Tax refund post bankruptcy

angie85

Hello,

I was declared bankrupt earlier in 2019. My debts more than outweighed my assets leaving me with nothing.

Starting from scratch again and received a call from my accountant (genuine) advising I am due a tax refund relating to the 2018-2019 tax year. It's not much but would certainly help in my current situation.

Any thoughts on whether I would be able to keep this money?

Also, my bank account is frozen so I'm not sure how the funds from the refund would reach me.

Any advice greatly appreciated.

DrSqueeze

I suspect that if the tax refund relates to the time before you were declared bankrupt then it would be part of your pre-bankruptcy 'assets' so unfortunately you wouldn't benefit from it. I understand it's based on the period when the tax was overpaid, rather than the date on which the refund is paid.


Do check though to be sure.

Minkym00

You won’t be able to keep it I’m afraid. It’s a pre-bankruptcy asset and HMRC will send it straight to your OR.

terrence45

You'd need to declare it but you wouldn't necessarily lose it - depends on your current SOA and how you are supporting yourself. E.g. if your sole income is universal credit and you're living on the breadline, your tax refund might be absorbed into your SOA such that there's still no spare cash. You'd need to negotiate with the OR.

Your bank account is frozen - what have you been using all these months since bankruptcy? Open up a basic bank account, which is suitable for undischarged bankrupts as it has no overdraft facility etc. E.g. Co-op Cashminder, Nationwide Flexbasic, Barclays Basic.

Minkym00

You could argue that you need your increased income from a NT tax code and it would be considered when calculating any surplus. But a tax rebate is a pre-bankruptcy asset.

In fact you signed a TNIDIS form which states that "you authorise and requested HMRC to pay to the Official Receiver (and the trustee of my bankruptcy estate) any income tax refunds due to me for all tax years up to and including that in which the bankruptcy order was made against me”.

BoGoF

It belongs to the OR and if HMRC are aware of your bankruptcy (and they should be) then you won't be seeing any refund.

Does your accountant know you were declared bankrupt?