Hello all

BobBasket

Hi everybody,

I've got a few questions I'm looking for answers.

1) Do I need to work while bankrupt?

2) If not, do I need to go on jobseekers or can I simply live off my partner?

3) If my partner starts a Ltd company and I work for it without pay (not an employee) partner takes all the monies after corp tax as dividends is this ok (she would run do all the director stuff, accounts, speak to the accountant, submit returns etc etc)

4) What does the OR do to check up on me? how far can they look into me?
Can they ask what my partner's name is and find the Ltd company on companies house and say "Hey look at this, she runs a business in the industry you used to be in"

5) When I get discharged, if I become director of the company after my discharge will I be liable to notify the OR of my new job/directorship? and be liable to make payments

6) Should I do the work and just claim I don't have a job or should I just become an employee and earn minimum wage and go from there?

7) if the company only makes 600 a month and I can only pay myself a wage of £8.21 x 60 hours a month, will the OR look at this suspiciously and ask to see payslips and enquire with the "employer" (a.k.a my partner) about why I have such low hours? how far will the OR go into looking into my cover story?

Pre Thanks to anyone who replies

Flyright

The OR can and will check Companies House as the situation you describe is a common ruse used by bankrupts to circumvent the restrictions imposed by bankruptcy in terms of you not being allowed to be a director. Breaching this is a criminal offence so yes the OR will monitor Companies House.

The OR can 'check up' on you in numerous ways and can go back as far as they deem necessary, especially if given cause to think there is some misconduct on the part of a bankrupt.

Your post implies that you are considering failing to tell the truth to the OR and this can land you in serious trouble. Nobody on this forum is going to encourage you to commit offences.

TheGardener

BobBasket wrote: »

Hi everybody,

I've got a few questions I'm looking for answers.

1) Do I need to work while bankrupt? No

2) If not, do I need to go on jobseekers or can I simply live off my partner? No and yes but beware gaps in your National Insurance payment history, being on benefits would give you NI credits. Jobseekers is not a benefit? Universal Credit however is - and there is a large time commitment and evidence of seeking work required - and you will be expected to take work - whatever it is. You are unlikely to be able to claim UC for a year without actually taking up employment no mater how menial/boring/low paid it is, you wouldn't be able to kick your heels for a year. (rightly so)

3) If my partner starts a Ltd company and I work for it without pay (not an employee) partner takes all the monies after corp tax as dividends is this ok (she would run do all the director stuff, accounts, speak to the accountant, submit returns etc etc) A pointed out already - the OR is not daft, they would almost certainly investigate your roles in the business.

4) What does the OR do to check up on me? how far can they look into me? The Insolvency Service can look at whatever they like for as far back as they like but in practice most ORs look at back around 2 years - unless they find something they want to look at in more detail...Once you are AD they will leave you alone unless you are paying an IPA. Remember they are professional 'hunters' for assets..
Can they ask what my partner's name is and find the Ltd company on companies house and say "Hey look at this, she runs a business in the industry you used to be in" Probably

5) When I get discharged, if I become director of the company after my discharge will I be liable to notify the OR of my new job/directorship? and be liable to make payments Only if the IPA was set up prior to you being discharged.

6) Should I do the work and just claim I don't have a job or should I just become an employee and earn minimum wage and go from there? Whatever you chose - don't lie about it to the OR

7) if the company only makes 600 a month and I can only pay myself a wage of £8.21 x 60 hours a month, will the OR look at this suspiciously and ask to see payslips and enquire with the "employer" (a.k.a my partner) about why I have such low hours? how far will the OR go into looking into my cover story? The fact you have referred to it as a 'cover story' suggests you are looking for ways to bend the rules. You are unlikely to get advice that might be considered contrary to the law on this board.

Pre Thanks to anyone who replies

Don't underestimate the powers of the insolvency service - or how upset creditors can be. Local creditors that know you may well be inclined to inform the OR if you are being 'economical with the truth' or about anything they feel is unjust.

silvercar

You know you would be sailing close to the wind and risk a serious investigation, but in answer to your questions:

1. Not necessarily. bankruptcy can mean that people are mentally exhausted by all the debt problems they have had and need a break

2. you can only claim jobseekers if you are actively seeking work

3. You can't work for it without pay. A couple of hours a week admin help with no customer/ business contacts would probably be ok. Anything more and you should go on the payroll.

4. The link will be easy through your address. But if you have no income you will need to explain how you are being supported to avoid the OR thinking you have undeclared income or savings. Refusing to declare the name will be highly suspicious.

5. You will only be discharged when the OR is satisfied with their enquiries. After discharge the OR could take action if they suspected fraud.

