Moobag Registered Posts: 59 Regular contributor ⭐
I have a client who has just gone bankrupt. I haven't had this happen before so was unsure of what is expected from me.

She is going to get a job which means she will have a tax code of NT, however just spoken to HMRC and they are asking for the Tax return 09-10 to still be completed is this correct???

I couldn't speak to anyone in the bankruptcy dept so not sure what needs to be done. I was told not to bother with accounts or 09-10 tax return!

I know that a new utr number will be given out but that won't be used till next year will it?

Any help greaty appreciated.


  • wildgoose1uk
    wildgoose1uk Registered Posts: 200 Dedicated contributor 🦉
    Assuming it is your client who has told you not to bother with the accounts or 09-10 tax return then that is who you take your instruction from and not HMRC. I sugegst you clarify with your client what she want you to do but be careful not to undertake work you will not get paid for.

    If you client does not instruct you to fo the tax return then inform HMRC that you are no longer their agent and they can contact her direct. It is possible she has asked you not to do it to minimise her costs.
  • T.C.
    T.C. Registered, Tutor Posts: 1,448 Beyond epic contributor 🧙‍♂️
    It happened with one of my clients recently. I had already completed their accounts for 09/10 and been paid for them, so that made things easier. HMRC did change the detail on the online list from my client's name to official receiver, but the overpaid tax is still sitting in their tax account. I had one letter from the official receiver requesting information about my clients income and I pointed them to the tax return. After that I have heard nothing! I am sure that is no help at all, but that is my experience of it all. And I am still acting for my client as he is still self-employed.
  • JodieR
    JodieR Registered Posts: 1,002 Beyond epic contributor 🧙‍♂️
    If your client was made bankrupt in 2010/11 then any tax due in 09/10 and 10/11 (and anything previously outstanding) will be included in the bankruptcy order. From 2011/12 they'll get a new UTR and start fresh.
    HMRC will need to submit a claim to the Insolvency service for the total tax outstanding and then once your client's assets have been sold and the insolvency service (& insolvency practitioner if applicable) have taken their fees out of the proceeds then any money left over is divided between other creditors on a % of debt basis.
    In reality it's very rare that there's anything left to distribute to HMRC and other creditors - in most cases bankrupts have no assets at all. Therefore although you (or your client) should submit the 2009/10 and 2010/11 returns, it's not going to make any difference what you put on them and HMRC aren't going to waste time and money questioning the entries and may not even bother chasing for them to be submitted.
    If your client is in one of the rarer situations where they did actually hold a lot of assets when they were made bankrupt and there are likely to be surplus funds to distribute then your client should take more care in submitting their returns. It does get a bit complicated when it comes to your fees - you should probably first check with the insolvency service that you're alright to proceed with the work first, and there's limits to how much credit bankrupts are entitled to so you may need to ask for the fee upfront.

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