Re possible owed tax

[elisha]

I took out an IVA at the end of last year, and at the time I was self-employed.

The business was going downhill fast, and I took the decision to end the business, and become unemployed, claiming JSA, and am now looking for a job.

The tax office is doing an enquiry into my returns for 2005/2006, and I have fully complied with their investigation. But, if they do find I owe any back tax how would I go about paying it if I`m already stretched by paying my IVA?

I have no assets that could be sold, and am just about keeping my head above water.

[Cybus]

By end of last year, I assume you mean at the end of the calendar year or do you mean end of the tax year?

Either way, if the tax man assesses a liability arising in the 2005 / 2006b tax year, it will fall in to the voluntary arrangement.

Your IP should have been able to advise you of this even prior to the arrangement being approved, assuming he knew you were in self employment. I assume the IP has been advised of your change in circumstances? If not, I would do so now.

The future course of the arrangement may well depend on the assessed liability. Do you expect the amounts of tax due to be quite high?

[abc]

If it was tax prior to your approval of your IVA it would increase the Revenue's claim in your IVA. This may cause problems if the amount is large as you may have modifications such as a min dividend. If this happens you need to take advice from your Supervisor as there could be other implications subject to your proposal/modifications.

If you are unemployed are you paing our IVA contributions, again subject to your proposal/modifications if you miss 2/3 payments your IVA may fail so again you need to speak to your Supervisor as they may be able to propose a vaiation to creditors to allow you a holiday while you seek employment.

[elisha]

Cybus, I meant at the end of the last calendar year, the back end of November I think it was.

The IP didn`t know about the unemployment situation, as that was something I have done since the IVA was arranged and agreed.

As for the tax enquiry, I only found out about that a few months ago, so again, the IP didn`t know anything about it either.

abc, I informed my Supervisor about the unemployment situation, and I am now paying less each month, but, I have to make up the shortfall by the end of the calendar year.

If I have to increase my payments to the Inland Revenue I can`t then pay he IVA properly, or, it could mean that an increase in payments to the tax people will mean a reduction to my other creditors. Something I doubt they`d be happy about.

As for the amount, I really don`t know as I`m still providing facts and figures to the tax people, but the `what if?` in me is apprehensive in case they do find something and are demanding thousands of pounds, not hundreds back.

[abc]

Any personal tax due to 5 April 2008 will form the Revenue's claim in your IVA. So you will not be paying any additional tax to the Revenue BUT you may need to pay a little more into the IVA if you have a min dividend in your IVA, your Supervisor can advise you on this point as they have the benefit of your proposal in front of them.

[elisha]

And, if I can`t increase the amount I`m paying, what then?

Could the Inland Revenue seek to make me bankrupt?

[abc]

You need to speak to your supervisor, there are ways to deal with this, if indeed it is a problem. Extend the arrangement, increase payments in a few years time etc.

Example if you have a min dividend of 30p/£ and the Revenue have an increased/additional claim of £2,000, then you will need to find £600 being 30% of £2,000 before the end of the arrangement.

[elisha]

Thanks all for your replies. I`ve now spoken with my Supervisor who suggested I wait until the tax people have completed their enquiries and if they say I do owe back tax to pass that information on to the Supervisor.