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HMRC Bankruptcies

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I was Share fisherman and never filed my tax returns. I changed jobs in 2012 and went PAYE. I buried my head in the sand and now it has all caught up with me. I recently found out the HMRC have filed a petition and are making me bankrupt. I am working now and I earn an ok wage. I called HMRC and ask to pay a percentage of my wage each month but they refused and said they need full amount within 12 months. So the tax I actually owed is £40k but this goes back from 2002 to 2012. Now the amount is £150k. I have no assets, so why would they make me BR? Can I keep my job now ? Can I still have my wages paid into bank? I know I buried my head in the sand and ignored this for a long time but I tried contacting them and now it’s all gone wrong. Not sure where to turn 

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  • mwarby
    mwarby Posts: 2,049 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    For most jobs bankruptcy isn't an issue, it can be in finance, the police or working for goverment

    If you don't own your own home and have no assets all the can hope to recover is 3 years of your disposable income, this is referred to as an IPA. HMRC use bankruptcy to try and recover as much money as possible, in living from assets, I'd imagine for many who plead poverty as soon as bankruptcy comes up they can magically come up with a much better repayment option

    Bank accounts are much easier than they used to be, most high street banks will give you a basic account (no overdraft or chequebook). If you currently have loans or an overdraft your using, setting up an account with bank you don't owe money to is a good idea(otherwise they could use your next pay, to set off these loans). You account will likely be frozen for a few days, so make sure you have about a weeks worth of cash to tide you over

    It's worth noting that the bankruptcy will cover all of your debts, not just those with HMRC. It's possible that an IVA could be setup to avoid bankruptcy, but if you have no assets to protect there are pretty much no benefits to this and many downsides
  • mwarby said:
    For most jobs bankruptcy isn't an issue, it can be in finance, the police or working for goverment

    If you don't own your own home and have no assets all the can hope to recover is 3 years of your disposable income, this is referred to as an IPA. HMRC use bankruptcy to try and recover as much money as possible, in living from assets, I'd imagine for many who plead poverty as soon as bankruptcy comes up they can magically come up with a much better repayment option

    Bank accounts are much easier than they used to be, most high street banks will give you a basic account (no overdraft or chequebook). If you currently have loans or an overdraft your using, setting up an account with bank you don't owe money to is a good idea(otherwise they could use your next pay, to set off these loans). You account will likely be frozen for a few days, so make sure you have about a weeks worth of cash to tide you over

    It's worth noting that the bankruptcy will cover all of your debts, not just those with HMRC. It's possible that an IVA could be setup to avoid bankruptcy, but if you have no assets to protect there are pretty much no benefits to this and many downsides
    Thanks for the reply
    I have no other debts at all, I haven’t ever had any loans or claimed any benefits. This is just my tax from when I was a younger. It just seems a massive amount of interest. From £40k to £150k That’s £110k interest. 
    Thanks again
  • Flyright
    Flyright Posts: 424 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    edited 28 February 2020 at 7:06AM
    It won't just be interest. If you failed to file any returns there will be determinations and penalties as well. Bear in mind that the Official Receiver may well seek a BRO due to your failure to file returns with HMRC.
  • Sorry to hear about what has happened.  Afraid though HMRC fairly merciless.  Best you could hope for is they extend it to 18 months to pay which they might consider if you can persuade them you can realistically pay it back in that time.
    It is a huge sum and bankruptcy probably most realistic outcome.  I am well into my bankruptcy year and to be honest it hasn't been too bad after the initial shock.   Main thing is to try and avoid an IPA as that lasts for three years.  If you can reduce your income to bare subsistence for your bankruptcy year could save you large whack longer term.  
  • I am just over half way through after being made Bankrupt by HMRC, As RattyIrk has said its not as bad as feared, They will go through with it regardless of whether you have any assets or not, my situation was very similar to yours and i am expecting a Bro at some point in the next few months, read through the board and you will get most of the answers you need and if not ask and there will be people who really can help with guidance on how to get through it
  • Minkym00
    Minkym00 Posts: 791 Forumite
    Sixth Anniversary 500 Posts Name Dropper
    Your debt is very old so the OR will not pursue bankruptcy restrictions against you. Any misconduct is considered in the last 2-5 years. 
  • miike101
    miike101 Posts: 8 Forumite
    Fourth Anniversary Photogenic First Post
    Minkym00 said:
    Your debt is very old so the OR will not pursue bankruptcy restrictions against you. Any misconduct is considered in the last 2-5 years. 
    Yes. The debt is old 2002 till 2012. Since then I am all up to date. They asked me to borrow the money to pay them, but that is just going to be moving the debt. I understand I have buried my head and now it’s all caught up but WOW never had so much panic and stress in my life. 
  • John_
    John_ Posts: 925 Forumite
    500 Posts Name Dropper
    miike101 said:
    I was Share fisherman and never filed my tax returns. I changed jobs in 2012 and went PAYE. I buried my head in the sand and now it has all caught up with me. I recently found out the HMRC have filed a petition and are making me bankrupt. I am working now and I earn an ok wage. I called HMRC and ask to pay a percentage of my wage each month but they refused and said they need full amount within 12 months. So the tax I actually owed is £40k but this goes back from 2002 to 2012. Now the amount is £150k. I have no assets, so why would they make me BR? Can I keep my job now ? Can I still have my wages paid into bank? I know I buried my head in the sand and ignored this for a long time but I tried contacting them and now it’s all gone wrong. Not sure where to turn 
    They would make you bankrupt as a lesson to others as to the expected outcome if they do the same.  If they didn’t then we’d have far more people doing as you have, as there would be no serious consequences.
  • 00ewisD
    00ewisD Posts: 9 Forumite
    First Post
    hi,
    I've been in a similar situation. The next accountant I hired try to come up with an agreement so I can pay of my debt. But the debt was 70K with HMRC. not including my other debts. I never wanted to go BR. Then they flied a petiotion against me in jan 18 and I went to court and got it adjuded. The next court date a solicitor repsented me and it was adjured till july 2018. I couldn't attend court in july due to my training and I couldn't get anyone to repsent me so the court put me in bankrupty. 

    I didn't have any asset or money apart from my full time job income. Now I think I've been discharge. I still never wanted to go bankrupty but I never had no choice. 
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