A reader has asked which year’s income taxes are included in bankruptcy? HMRC used to have a special status as a preferred creditor, but since 2003 tax debts are treated the same as other debts and are wiped out by bankruptcy. There are however a few complications, so this article looks at all the different types of taxes and what happens to each of them when you go bankrupt. In particular, there has been a change this month (April 2014) in how the current year’s council tax is handled in bankruptcy.
Income tax
All income tax debts from previous tax years are included in your bankruptcy. The income that you would have been due to pay in current tax year is also included. In order to stop any further payment of income tax, your PAYE tax code will be set to NT so no tax will be deducted from your salary.
However, you are not going to be any better off because of not paying income tax this year.
Instead of paying tax to the Inland Revenue, the extra money you are now getting in your pay packet will be taken by the Official Receiver (OR) in an Income Payments Agreement (IPA). It is effectively a way the Insolvency Service covering some of its costs.
At the end of the tax year or if you change jobs during the tax year this all ends. Your PAYE tax code will revert to normal. Your IPA will be reduced by the equivalent amount, which may for some people mean that their IPA ends. If this happens, an IPA cannot later be imposed after your discharge even if your income rises.
If you go bankrupt towards the end of the tax year, you may well find that your tax code never changes as it takes a while to sort out.
If you are unclear about how much “tax” money you need to pay to the OR, or who to pay it to, then phone up and ask. If in any doubt, put the extra money aside, as it is going to be claimed by the OR at some point.
Council Tax
All council tax debts from previous years are included in bankruptcy, whether or not the council has issued a summons for them.
All your council tax liability for the current tax year is included in your bankruptcy. This includes amounts in arrears for this year and future instalments.
Points to look out for:
- if you are living with someone else who is liable to pay council tax (eg not a child or a student) then you are probably jointly liable for the council tax, so the council will seek to recover the whole amount from your partner.
- as with income tax, if your liability to pay council tax stops for the rest of the tax year, you are likely to have to pay a higher IPA as a result for the remainder of the tax year.
If you later move house
The council tax for the house you were living in when you went bankrupt went into your bankruptcy.
If you move into a new house, you have to start paying council tax on that. You didn’t owe this money when you went bankrupt so it isn’t wiped out by your bankruptcy.
If you are paying a higher IPA because of the council tax on your previous property, this should now stop. Contact your OR and ask them to sort this. So you won’t be “paying double” – before you move you will pay a higher IPA, after you move your IPA will drop but you have to pay the new council tax.
Other taxes
Unless you are running a business, it is pretty unlikely that you will have any other tax debts from previous years.
National Insurance will continue to be deducted from your salary as normal in the year after you go bankrupt.
Self-employment
Business Debtline is your best source of information about all the practicalities of going bankrupt when you are self-employed – the following is only a rough guide. If your business has any assets it is usually closed, if it has no assets it may be allowed to continue. Any tax debts such as income tax, VAT and NI debts from previous years and for the current year to the point of closure will be included in your bankruptcy.
You can then start a new business, in which case you are responsible for paying all the debts which then arise from that business (except for income tax in the current tax year, see above). If you were VAT registered before, you have to re-register and use the new registration number.
If the accumulation of tax debts was one of the main causes of your bankruptcy and you are planning on carrying on with your business, then you should take the opportunity of a fresh start to begin to put aside sufficient money for taxes each month. This future tax money is not ‘income’ from your business that you can use for your personal expenses. You are allowed to have a savings account when you are bankrupt and you should consider setting aside any tax money into this account each month.
Tax refunds
Any refunds of tax from previous years are going to go to the Official Receiver, not you.
Conclusion
As a broad summary, all tax debts are extinguished when you go bankrupt. If you are self-employed, then you need to take advice on the impact on your business, including taxes.
There are some complications about what happens to income tax and council tax during the current year, but you should assume that you will not be any better off because of these. If you are considering going bankrupt, then you can probably ignore all these complications, because it is very unlikely that they would make a difference to your decision.
Tax debts – go bankrupt or an IVA?
Problems paying your council tax?
Can’t pay your IVA this month?
Heather says
Thanks for clearing this up there was a lot of conflicting info out there! I’m presuming now that overpayments in tax credits are also included as long as they are not fraudulently claimed?
Sara (Debt Camel) says
The position of recovering benefits overpayments has changed a lot over the last few years, which is why there is confusing information on the web.
