Bankrupts & Reg 36 – Flex the brains after Christmas

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  • #23340
    John Boxall
    Participant

    I have a claim from a bankrupt, rather than paying Income Tax, the Official Reciever is taking an amount equivalent to what she would have paid in Income Tax & distributing it to her creditors. Because of this HMRC have given her the tax code NT – No Tax.

    She has asked for her income to be reasessed, treating the amount deducted in this way as the same as Income Tax.

    Reg 36 says

    3) For the purposes of paragraph (1) net earnings shall, except where paragraph (6) applies, be calculated by taking into account the gross earnings of the claimant from that employment over the assessment period, less—
    (a) any amount deducted from those earnings by way of—
    (i) income tax;

    I cannot see anything in the regulations that would allow me to reasess the claim. She is not being stopped Income Tax, and the regulation does not allow us to take any deduction in lieu of Income Tax.

    Am I right, comments please! 😕

    Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are for ever floored.

    Wilkins Micawber, Ch12 David Copperfield

    #12095
    Anonymous
    Guest

    Income Tax is Income Tax as you rightly say, John.
    This doesn’t walk like a duck, or quack like a duck……So I don’t think it’s a duck! 8)

    #12096
    John Boxall
    Participant

    Thanks!

    Quack Quack

    Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are for ever floored.

    Wilkins Micawber, Ch12 David Copperfield

    #12097
    Anonymous
    Guest

    This is probably a stupid question – but I am not clear from your post, is the lady employed or self employed? If the latter I think you would have to take an assumption of NI and Tax, if the former – no deduction from the salary, then I agree that no deduction should be made from the gross income in the benefit assessment.

    #12098
    John Boxall
    Participant

    Sorry, she is employed.

    Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are for ever floored.

    Wilkins Micawber, Ch12 David Copperfield

    #12099
    Anonymous
    Guest

    I’ve just done an appeal submission on this very issue. I couldn’t find any way that the sum could be disregarded either (it isn’t income tax anymore and there is no specific disregard for it that I could find). It hasn’t been listed yet, so no idea how it will work out.

    #12100
    John Boxall
    Participant

    I just thought that I should let you know, the Official Reciever has now confirmed that what he is taking IS Income Tax, he collects it rather than HMRC. At the end of the financial year he then pays HMRC the Income Tax owed as well as any otther creditor.

    So it is Income Tax afterall!

    Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are for ever floored.

    Wilkins Micawber, Ch12 David Copperfield

    #12101
    David
    Participant

    I’ve just presented the appeal that Ed referred to below.

    The Tribunal Chairman decided that the payments to the Official Receiver should not be disregarded.
    Essentally, she entered a voluntary agreement (although legally binding) that she pays the equivalent of the tax that would have been paid & is consequently issued with a NT (nil tax) code by HMRC.

    #12102
    sue large
    Participant

    I find it difficult to see how it is classed as a voluntary agreement, as when someone is declared bankrupt, they do not get the a choice not to pay their tax to the OR.

    This is an agreement between the OR and HMRC – the bankrupt cannot opt out of the agreement. The NT code is given purely to stop the tax being deducted at source from the employer.

    seems very unfair that someone who has been declared bankrupt and already getting benefit, now has their beneift reduced or even does not qualify because the tax they pay (to the OR) is now being taken into account!

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