All debts owed to the HM Revenue and Customs (HMRC) can be included in an IVA.
If you are self-employed and have accumulated tax arrears through previous years of trading, then your IVA will enable you to wipe the slate clean with the taxman.
All of your outstanding income tax liabilities can be included in your IVA and treated in the same manner as all your other debts. This means the taxman is not given any special preference above your other creditors with regard to the repayment of your debt.
However, if you are self-employed and normally pay your tax through the self-assessment scheme, your Insolvency Practitioner (IP) will be obligated to collect your tax contributions each month for the remainder of the current financial year, under the terms of your IVA.
Your tax contributions will be added to your normal IVA contributions, with the extra funds being introduced to the IVA for the benefit of all your creditors.
Collecting your tax contributions alongside your IVA contributions in this manner ensures that no new tax liability builds up, after your IVA commences.
At the end of the tax year you will become responsible for paying your tax directly to the taxman, as before, through the self-assessment scheme.
If you have VAT arrears, these too wil be included in your IVA.
All VAT liabilities will be added to the IVA creditors list, and you will be issued with a new VAT number by HMRC.
However, unlike personal tax liabilities, any ongoing VAT liabilities will remain your responsibility and must be paid on time at the end of the relevant VAT quarter.
If your business has PAYE arrears, these too can be included in your IVA.
As with VAT arrears, any liability to PAYE will be added to your IVA creditor list, and your liability to that historic debt will be removed.
Any ongoing PAYE liability will remain your responsibility and must be paid to the revenue on time, in the normal manner.
Understanding which debts can be included within an IVA is an essential part of the preparation process.
Follow this link to see What debts can go into an IVA