Pending BR with undisclosed earnings from self employment. Jail/BRO??? Help please

Johnnystone

Hi all,

I wonder if you could have a look at my brothers situation for me (his broadband has been cut off) and give me your advice/views.

My brother was running a limited company in which he set himself up as an employed director. The business was mortgages but due to the current climate, completions dropping off, tighter criteria etc he has earned next to nothing for a while now.

Before he went in to this trade he bought cars from auctions and sold them on ebay after cleaning them and doing any minor repairs/improvements.

He has kept this on whilst doing this (thank god or he would have had no money whatsoever) as a "sideline"

His concern is that when he goes bankrupt the official receiver will see the paypal payments over the last year and try to prosecute him for not paying tax on this, he is even worried they will put him in jail.
He is of the opinion that he has done something majorly wrong and could face prison on top of his bankruptcy and have to repay the tax on his ebay car earnings.

He knows that the Ltd company debts he is not liable for but is absolutely cakking himself about this.

I have tried to explain to him that you can be employed and self employed at the same time. I remember from when i was self employed and filled out my tax returns there was specifically columns asking, how much earnings from self employment, how much from employment.

With this in mind I have mentioned to him that this is where the secondary income comes from, self employment. And again IMO the only thing he MAY have done wrong is not to fill out his self assessment tax return (yet;))

In light of this he will have tax due form self employment, but as this was incurred pre bankruptcy won' t this be included in the bankrupt debts and written off???

I was thinking the worst case scenario was a fine for late filing of tax return, but again wouldn't this be written off?

He also thinks that his bankruptcy can be lengthened or have a BRO on it for this.

Has anyone got any idea on this????

Surely people can be employed and self employed at the same time. I know loads of PAYE mechanics who sell cars out of work to earn extra.

I hope you can give me some advice to pass on, good or bad, as he it at his wits end.

debtsucks

Johnnystone wrote: »

Hi all,

I wonder if you could have a look at my brothers situation for me (his broadband has been cut off) and give me your advice/views.

My brother was running a limited company in which he set himself up as an employed director. The business was mortgages but due to the current climate, completions dropping off, tighter criteria etc he has earned next to nothing for a while now.

Before he went in to this trade he bought cars from auctions and sold them on ebay after cleaning them and doing any minor repairs/improvements.

He has kept this on whilst doing this (thank god or he would have had no money whatsoever) as a "sideline"

His concern is that when he goes bankrupt the official receiver will see the paypal payments over the last year and try to prosecute him for not paying tax on this, he is even worried they will put him in jail.
He is of the opinion that he has done something majorly wrong and could face prison on top of his bankruptcy and have to repay the tax on his ebay car earnings.

He knows that the Ltd company debts he is not liable for but is absolutely cakking himself about this.

I have tried to explain to him that you can be employed and self employed at the same time. I remember from when i was self employed and filled out my tax returns there was specifically columns asking, how much earnings from self employment, how much from employment.

With this in mind I have mentioned to him that this is where the secondary income comes from, self employment. And again IMO the only thing he MAY have done wrong is not to fill out his self assessment tax return (yet;))

In light of this he will have tax due form self employment, but as this was incurred pre bankruptcy won' t this be included in the bankrupt debts and written off???

I was thinking the worst case scenario was a fine for late filing of tax return, but again wouldn't this be written off?

He also thinks that his bankruptcy can be lengthened or have a BRO on it for this.

Has anyone got any idea on this????

Surely people can be employed and self employed at the same time. I know loads of PAYE mechanics who sell cars out of work to earn extra.

I hope you can give me some advice to pass on, good or bad, as he it at his wits end.

Hi just wanted to say hello and welcome to the board!!

i dont have any answers unfortunately, but hopefully someone will come along to help you soon??

Hope your bruv is ok, how much are we talking about, did he make much profit.

Johnnystone

Hi,

He sold a car nealry every week and made between 500 and a grand on each one.

He reckons without looking that its gonna be a lot £25-30k..

Will this make a big difference???????

He is hoping to do this now full time ( I will lend him the money so the BR people have no say in his spending) as he can make more out of this with less stress.

Any help/suggestions appreciated

sparrabeth

If he does get a BRO, it doesn't have much impact tbh, although he won't be able to be a company director anymore.

Johnnystone

Thanks Beth and DS.

He has already been on this morning asking has there been any advice:whistle:

I asked him does He have to go BR as it is only the company that has debts but apparently he too has HUGE debts and he has already spoken to the charities who recomend BR.

This is where he thinks that the OR will see all the paypal transactions and query them. This will potentially unveil his earnings he hasn't paid tax on:mad:

Any help on this anyone please. The company side of it he is fine with but is really stressed over the BRO/TAX imlications.

Thanks for reading

tigerfeet2006

Sorry not sure what to say really. He may have to a specialist soliciter on this.

kazwookie

I think he can earn a certain amount on the side before paying tax, ( I am sure others who know better will be along soon) but £25k to £30k I am sure will be classed as an income even if it was a 'sideline'

1. What did he do with this money? £25k to £30k is a lot of mooney IMO
2. Did he put this money through his companies books?
3. I suggest he take good advise from people who know more about this sort of thing, and he gets all his paperwork in order ready for any questions the OR may have.
4. Get his tax returned copied and get him to start filling it in.

tigerfeet2006

Has he spoken to Business Debtline? Number and link in my signature.

chilli_dog

Thats some sideline.

Does he intend to continue this after BR?

Johnnystone

Hi Everyone.

This is what happens when you post for someone else, knew i would get something wrong.......

He has had a look and the figure that will show as "profit" is £21k.

This seems like a lot to me too but as he was £9k overdrawn and had taken cash advances on numerous credit cards the profits were mostly keeping his head above water...

NONE of this money went through the business, the 2 are completely seperate matters.

He knows that this will be classed as an extra income, no quarms there. But my question is still whether the tax owing from this, and any penalties for non declaration will be written of in BR.

Also is he likely to get a BRO for not declaring the tax on time, or in the right manner????

Any help most appreciated, re filing the tax return he was going to wait for some more advice first rather than dig a deeper hole.

Thanks again

Persolv0

Hello Johnny(cant help directly with your question but i did sell a few cars via e bay a few years back and looked into the option of building it up)
I think your brother really has to move forward quickly on this by ..
1)getting in touch with business debt line
2)getting his tax return moving to avoid his current position escalating to include tax evasion
3)He also needs to check out the position of trading e bay for the sums mentioned as his limited company may not be enough to cover him and he may require a sole trader /motor trade status on this
4)obviously he will have withdrawn e bay funds via his bank account so he will have to be up front

I appreciate what you say about him not wanting to dig a deeper hole but hes doing that now on the tax front.......He really needs to phone specialists on this one to get clear guidance

best of luck to you and your brother