any advice greatfully received

[david M]

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Hi

I have just been declared bankrupt yesterday at the High Court london, alas I was just ten min late for the case having travelled for four hours getting to court/room and so could not/did not get any advice as to whats next, just a number in london that I have been trying to get thru to all morning.
it was for 22k to revenue add banks & other bodies it will add to around 35k. I rent/lease my home have no savings etc have one vehicle thats road worthy and legal and one that is not (parked on drive) three children who are here for around half the week and am 1mile from the nearest rural bus route and five miles from nearest town. work is in the form of handyman working when can or requested.

can anyone give me a view as to what will happen next?
as I seem to be getting various info from parties who have no real experience

thanks

[Skippy]

Hi David and welcome to the forum.

I was made BR in March and I was told to wait until the OR contacted me, which happened the next day. She arranged the date for my interview and told me that a BR 'pack' would be sent to me in the post. When I received that I had to send back all the information they asked for - credit card statements, bank statements, loan agreements.

Regarding your vehicle, am I right in thinking that you use the roadworthy one for your work as a handyman? If so, depending on the value of the vehicle it may be exempt. The vehicle that isn't roadworthy will most likely be taken and become part of your BR estate.

[ianmillington]

Hi David

Skippy is spot on. If you own your vehicle (it must be owned i.e not on HP) and you need it for work it will be exempt, although if it is worth much over a given figure (£2.5k seems to be the average) the OR willwant you to hand it over and he will replace it with something cheaper.

What will happen soon is that your case will shortly be transferred to your local OR who will probably then ask the Court to transfer the proceedings to the local county court. The London connection will end at that point. As Skippy says you will get a pack from the OR including a questionnaire. I suspect that as you have a debt to HMRC you will be called in for interview rather than interviewed over the phone. You will hear one or 2 frightening references (criminal offence if you falsely fill in the questionnaire and perjury if you lie at the interview) but so long as you are open and honest and make a full disclosure that should not be a problem.

As they have made you bankrupt once, you can expect HMRC to keep you under close surveillance in the future, so it will be sensible for you to start making appropriate provision for your future tax liabilities, starting April 2008, assuming you will be remaining self-employed.

Hope this helps

ian

[david M]

thanks for the advice.

what worries me is that as its HMRC what will they do in the future e.g. I have had offers of work present and in the past but the very idea of the tax man placing a high energency code and taking at source (as they did some years ago when I took a salary position) makes the very idea not at all worth while, as it will involve being away from here some 12plus hours a day and not seeing the children except for weekend. also as I have animals here they would also for want of a better word suffer.

I am aware the debt will have to be delt with but is it poss that once I get myself back on my feet HMRC will come back at me. or is it a new start ?
also how long will the charge last?
the base line is that I have no way of paying the existing debt of any added amount HMRC may come up with.

[MelanieGiles]

Bankruptcy can be viewed as a fresh start, in that you will be released from all of your debts, but as Ian has mentioned they will probably watch you like a hawk over the next couple of years if your Trustee allows you to continue trading.

You will receive your discharge from bankruptcy after one year (or perhaps earlier), unless an application is made to suspend your discharge, which is only done if the Official Receiver finds you guilty of bankruptcy offences.

[ianmillington]

Here's my understanding:

From now till 5 April 2008. You won't pay any income tax as such as all your tax liability for the current tax year will be a claim in your Bankruptcy. Any tax liability you would normally have to pay in that period will probably have to be paid over to the OR for the benefit of the bankruptcy. If you now become employed, you will probably in practical terms be taxed on emergency code (as you won't have a P45). However, just to clarify, emergency code (522L Month 1) is, on a month by month basis, exactly the same as you will normally have to pay as an ordinary married or single person. The first £100 per week will be tax free. If you have suffered tax in that period, you will theoretically be entitlted to claim it back but by virtue of what I say above the rebate will most likley go to the Official Receiver.

From 6 April 2008. You should be treated as any other employee and properly treated to the joys (?!) of the PAYE system.

If you decided to remain self-employed, the same thing applies generally for the period to 6/4/08 - any tax for which you ought to provide needs to go to the OR. From 2008/09 onwards you pay your tax and submit your returns as normal (but woe betide you if you don't comply - they'll probably bankrupt you again!)

So far as the past debt is concerned, HMRC cannot do anything about it other than learn from it, hence my refence to keeping you under close scrutiny in the future if you remain self employed.

Sorry about the convaluted response

Ian