Bankruptcy

Bankruptcy

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We are a very small book-keeping firm and this is the first sole trader bankrupt that I have had to deal with, so wanted to check that this procedure is correct.

Made bankrupt on 3 January 2009.

From looking at IR site there will be a new record set up from 6/4/2009 to deal with 2009/2010 onwards (nice and simple).

For the 2008/2009 (year of bankruptcy) im a little confused. Clients only want us to deal with new business which started on 4 Janaury 2009 and wants accounts to run to 5 April 2009. Client has said no point in dealing with accounts prior to bankruptcy as I havent got to pay the tax and the official receiver can sort this out. Its the same trade just a change of name imo so hardly a new business

Am I correct to show the accounts for period 4 January 2009 - 5 April 2009 under the bankruptcy record and if so do the Inland Revenue still collect the tax for this period as its all going to be added to the bankruptcy debt.

Any help much appreciated.

Jon Sadler
Jonathon Sadler

Replies (5)

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By User deleted
05th Feb 2009 18:56

Bankruptcy & tax
You are in rather an odd situation. The reason I say this, is it has been some years since I dealt with someone who was bankrupt. But the last time I did, the official receiver was responsible for the individuals tax returns until they got their discharge. Therefore you should do nothing unless the Official receiver tell you to.

Have you had it confirmed (by the official receiver) that you are getting paid for the work you are doing?

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By 01638603404
06th Feb 2009 09:50

Bankruptcy
Thanks Jon, that was my understanding the same as an employee who goes bankrupt gets an nt tax code for the whole year.

I will deal with the small set of accounts as these have been requested to be dealt with by the official receiver and also submit the return under the bankruptcy record to IR for their records.

I have been given the all clear to do the work from the official receiver for anything post bankruptcy as we also have to deal with CIS/PAYE for the client.

Thanks all for your help I think i am now happy with the way forward.

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By johnpaylor
05th Feb 2009 21:43

The whole year's tax is a claim in the bankruptcy
Tax payable in the year of bankruptcy is treated as a claim in the estate in bankruptcy for self employed, so the tax accrued after the bankruptcy order is not collected from the debtor.

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By 01638603404
05th Feb 2009 18:44

Bankruptcy
Thanks for the info.

We had been advised by the official receiver on the name point, and all the new company info does still show the previous bankruptcy name.

Unfortunately the offical receiver did not know the tax position when i spoke to them and asked me to contact the Revenue direct. This was hopeless, hence me researching it myself and landing on this forum.

Hopefully a large practice wld have seen this scenario a number of times and can point me in the right direction.

Thank you once again for responding

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David Winch
By David Winch
05th Feb 2009 17:34

Trading name whilst bankrupt

Jon

You might find it useful to do a bit of reading up on trading names used by bankrupts, such as this from Purnells.

"You are not permitted to obtain credit during the life of the bankruptcy over and above the sum of £500 without informing the lender that you are bankrupt. (This includes not only money, but ordering goods without asking for credit and then failing to pay for them when they are delivered). Should the lender then wish to still deal with you, you are within your rights to accept any offer of credit made.

Should you trade as a sole trader, you should be aware of the restrictions that will be imposed as a result of a bankruptcy order being made.

Subsequent to a bankruptcy order being made, there is nothing to stop you from continuing to trade in the capacity of a sole trader. You must, however, ensure that your invoices, letterheads, etc carry the name in which you were made bankrupt, i.e. your personal name and any former trading name. This is to ensure that creditors can identify you as a potential credit risk. Although it is permitted for you to use a trading name, you must ensure that the Official Receiver/Trustee in bankruptcy, has expressly given you permission to use such a name. You must, however, ensure that your personal name is dominantly shown on all trading paperwork.

e.g Jacob James trading as Somewhere Over The Rainbow.

As a bankrupt, it is a criminal offence to be concerned (directly or indirectly) in promoting, forming or managing a company or acting as a company director without the courts permission, whether formally appointed as a director or not.

Should you be a director of a limited company you must resign office immediately. Should you be a shareholder of the company at the time that the bankruptcy order was made, your shares in that company will automatically vest in your Trustee in Bankruptcy as an asset of the bankruptcy estate. "

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