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Unknown debt at time of bankruptcy HMRC
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Sej107
Posts: 3 Newbie
Hi, i will be going bankrupt in 2020 due to the new HMRC loan charge. At present i contract through a limited company paying myself a salary and the rest in dividends. IR35 seems to be next on HMRC’s list to generate funds and they seem to be able to pass new rules whenever they want. 2020 will give me a fresh start and what i want to avoid is hmrc investigating my limited company after i go bankrupt then saying i have been ‘caught’ by IR35 and habe to pay tax/ni and penalties. So i am wondering how bankruptcy works in relation to possible unknown debts at the time of application? I understand that i will no longer be able to operate this way and will look to secure paye employment to avoid any future run ins with HMRC and relieve myself of the stress caused by all of this over the past couple of years.
If anyone has any words of advice it would be greatly appreciated.
Thanks
If anyone has any words of advice it would be greatly appreciated.
Thanks
0
Comments
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Hi Sej107,
The best people to speak to in this situation would be Business Debtline. They are available Monday - Friday 9am - 8-pm and their number is 0800 197 6026. Good luck,
Laura
@natdebtlineWe work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps0 -
Hi, i will be going bankrupt in 2020 due to the new HMRC loan charge. At present i contract through a limited company paying myself a salary and the rest in dividends. IR35 seems to be next on HMRC’s list to generate funds and they seem to be able to pass new rules whenever they want. 2020 will give me a fresh start and what i want to avoid is hmrc investigating my limited company after i go bankrupt then saying i have been ‘caught’ by IR35 and habe to pay tax/ni and penalties. So i am wondering how bankruptcy works in relation to possible unknown debts at the time of application? I understand that i will no longer be able to operate this way and will look to secure paye employment to avoid any future run ins with HMRC and relieve myself of the stress caused by all of this over the past couple of years.
If anyone has any words of advice it would be greatly appreciated.
Thanks
What exactly is the issue?
Are you talking about disguised remuneration schemes?
https://www.gov.uk/government/publications/hmrc-issue-briefing-disguised-remuneration-charge-on-loans/hmrc-issue-briefing-disguised-remuneration-charge-on-loans
Are you saying that is your intention not to sign a contract of settlement with HMRC by 5 April 2019, and then go bankrupt in order to avoid having to repay the money to your company?
As far as IR35 is concerned, the proposed new rules involve obliging the private sector to (in many cases) operate PAYE in respect of individuals previously paid gross. So your limited company would only be investigated if it was paying other contractors in contravention of these new rules.
In respect of your own contract income, your customers/employers will decide whether or not to operate PAYE. That's their proble, not yours.0 -
They're not passing new rules, the rules about IR35 have existed for many years and you'll find IT contractors talking about it 18 years ago when it was introduced. What is happening is that there has been increasing widespread abuse of self employment when the role actually didn't qualify as self employed and HMRC have finally had enough.Hi, i will be going bankrupt in 2020 due to the new HMRC loan charge. At present i contract through a limited company paying myself a salary and the rest in dividends. IR35 seems to be next on HMRC’s list to generate funds and they seem to be able to pass new rules whenever they want.
You can't. You as a person and the Limited Company are two separate entities in law so you going personally bankrupt doesn't protect the Ltd Co from being investigated and issued a whacking tax bill. The only way to avoid that is wind the company up.2020 will give me a fresh start and what i want to avoid is hmrc investigating my limited company after i go bankrupt then saying i have been ‘caught’ by IR35 and habe to pay tax/ni and penalties.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0 -
HMRCVictim wrote: »Please join the Loan Charge Action Group. We are pursuing numerous strands to stop the Loan Charge. We now have more than 100 MPs who support us.
They're using the model of small salary and dividend, not abusing the loans scheme to evade tax like the majority of your group's members are.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0 -
They're using the model of small salary and dividend, not abusing the loans scheme to evade tax like the majority of your group's members are.
Well the OP does say that;
Hi, i will be going bankrupt in 2020 due to the new HMRC loan charge.
It's sort of related to IR35, because when IR35 was first introduced in 1999, many sought to avoid this by entering into a tax avoidance scheme which involved a certain amount of legal jiggery pokery, but the basic result was that the individual received a chunk of cash in the form of a loan which was never going to be repaid and paid no tax whatsoever on the money.
It would appear that since these tax avoidance schemes are no longer available, the OP is now "paying myself a salary and the rest in dividends" i.e. "using the model of small salary and dividend", and is worried that the new IR35 crackdown will come back to bite 'em.
Thinking about, I'd be more worried about the fact that someone planning to go bankrupt in two years time in order to avoid paying an existing tax liability might be committing fraud and potentially facing criminal charges,0
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