IPA after BR

WhyPPIWhy

Hi :j

Not been on here for a while and defo not since being declared BR last November (2014).

Looking for some advice from all of you lovely helpful people please.

After receiving a letter from OR stating that I should receive a NC Tax Code, which would result in me paying no tax against my PAYE earnings, I was asked to sign a IPA to state that when this tax code was applied, I would be required to pay the same amount to the OR's appointed representative instead. This suggested it would only be until the end of the fiscal year in which I went BR, so as the NC tax code hadn't been applied before April 15, I've not yet received any additional £'s within my pay.

The OR has informed me that they will now be contacting my employer to confirm how much tax I paid between Nov - Apr in order to retrospectively reverse the tax paid to benefit my creditors (I can only assume).

Whilst this doesn't concern me particularly, as this was £ I would ordinarily have paid through PAYE direct to the taxman, I have today received another IPA from OR asking me to agree to pay circa £300 pcm for the next 3 years.

I can only assume this has nothing to do with my tax code, but is a direct result of their assessment of my income & expenditure, albeit 5 months after being declared BR? Whilst I had declared a small amount of unaccounted income each month (circa £100), the OR appears to have decided I should have more and to be perfectly honest, this is not the case in reality.

Is the OR able to do this? I had understood that the BR would apply for 12 months before being discharged, but it now appears that I will continue to pay for the next 3 years?

My decision to apply for BR was made instead of going down the IVA route, but it now appears that I have a mixture of both?

Your advice is really appreciated as I'm not sure what to do next....

:beer:

fermi

Any IPA based on surplus income rather than tax lasts for 3 years, even if that runs after you are discharged.

Ask for a breakdown of how they have come to the £300. If you do not agree with it and think it unreasonable, then you are not obliged to sign the IPA or agree to it.

The OR cannot force a payment plan on you unless they go to court and ask a judge to decide what is a reasonable amount, and if £300 is not reasonable then they would be silly to try that. The number of cases where the OR forces an IPO using the courts is very small each year, showing that they may huff and puff but rarely go through with it unless they can really justify the amount they are after in front of a judge.

Demand a breakdown. Review how they got to that amount. Then decide the next step based on that.

WhyPPIWhy

"Any IPA based on surplus income rather than tax lasts for 3 years, even if that runs after you are discharged."

Will they extend the tax IPA into the 2nd fiscal year of my BR?

fermi

No, that tax can only last until the end of the tax year you went BR in.

WhyPPIWhy

Sorry but have one more question......

If my income or expenditure change, after agreeing to an IPA, how quickly will the OR reassess the IPA amount? And I assume if the IPA lasts 3 years, I will continue to have to report changes to I&E throughout this period (even once discharged from BR)?

That was 2 questions.....:o

fermi

Yes, it can be varied, and they should change it reasonably quickly. Don't think there is any timescale set in law, but in the end if they did drag their feet the law allows YOU to ask the court to change it, so again a sensible OR should be reasonable.

Yes, an IPA agreement wording would require you to inform them of any increases in income through the 3 year IPA.

alastairq

Yes, an IPA agreement wording would require you to inform them of any increases in income through the 3 year IPA.

That should read, ''changes''.....must be reported within 21 days of the change of circumstance.

fermi

alastairq wrote: »

That should read, ''changes''.....must be reported within 21 days of the change of circumstance.

No. That should read increases.

IPA wording.

Until the end of the term of this agreement I shall notify the Official Receiver or other trustee of any increase in income within 21 days of becoming aware of the increase. I understand that the Official Receiver or trustee may claim any increase in income for the benefit of my creditors. I acknowledge that my obligation to make payments under this agreement does not end when I am discharged from bankruptcy and that failure to make payments can affect the date upon which I am discharged.

Same as the duty to the OR before you are discharged under s333 of the Insolvency Act 1986, which also specifies increases in income. Not changes of circumstances.

alastairq

So, are you saying, decreases in income cannot be reflected in the IPA?

fermi

alastairq wrote: »

So, are you saying, decreases in income cannot be reflected in the IPA?

Not at all.

If you inform the OR of them they certainly can.

The IPA agreement just obliges you to inform of increases. Not decreases, but you obviously can and will if you wish to have the IPA adjusted accordingly.

In other words:

If you don't inform them of an increase = they have some legal comeback

If you don't inform them of a decrease = tough, your fault.