Overpayments of benefits, which includes tax credits, are now included in bankruptcy provided the overpayment occurred before the date of bankruptcy and there was no fraud.
Like council tax, tax credits overpayments are a debt which a couple are jointly liable for, so if only one of you goes bankrupt, the other will have to repay the full amount.
Heather says
So when being bankrupt my coyncil tax payments have stopped .So who do I give the money to ??
Sara (Debt Camel) says
Contact the Official Receiver’s office to ask when and how you should be making payments.
Liam says
I’m in a business partnership with my uncle it’s been just over a year and have not put any money into the business. But have a lot of personal dedt hanging over me and am going to file for bankruptcy how will this affect business partner and his assetts
Sara (Debt Camel) says
Hi Liam, generalisations won’t really help you here, you need specific debt advice. I suggest you call Business Debtline, see https://www.businessdebtline.org.
Jane says
hello, I was made bankrupt last October . My business partner was also made bankrupt at the same time. we ceased trading about a month before the bankruptcy.
We are being chased for a partnership return for the year ending 05/04/2014. As this wasn’t due before we were made bankrupt we never asked our accountant to do the return. Do we still have to do one? If so how do we do this. All the invoices etc are with the OR and even if we got them back I can’t afford to pay anyone to do the return.
Sara (Debt Camel) says
Hi Jane, I suggest you talk to your Official Reciever’s office about this – they can usually resolve problems fastest.
jane says
Hi Sara,
still having problems with this one. The OR has stated that this is nothing to do with them . However they also added that they did not dissolve the partnership because there were no assets. I have written to tax office to confirm situation but as I had another penalty for late filing , I chose to spend the 50 minutes on hold waiting to speak to them. They seem adamant that I need to complete a partnership return, even though any tax, of which there will be none, will be written off. strangely neither of us are required to complete the individual self assessment forms for the same period. Can you help or shall I just try and complete the return as best as I can?
Sara (Debt Camel) says
Hi Jane – it sounds as though you are just going to have to do your best, even though it is a waste of everyone’s time. Sorry I can’t help further.
Simon says
I previously used a “loan scheme” whereby I was paid minimal salary then the rest paid back in a loan form. I have since stopped that from this financial year so it was used from 2011/12 – 2015/16
HMRC have since sent a bill for unpaid taxes for 2011/12 on the loan amount and another one for 2014/15 (information request which like the 2011/12 period became a bill). I cannot pay this easily without my family suffering and as there are still the other years they may come back about , which I am sure they will at some point. If I was to have to go bankrupt, say from August this year (2016), would that also include the owed tax from what they have currently requested (2011/12, 2014/15) and the tax they have not yet requested i.e. 2012/13, 2013/14, 2015/16
Regards
Sara (Debt Camel) says
I’m guessing this may have been from your own limited company? I think you should discuss the impact of bankruptcy on you, your company and this tax issue with Business Debtline https://www.businessdebtline.org/EW/Pages/default.aspx
Brian says
Hi Simon
I know someone in a similar position, what was your conclusion please and any advice you can offer?
thanks
Brian
Simon says
Hi Brian
I am still under the stress. I feel for your friend in the same situation.
I am using a company to deal with HMRC. With the ones they have asked moneys for WTT have requested postponement and tribunal. It does not solve the issue but delays the same outcome as I dont have the money!!
So far they (HMRC) have sent “bills” for 2011/12, 2012/13 and requested information for 2014/15 so I am sure that bill will come soon.
******
Question for Debt Camel – This was while I was self employed (so no Limited company issues). If I decide to go bankrupt now, does it include all previous years from this point back? Does it include the years they have not requested any information on as well e.g. 2013/14, 2015/2016?
I am trying to work out will going bankrupt now wipe future stress on this matter going forward or will it only deal with what they have requested and further down I will face the same stress over the ones they did not ask about?
Regards,
Simon
Sara (Debt Camel) says
Business Debtline can also talk to you about your self-employment business… they are the experts and you can discuss your full situation with them.
Simon says
Hi Sara,
It actually was not through my own limited company. I was via an umbrella called AM Limited but I am now via my own limited company. I do understand I cannot be a director of my limited company if I become bankrupt but I assume I can still carry on working as an employee (my wife is a director as well). So I would need to resign as director and sell my shares back to my wife at “fair market price” … Dont know how that would be worked out at , I guess at whatever the asset value and cash balance of the company at that point in time?