6. If you work you should be paid.

7. If the company only makes 600 a month, how will you and your partner survive. If your partner has other employment, they will get taxed on dividends, so the fiddling may not pay off.

Really the risks of being caught are that your bankruptcy will be extended. Not recommended!

BobBasket

I’m not trying to avoid taxes or be a fraudster, I left my previous employment due to the fact I was paying all my wage towards debts and it wasn’t emotionally sustainable for me to continue to work for all my salary to pay off debts

So I can work for a couple of small businesses doing odds and ends, but it’s easier if it’s done as a Ltd company so it looks better than me being a “Bob Castle” sole trader, I’m not going to be making millions from this Ltd company, it’s purely going to be buttons it makes,

So if I worked for the Ltd company that was in my partners name

They would say I was shadow?

Even if I honestly did nothing in regards to being a director and they could not prove otherwise

E.g my partner did all aspects of running the business

She accessed the bank account, invoiced clients, ran the payroll.

I strictly stuck to the work of an employee to make the customers happy?
(No access to the accounts, no access to bank, hmrc, companies house, the accountant etc)

There must be scenarios in real life where a person goes bankrupt and they live with family or a friend and they then work for that family or friend legitimately and get a wage for it, in this scenario how can it be proven or disproved as scam if they are both in the same trade

For example if a son had his own stonemason business and went bust, his father also has a stone mason business

The father hires the son on as an employee? What happens there?

Thanks

BobBasket

Yes my partner has full time employment elsewhere her main income would be from that, I doubt there would be any dividends to take anyway, the Ltd company would not be making that much for it to make sense to withdraw any dividends

debt_doctor

Hi,

From the Insolvency Service Technical Manual....

25.17 Promotion, formation and management of a company

(Amended November 2009)

It is an offence for an undischarged bankrupt to act as a director of, or directly or indirectly take part in or be concerned in the promotion, formation or management of a company, except with the leave of court.

So, you can be an employee of your partners company, but must not play ANY part in its running, not only as a (shadow) director but not assisting to manage the business, no access the the board, decisions on business plans or spending plans.

Any money you earn can be considered for the purposes of an IPA (if it is deemed that you have surplus funds).

If you have enough class 1 national insurance contributions you could claim 'new style' Job Seekers Allowance. £73.10 pw, not affected by your partners income. You would however be subject to the normal job seeking requirements.

DD

BobBasket

debt_doctor wrote: »

Hi,

From the Insolvency Service Technical Manual....

25.17 Promotion, formation and management of a company

(Amended November 2009)

It is an offence for an undischarged bankrupt to act as a director of, or directly or indirectly take part in or be concerned in the promotion, formation or management of a company, except with the leave of court.

So, you can be an employee of your partners company, but must not play ANY part in its running, not only as a (shadow) director but not assisting to manage the business, no access the the board, decisions on business plans or spending plans.

Thanks for the detailed reply,

So if my partner was to contact a local accountant and ask them to assist her with setting up a Ltd company and to run her payroll etc, she sets up the company bank account and then proceeds to hire me as an employee and that's all I do,

That's above board? sounds like it to me as I would only be doing the work required by my employment, I wouldn't be telling her what to do, I would simply discuss pricing/quotes with her and she could quote/invoice clients herself.

That would be as far as I would need to go.

BoGoF

Depending on the nature of the business it will be pretty obvious if she is just a front for you.

For example if it were a builder and she had zero experience in the field but you did then you are sailing close to the wind.

Why does it have to be a Ltd company?

BobBasket

BoGoF wrote: »

Depending on the nature of the business it will be pretty obvious if she is just a front for you.

For example if it were a builder and she had zero experience in the field but you did then you are sailing close to the wind.

Why does it have to be a Ltd company?

Thanks for the reply BoGoF,

I don't think it looks good from a neutral point of view looking in, when a potential new client see's my business name is Bob Castle, as far as I know, the only reason anyone would ever do that would be due to insolvency, so anyone with business sense would avoid me like the plague or would openly know I was insolvent, which in my opinion, gives me a bad reputation by default.

I wouldn't need to run the business or be a director to do the work required, so having my partner start a ltd company and run it like one, whilst I do the work of an employee is fine.

It's not a construction company, it's a service provider of IT Support,

If she chooses to start a Ltd company and has the business knowledge to gain clients and knows how to run the business as a director, surely hiring employees to do the work while she remains the director to run the company from a financial/accounting/business standpoint is ok.

There must be Ltd companies out there with directors that aren't skilled in the trade that the company operates, but they have good business skills and are able to successfully run the company via employees that do the work.

BoGoF

You keep telling yourself it will be fine.

I doubt very much there are many one man band Ltd companies doing as you suggest.