| T O P I C R E V I E W |
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Posted - 06 August 2010 : 16:12:07
I read somwhere that you have to cease trading when you are declared BR, but that you can then start up again straight away....
My wife and I are self employed (therefore regarded as a partnership by the Inland Revenue). The partnership has no assets, no separate bank account etc, and there are no debts or employees etc. It is just a small business run from home.
So:-
1) Do we have to formally cease the partnership on the day of BR declaration (if so, why)?
2) Can we then start up the partnership again the same (or next?) day?
3) Presumably if the above answers are YES, then we have to notify the Inland Revenue? |
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| Searcher |
Posted - 22 August 2010 : 22:42:18
quote:
Originally posted by debtinfo
Yes it works exactly the same, it just adds the partnership on to your 2 individual bankruptcies. I think it is about £750 in total for everything rather than 2 x £600.
The sticking point might be if the partnership itself has no debts (does it not even have a tax debt) as if it has no debts at all then the partnership would not be insolvent just the two of you.
Anyway fill in your own SOA and ask at the court about the partnership, at worst you can go bankrupt individually at best you might save a bit of money
There are no debts with the partnership. We'll be taking £600 x 2 with us on the day, although the person I spoke to at the Court assured me that we would get £150 x 2 off fee remission as we receive Working Tax Credit (we have forms EX160 to fill in). I hope they are right, because we don't qualify for the full benefit as our earnings are above a certain threshold. When I looked online, I gather that it is discretionary with our earnings. Fingers crossed!! |
| debtinfo |
Posted - 22 August 2010 : 22:33:43
Yes it works exactly the same, it just adds the partnership on to your 2 individual bankruptcies. I think it is about £750 in total for everything rather than 2 x £600.
The sticking point might be if the partnership itself has no debts (does it not even have a tax debt) as if it has no debts at all then the partnership would not be insolvent just the two of you.
Anyway fill in your own SOA and ask at the court about the partnership, at worst you can go bankrupt individually at best you might save a bit of money |
| Searcher |
Posted - 22 August 2010 : 22:28:05
quote:
Originally posted by debtinfo
Have you asked about doing a Form 16 partnership bankruptcy, this will be cheaper and is one bankruptcy order that covers the partnership and the two of you in one go, It is only a very short form so ask about it on the day
I seem to recall that we looked into this a while back but was advised that in our case it would not be appropriate.
We are self employed, working from home and are required to be a partnership as far as the IRev are concerned, but the partnership does not have its own assetts, bank account etc. The amount of activity is now very low and we have run at a loss for the last two years.
All income (mainly commission based) is received into our personal joint bank account and expenditure is paid for from that account or from personal credit card accounts. It has always been that way, and the Tax Office have been quite happy about that, even when they decided one year to check us out and request statements etc.
Do you think we should look at the idea of a partnership BR in the circumstances, and if so how much does it cost and does it mean we would still go BR and be released from all out personal debts?  |
| debtinfo |
Posted - 22 August 2010 : 21:49:56
ok, for a start whatever you might owe or whatever they might fine ou for not filling it in will be covered by the bankruptcy, Also technically after you go bankrupt the OR will take possession of your records so filling one in later would be difficult, alot of people never fill in their last tax return.
The one next yaer will be for the new business which starts the day after the bankruptcy and so will need to be filled in.
Have you asked about doing a Form 16 partnership bankruptcy, this will be cheaper and is one bankruptcy order that covers the partnership and the two of you in one go, It is only a very short form so ask about it on the day |
| Searcher |
Posted - 22 August 2010 : 21:29:53
quote:
Originally posted by debtinfo
Actually it is not necessary for you to do the tax return at all (you can if you want to).
Just a thought are you both going bankrupt
Yes, we both are intending to go BR on the same day, so can you explain why we don't need to fill out the return, and will the Tax Office expect this next year? |
| debtinfo |
Posted - 22 August 2010 : 21:23:58
Actually it is not necessary for you to do the tax return at all (you can if you want to).
Just a thought are you both going bankrupt |
| Searcher |
Posted - 22 August 2010 : 21:18:27
quote:
Originally posted by debtinfo
All the tax affairs pre bankruptcy are included in the bankruptcy You start again as if you were setting up a new business and your tax starts from day1 again
If say we (wife & I in a partnership) go BR on 31st August, should we fill out the tax return for the terminated partnership at that time, or wait until the new tax year starts (like normal)? I presume that HMRC are used to seeing a partnership business cease and start on consecutive days (with the same trading name), and that this will not result in problems or queries from them? |
| debtinfo |
Posted - 06 August 2010 : 17:05:33
Yes, the reason for this is for instance if the partnership had a net worth of £10,000 then the OR stops the partnership and would want half of the value
Obviously in your case it doesent really matter, its just a case of dotting the I's and crossing the T's |
| Searcher |
Posted - 06 August 2010 : 16:59:19
quote:
Originally posted by debtinfo
1)The bankruptcy automatically severs any partnership and a letter will be sent to your wife to account for the assets of the partnership (which as you say are none so should be an easy job)
2)Yes you can
3) yes you do, All the tax affairs pre bankruptcy are included in the bankruptcy (unless it falls to the other partner). You start again as if you were setting up a new business and your tax starts from day1 again
Thanks - I think I understand. So, if we both go BR on say the 15th we would cease trading on the 15th. We would have to then declare that we are a partnership again starting on the 16th if we want to continue without a break (in practice) |
| debtinfo |
Posted - 06 August 2010 : 16:38:52
1)The bankruptcy automatically severs any partnership and a letter will be sent to your wife to account for the assets of the partnership (which as you say are none so should be an easy job)
2)Yes you can
3) yes you do, All the tax affairs pre bankruptcy are included in the bankruptcy (unless it falls to the other partner). You start again as if you were setting up a new business and your tax starts from day1 again |
