Income Payments Agreements (ISCIS)

Income Payments Agreements (ISCIS)

December 2010

Introduction

1. What is the purpose of an Income Payments Agreement (IPA)?

One of the aims of bankruptcy is to relieve a debtor of unmanageable debt problems. A consequence of this is that the bankrupt, who no longer has to make payments to the majority of his/her creditors, may have a surplus income beyond that needed to meet the reasonable domestic needs of him/herself and his/her family. Any surplus income can be paid into the bankruptcy estate. To address this point, section 310 of the Insolvency Act 1986 provided that the trustee could apply to the court for an order that the bankrupt (or his/her employer) made regular payments from his/her income into the estate, from any surplus income. Such an order is known an Income Payments Order or IPO. (See the separate Case Help Manual(CHM) part: Income Payments Orders (ISCIS) for more information.)

The Enterprise Act 2002 (EA2002) extended this idea by introducing the Income Payments Agreement (IPA) to run alongside IPOs. Although the system for IPAs is voluntary, there is a formal binding agreement between the official receiver and the bankrupt that the contributions will be made. In effect, the IPA works in the same way as an IPO but removes the need for the official receiver or trustee to make an application to court with the potential time delays that may lead to. It is envisaged that in the majority of cases where the bankrupt has income in excess of expenditure, an IPA will be obtained in preference to an IPO, which should only be sought in those cases where the bankrupt fails to consent to the proposed IPA or does not co-operate with the official receiver.

2. What are the terms of an IPA ?

Section 310A(1) of the Insolvency Act 1986 provides that the trustee or official receiver and the bankrupt can enter into a written agreement that the bankrupt, or a third party instead of the bankrupt, will make regular payments of a specified amount into the estate for a specified period. An IPA is a contract and therefore binding agreement, the terms of which are enforceable as though it were an IPO.

The IPA can only be entered into prior to the discharge of the bankrupt and, although it may continue after the bankrupt has been discharged from bankruptcy, it may not end after the period of three years beginning with the date on which the agreement became binding. The period for which the IPA is to run must be specified in the agreement document.

Unlike an IPO, the official receiver does not have to be trustee of the bankrupt’s estate to be party to an IPA. This means that an IPA can be agreed and payments commence early in the proceedings.

3. How are such cases identified? (amended April 2012)

The bankrupt should in all cases answer the questions regarding income and outgoings which appear in either the debtor’s statement of affairs or the Bankruptcy Preliminary Information Questionnaire (PIQB). Both documents ask for details of the bankrupt’s income and normal monthly expenses such as rent, food, heating and lighting, clothing etc. and should be completed before interview. Where the bankrupt subsequently attends for interview, the examiner may request supporting evidence such as payslips and utility bills and query any contentious points contained in this information with the bankrupt. To assist in calculating the proposed IPA contribution, reference can be made to the IPA/IPO calculators (available on the Technical Section intranet page).

It may be that the initial information provided is sufficient for a decision to be made that there is no likelihood of an IPA and no further action needs to be taken. However, if it appears that the bankrupt has income in excess of what he/she requires to pay for the reasonable domestic needs of himself/herself and his/her family, an IPA should be considered.  

An IPA should not be sought, where the effect would be to reduce the income of the bankrupt below the level considered adequate to meet the reasonable domestic needs of the bankrupt and his/her family not just their basic domestic needs.

It should be emphasized that the bankrupt should provide details of all sources of income, which includes state benefits, pensions, contributions from a spouse/civil partner/partner and contributions from other members of the household. This list is not exhaustive and every case should be treated on its merits. Further detailed examples of various sources of potential income can be found in the Technical Manual (TM 31.7) Part 3 and accessed from the table below.

