CIS Tax Rebate 50% to be paid to IVA?? Confused!

[Jules79]

Hi all,

I need some independent advice before I proceed with contacting the customer services team with the company we use.
I have originally posted on another post a few weeks ago, Michael Peoples and Melanie have been invaluable and from this site some confusion has been sorted however after a very stressful few weeks I want to get all the facts before we hand over money we simply cannot afford to give up.
The rebate my husband has had is £3311.60 This is for 2011/2012. We entered our IVA on 15th March 2012. Income and expenditure plus projections of my husbands income have been completed 2012/2013 is at £31,600 with I&E based on £21,600. From the off we were NEVER informed or given any documentation with information in regards to my husbands rebate. We assumed it would be classed as part of his income as he is on the CIS scheme and has been used for to cover the cost of some expenses and time off over the year for the past 12 years. After several conflicting telephone calls I posted on here to try and gain some clarity so you can understand my wariness in taking what another customer service rep has told me..
After posting originally some of the questions I had have been answered after a representative of the company contacted me VIA this site? We Still haven't spoken with our IP but have been told that they have a dedicated Customer Service team who will help us? The first EMAIL received: I am writing to advise I have taken the opportunity to conduct a full review of your case and would comment as follows.
The availability of your Supervisor in the office is very limited therefore he has put in place a dedicated Customer Services team to address the day to day running of Voluntary Arrangements. I am genuinely sorry your experience has been less than satisfactory and I will ensure points are raised with the team to ensure the understand how to address a query such as this in future.

Unfortunately Self - Employed clients under the CIS scheme is not a common occurrence and I believe confusion lies in that a Tax Rebate is considered a Windfall under the IVA. For the purposes of this scheme however a different approach has been taken in the past.
Firstly I would be grateful to receive confirmation of the amount of the Rebate. Following a discussion with our Income and Expenditure review team, we have determined the best way to treat the rebate in your case, is as if it were additional income in that 50% would be due, as I understand from your correspondence this is likely to be a regular occurrence each year.
I would also be grateful to receive a set of accounts showing Stuart's actual earnings. I am concerned that you are reliant on the Tax Rebate to fund the cost of insurance, repairs etc as these expenses were accounted for as part of Stuart's expenses before drawing a salary.

As I am aware the originals were 'tweaked' in order for the IVA to be approved I asked for copies to be forwarded to us.

...The last one states that' I have attached a copy of the projection account attached to your IVA proposal, and confirm this demonstrates the Net figure used in your personal Income and Expenditure budget.
All deductions you have listed in your email have been accounted for before this figure has been reached. On that basis, 50% of the full rebate would be due to the IVA unless you can otherwise demonstrate it is essential for the costs listed as business outgoings. To that end, as previously requested confirmation of Stuart's actual earnings would be required (a set of completed accounts for that period).

As it stands since all this started my husband has had a total of 10 days off work to date due to bank holidays/laid off due to bad weather. Now the money that has been in our account since 28th May has been used to 'top up' those 10 days of lost income inequivalent to £1250. We paid £330 to the accountant and now have £2047.24 available in the account until tomorrow when £790.39 will come out for the Mortgage which will leave £1256.85. This in mind, if we pay the £1655.80 today which they want for the creditors we will not have money to cover our mortgage/food shopping/fuel for running the van and car/ plus all other bills? Plus my husbands Van has just had its MOT and needs two new tires at the cost of £160. An advisory for the Cam Belt on the Car has also been raised which could cost in excess of £400. Also we know for definite that he will have two weeks of lost earnings over Christmas as the company he sub contracts to closes down. We are able to accumulate a small amount of money to keep us OK so long as the money in the bank stays as it is.
I need some advice on my best approach. I am thinking of emailing the customer service adviser whom has been dealing with us to ask her to phone me directly to discuss the options. Also I can write up my husbands actual earning for this year as requested as we only have 'basic accounts' which is how we saved money on our accountancy fee. However this sum is for last year and will not reflect this years income as we still have another 6 months to go until the tax forms are submitted. As he is self employed on the CIS scheme he does NOT get paid for time off... How does this figure? As I know his actual income for 2011/2012 was £32603 - £6520.75 Tax = £26083.01 (FOR LAST YEAR!!) However The I&E is based on a projection of £21,600 for (THIS YEAR, what we are living from) 2012/2013 with a Gross Figure of £31,600.

Im going out of my mind with figures and stress of the IVA failing if we hand the money over. HELP [V]

[Jules79]

Anybody out there? Please....

[UpToMyNeckInIt]

I'm self-employed as well, so I feel your pain!!!

My view is that you should be able to keep the tax rebate on the basis that it is tax that you have over-paid effecively from your net income. It's not the same as a windfall (ie: 'extra money' - lottery win, inheritance etc).

The only complication might be: If your I&E figures to your IP when drawing up your IVA proposal, were based on the net income whilst you were paying too much tax, they might take the view that, now the tax error has been corrected, you have extra income, and adjust your IVA payment accordingly.

Suggest you discuss with your case handler.

Good luck.

[Jules79]

Thank you for your reply. I really appreciate your advise.

