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Post Info TOPIC: Client about to go bankrupt. Tax return needed?


Master Book-keeper

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Client about to go bankrupt. Tax return needed?


Client did not complete a tax return 2015/16 or 2016/17. I had more or less forgotten about him until he phoned me this morning and said he wants to go bankrupt and does he need to complete the missing tax returns and 2017/18. I've actually no idea although my gut feeling is yes. I say client rather than ex-client as I never actually disengaged, although I did delete him on my agent record after the first deadline had well past and I knew he wasn't doing a return.

Pointers please.



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John

Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Guru

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Hi John

Not entirely sure but I would imagine that he would have to fill in the returns as these would be needed to find out the full extent of how much he actually owes, not just any tax that is owed but also any penalties incurred.

Sorry not had any experience with bankrupt clients before so can only offer my opinion and not a definitive answer, but if I was to be doing 3 years worth of accounts I would be making sure that I got paid up front before doing a thing.



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice



Master Book-keeper

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Thanks Doug, that's a good point about knowing the amount actually owing. Needless to say payment will be upfront if he wants me to do the returns.



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John

Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Master Book-keeper

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hi John
Did he have an engagement letter? If not and verbal, then you could consider yourself dis-engaged as in - he dis-engaged himself when he ignored your chasers. You could indeed just dis-engage now if you so choose.

But my view is as Doug's. (as his, its just a view!) Not sure how an insolvency practioner (IP) can calculate total debt without it, nor how he can sign an affidavit to confirm his debts when he has no idea what they will be. Im assuming no repayment situation given he has done nothing for the last couple of years.

Has he stopped trading already? If not then the bankruptcy will cease the trade. So what will he do to earn a living? Has he considered other ways to solve his debt problems?

I understand a cessation one will also be needed but poss the IP will do that anyway (but then may keep any overlap refunds. Its chicken and egg - if he doesnt go bankrupt then there is no need for cessation accounts and so no refund!)






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Joanne

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Master Book-keeper

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Actually worth a dig around on aweb - some interesting stuff! (if you havent already!)

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Joanne

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.



Master Book-keeper

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Sorry Joanne, lack of detail (again) He's a ST subcontractor, or was when I last spoke to him. No IP involved as he has no assets to speak of and it's him personally going bankrupt rather than a business folding. he can start trading again under a new UTR once HMRC have been notified.

I don't mind doing the books, subject to being paid upfront, as the money will be handy.



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John

Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Master Book-keeper

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Oops, did I mean the official receiver? I thought they had to agree to continuation of the business after he has gone bankrupt, they can decline if they think they can get more money by selling the business. They can also sell the stock, he cant keep it and he has to hand over all business records. But in ost cases they can keep his tools of trade.

__________________

Joanne

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

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