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 bankruptcy postbag for march
 Bankruptcy and Nil Tax Code
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pix1
Average Member

689 Posts

Posted - 19 March 2008 :  14:44:40  Show Profile  Reply with Quote
I have been reading a bout how, if one goes bankrupt just before the end of the tax year, say end March or early April, there is not enough time before the end of the tax year to set up a nil tax code with an employer and it therefore would not happen during the bankrupts undischarged period. Along these lines, also, I have read that in this situation the bankrupt might not get an IPA or an IPO at all during his/her bankruptcy. Is there an answer to this?

Helpful Advice
Average Member



United Kingdom
646 Posts

Posted - 19 March 2008 :  14:55:32  Show Profile  Visit Helpful Advice's Homepage  Reply with Quote
Hi Pix1

Some good questions, section 310 of the insolvency act 1986 deals with both these points

To clarify this point by switching you to an NT (NO TAX) code you will no longer pay tax for the remainder of the tax year, however what you would normally pay in tax will go to the OR as an Income payment Order or Agreement (IPO/IPA).

This is a seperate matter to that of disposable income as this IPO/IPA would last for three years.

In summary it is correct that you would not get an IPA/IPO for tax payments as the tax code would not change, but you may still get an IPO/IPA for surplus income payments

Hope this helps


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pix1
Average Member

689 Posts

Posted - 19 March 2008 :  15:07:39  Show Profile  Reply with Quote
Thanks for your quick reply.

I thought that would be the case. However, if you did not get a nil tax code would this mean your employer would never know of your bankruptcy status, that is, so long as your terms and conditions of employment did not require you to disclose it? I thought that the employer only knows through the IR notifying them to apply a nil tax code? If you got an IPA/IPO administered I believe through an accredited third party would you simply be issued with a payment book and, provided, you kept up payments, the OR third party would not inform the employer unless, say, they felt they needed to doc earnings at source if you were missing payments?

My wife is worried about the possible stigma and embarassment of people at work knowing. I have tried to convince her that even a nil tax code could be for other things apart from bankruptcy (though I am still trying to find out what) and that the employer is not directly told of the bankruptcy.
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Helpful Advice
Average Member



United Kingdom
646 Posts

Posted - 19 March 2008 :  15:23:53  Show Profile  Visit Helpful Advice's Homepage  Reply with Quote
If You do not get a nil NT tax code then your employer will be none the wiser, depending on your career of course as there are some careers that are directly affected by Bankruptcy.

Your IPA/IPO is paid to the OR by the bankrupt normally by standing order it is not deducted from wages so again will not flag up with your employer.

An NT tax code is for two reasons only either Bankruptcy or overpayment of tax in previous years as her employer pays her tax on her behalf they would be aware if there was an overpayment therefore it will be obvious.



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Reviva UK
Advanced Member

United Kingdom
2452 Posts

Posted - 19 March 2008 :  15:28:15  Show Profile  Reply with Quote
It is normal that the OR appoints a collector for the tax that you ould have paid.

At the moment he favourite is Clark Willmott & Clarke accountants based in Taunton

Paul Johns
Assisted Bankruptcy Specialists
Reviva UK
www.revivauk.com
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pix1
Average Member

689 Posts

Posted - 19 March 2008 :  15:49:15  Show Profile  Reply with Quote
Thanks Brett, and Paul.

My wife starts her new job about 15/4/08. This is, of course, in the next tax year. She will be with her current employer until then. If she went bankrupt by 5/4/08 she would not get a nil tax code and, therefore, the current and the new employer would not know. Only she would, depending on disposable income eventually get an IPA/IPO at a later date during undischarged period.

Does it make any difference i terms of the employer knowing that she is still going to be working in the NHS only switching from one Trust to another. i suppose whether they know or not is all down to whether she gets a nil tax code. Is this right?

The repossession hearing (see Mortgage Shortfall and Bankruptcy topic) is set for 9/4/08. If it is ok for this to go on the form and any shortfall is treated as unsecured debt in her bankruptcy she might be ready to go ahead. Still just ned to be checking if she could be stopped from working in USA as a nurse if a UK bankrupt.
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pix1
Average Member

689 Posts

Posted - 19 March 2008 :  15:51:04  Show Profile  Reply with Quote
Also, I wonder if the High Court will be much busier than usual just before the end of the tax year?!
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Helpful Advice
Average Member



United Kingdom
646 Posts

Posted - 19 March 2008 :  16:31:06  Show Profile  Visit Helpful Advice's Homepage  Reply with Quote
Hi Pix1,

You would need to check the details of the USA by calling them as this is beyond my knowledge, however you are quite right in what you have said regarding to her changing jobs (Or at least trusts)they will be unaware unless they are instructed to change tax codes and this is all down to timing.

As I said before as long as you cover yourself on the form and her OR is aware of the Immanent unsecured debt due to mortgage shortfall then there is no reason for your wife not to go ahead now.

I would give the high court a ring and see how they are as it varys from week to week and I have not been there since early January, but needless to say with the current climate all the courts are busy with Bankruptcy related issues at the moment.

Good Luck

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England,Jackman & Spacey

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pix1
Average Member

689 Posts

Posted - 19 March 2008 :  18:22:54  Show Profile  Reply with Quote
Thanks.
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Helpful Advice
Average Member



United Kingdom
646 Posts

Posted - 19 March 2008 :  19:08:59  Show Profile  Visit Helpful Advice's Homepage  Reply with Quote
Your welcome Pix1,

Good luck and would be interested to see how you both get on with the issues we've discussed so keep in touch.

Best of luck

Kind Regards,

Brett England

View my Blogs at:

http://HelpfulAdvice.blogs.bankruptcyhelp.org.uk/

Bankruptcy Specialist

England,Jackman & Spacey

WebSite www.ejands.co.uk
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