Regards
Sara (Debt Camel) says
Another thing to discuss with Business Debtline… or your accountant… or both…
john says
hi i have been self employed as a pub manager for the last 5 years and have not sumitted any tax returns in that time if i file for bankruptcy would my tax dept be wiped out i also have a council tax dept for this time also would this be included ?.
Sara (Debt Camel) says
Yes, but I suggest you should talk to Business Debtline about this and your whole situation. You may get a Bankruptcy Restriction Order – this may not matter to you (or you may have no practical alternative anyway) but you do need to talk this through in advance with an expert.
William says
I’m contemplating personal bankruptcy. I have several thousand pounds in late payment fines for tax. Are these included within the bankruptcy>
Sara (Debt Camel) says
Yes normally. If you are considering bankruptcy, it is always worth talking to a debt adviser about your situation in detail. Even if you feel you have no other options, it’s worth getting an opinion “from an expert” that confirms this! Citizens Advice are good for face to face advice or National Debtline 0808 808 4000 if you prefer telephone advice – the adviser will be able to look at each of your debts and confirm if they will be included in bankruptcy.
Bernie says
Hello
I know there are lots of questions out there and we have asked the OR but not had an answer…..regarding the NT tax code. My husband has just declared bankruptcy. He has agreed an IPO with the OR of £150 a month – the form also states “in addition £146 per month from NT code being applied” (or words to that effect but importanly it says “in addition”). Our questions are:
1. I do payroll for a living and if I apply an NT code through the year the whole year to date is tax rebated. This would amount to about £3500 rebated to my husband if this happened to him with nil tax for the remainder of the year. What does he do with this money?
2. Will HMRC ever attempt to recover this tax?
I hope you can help – there doesn’t seem to be any difinitive answer to this tax thing out there!
Sara (Debt Camel) says
I can only say what generally applies. For specifics you need to ask his OR. Put your question in writing.
The NT code should only be applied from the date of bankruptcy. It can take time for this to be done and then your husband may get a refund at the end of the tax year. This needs to be paid to the OR.
HMRC will not attempt to try to claim back the extra tax afterwards, if that is what you are asking.
Bernie says
Thank you. We have asked the OR but he just won’t answer! We have had notice of the NT code so this will be applied to his wages this week (he is paid weekly). We are just confused as to whether they are two separate payments – the IPA and the Tax and how they are collected?
And yes, thank you I was asking if HMRC ever attempt to recover this rebated tax as I have read many comments from people being sent underpayment of tax bills! It’s so confusing :(
Martin Mcnaughton says
Yip, bit confused still, was on a NT tax code for a year, now they want a tax return for that year.
Simple question, am I going to get a huge tax bill?
Many thanks
Martin
Sara (Debt Camel) says
HMRC aren’t going to ask you to pay them the amounts you have already paid to the OR, if that is what you are asking. Well if they do, it is a mistake and you need to give them your bankruptcy details.
Whether you have paid the right amount of tax so far to the OR is a different question and that is probably why you need to complete a tax return.
Andrew says
Hi there, I need some help in working this out, I went bankrupt of 15 April 2015 and was discharged 15 April 2016.
I continued working self employed since, my tax return was filed for the year I was in bankruptcy December 2016, will the tax return be taken by the OR?
Sara (Debt Camel) says
I suggest you tell the OR you have filed your 15-16 tax return and ask if there is anything else you need to do.
Granola says
Hi Sarah,
I was wondering if you could help with a question on this. You say that council tax arrears will be included in bankruptcy even if a summons is issued. I’ve been issued with a liability order. If I sign it and return, does that mean the arrears will not then be included in the debt as I’ve made myself fully liable?
Also, there’s a jointly liable person for this council tax bill but the council cannot locate them.
The pressing matter is the liability order and whether or not I could cause myself more trouble by signing it.
Thanks in advance!
Sara (Debt Camel) says
I am not sure what you are being asked to sign – is this something from a bailiff? There is no requirement to sign a Liability Order. If it is something from the bailiffs, don’t sign this without taking debt advice first, call National Debtline 0808 808 4000 and talk through your situation with them asap.
