PAYE13038 - coding: coding: general principles: bankruptcy: details of a bankruptcy order are received (Action Guide)
When you receive details of a bankruptcy order in
England, Wales or Northern Ireland, follow steps 1
- 7 below. This guide is presented as follows
| Action to take when debtor continues in the same job / pension | Steps 1 - 5 |
| Action to take when debtor starts work for a new employer | Steps 6 - 7 |
For details of how to access any of the COP functions use the
[Index of Functions] button on the left of the screen.
Action to take when debtor continues in the same job / pension
- Use COP Function CD to amend the code to NT Week 1 and send
form P6
- Advise the trustees that you have told the employer / pension
provider to stop deducting tax
- Ask the employer / pension provider to tell you
- The total pay / pension and tax deducted from 6 April to the date of the bankruptcy order
- The net tax deducted or refunded from the date of
the bankruptcy order to the present. Remember,
do not tell the employer / pension provider that
the employee / pensioner is bankrupt
Note: Set the POTA signal and make an eNote when you write to the employer / pension provider for the relevant details. This will ensure that if the employer / pension provider does not respond the case will be reviewed on eOpen List. When you review the eOpen List, if the year of bankruptcy appears on it, check to see if a repayment is due to the Official Receiver, and deal with accordingly
- Use the employer's / pension provider's figure for the period
up to the date of the order to work out the amount for which HMRC
will lodge proof only where the Insolvency Claims Handling Unit
requests this
- Repay any net tax deducted after the date of the bankruptcy order. Further guidance on ‘Repayments and set-offs’ is given in the Insolvency (INS) Manual at INS9307. Do not set off any arrears against this repayment
Action to take when debtor starts work for a new employer
- If the debtor starts work with a new employer after the old employer has received code NT, this will be shown on the form P45
- Use COP Function CD to change the code again
- Give the correct allowances due and use Week 1 basis
- Do not code out any underpayment or potential underpayment which arose before the date of the bankruptcy order as this will be included in the proof of debt
Coding year that follows year of bankruptcy order
- Use COP Function CD to code the employee or occupational pensioner in the usual way
- Do not code out any underpayment or potential underpayment (PUP) which arose before the date of the bankruptcy order as this will be included in the proof of debt
Therefore
- You may need to apportion any PUP arising in the year of bankruptcy so that only the amount arising after the date of the bankruptcy is coded and the balance included in the proof of debt