Section

Income type

Paragraphs

(a)

Employment and self-employment (including foster care income)

31.7.33 to 31.7.39

(b)

State benefits

31.7.40 to 31.7.43

(c)

Arrears of benefits received post bankruptcy

31.7.44

(d)

Pension receipts

31.7.45 to 31.7.52

(e)

Periodic payments in respect of loss of earnings/personal injury/redundancy

31.7.53 to 31.7.55

(f)

Income arising from capital property (including rents) and mortgage payment “holidays”

31.7.56 to 31.7.58

(g)

Tax refunds and reliefs

31.7.59 to 31.7.62

(h)

Income arising from nil tax (NT) coding

31.7.63 to 31.7.70

(i)

Income received from spouse/civil partner/partner

31.7.71 to 31.7.73

(j)

Income from adult children and other adult members of household

31.7.74

(k)

Maintenance payments income

31.7.75 to 31.7.77

(l)

Student loan income

31.7.78 to 31.7.79

4. How much can be claimed under a new IPA assessed after 1 December 2010?

From 1 December 2010 in all new IPAs, where the bankrupt’s surplus income is £20 or more, official receivers will seek the full amount of any surplus income , by way of monthly payments under an IPA (or an IPO if an IPA cannot be agreed).

As the official receiver is seeking to recover the full amount of any surplus available to the bankrupt, it is important to emphasize that in assessing a bankrupt’s surplus income every situation will differ and each case is considered on its own merits. As all of the surplus will be claimed , a provision of £10 per person, per month, will be included in every assessment for the individual and each dependant household member, to cover sundries and emergencies.

Where the bankrupt is self-employed, a fixed monthly figure may not be appropriate for the IPA as income may be variable. The IPA will have to be tailored to meet the individual circumstances of the case and should be reviewed regularly to allow for fluctuations in income. See TM 31.7.35-31.7.37 for further guidance.

Once the official receiver/trustee has agreed with the bankrupt the amount to be collected under the IPA, the bankrupt's consent to the agreed IPA should be obtained in writing at the earliest opportunity.

5. What if there is an existing IPA?

Existing IPAs in place on 1 December 2010 will continue under current arrangements, including any subsequent review or revision of those agreements following a change in circumstances. Where the IPA was agreed before 1 December 2010 and is reviewed after this date, the percentage scale calculation will still apply, in the same way as when the IPA was originally calculated. The only exception to this is where the surplus income on reassessment is less than £50 but equal to £20 or more, then a revised IPA  will be sought for the surplus income of £20 or more.

6. What if the bankrupt is in receipt of state benefits?

An IPA should not be sought where the bankrupt’s only source of income is state benefit payments. 

Where the bankrupt is in receipt of benefit and other income, and has surplus income above that required to meet his/her reasonable domestic needs, the official receiver should still consider the possibility of obtaining an IPA. Any calculation to identify surplus income should include all available income, including state benefits, "State benefits” refers to all forms of income supplement and support provided by central or local government including, but not limited to:- income support, job seeker’s allowance, disability living allowances, incapacity benefit, council tax benefit, housing benefit, state retirement benefit, child benefit and all forms of tax credit (child, working and pension).  It is the income from the sources other than the benefit(s), which is providing the payments under an IPA, so if the bankrupt is in receipt of benefits and has surplus income, an IPA contribution should only be sought from the non-benefit element of the income. Examples of calculations and the adjustments to be made where the bankrupt is in receipt of benefit income can be found at TM 31.7 Annex A. (See also TM 31.7 Part 3 Section (b) and (c) ).

7. What can be deemed as reasonable expenditure? (amended April 2012)

A consistent approach should be taken to those items that may, or may not, be allowed when considering whether the bankrupt’s expenditure is reasonable. An assessment should be made as to whether the outgoings are realistic, relevant and appropriate to the bankrupt’s circumstances and whether outgoings included are sufficient to provide for the reasonable domestic needs of the bankrupt and his/her family. The Household Expenditure Spreadsheet (HES) is available on the intranet for comparison and provides average expenditure statistics available for various household groups, based on the most recent Office of National Statistic(ONS) figures.  There are also further guidelines issued by ORBS available HERE.  Detailed guidance for particular types of expenditure can be found in the TM 31.7 Part 4 and can be accessed from the table reproduced below. The list is not exhaustive and all expenditure claimed must be considered according to the individual’s personal and family circumstances.

Section

Expenditure type

Paragraphs

(a)

Accommodation costs

31.7.82 to 31.7.91

(b)

Communications

31.7.92 to 31.7.93

(c)

Education (including student loans)

31.7.94 to 31.7.106

(d)

Employment, self-employment, tax and pensions

31.7.107 to 31.7.109

(e)

Entertainment, sports, leisure and social

31.7.110 to 31.7.115

(f)

Family and household

31.7.116 to 31.7.118

(g)

Family maintenance payments

31.7.119 to 31.7.120

(h)

Healthcare

31.7.121 to 31.7.123

(i)

Motoring and travel costs

31.7.124 to 31.7.125

By way of example, the following gives a brief description of some common items of expenditure which may need to be considered:

Items such as TV licence, household and car insurance and car road tax (where the bankrupt has been allowed to retain the vehicle) may be treated as part of the bankrupt’s domestic needs.