Granola says
Hi, it was a form about income and expenditure that they sent with the order that the council has said I have 14 days to return. I’ll give Debtline a call. Thank you
Sara (Debt Camel) says
ok, that is nothing to worry about – do fill that in and make an offer, it will stop the debt being passed to the bailiffs. The debt will still be included in your bankruptcy.
Granola says
Thanks very much. So easy to be confused by all the different forms.
Susan says
Hi I’m currently on jsa with my husband I’m the claimant, we are in alot of debt with council tax and water rates we have a collection agency that we have to pay backdated council tax to, we find it very hard and struggle to live at times would going bankrupt be an option as can’t cope much longer.
Sara (Debt Camel) says
Hi Susan, I can’t tell from what you have said if bankruptcy is your best alternative – but I can tell that you would benefit from talking to a debt adviser that can help you and your husband look at your possible debt options. There may be other situations such as a debt relief order (see https://debtcamel.co.uk/debt-options/dro/) that would suit one or both of you. If you would like to talk to someone on the phone, call National Debtline 0808 808 4000. If you would prefer to meet a debt adviser, then go to your local Citizens Advice. Debt advice from either of these sources is confidential and non judgemental – they can help you find the best way forward so life is not so much of a struggle.
Council tax debts and water rates will be wiped out if you do go bankrupt. But equally they would be in a DRO, so you have a choice of ways to improve your situation.
Lesley Ryan says
WE have both been made Bankrupt last September, Council tax Bill I didn’t deal with very well due to lots of reasons. Mostly death and illness. My Council has attached my income, and is taking £163 a month from my very small salary. What rights do they have considering I paid them everything before them going to court. It seems I went bankrupt to pay their debt collectors Who wanted £19,000. Where do I Stand on this.
Lesley
Sara (Debt Camel) says
You say you were both made bankrupt last September. Do you mean you both applied to go bankrupt or did a creditor make you babnkrupt?
What do you mean by “considering I paid them everything before going to court” ?
When you went bankrupt, your total council tax debt was £19,000? And they are still taking money from your wages? Have you told the council you are bankrupt?
An says
The first line of this piece states “All income tax debts from previous tax years are included in your bankruptcy.” Does this include income tax debts judged to have been accrued through deliberately not disclosing your earnings?
My sister suffers from bipolar and struggled to get a job so she decided to try going self employed for a while but it didn’t work out. She didn’t really know what she was doing partly due to her mental health problems and partly due to naivety. She didn’t know that she had to register herself as self employed and she didn’t declare any of her income believing that because she was earning under the tax threshold she didn’t need to pay income tax and therefore wasn’t required to register.
Now she’s being asked to pay lots of money that she can’t possibly afford. She can’t prove what she earned when she was self employed so the taxman is simply making an estimate which is way more than she made. They are adding interest and penalties too. This has put her in a very dark place.
I have read that fraudulent debts are not discharged after bankruptcy but I don’t know if that includes income tax debts. Is bankruptcy likely to wipe her HMRC debts even if the taxman view what she did as deliberate concealment/fraud?
Sara (Debt Camel) says
I suggest your sister talks to Business Debtline https://www.businessdebtline.org/ about her options for dealing with her tax debts. Another possible source of help is TaxAid http://taxaid.org.uk/guides/taxpayers.
Yayiku says
Hi Debt Camel,
My business is a partnership with my wife and we are having a huge accessment from the HMRC. The only asset we have is the family house, and the deposit were borrowed from our parents who transferred the money from abroad. So my question is : if we went bankrupt and we sold the property, would the borrowed deposit go to HMRC ?
Sara (Debt Camel) says
1) you need professional advice on whether the tax assessment is accurate/challengeable.
2) if it’s not, you need advice on whether bankruptcy is a good option for you and its potential impact on your business, I suggest talking to Business Debtline https://www.businessdebtline.org/
3) I assume there is some doumentation (for example bank transfers) that shows the deposit came from your parents. In that case in bankruptcy they will probably be treated as owning a beneficial interest in the property. You don’t say whether the equity in the property is now larger than this deposit – if it is, could your parents “buy back” the additional equity from the Official Receiver? This could let you stay in the house, if that is what you would rpefer. Business Debtline can talk through all these points in detail.
