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I owe some tax from when I was self employed in the tax year 2006/2007 that will be due 31 January 2008.

This was a profitable year for my business and I probably still owe about £5,000 ish in tax & NI contributions. Since the new tax year we've now lost our business and the £5k that was put aside to pay in January has since been "absorbed" by mortgage/secure loan payments when the business was going down hill.

Am I able to put this "debt" in an IVA or do HMRC demand that you pay a high p/£ ?

Also, if i'm looking to start the IVA process now (getting debts together now and then presenting them to someone like the wonderful Melanie ([;)])within the next week or so, should I default on credit card/catalogue/unsecure loan payments that are due round about now, or should I maintain payments until the IVA is hopefully approved?

I should probably add that i've no doubt made some sort of capital loss when the business ceased trading in *this* tax year, so I don't know if that can be used for anything...?

Hi Wen

Firstly I am sorry to hear of your situation and sorry your business did not do well.

Firstly, have you made losses in your second year because those losses can be carried back against your profits. Worth looking at that issue with your accountant.

Secondly, it will be difficult for you to have an IVA unless you have creditors.

It might be worth looking at your whole debt problem and let us have more info so we can assess whether an IVA would be a good option.

A further thought if you are working it might be a good idea to ask the Revenue if you could clear the outstsanding tax by way of adjusting your notice of coding. I have had mix results when advising on this issue but sometimes the Revenue will accept it. If you don't ask you don't get is my approach!

Do come back so we can help!

Good Luck

If there is a capital loss it can't be used against your profits but sometimes people get confused with income loses as opposed to capital losses!

Perhaps you let us have a bit more info please!

Hi Ray,

We do have other debts i'm afraid! -- not just the Revenue!

We have a business loan of £110K which is with Bank of Scotland. It was "secured" on the business lease we had, but we've had to give it up due to arrears with the landlord, so now we are liable for the £110K personally.

We then have other outstanding suppliers + personal unsecured stuff totalling about £40k.

So all in £150K...

I am sure our losses can wipe the tax owed on the profits, but at the moment I don't want to spend any money on our accountant.

We do own a house with a secured loan also, but this is mortgaged to 95% + loan means there is neglible equity in the house at present.

We have both started jobs so now have money coming to cover mortgage, secured loan and other expenses. But i'm worried we wouldn't be able to offer enough p per £ to keep BOS happy (or HSBC -- our unsecured loan/cc's).

Hi im self emplyed and the inland revenue insisted on being included in my iva even though I have no debt with them. They put in a claim for £3000 then voted no (didnt matter as they were a relatively small percentage of vote)what annoyed me was they would only be claiming for a yr and half tax and my highest tax bill has been £100 so where they got £3000 from I have no idea!!!

Hi Wen
You need to speak with an Insolvency Practitioner as your case is fairly complex.
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

Hi Wen

Whilst you may have problem with your accountant there is a strong possibility the debt with the Inland revenue can be reduced if not removed. This is an issue that requires to be sorted out. If the amount owing to the HM Customs & Excise represents 25% or less of your total creditors voting then there is a little chance of them stopping your IVA. I have to point out that they will be voting and they tend to be make quite strong variations to your proposal which is why I would prefer that you went into your IVA proposal knowing what your tax position is.

As for approaching your accountant if you are having a problem then I suggest you look at others after all there are a good number around who have very reasonable fee structures.

I think your ex Landlord could be a problem as well.

As Andy says it would be a good idea to talk to someone like Melanie!

Good Luck and keep us posted!

Hi Wen

The tax debt is just another unsecured creditor, so make sure you include the amount owing to HMRC within the list of creditors you intend to present to your chosen IP.

Ray makes some very good points about losses carried back, and your accountant or prospective IP will be able to advise further on this. With the level of debts you are currently carrying, I would get some advice sooner rather than later due to the ongoing interest which is continuing to be charged.

Good luck and keep us informed how you are getting along.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

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