Mobile phone costs must be reasonable and it may be necessary to disallow part of the costs if they are excessive or mainly for social use. If the calls are largely work related, a check should be made whether the employer is reimbursing the bankrupt for those calls.(Section (b) above).

Broadband internet costs can be considered, where it can be demonstrated that the use is for more than purely social contact. (Section (b) above).

Items such as gym membership, private healthcare insurance and additional pension contributions to enhance a pension should not be treated as allowable unless there are extenuating circumstances.

An allowance for clothing may be included in the calculation. What is considered reasonable expenditure may depend on (for example) whether the bankrupt is required to purchase specific clothes for their employment. If the amount claimed appears excessive (with reference to the guidance figures provided relevant to their family circumstances in the HES), the bankrupt should be asked to provide an explanation and evidence as to why they require the extra allowance.

An expenditure claim for after school clubs can be allowed if they are used to provide childcare whilst the parents are working but if used simply for convenience, it is up to the bankrupt to fund it as it cannot be considered as an essential expense.

8. The agreement

Once the bankrupt has consented to the proposed monthly payment, it is for the official receiver to provide a draft agreement for consideration using form IPA. The agreement must specify how long the IPA will run for (not more than 3 years from the date of the agreement) and the amount to be paid each month or agreed period if the bankrupt is self-employed, for example and has an income that fluctuates.

Once the IPA has been drafted by the official receiver, it can be presented at interview for the bankrupt to sign or may be sent to the bankrupt for signature under cover of form IPALET(IPA letter to bankrupt - enclosing signed IPA or IPA to sign) requesting that it be returned within 14 days.

The Service has decided to provide  this 14-day"cooling off" period for the bankrupt to reflect upon the agreement he/she has made before it comes into effect. If the agreement was signed at a face-to-face interview, the official receiver should not sign the IPA for 14 days.

Under Insolvency Rules, all parties are required to sign the IPA prior to discharge in order to validate the agreement and bring it into force. (See TM 31.7.137 however, for an exceptional circumstance where the official receiver may dispense with the 14-day period.)

If the official receiver deems it appropriate, a longer period than 14 days may be specified. This could be true over holiday times or the Christmas period, for example. If the bankrupt decides not to sign the IPA, he/she must notify the official receiver of that decision within the same timescale as specified by the official receiver for return of the signed form.

9. What happens after the 14 day period has expired?

If after 14 days, the bankrupt has not contacted the official receiver to withdraw consent to the agreement, it should be signed and dated by him/her and this is the date that the IPA becomes effective and legally enforceable.

Where the IPA is sent to the bankrupt by post, the 14-day period will run from the deemed date of receipt by the bankrupt, which is to be 2 days after the date of dispatch by the official receiver and not from the date on which the bankrupt signed the agreement. This means for example, that if the IPA is sent to the bankrupt for signature on 1 September, the 14-day period will run from 3rd – 17th September. If the official receiver receives the agreement signed by the bankrupt before that date, he/she only has to wait until 17 September to sign.

A copy of the IPA signed and dated by the official receiver must then be sent to the bankrupt with form IPAPAY which also explains how contributions are to be made. Where the IPA directs a third party, such as an employer, to deduct the monthly payments at source, a copy of the agreement must also be sent to the third party.(See TM 31.7.140 for details of the content of the notice).

10. What if the bankrupt does not consent?

Where the bankrupt does not consent to the amount sought under an IPA, the official receiver should consider whether to make application to the court for an IPO. However, since an IPA can only be entered into prior to the discharge of the bankrupt, both the bankrupt and the official receiver must agree to and accept the IPA prior to discharge. Where the bankrupt does not consent to the IPA or there is insufficient time to obtain an IPA prior to discharge, the official receiver has the option of applying for an IPO, since an IPO may be made on an application initiated or commenced before the date of discharge.

