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Following the issue of a bankruptcy order i have the following questions regarding the potential issue of zero tax codes:

1.Is the issue of a zero tax code automatic and inevitable following bankruptcy and if so how long does it normally take to come into effect and for how long does it apply ?.

2.Can a zero tax code be avoided for the sake of maintaining confidentiality of the situation and avoidance of an employer discovering a personal bankruptcy situation and if so what is the best way of going about this ?. [I was thinking along the lines of paying normal tax through the tax year[s] and then claiming back the appropriate amount direct from the tax office or getting the OR to do this directly.]

3. I assume any financial advantages howsoever generated from a beneficial tax code must in any event be paid to the OR - is this correct ?. If so how should payments be made i.e. annually, or monthly by being added to the IPA payments or other means ?.

4. It is now 5 weeks since the bankruptcy order was made and my tax code has not yet changed. I assume the OR will ultimately contact the tax office to inform them of my position and i need do nothing at this point myself - is this correct ?.


regards.

Hi james

1 Not necessarily, although I think that this is generally the case, as the tax you are due to pay for the current fiscal year technically becomes a creditor in your bankruptcy estate.

2 You might be able to persuade the OR to stop doing this, if you have a family member or friend who can make similar contributions to the tax element on your behalf. Your own suggestion will not work.

3 Yes - this is the very reason why this is done, and you will need to make payments directly to the OR's office or to their agents on a monthly basis.

4 It does take some time to filter through to HMRC but should not take too much longer. The OR will be already in correspondence with HMRC and there is no need for you to do anything.

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

if it helps i have had my notification of zero tax code this week, i went br on 25.04 it won't come into effect until the end of the month when i get paid, i phoned the OR and they said it was sent directly to them and i wouldn't see it, but reading other posts they received it in their paye so a bit confused on that one, however my boss knows the score so i have nothing to worry on that front, my hubby has not had notification of his yet and he went BR the same day.
kerri

Please view my blog at: http://scaredkez.blogs.iva.co.uk/

I have been told that I won't get a zero tax code - I went BR on 29th March and the new tax year started on 5th April. The zero tax code is only applied for the tax year that you were made BR.

Yesterday is history, tomorrow is a mystery, today is the present - a gift to make the most of.

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