Personal bankruptcy / sole director

Discussion in 'Insolvency' started by Sej107, Mar 8, 2018.

  1. Sej107

    Sej107 UKBF Newcomer Free Member

    3 0
    Hi All,

    Hoping someone can help...........I will be going bankrupt in 2020 due to the loan charge (I have thought about this decision for a long time) and I want to draw a line under all of this, stop contracting and just get onto PAYE to stop all the worrying / stress. I'm currently contracting under a limited company and with all the recent IR35 cases I honestly do not know if I would be caught by IR35. I am sure all my contracts are watertight and my contracts have all been under 2 years but I appreciate that this may not make a difference if HMRC investigate. My plan is to continue contracting up until bankruptcy however what I don't want to happen is to go bankrupt for disguised remuneration then years down the line be investigated for IR35 and end up in another long drawn out battle. So I guess my question is if I go bankrupt could I be investigated and asked to pay any PAYE/NIC at a further date down the line? My other thinking was to ask HMRC to investigate me close to the bankruptcy date then if they find that my contracts are inside IR35 and if they demand additional TAX/NIC it would be a lot easier to include this in my bankruptcy.

    Thanks in advance.
     
    Posted: Mar 8, 2018 By: Sej107 Member since: Mar 8, 2018
    #1
  2. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    2,457 297
    What is the significance of waiting until 2020 to go Bankrupt?

    Any personal HMRC debts due at the time of your Bankruptcy will be included in your Bankruptcy so they cannot then retrospectively post Bankruptcy pursue you for liabilities incurred pre bankruptcy.
     
    Posted: Mar 9, 2018 By: Lisa Thomas Member since: Apr 20, 2015
    #2
  3. Supercoach

    Supercoach UKBF Regular Free Member

    273 52
    Isn't it better to have a competent professional look at your contracts with IR35 in mind rather than go through the stress and the worry of something that may not even be a problem?
     
    Posted: Mar 9, 2018 By: Supercoach Member since: Feb 10, 2015
    #3
  4. Simon Green

    Simon Green UKBF Regular Free Member

    109 9
    Inland Revenue 35 is rightly a very serious worry for you as well as lots of others who HMRC will regard; if they investigate you, as a disguised employee!!!
    Look no further than the most recent Appeal made by the former BBC journalist who has now ended up with over £420,000 in tax liability because HMRC won, the first success in 7 years I believe.
    I believe that bankruptcy status will NOT protect anyone from HMRC investigations with IR35 as the fundamental reason for the investigation. Trust me chum HMRC can come looking with IR35 at any time and no one knows when or where.
     
    Posted: Mar 9, 2018 By: Simon Green Member since: Dec 4, 2017
    #4
  5. Sej107

    Sej107 UKBF Newcomer Free Member

    3 0
    Thanks for the responses. HMRC can do what they want including any retrospective laws. That has been made clear by the 2019 loan charge. The reason for waiting to 2020 is because that is when the tax for the 2019 loan charge will be due. Possible ir35 liabilities may not have yet crystallized at that time.
     
    Posted: Mar 9, 2018 By: Sej107 Member since: Mar 8, 2018
    #5
  6. Simon Green

    Simon Green UKBF Regular Free Member

    109 9
    I’m not sure what you mean by, ‘’Possible ir35 liabilities may not have yet crystallized at that time.’’
    If you really feel comfortable as well as sufficiently confident to face HMRC with regard to Inland Revenue 35 then that’s great, but in my long experience Inland Revenue 35 for contractors is very dangerous and believe me chum, the recent decision regarding the former female BBC journalist in Yorkshire has helped HMRC to crystallize their own approach using tools of analysis.
    Best of luck to you, but watch out for move forward; its the actual working practices and definitely not what someone may think that counts.
    In short IR35 can explode at any point as the recent result with over £420,000 liability to HMRC demonstrates.
     
    Posted: Mar 10, 2018 By: Simon Green Member since: Dec 4, 2017
    #6
  7. Sej107

    Sej107 UKBF Newcomer Free Member

    3 0
    Sorry, i will try explain better. Years ago i operated through an offshore trust scheme whereby i would receive a small salary and the loan from the trust. The newly created disguised remuneration loan charge by hmrc will see these loans treated as taxable income on 5th april with tax due by 31st Jan 2020. This will make me bankrupt and i have come to terms with that.
    The past few years i have been contracting through my limited company as a sole director on the basis that my contracts are outside IR35. When i go bankrupt i will need to have my company struck off. I appreciate that hmrc can reopen limited companies and transfer ir35 from the company to director. I do not want this risk hanging over me after i go bankrupt as it will cause me to go bankrupt again!
     
    Posted: Mar 10, 2018 By: Sej107 Member since: Mar 8, 2018
    #7
  8. Mr D

    Mr D UKBF Legend Free Member

    10,599 1,110
    Why would you think HMRC cannot do that later?
    New personal liability.
     
    Posted: Mar 10, 2018 By: Mr D Member since: Feb 12, 2017
    #8
  9. Newchodge

    Newchodge UKBF Big Shot Free Member

    10,409 2,670
    Is it feasible to approach HMRC now and explain that you think there may be an issue with IR35?
     
    Posted: Mar 10, 2018 By: Newchodge Member since: Nov 8, 2012
    #9
  10. Simon Green

    Simon Green UKBF Regular Free Member

    109 9
    I think you should speak firstly to the Citizens advise who will advise where is the best free source of tax advise which is also confidential.
     
    Posted: Mar 10, 2018 By: Simon Green Member since: Dec 4, 2017
    #10
  11. ethical PR

    ethical PR UKBF Legend Free Member

    6,869 1,500
    Why Citizens Advice? They deal with consumer matters.

    Why wouldn't he look here https://www.gov.uk/business-support-helpline
     
    Posted: Mar 13, 2018 By: ethical PR Member since: Apr 19, 2009
    #11
  12. Simon Green

    Simon Green UKBF Regular Free Member

    109 9
    Oh yes, he could look there also, But, the Citizens Advise is Free, Impartial and Confidential and provides facility to discuss options face to face, hope that helps.
     
    Posted: Mar 13, 2018 By: Simon Green Member since: Dec 4, 2017
    #12
  13. Mr D

    Mr D UKBF Legend Free Member

    10,599 1,110
    They have also been known to tell people with business problems that they cannot help.
     
    Posted: Mar 13, 2018 By: Mr D Member since: Feb 12, 2017
    #13
  14. Simon Green

    Simon Green UKBF Regular Free Member

    109 9
    In my case Citizens Advise couldn’t have been more helpful; Enormously Helpful,
    Seems I’m the lucky one!!!
     
    Posted: Mar 13, 2018 By: Simon Green Member since: Dec 4, 2017
    #14