Just for Info - IPA/IPO Income

Lizzibuff

I've just recently discovered this and thought it best to pass it on.

When calculating whether or not to implement an IPA/IPO - all income is taken into account - including child benefit and child tax credits.

I was under the impression (and had read other posters agree) that the child stuff would not be taken into account as income.

According to an insolvency publication this is not the case.

This publication on end of page 6 states :-

What do i include in my income?

Your income includes all payments you get, including income from self employment, PAYE employment, benefits (including child benefit and child tax credit), working tax credit and any payments under a pension scheme.

http://www.insolvency.gov.uk/pdfs/guidanceleafletspdf/ipoipa.pdf

Lizzibuff

It would seem that my child benefit and child tax credits have both been taken into account as due to this have just gone over the £100 mark at £109 surplus and so the OR has said i need to pay an IPA of £50.

That was why i looked into it as had been told and read on here that it wouldnt be included.

Can you post a link to the tech manual so i can have a look?

fermi

Doesn't matter in the slightest what it says there.:rolleyes:

This has been tried and tested, including being ruled upon by the High Court!!

Child benefit should never ever absolutely 100% not be counted towards the income assessed for an IPA by the OR. Any OR that tries to claim different is talking out of their *****.

Whether CTC falls under this ruling seems to be a little bit more open to debate but the OR's own guidance says:

http://www.insolvency.gov.uk/freedomofinformation/technical/techmanvol1/Ch25-36/Chapter31/part7/part2/part_2.htm

31.7.9 State benefits

An IPA should not be sought where the bankrupt's only or main source of income is state benefit payments without any other significant source of income [note 3]. This applies even in the rare circumstances where the official receiver's analysis of the bankrupt's income and expenditure discovers sufficient surplus for an IPA arising as a result of the income received by the bankrupt which either solely or chiefly comprises state benefits. The official receiver should consider that it is always open to the bankrupt who wishes to contribute, to make voluntary payments. If the bankrupt was minded to contribute on a voluntary basis, having been informed that their income appeared to be sufficient to produce a surplus taking in to account their reasonable domestic needs, a voluntary agreement could be incorporated into an IPA, but it would have to be clearly noted that no enforcement action would be taken if the bankrupt failed to make agreed voluntary repayments.

This does not mean that the official receiver must exclude all benefit payments received by the bankrupt when calculating available income for an IPA. Theperson making the calculation (usually the examiner) should first consider whether there is income paid to the bankrupt not comprising state benefit . If this is the case, an IPA may be a possibility, and any calculation of income should include all available income, including state benefits which are paid to an individual for the general benefit of that individual and their family. The notable exceptions to this rule when dealing with state benefits is child benefit. The High Court has stated as a matter of public policy that child benefit and similar benefits should not be included in the statement of income when applying for an IPO and there is no reason why this point should not be extended to cover IPAs. Whilst it is acknowledged that in the figures for expenditure there may be outgoings for the benefit of the children, at least to the value of the child benefit received, to ensure that there is no risk of them being deprived of it, child benefit should not be included in IPA assessments. The Department of Work and Pensions website provides useful information regarding allowances and benefits currently in force and can be accessed at http://www.dwp.gov.uk/

Where the bankrupt is in receipt of benefits and other sources of income, the total income should be established (see other income sources at paragraph 31.7.7) and the bankrupt's reasonable expenses deducted (see paragraph 31.7.19). An assessment can then be made as to whether the bankrupt is in receipt of income surplus to his/her reasonable domestic needs. If there is a surplus of income, this surplus should be less than or equal to income from the source other than benefits in order for an IPA to be sought. It should be remembered that whilst the bankrupt's total income including state benefits should be included in the calculation of surplus income, it is the income from sources other than the benefit(s) which is providing the payments under the IPA/IPO, the surplus income from which an IPA is sought should not be comprised of state benefit.

OR's who have attempted to include CB in the income for an IPA have so far been made to back down when challenged, so it is a good idea to quote the above to any that try.

fermi

blind-as-a-bat wrote: »

Read this http://bankruptcy.informe.com/possibly-ipa-what-restrictions-does-that-hold-on-me-dt264.html)

Cheers Bat. I was going to go and look for that link next.:D

Lizzibuff

Thanks a lot to both of you - think a call to the OR is in order tomorrow then!

Sorry if i mislead anyone with my original thread.:o