My main worry is my inland revenue debt

[alexmac]

I am looking to enter an iva, have debts of over £150k. My main worry is my inland revenue debt, approx £75k. This just built up so suddenly as only started my business as a sole trader a few years ago. My tax returns are up to date. I was on a payment plan with the tax but they are now asking for over £6 per month now unable to keep up with this and with other debts. I really want to enter an IVA but worried about if the inland revenue will accept this or not. Does anyone have any experince with them. I have little assets so an iva would be the only way they would get a return. I cant go bankrupt as will lose my income. Can anyone gibe and advise as to how the inland revenue are likely to approach this.

[MelanieGiles]

Hi alexmac and welcome to the forum

I assume you mean that HMRC are asking you to pay £6k per month not £6!

To have a tax bill of £75k, you have been making some serious profits. What has happened to all of the money, if your tax returns are up to date?

HMRC are generally a pretty supportive creditor, so long as all outstanding returns have been submitted, but if they feel that you have deliberately held money back from them they can sometimes take a moralistic stance. You will need to be able to provide a detailed summary of the events that have caused the non-payment, and demonstrate that your business is viable and can therefore support the payment of voluntary arrangement contributions.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[alexmac]

Hi Melanie, ( yes its 6k not £6!!) I have had unsecured debt for a number of years. I started my business a few years ago to enable myself to pay off my debts. I was shocked how quick the business grew. Was worried about it not being sustained so remained in employment and this eat up all my lower rate of tax. When got my 1st tax bill in Jan 2006 did not realise is was to 1.5 times the bill with another 0.5 times in july. The in jan 2006 was approx 15k and in july 7.5K. This has now been virtlually all paid. In jan 2007 got a bill for 49k!! and last one in july 21k. I did meet with the revenue a few months ago to explain my situation and we agreed a payment plan, but it was 105K over 15 months, so it would cover the estimated interest and bill for jan 2008. I paid 4k in april and 4k may , 5 k in june and now goes up to 6k and in sept to 7k then 8k from nov onwards. Its killing me. I have started to fall behind in other unsecured debts as a result and do not have the 6k to pay them this month. I have a great income approx 9k per month (before tax)and rising so business is totally viable. I need to move fast as sure one i do not make the full 6k at end of this month, they will start to bankrupt me. I have decide on an iva and will go brankrupt if this fails. I do believe i have a duty to pay back my debts but cannot pay them at the rate expect and have calulated I can afford min 2 k per month into an iva so expect a min of about 70p in the pound. Do you think they will go for this, and have i got enough time before they bankrupt me.

[alexmac]

just to add. i am no longer in employment. totally self employed now, so now longer using up my lower rate of tax in other work. the stress of things is taking its toll on me. I am able to get an income of 9k per month, but know if this was sorted i could work easier and get over 10- 12k per month before tax. Ideally as my income is high i was to make a realisic offer but a large one as well as feel i have a duty to do so.

[alexmac]

also im answer what happened to all the money. mostly on paying debts, also stamp duty on a house purchase last year, 13k ( more to the tax man). With my redemption in mortgage i have no equity though so if when brankrupt , creditors would get nothing so hoping that an iva is seriouly considered my then. Northern rock is one of my creditors, but only about 15%.

[hara]

Dear alexmac,

It is such a shame that a business do so well should made to think of iva or br.Is there no way of putting your case again to revenue and make them understand.

hara.

[alexmac]

problem being is that they do wish to wait for so long to get their payments, but its the fact that i have always had other debt on top of this. I have been paying approx £2,000 per month to my other creditors and now £6,000 to the revenue. With mortgage and bills on top of that I have had to get over £10,000 per month just to break even. Earning over 100k but living on the edge!!!! Do really want to do an iva.

[MelanieGiles]

Hi again Alex

It seems to me that an IVA is a potential solution for you, and will allow your business to continue trading whilst you repay your debts. 70p in the £ is very likely to be acceptable to your creditors, and you make one affordable payment to an insolvency practitioner each month which is distributed to your creditors.

You should now consult an insolvency practitioner who specialises in self-employed cases. When I interview my own clients initially, I am very keen to see historic accounts and future trading projections, so make sure that you have those available for the IP you choose to act for you.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[alexmac]

have been checking more things today and spoke to the inland revenue. They have agreed alittle breathing space, not much but enough for me to move forward. They are letting me pay an initial £500 only this month, but have to continue with the rest of the plan. However that is enabling me to orgainise a DMP for the rest of my debt, and this would really help me. Its going to be a stressful few weeks but once dmp in place i at least have a target which is achievable.

[ray_a]

Hi Alex

Just seen your post and as someone who runs a business I know what you are goping through.

I think people have dealt with the problem but do keep in touch and don't be afraid to ask for any help or guidance.

Just a quick thought the business may be profitable but is the cash flow strong as well and have you got a lot of people owing you money?

That sometimes makes it difficult!

Good Luck

Ray