My Husband and I have just had our proposals drafted and have signed and returned them to Payplan. My Husband is self employed but does not owe any tax etc purely credit cards and loans. However, included in the list of creditors is HM Revenue & Customs which is for the estimated tax bill, even though this has been taken into account in his business income & expenditure and he will pay his tax bill in full when due in January next year. Can you explain why this is included?
The liability for 2011/12 will be a debt in the IVA as will an estimate for 2010/11. Your husband's IVA payments should be higher until next April to reflect the fact that he will not be paying HMRC for 2011/21 at which stage they will decrease. The liability for future HMRC payments will then become your husband's responsibility but he should pay nothing to HMRC until he has to make payments towards 2012/13.
Any projected cashflows for 2011/12 should not have an allowance for payment of self assessment tax but should include PAYE and VAT as these must be paid on an ongoing basis.
You should contact your IP if you are unsure as this is very important and needs to be explained properly to clients. Do not sign something that you do not understand.
Thank you for your reply. My husband's year end is 31st March, so is Self Assessment has not yet been done so don't know what is tax bill will be for 2010/11 period yet. Does it mean that he will not pay this bill in full in January next year?
Yes nor will he make any payments on account for 2011/12 as this debt is also in the IVA. He will have to do the returns but not make the payments and he will be given new self assessment numbers from 2012/13.
