Both my husband and I are self employed and were made bankrupt in January 2007, and discharged in January this year. The business is still trading. We tried to get some advice last year about filling in our tax return (2006-07), but got very conflicting answers. In the end we were told by a very unhelpful person at my tax office to file a tax return for the whole year. We were very confused about this, as we couldn't see how the tax office could could calculate our tax during the period of January to April 2007.
We are also both pretty sure that during our telephone interview with the OR that she told us that the tax up to the end of that trading year would be included in our bankruptcy. This surprised us both at the time, as we assumed that we would be liable for tax from January to April 2007.
The problem is that our tax liability online is showing an amount that appears to be for a whole year plus a previous amount. As we are getting close to filing a return for 2007-2008 can anyone of the experts help us with this please? I should add that we haven't heard anything from the tax office, and we are paying an IPA.
NT tax codes are usually only applied if you are PAYE. The B3 examiner that interviewed you has probably never been self employed and therefore doesn't realise your returns are filed historically. I would suggest you file you returns as normal.
Julian Donnelly Spokesperson for www.Bankruptcyhelp.org.uk Don't forget the helpline on 0800 078 9367
I am ex HMRC. So far as i am aware you should follow Julian's advice and file all your returns as normal. If the OR wishes to take this up with the Revenue it is for them to do. Your liability as self employed is always viewed retrospectively as your tax record is only completed after the end of the tax year. Making payments on account minimises any unexpected bill at the end of the year. if you can't make these you should write to the HMRC asking them to be amended, for example asking for them to be reduced to zero.
My understanding is that you are only liable for income tax from the date of the bankruptcy onwards as any debt due for income tax prior to that is captured in the bankruptcy estate. I would try to speak to someone at HMRC to find out what they need from you in terms of this.
Self employed tax question
Posted - 11 September 2008 : 19:20:16
