Reply To: Bankrupt claimant



I have no dispute that the payments are “by way of” and agree with your definition – my concern is the word deduction. If my understanding is correct, the claimant receives full gross wages and then makes payment to the Insolvency Service.

If this is correct they are not deductions but payments made after receipt. Just to be pedantic, if the claimant’s earnings were paid to the I.S. who then made deductions and passed the balance back to the claimant I think there would be an arguable, but by no means watertight, case that the Tax and N.I. could be disregarded.

I think (hope!?) this is contrary to the intention of the Regs but cannot see how they can fall to be disregarded.

Must admit, I know its difficult to contemplate it ever happening but I think this may be a case of the Regs being poorly worded.

To give what I think we agree is the appropriate result would require wording along the lines of …any deductions… or, where no such deductions are being made, payments made in place of those deductions.