sam bedford says
Have had a tax bil feom 2006 up t o 2012 late penalities bit i was working for someone during that time too i have pay slips but hidden away as scared of tax man now they sent it to fredrickson what do i do i havent sent a tax assement in for 2 years and been paying 20% during that time to my employer do i still do tax assement im so confused
Sara (Debt Camel) says
I suggest you contact TaxAid and ask if they can help http://taxaid.org.uk/guides/taxpayers
katie says
Hello just a quick query re council tax. In the 12 months I am bankrupt do I have to pay council tax ?? I have a low income tax credits only and no ipa. I was single when I went bankrupt in Jan 2017 , my partner moved in march 2017 . Thanks
Sara (Debt Camel) says
You don’t for the rest of the tax year in which you went bankrupt, so for Jan-Mar 2017. If your partner moved in in 2017, they would have been liable to pay council tax for that one month. from April 2017, there is a new tax year and yes, you are liable to pay council tax. With a low income you would normally qualify for some form of council tax reduction, but as you aren’t single, that will also depend on what your partner’s income is.
your local Citizens Advice can help you with information about what council tax reduction, if any, you are entitled to.
Lee says
Hi. My wife and I were made bankrupt in 2013. My wife’s income tax was paid to Moonbeever as HMRC gave us a nil tax code. Roll forward to the present day and HMRC are trying to claim the tax back that we should have paid during the year we were bankrupt. Can they do this? They are going to start charging us from April 2018. Surely we are effectively paying the tax twice?
Sara (Debt Camel) says
Have you told HMRC that you were bankrupt in that tax year?
Lee says
Yes we have told them. They say the tax we paid to Moonbeever still has to be paid to HMRC. It’s almost like we are paying twice!
Can they do this?
Sara (Debt Camel) says
You need to distinguish the tax in the tax year you went bankrupt (either 2012-3 or 2013-4) from the tax in the following tax year.
For the tax in the tax year you went bankrupt, you should not be being asked to pay this to HMRC. If HMRC are asking you to do this, I suggest you talk to your Official Receiver about this.
For the tax in the following tax year (which may still be whilst you were undischarged and paying an IPA to Moonbeever) Moonbeever should not have collected any money from you, your tax code should not have been set at zero and you should have paid the tax man.
steven ponsford says
Hi sara i was made bankrupt on 5th of december 2017; the offical received has set up a short term IPA for 4 months for some of the NIl tax code money back, my question is if the IPA comes to an end in April , as i am not discharged until December this year if my salary increases after the ipa comes to an end say in may are they allowed to set up a second ipa
steve
Sara (Debt Camel) says
Yes, a “proper” IVA can be imposed whilst you are undischarged.
Mike says
Hi,
Great info and support on this site – thanks!
I will be considering applying for bankruptcy due to a pending tax bill. As I no longer reside, work or have assets in the UK, the HMRC and/or the OR will be unable to deduct any funds from my PAYE (as there will be no salary in the UK going forward). Am I correct in this assumption, or is there a mechanism for them to deduct payments from my salary in my new country of abode?
Many thanks.
Mike.
Sara (Debt Camel) says
See https://debtcamel.co.uk/bankrupt-england-from-abroad/ for some information about going bankrupt in England when you live abroad. If you are considering going bankrupt and then not complying with an Income Payments Order from the Official Receiver you will need to take professional advice about the implications- it is not a course of action I would advise.
Mike says
Thanks for the quick reply.
OK. I appreciate the input. If bankruptcy opens up more issues than it answers then I am happy paying what HMRC believe I owe.
However, the payment would have to be over a manageable period and it does not appear that HMRC offer a negotiation mechanism to pay in any reasonable and agreed period – unless you are aware of a process to do this.
Thanks again.
Mike.
Sara (Debt Camel) says
Your definition of a manageable period may not be the same as HMRC’s… but read https://debtcamel.co.uk/10-things-you-should-know-if-you-cant-pay-a-tax-bill/. If you are no longer in the country and have no assets here, you could simply start making the repayments you can afford without having an agreement – but I can’t advise on what action HMRC could be able to take against you. If there is a lot of money involved and you have any assets then I do suggest proper professional advice.
Sean Barton says
I have council tax arrears, and this is being deducted from my wages in the form of 2 ‘court orders’. Would this be included in a bankruptcy?
Thanks.
Sara (Debt Camel) says
Yes they would.
Sean says
Cheers Sara.
Sean says
I’ve read if you go bankrupt, owing council tax arrears, that they can still send bailiffs to collect the outstanding balance if they have liability orders connected to them? I’m currently having it stopped from my wages in the form of 2 x court orders.
