Hi
I'm self employed and have been in my IVA for 9 months. I am up to date with my payments, BUT, one of my creditors are HMRC for tax and VAT, and due to the current economic climate
I am struggling to pay last quaters VAT. I informed my IP and he gave me until Dec 31st to have it all paid. Sadly this is not the case. I know that it is a breach of my IVA, and am worried as to what happens next? Have a meeting with my IP today, just wanted to be for- warned as to what happens next. I really don't want my IVA to fail.
Thanks
Hi LittleTed.
If you have been unable to pay the VAT due it means that something has gone wrong. Either the original projections have not been met or money allocated for VAT purposes has been spent on something else. If the projections have not been met due to the downturn in the economy it could be possible to put forward a variation to reduce payments. However, HMRC do not like post IVA debts to them and you would need a very good reason and evidence to justify the new payments. As you are only 9 months into the IVA it may be difficult to argue that the projections were feasible at the time of the meeting of creditors.
Um, yes, understood.
There has been other circumstances, the town in which I trade is currently being completely torn up by the gas company and I have noticed an instant difference in takings.
I do have most of the VAT payment in the bank, but due to what is happening in the town I fear I will need it to pay running costs. The work is due to last 12 weeks.
Also to be fair, retail has been suffering in the last quater something terrible.
That sounds better as you could not foresee the gas company ripping apart your town and your IP may allow a short payment holiday to have the VAT paid. A payment holiday is not a breach whereas post IVA debts to HMRC is. If the VAT is up to date HMRC may support a break or reduced payments but I would supply the IP with anything that backs up your story such as press clippings and possibly even photos.
Do not let it drag on and speak to your IP immediately as it may be difficult to have payments reduced later when the streets are back to normal and the economy starts to improve. Good luck.
Thanks
Am meeting him today with a copy of the works schedule.
I've managed to trade the whole year with no credit which has had it's tough moments, and then things like this happen that you can't control. I know many other traders whom are up to their o/d limit, and I'm pleased that I'm not in that position, it's just that I don't have the room to breath when something comes up.
I am sure that your IP will work with you as it does seem unfair for you to suffer for reasons beyond your control. He/she wants proposals to run their course and needs the evidence to show your creditors. Let us know what is agreed at the meeting.
This does rather highlight the need to produce trading projections with some sensitivity and contingency built it, and also allowing self-employed clients a more flexible window for payment of their contributions.
In my practice our proposals are presented on the basis of quarterly payments, in order to provide a bigger buffer from trading peaks and troughs.
Let us know how you get on with your IP - I think I know the town you operate in, and am sure that things will get back to normal once the construction work is completed.
I think you might be able to and claim a large reduction in business rates. Also discuss with HMC&E for a repayment term as they are under Government Orders to help small traders. Especially because of what is going on in your town. Let us know how you get on please. Good luck.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
