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Hi there,

Another IVA question. I am self employed. When my accounts are done for 2014, they are likely to show a spike in profits, (perhaps as muck as 20k) but I happen to know that the figures for the subsequent tax year will come down again. Although there will / may still be an increase overall, how is this going to be treated. I appreciate the 50/50 rule. Is a fair way to deal with it to take the average profit for the last three years, and if there is an increase over the income declared at the start of the IVA to use that as the basis of the 50/50 uplift. This must be a real headache for self employed people in an IVA

Self employed can often negotiate a happy medium in the method of setting the repayment amount, as an IP well versed with self employed clients will know all about the variances in income. It is a matter of sitting down and discussing the best method, according to your own specific set of circumstances.

Normally at the review time the payments are increased by 50% of the additional surplus income after allowing for tax, N.I and increased costs of living. If the profits subsequently reduce then the payments are also cut but it is unusual for profits to swing dramatically from year to year.

In my case I started with an income of 70k at the point of entering the iva in nov 13. The accounts for 2013 showed a drop of 10k to 60k. The 14 accounts will show a spike to 80kand the 15 accounts will show a drop back down to 70k. I can say this because of my 30th April year end.

It is all to do with the way people in my profession have to account for fees not yet received. But overall it is an ever age of 70k

Explain this at review time which should be fine. Affordability is the most important thing and perhaps an average over the three years is as good a way as any.