Please help.
Sara (Debt Camel) says
In theory this is possible. In practice it is extremely rare. If you are concerned, go to your local Citizens Advice and ask if they have ever heard of the local council doing this. As bailiffs have no right of entry, you can just tell them to go away without opening the door, so what would be the point in this?
Dawn says
Hi
Great website with lots of useful info so I am hoping you could help me. I have been working self employed but directly to one company in direct sales as a rep. I am about to apply for bankruptcy and am including a tax bill that I from apr 2016 to apr 2017 that I have been trying to pay but have not been able to pay all of it. My question really is twofold, my new tax return for apr2017 to apr2018 will become due in Jan 2019 and I will still at that time be and undischarged bankrupt so I am wondering if that bill would be included in my bankruptcy, looking at your notes above I think it might.
Also I am about to give up self employment and go to an employed role, although I do not think there would be any attachment of earnings or income payments agreement as my new role just about covers my bills.
I would really appreciate your thoughts on this.
Thanks
Dawn
Sara (Debt Camel) says
Hi Dawn,
I suggest you talk to Business Debtline, see https://www.businessdebtline.org/. You can phone or use their webchat which is very good.
They are experts in debt advice for the self employed and will be able to help with your questions as well as look at whether bankruptcy is your best option. It may well be, but it is always worth asking a debt adviser!
Farrokh Kouchekpour says
Hi Sara,
I moved house during my bankruptcy and I informed my new local council that I was bankrupt. However I received a letter saying that my counciltax is payable because the bill was raised AFTER I went bankrupt. Is this true? I’m getting really confused. My income tax IPA was sorted in days, but this is taking forever. My discharge is due in April and I still havent received the IPA for my council tax! I am worried the delay will affect my discharge. Worryingly my last two emails to my OR have been ignored and I can’t find her in the GOV registry.
Farrokh
Sara (Debt Camel) says
“However I received a letter saying that my council tax is payable because the bill was raised AFTER I went bankrupt.”
If this is council tax from the new property then yes this is correct. you are not let off paying council tax for a year, it’s just that the council tax fro your previous property was due when you went bankrupt, so that was wiped out by your bankruptcy.
have you tried phoning the OR’s office?
Farrokh Kouchekpour says
Thank you Sara. I thought it might all be included in my council tax IPA. I was prepared to pay it either way, just wanted to know to who! ;)
I will ring them on monday, I just struggle to fit it in around work.
Thank you so much for your help.
Sara (Debt Camel) says
You won’t have to pay twice. As you now have to pay council tax, that bit of your IPA will reduce.
Farrokh Kouchekpour says
Thank you. Only a month to go, so want to make sure I do everything right :)
Steven Foster says
Hi Sarah
Got made bankrupt feb 12 2019 so was discharged yesterday, today I received a letter from HMRC’s saying I owe £408 in tax I was never given a nil tax code but HMRC’s forward6a months tax into official receiver’s office, today they are saying they have reduced my tax allowance by 2043 a year to claim back the 408 inowe them is this correct seems rather a big tax rise to me
Sara (Debt Camel) says
Have you talked to your OR’s office about this? I am unclear why HMRC sent 6 months of tax to the OR.
Steven Foster says
Sorry Sarah typo there they claimed a months tax I’ve spoken to OR office and forward the letter from the HMRC, they have never had case like mjne before so they are investigating it, my ipa is £46 a month the tax office are claiming £34 a month surely this would impact my ipa payments too, is the a claim to actually get the ipa cancelled
Regards
Steven
Sara (Debt Camel) says
“they have never had case like mjne before so they are investigating it”
who is, the OR or HMRC?
Steven Foster says
My case officer she gonna speak with her boss which I guess is the OR,
Sara (Debt Camel) says
OK, then I suggest you see what the response is. If that seems unreasonable, you can argue against it.
Tristan says
Hi debt camel,
Went bankrupt in Jan 2020, finally agreed a IPA of £24.44 for 36 months. I wasn’t aware that NT would be applied to my tax code and the OR will now be due the income tax (£780) for Feb and march payroll.
The way I am reading the gov.uk website and other websites, does this mean once OR get the 2x income tax money, I have fulfilled the IPA as they have received over the IPA agreement (£24..4 X 36 months) or am I still liable for the £24.44 for the remained of the IPA agreement?
