We have not been aware that there are two types of IVA; Standard and Protocol....? I have been advised that as my husband is self employed/sole trader that we should have been aware of this, as our house may not be protected in the same way when asked to release equity in the final year, because his wages can not be guaranteed. Can someone explain the difference and also of any areas that we should be aware of before signing the proposal as we are at that stage now....I am stalling on the paperwork.....need second opinion and not had time to call, trying to teach part time, look after 15month old son, loose weight, get on with husband and try and be happy....as well as answering calls and letters demanding money....help! x
Protocol IVAs are for the straightforward cases and not suitable for everyone. IVAs were introduced for the self employed originally whereas the protocol ones are a more recent introduction.
Your IP will draw the proposal up which suits your circumstances best but given that your husband is self employed you cannot for example include overtime as he does not get any. The IVA proposal itself can include protocol conditions concerning the property but HMRC for example could have this removed if they hold sufficient votes.
Hi Andy,
HMRC usually want the equity brought into the arrangement in the final year but are usually amenable to a variation/extension if it can be shown to be impossible to remortgage. However, there is no guarantee and they could demand the sale of the property if this is the only way to raise equity. They do not specify anything about loan to value, payments etc which the protocol conditions do, so unless the equity is introduced there has to be a variation called.
The second thing is HMRC will look at a property at the beginning and if there is equity and/or savings to be made by selling and renting, they can make this a condition of accepting the IVA. In a protocol IVA the property is normally protected but HMRC have not signed up to protocol and are unlikely to do so.
If HMRC are less than 25% of the vote the other creditors can vote through the proposal with protocol terms for the property but if HMRC hold a significant share of the votes this would not be possible.
Not at the moment because there are so few properties with much equity anyway. Most clients can raise some form of offer and HMRC are usually fine provided there are no outstanding returns and post IVA debts. However, when the property market does recover and if there are changes in personnel at HMRC this could change.
I have seen protocol IVAs approved with huge amounts of equity and little change or a remortgage in the future. Under protocol an automatic extension butI have my doubts that HMRC would accept an extra year at £2-300 per month when there is tens of thousands of equity.
Oh my god this is worrying...we currently have only 5k of equity however who knows in 5years and yes my husband has around 4k of HMRC debt which has been put into proposal....I have just checked our paperwork from GT, it is a non-protocol proposal (this has not been highlighted to us....should it have been??? And they are proposing 10p/£ which seems extremely good....I can not go through the next five years worrying that HMRC may insist that we sell our house.....otherwise BR would surely be more preferable in the long run although absolutely not what we want to do, plus are HMRC likely to accept such a low dividend??? We have started to hold back on all payments, I hate to think if we were refused that we would be then further back than before and at a point of no return and out of our control.... Please advice, very confused now, want to call GT but cant call at work and dont know if I will get the chance today.....
If your husband's paperwork is up to date HMRC may not even vote for such a small debt so the may be no issue at all here. Check and see what the proposal says about the property as it could be approved with protocol conditions i.e remortgage or extension.
Bailo.... it seems to me that GT have not helped to explain things very clearly and reading from your other post, I see you are seeking secondary advice from another company. Can I suggest that you pose your queries when speaking to the other company, and see if you feel more comfortable with their advice. PLEASE NOTE PEEPS, I am not telling anyone to switch advisors at this stage, but it does seem to me that you are not fully aware of what you are entering into, and it is paramount before you go any further with any company, that you need to understand what is going on and what are the potential pit falls. If when you speak to the other team, you feel safer in their hands for the next 5-6 years, then it MAY be a switch would be advisable. Good Luck in search for understanding, and make sure you know all you need to before signing any dotted line.
