Bankruptcy petition

Bankruptcy petition

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I have received a note from a client saying:

i have been served with a bankruptcy petition for outstanding tax arrears,the hearing is at the royal courts of justice,
london

I am not sure of the procedure and would be grateful for any advice.

The client has been making payments, but not enough to clear a few years of arrears.

He has a house and mortgage.

Recent press articles suggest that he may simply walk away from his debt and be no worse off - is that right?

Replies (5)

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By carnmores
10th Aug 2011 17:14

NO , how much is the equity in the house , is he married and how much is owed

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By ireallyshouldknowthisbut
10th Aug 2011 17:59

Limited company or sole trader?

 

 

 

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By Top_Cat
10th Aug 2011 18:30

Hit them first and hit them hard -

How much does he owe, and what has he been paying?

This sounds like HMRC just churning out actions without any thought.  If your client can demonstrate to the court that he has been making regular payments, that these payments were agreed by HMRC (the fact they accepted them over a period of time without complaint would be sufficient), and, if by maintaining those payments the rest of the debt will be cleared in a reasonable time (2-3 years max), then it is doubtful that a court would make a bankruptcy order.

Of course, once the court formalises the payment arrangement your client might have a chance of filing a claim for damages against HMRC as their actions in seeking bankruptcy were unreasonable and caused unneccesary distress and expense to your client. If he could arrange a small nervous breakdown that would really help :)

 

Alternatively you could pre-empt HMRC by petitioning your clients local county court for a "time to pay" order simply formalising the current arrangement. If granted then HMRC would be in contempt of court if they continued any other collection activity including bankruptcy proceedings, and, if HMRC try to oppse a time to pay order they would have to convince a court why they were not prepared to allow an existing arrangement to continue - a difficult tak for them.

   

 

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By User deleted
10th Aug 2011 21:50

Not enough info

Did he have an agreement to pay the tax by instalments?

Has he kept to that agreement?

If no agreement, have HMRC already been pursuing him for the debt?

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By Huw Williams
25th Aug 2011 09:22

More info

My aplogies for not updating on this - I had not switched on the notification update so did not see the replies coming in.

 

I do not have much more information and am told that the matter is now sorted (although I am waiting to see what this means).

 

The person is a sole trader and married.  I do not have details of equity in the property - I would have thought quite little with current house prices (and previous remortgage).

 

The idea that HMRC could be tied to payment arrangements they have not agreed to in writing is interesting.  The downside here is that payments appear to be "as and when" rather than a regular amount each month.  Debt was around £8,000 being paid off at £100 a week until last September and then a few lots of £100 more recently.

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