Regards
Sara (Debt Camel) says
you need to talk to your OR’s office. Often with these “late in the tax year” bankruptcies, your tax code was never changed in time and the OR gets the money direct from HMRC, not from you.
Tristan says
I have had the letter from HMRC stating that my tax code has changed to NT month 1, and any tax already taken by my employer (Jan salary) will be addressed directly with the OR.
My main question is, am I still required to continue with the IPA considering the OR will receive circa £2340, which is over the agreed £24.44 X 36 months, or have I ready the gov.uk website and others wrong, and regardless of any additional payments to OR the IPA is still applicable for 36 months?
The letter was dated 14th Feb, I have checked online tax account at HMRC and it is stated as NTX
Sara (Debt Camel) says
So you received more income in February and will in March? You need to talk to the OR about how this interacts with your IPA.
Tristan says
Thank you Sara
Abby says
Hi Sara,
What happens when you have fraudulent debt to HMRC? If bankruptcy cannot get rid of fraudulent debt and you have no assets to give creditors, when does it end?
Many thanks,
Abby
Sara (Debt Camel) says
You need detailed advice on your situation, talk to National Debtline on 0808 808 4000.
Abby says
I have already called them and business debtline and I couldnt get any answers
Sara (Debt Camel) says
I’m sorry, there may not be any nice options for you but Business Debtline should have helped you to look at your choices and what may happen if you don’t do anything.
Malik says
Hello there
Iam so much in debt ,as i read non of the option seems good.can just make a deal with my Cretidors and pay them as much as i can.if i do that so,when will my credit score be fixed or will it be getteng beter when i finished
Sara (Debt Camel) says
That’s too vague to be able to say anything useful about.
Could you say some more, eg who your creditors are (you have posted on a page about taxes, does this include any HMRC or council tax debts?), how much you owe them, how much can you afford to pay them a month or in a settlement offer, are there already defaults for these debts on your credit record, do you own a house or are you renting?
Alan says
I was made bankrupt by Inland revenue around the early 1990s. I am now about to receive my private pension. Does the official receiver have a claim on my pension pot for the tax owed in the bankruptcy, and if so ,is interest accrued on the initial amount?
Sara (Debt Camel) says
read https://debtcamel.co.uk/pension-safe-bankrupt/ – it sounds as though you are Case 2 in that article. I can’t give any further information about this.
Nichola Albrighton says
I went bankrupt in 2017 , june this year I recieved a letter saying hmrc owe me some money . No amount on the letter. They stated because of Corona virus they need my bank details. I telephoned hmrc and gave my details. That’s was 8 weeks ago. How long before they pay what they owe me ??? Anyone in the same position ?
Sara (Debt Camel) says
I hope that wasn’t a scam. I suggest you phone HMRC urgently on 0300 200 3300, not the number that was given on that letter.
Bobby says
Hi
C
I was recently made bankrupt by one of my creditors. Had my interview with the official receiver officer today. I explained all my debts and the reason as much detail as possible. I am currently not working, I have no assets and rely solely on my wife to support me. We have a joint tax credit claim, and she is currently furloughed.
I’m worried on one area, and would appreciate your advice. I had a business and was operating as a sole trader for 2 years. Business closed beginning of this year. I used by personal bank account. I never declared anything to hmrc whilst I was trading and not kept any book keeping. middle of last year I took out a bounce back loan to pay for business essentials. I also transferred some funds to my wife. Now the OR wants to see my bank statements. Would this have any effect on my wife’s asset? Can they question her? Can hmrc penalise me? What result can arise from this situation?
Thanks
Sara (Debt Camel) says
I suggest you talk to Business Debtline https://www.businessdebtline.org/ about this.
Jay says
Hi,
Today I received a letter from HMRC stating I owe them the total amount of tax generate from NT code that was paid to the OR.
Is this an error on their part or am I paying it twice? Do I simply contact the HMRC and explain?
Sara (Debt Camel) says
Ask your OR what to do – it doesn’t sound right.
AM says
Dear Sara
I was made bankrupt on 11 November 2022. I have not had any income during my bankruptcy as I am awaiting my discharge this coming November before going back into employment.
I assume that when I go back to employment PAYE, my code will be back to normal, as the tax year in which I was made bankrupt is over (5 April 2023) therefore there is no longer the NIL Tax code applicable?
thank you
AM
Sara (Debt Camel) says
That sounds correct.