm pretty sure though that they couldn't touch your son's house.