If this is the case and we have to give the 50% and we haven't got it to give how does that affect us? Also what happens with the future tax rebates he gets? 50/50 or should we project it into the his income when we next do a review?
We don't seem to be getting and plain talking from them, just questions to questions for want of a better phase.

Thanks Jules [:)]

[MelanieGiles]

Regardless of what is right and what is wrong in this particular case, the fact of the matter is that you have relied upon the tax rebate historically to fund ongoing expenditure and this does not appear to have been taken into account when your proposals were presented to creditors.

I personally feel that the best way forward, given that the amount involved is relatively modest, is for your IP to allow you to keep the money now but that both of you need to get together to make sure that the position is understood for the current and subsequent years.

We cannot give definitive advice on the forum, as we don't know the full facts of your case, or the workings behind your original trading projections and how provisions for future tax payable have been accounted for. I suspect that technically your IP may be correct, however there has to be a practical and common sense approach here which suits both sides.

Did you have a face to face meeting with your IP to discuss the IVA and its content prior to the IVA proposals being presented, and which firm are you with?

[Jules79]

Hi Melanie.
I'm please you have given me your advise, if it wasn't for your input and forwarding our case on a few weeks ago we wouldn't even have got this far! As for speaking with our IP?! Its like asking to speak to Father Christmas! I've only spoken to him once and that was on the day of the creditors meeting. The rest of the time we spoke to several different people with in the company. At NO point during our IVA proposal was the tax rebate discussed? Not even any questions in the paperwork surrounding it, I don't actually recall them even asking if my husband was part of the CIS scheme, it was us who offered that information when we called back in June. As we live too far away we never have met face to face. Our firm is GT and after you 'nudged' Karol our case was sent to the customer care team. The info I've written above is the most recent information they have sent us.

I was thinking that rather than sending emails maybe I should request that Claire the person that is now replying to my emails give me a telephone call? I am worrying myself silly trying to get a clear understanding and not from want of trying?! If we hadn't have contacted them back in May we could have spent the money as we had no information/discussion not to? It was only due to receiving a land registry form that I called and asked about a clause in the chairman's report about any extra profit from my husbands income 50% would be due to the IVA. I asked if this was from the tax rebate? So it was us who asked them and was told that in fact we had to hand it all over? (windfall) After posting on here you advised us otherwise. After explaining in some depth our situation they have now asked for 50% but with questions surrounding it (yet again questions answered with questions) My argument has been answered by you. We have always used it historically for said purposes and have never said anything other. Some of the expenses are met in the I&E plus in the projection. In future now we are aware we would be able to work with the 50% with future rebates knowing we have to pay 50% to the IVA. This has been dragging on since May now and at each point I keep coming up against yet more obstacles

[MelanieGiles]

It is a requirement under insolvency best practice that IPs, or a senior member of their staff, should always meet self-employed clients personally - so are you saying that no such meeting took place or was offered at any stage of the pre-proposal work?

You may live a long way from the GT office handling your case, but they are a very large firm with offices all over the UK and I would think that they have insolvency specialists in each regional officewho could review your situation for your IP and report back. Why not ask if you can have an appointment to go throught things if you feel that they are not currently understanding your point of view with regard to the tax situation - I am sure that they do really want to assist you, and that this must be a misunderstanding.

[Jules79]

This news to us Melanie, We have never been asked to meet anybody. A courier came to the house to take our paperwork but we wasn't to discuss the IVA with him as he wasn't qualified to give us advise. They asked that both myself and husband be available on the phone from 3pm on the 15th March in case of any queries with the creditors. That is all! I was the one who chased for the outcome of the meeting too?! After a couple of emails we finally had the call at 7.45pm... Very anxious few hours I can tell you.
The more I find out the more concerned I'm becoming. I feel I maybe responsible for not researching thoroughly enough but I was following advise/recommendation from the CCCS. If it wasn't for finding this forum and getting advise off you I'd be a wreck! Thank you

[MelanieGiles]

Grant Thornton are a reputable firm and I know the IPs in the Belfast office who are handling your case very well. They will want to be sure that you are correctly advised, and that this matter is being dealt with properly - but importantly that you understand why they are making the decisions that they have to make in accordance with the terms of your own IVA. I am sure that there is a simple solution to this - but it is important that you have the CIS tax issue correcty explained, so you can budget correctly over the next five years.

[Jules79]

This is what we thought which is why we were more than happy to use them. With confusion from the outset and several different people's involvement no wonder its got so messed up? All I've been asking them for is just some understanding, I will contact them first thing and ask for a meeting to be arranged or at the least someone who understands the CIS scheme fully to contact us directly to discuss it further. Not having the correct understanding makes it so much more difficult the liaise with anyone. Fingers crossed for some clarity this time around

[Grant Thornton]

Julie - We will be in contact today to hopefully resolve all concerns,
Kind Regards
Karol

[Jules79]

Thank you for the call today, all of my concerns and confusion have been sorted and discussed. Knowing that a payment plan would be available if the extra costs we have wont be enough to satisfy the creditors and repayment of some of the rebate will still be due has taken an immense amount of pressure off me. Looking ahead also knowing that each year of the IVA 50% of my husbands CIS tax rebate will be required for the creditors gives us something to work with regards our budgeting for the years to come.

Many Thanks for all your help.