www.iva.co.uk

hi i hope i am asking this question in the correct place there is so many can anyone help with this question


am i correct in thinking that if the dividend you are paying is 34p in the pound when you hit 30 months you have paid 17p of it?

thankyou

I'll bump this back up lost because I haven't got a clue!

thankyou jan[:)].

it wouldn't really work like that because of the iva fees. The bulk of these are paid in the first year then the supervisors fees yearly.

Pixie is correct. The IP's nominee fees will be drawn usually out of the first year payments, so this can distort the dividend downwards but it is caught up by the end of the arrangement.

Well the dividend payment quoted in your proposal is after taking into account the fees for the nominee and supervisor so I would say yes you are 50% in and a dividend of around 17p would have been paid

How can you say that David, when the Nominee's fee is drawn in priority to dividends to creditors?

Because mathematically the dividend is quoted after allowance for the fees - hence it has already been discounted in the figures!

Or look at it this way - if the IVA failed at the halfway mark, how much of the 34p would end up being paid to creditors?

Well here is my example:

Contributions per month £250 x 60 = 15,000

Nominees Fee say £1,250 plus VAT = 1,438

Supervisors fees 5 years at £500 + VAT = 2,875

That would leave £10,687 to pay out over the 5 years representing 34p dividend (Debts were £31,432)

Now presuming it failed after 2.5 years what should happen is:

Contributions = £7,500 - nominees fees and 2.5 supervisors fees = £2,875.50 which would leave £4,624.50 to pay out as a dividend

4,624.50 divided by total debts (see above) £31,432 = 14.71p

So just short of the 50% I previously mentioned.

This is subject to the IP agreeing to forego future supervisors fees.

Hope that helps.

I've worked this out based on our own figures as we are just over half way through and I think we are at about 13p in the pound. Set to be 30p in the pound at end. So a bit less than half. Not sure I've worked it out right though!!!

You probably are - use my figures as a template to help

David has provided a useful template, which indicates that 43% of the dividend would be returned in the first half - I work the supervisor's fees on the basis of quarterly distributions which is more normal under the IVA protocol as dividends are paid, or the basis that IPs are remunerated at 15% of the monies actually received.

Thus the remaining dividend can be delivered at 57% during the second half. This clearly demonstrates my point that in the early years, there is less available to be drawn due to the nominee fee being paid in priority to creditors.

As with all samples, figures will alter depending on the level of fee and the level of contributions being paid.

Very impressive David! You even have Mr. Darling's new giveaway (joke) rate of V.A.T., tho I suppose any current agreement will have been worked on a 17.5% basis which will slightly decrease the payout in the first half owing to the small increase in the nominee fee (£31.25!).

The big difference comes if the IP does NOT 'agree to forego future supervisors fees' as this drops the dividend to around 10p or just 30% of the intented original.

I assume some guidance on this ought to be written into the agreement, or is at least implicit as in Melanie's example above, with an ongoing 15% charge.

Best Regards

Most new Protocol compliant IVA's states that the Supervisor will charge so much per annum (at least my firm does) and I cannot see how any proposal that does not and an IP who is not prepared to "discount" future fees in respect of work not to be undertaken is in reality not acting fairly.