Please can an IP advise me regarding the following situation.
As per the standrad IVA protocol, I am aware that income tax for self employed individuals must be paid into the IVA for the benefit of all creditors until the end of the current financial year.
If, however, like myself you are a sub-contracting builder, your contractor will made CIS deductions of 20% of your gross income monthly. What will happen to these deductions once in an IVA? Will HMRC be required to pay the tax which falls due on my earnings to my IP from the CIS deductions?
Each year, I overpay my tax and NI due to my CIS deductions and receive a rebate from HMRC annually in relation to this. This rebate is offset against my business expenditure. For example, I will use this money to pay my annual public liability insurance, van insurance, MOT, service and road tax ect. I have been made aware that any windfalls (including a tax rebate) would be expected to be paid into the IVA. This would severely effect my cash flow as I would then have to make arrangements to pay these expenses monthly, which will reduce my affordability to make payments into an IVA on a monthly basis. Would this be taken into consideration if I were to enter into an IVA?
I have spoken to a freind whom works within the industry who has given me this advice so far, however I wished to get further guidance on these issues before proceeding.
I've no idea on this one I'm afraid, hopefully one of our experts can help.
In the meantime I would visit www.iva.com for a list of companies and reviews and give one or two a ring for some free and impartial advice. There are a couple of firms who post on here who are well versed in dealing with the self employed,
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Unfortunately, my attempts to make informal enquiries to such companies regarding this usually leads me being offer advice I do not want, and rather than being able to discuss this with an IP directly, I usually end up speaking with a member of their staff who have no more idea on this than my freind who has advised me thus far.
HE recommended using this site due to the direct contact obtainable with the forum experts/IP's.
Do you think an IP or forum expert may respond to this thread if I give it a little longer?
If not, click on the 'Ask a question' link on the left hand side of the page and make direct contact.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
The IVA Protocol is actually not suitable for self-employed persons, so you would need to present your IVA under non-protocol terms - in reality there is little difference, certainly in my practice that is how we operate.
Given that you are paid under the CIS scheme, there will be no requirement for you to pay tax provisions into the IVA on top of your usual contribution, as your tax is being deducted at source. Neither should you need to pay in any overpayment of tax you may get at the end of the tax year, as this is part of your business cashflow and is needed as working capital.
What a shame that the firms you have already tried to seek help from have not been able to offer the services of an IP to speak with you directly, but I hope these few words help you in the meantime.
