Windfall clawback

[marksmiles]

Supposing the circumstances are that an IVA has been approved and working satisfactorily for a few years, with a few years to go.

Suppose that debt problems were less pressing than they might have been at the time the IVA commenced.

1. Can a person in an IVA make use of his / her CGT allowance ( c. £10k )?

In the case of a married couple, only one of whom is the subject of an IVA, I wonder whether there would be any problem with the ( more solvent ) spouse making a loan, that loan being successfully invested, and with luck, a capital gain made. The loan is repaid and the capital gain benefit stands.

Would there be anything wrong with this?

In these circumstances, might there be any danger that such capital gains might fall to be treated as "windfall profits" and therefore susceptible to IVA clawback?

[Shining]

Hi marksmiles, I'm afriad I've no idea on this but will keep this post bumped up for an opinion from another poster.

[MelanieGiles]

Yes - you can make use of your annual CGT allowances. Who would the non-insolvent spouse be making the loan to, bearing in mind that that insolvent spouse is not permitted to take any credit?

[plasticdaft]

Supposing the circumstances are that an IVA has been approved and working satisfactorily for a few years, with a few years to go.

Suppose that debt problems were less pressing than they might have been at the time the IVA commenced.

1. Can a person in an IVA make use of his / her CGT allowance ( c. £10k )?

In the case of a married couple, only one of whom is the subject of an IVA, I wonder whether there would be any problem with the ( more solvent ) spouse making a loan, that loan being successfully invested, and with luck, a capital gain made. The loan is repaid and the capital gain benefit stands.

Would there be anything wrong with this?

In these circumstances, might there be any danger that such capital gains might fall to be treated as "windfall profits" and therefore susceptible to IVA clawback?

Can some be technically more solvent? You are either solvent or not surely?!?[:D]

Paul

[marksmiles]

Sorry if I was not clear. The spouse making the loan is solvent, to be properly regarded as unconnected with the ( my ) IVA in any way, other than by marital relationship.

To be clear, solvent partner making a loan to partner subj of an IVA, the latter then goes on to make some capital gains profits.

Are any such profits vulnerable to windfall ( or other ) claw back?

Yes - you can make use of your annual CGT allowances. Who would the non-insolvent spouse be making the loan to, bearing in mind that that insolvent spouse is not permitted to take any credit?

[MelanieGiles]

People in IVAs cannot take any form of credit without the permission of the IP - which is unlikely to be granted in your example. If the financial position of someone in an IVA improves at any stage during the IVA, from whatever source, they can expect to contribute more into the IVA - so if there is a profit from "trading" then this is captured.

[marksmiles]

People in IVAs cannot take any form of credit without the permission of the IP - which is unlikely to be granted in your example. If the financial position of someone in an IVA improves at any stage during the IVA, from whatever source, they can expect to contribute more into the IVA - so if there is a profit from "trading" then this is captured.

Yes good advice, this makes sense to me. One curiosity, you mention an IP may give permission for credit, but
is unlikely to be granted in (your) example.

I wonder why this might be. Perhaps you are saying that an IP is unlikely to give credit if advised that the purpose is in order to make investment(s)? That may be fair.

Whilst I am not aware of which circumstances may generally work, it might be rather harsh that an IP would deny permission. Perhaps one example here might be where a proposed loan was structured in such a way where it was unsecured and in the event of full loss would be written off and not serve to the detriment of the person in IVA, or the IVA creditors.

[MelanieGiles]

Mark

I don't think it is appropriate to continue this thread, as the issues you are raising are speculative and probably complex if you are serious about your questions.

If you are already in an IVA, then it is probably best that you bounce your ideas off your own IP, who has detailed knowledge of your case.

[kallis3]

Melanie is right. This is something to be discussed with your own IP if it were something you had thought of doing.

[marksmiles]

I understand.

Thank you for the advice which you have freely given.