Wife possible bankruptcy/DRO?

magpies79

So never thought I’d be typing in this section but here goes so we had a visit from a lady yesterday and it was from HMRC turns out my wife hasn’t paid or filled in any tax returns for the last few years to the amount of 20k!!!.

Now putting aside I’m going to have a sit down and talk things through with her she has no way of paying this and is currently in a low income full time job.

She does have a few other debts and has 2 recent defaults on her file and her credit file is very poor with lots of missed and late payments.
She has spoke with step change and they have suggested either IVA or bankruptcy however I believe HMRC want the debt paid over 12 months and that’s never gonna happen so IVA isn’t going to happen.
 

we have read up on DRO or Bankruptcy but our main concern is the house so to add a bit of background me and my ex wife are still on the mortgage we have arrangements in place for me to get her off and just have me on as credit file was adverse now isn't now so at some stage that will happen.

So I do and always have paid the mortgage current wife has never paid and we haven’t made any alterations or improvements together she didn’t pay any deposit as this was obviously all done before I knew her so our main concern is because we are married will she now be classed as having a 
 beneficial interest In the house step change did say this is possible it could be viewed that way so a DRO wouldn’t be a good idea and going down the bankruptcy route could potentially lead to a restriction/charge being placed on our house have 2 kids age 11 and 13 also.

just looking for some advice the conversation ended with step change saying it may be best to seek legal advice 
thanks.

ManyWays

That is a lot of back tax, are you sure it is right? You should be very sure before considering things like bankruptcy. 

Tax Aid may be able to help https://taxaid.org.uk/about-us

I believe HMRC want the debt paid over 12 months
Yes but longer is possible. NB I am not suggesting an IVA but saying that 12 months is not an absolute limit.

Keep_pedalling

Was she previously self employed? If she has not filed any returns how do HMRC how do they know how much she owes? 

magpies79

She was definitely self employed for I think around 10 years she has filed some returns and paid some alot are fines for late and no returns and none payments I also believe it’s generating like £40-50 interest a month alone.

appreciate the replies yeah the lady she spoke to dealing with it said could go over 12 month but the payments alone to even try that couldn’t even do it as don’t have it.

magpies79

ManyWays said:

That is a lot of back tax, are you sure it is right? You should be very sure before considering things like bankruptcy. 

Tax Aid may be able to help https://taxaid.org.uk/about-us

I believe HMRC want the debt paid over 12 months
Yes but longer is possible. NB I am not suggesting an IVA but saying that 12 months is not an absolute limit.

Yeah it’s not an ideal situation but any kinda payment she came up with didn’t come anywhere close to what they expect and all took like 10-15 years to clear the lady on the phone from HMRC also said interest alone on anything like 150-200 a month would be 8k added by the time it’s paid off also. 

fatbelly

It sounds like a 'whistling in the wind figure'. Get some proper tax returns done and that figure will come down

I disagree with stepchange. If it comes to insolvency then a DRO may be possible. No established beneficial interest. If it fails, it fails. No loss.

If it comes to bankruptcy then 'interest follows title'. There should be no effect on the house that you and your ex own

But get the tax sorted out first.

magpies79

fatbelly said:

It sounds like a 'whistling in the wind figure'. Get some proper tax returns done and that figure will come down

I disagree with stepchange. If it comes to insolvency then a DRO may be possible. No established beneficial interest. If it fails, it fails. No loss.

If it comes to bankruptcy then 'interest follows title'. There should be no effect on the house that you and your ex own

But get the tax sorted out first.

I was waiting for you to pop up as you are clearly in the know when it comes to these sort of things I’ve got a break down of the fines shall I post no personal details on there? 

I believe she would pass the criteria for DRO with regards to is it no more then £75 spare cash left over?
also car is worth less then £4k we have 2 cars but think mine is worth 2k at best.

i believe there’s no fee for a DRO is that right?what do we do if nobody advises us for a DRO

With regards to the tax bill what are we asking for a better breakdown and fines and fees?

magpies79

Sorry fatbelly another question if we able to get my wife a DRO upon the application who makes the decision about if there on No established beneficial interest. 

fatbelly

Usually when HMRC hit someone like your wife with a large bill it's just a figure plucked from the air because they have not received a completed tax form(s)

The forms for previous years are still available and hmrc can tell you which ones they want.

It may be worth talking with an accountant at that stage - may save you more than they cost.

If you end up going for a DRO the main suppliers are CAB and Money Wellness. Stepchange won't do them.

The decision about beneficial interest is made by the Insolvency Service but it is the debt adviser who tends to get nervous about it so yes it could be an issue though in my opinion it shouldn't be.

magpies79

Thanks for the advice if I’m honest it’s going to be a DRO if she can get one because with what she owes through the tax and afew other things her credit file is basically stuck in a loop of missed and late payments all the time and going forward something has to change as never has enough money to pay everything.

think this tax bill is the final straw even if it’s reduced 

magpies79

So she completed the online forms on money wellness and that one came back with advised to go bankrupt DRO they didn’t advise due to amount of money left over yet on the Soa it came back as £-8 for money left over so can’t see why they wouldn’t Recommend DRO.

Do you have to go with there recommendation or can you ask to apply for a DRO