11. What is a ‘NT’ tax code IPA?

(amended January  2014)

When a bankruptcy order is made against an individual who is subject to PAYE, HM Revenue and Customs (HMRC) applies a “nil tax”(NT) code to that person for the remainder of the tax year in which they were declared bankrupt. HMRC can then claim in the bankruptcy for the amount of tax which would have been collected (plus any other money owed for previous years), as long as the debtor does not change his/her source of income (i.e. gets a new job) during the tax year in which the bankruptcy order was made.

Where the NT code is expected to be applied before the end of the tax year, the additional income arising as a result of the application of the NT coding, can be included when calculating the amount of the bankrupt's surplus income from which contributions can be collected under an IPA.

An IPA can be agreed purely on NT tax code grounds. However, the ability of the bankrupt to be able to afford his/her reasonable domestic needs and those of his/her family must still be taken into account when considering an NT only IPA.

Once the NT tax code IPA is obtained HMRC, PO Box 1000, Newcastle upon Tyne, NE98 1WY should be notified using form IRNTMB (letter to HMRC re nil tax coding). A signed TNIDIS (in Word or pdf format) should also be sent separately to the HMRC e-mail account TNIDIS.ptopsbankruptcy@hmrc.gsi.gov.uk. The IRNTMB letter asks HMRC to forward notice of tax coding to the official receiver’s agents, Clarke Willmott, who will then deal with collecting the amounts payable. The official receiver should retain a copy of the TNIDIS form on file and a copy should be sent to HMRC at the above e-mail address.

For further information see TM Chapter 31 Part 3 section (g) and (h) and CHM part: Tax Refunds paragraph 5. 

 

12. Can the case go to a LTADT?

(Amended July 2014)

Once the IPA is effective, and if there are no other assets in the case that would merit seeking the appointment of a trustee, the case can be transferred to the appropriate LTADT, to administer the payment collection and monitoring, after instructions have been given to Clarke Willmott (see below). In those cases where the appointment of a trustee is being sought, the official receiver should not neglect to take steps necessary to secure the payments under the IPA pending the appointment of an insolvency practitioner.

All cases transferred by OR offices to a LTADT are routed through the LTADT Central Operations Team (C.O.T.). Cases are re-assigned to the C.O.T team on ISCIS by selecting the RTLU Midlands option when transferring the case.Cases should not be transferred to the LTADT until all general administration actions and ISCIS associated notes have been completed and the first IPA payment has been made. Full guidance for cases being sent to the LTADT and the Protocol for transferring cases to the LTADT can be found on the LTADT intranet page.   

13. How are instructions sent to Clarke Willmott?

(Amended July 2014)

The current contract for the collection of monies due under an Income Payments Agreement is with Clarke Willmott.

Information on the service provided by Clarke Willmott and full guidance on using the Debt View website is available on the Clarke Willmott intranet page.       

IPAs should be referred to Clarke Willmott using a corporate report (Clarke Willmott IPA/O Referral) which is uploaded to Debt View. This removes the time spent in offices manually entering data on to a spreadsheet and eliminates data discrepancies between ISCIS asset screens and the data we provide to our agent. The corporate report contains all the information Clarke Willmott require apart from the bankrupt’s employment details which should be added before the report is uploaded to Debt View.  At the same time copies of the signed IPAs should also be uploaded. A designated manager from each Office/Command should upload the corporate report (Clarke Willmott IPA/O Referral) to Debt View on a regular, locally agreed basis. Within two working days of receipt of an instruction Clarke Willmott will set up in Debt View a separate record for each IPA and the record will be accessible by the case officer assigned to the case.        

There will be no paper confirmation via letter and all communication with Clarke Willmott regarding a case should be an instruction in Debt View.

Detailed guidance on the IPA referral process is available on the Clarke Willmott intranet page link Referring IPA/Os

The following information will need to be appended to the instruction in every case:  

  • the name and court details of the relevant case, together with the name of the official receiver and details of his/her office
  • the name and address and contact number of the bankrupt
  • date of the bankruptcy order and the date and terms of the IPA
  • amount of payments and frequency of expected payments
  • date first payment due
  • the bankrupt’s employer’s details, if available

All this information will be supplied on the corporate report (Clarke Willmott IPA/O Referral) to allow Clarke Willmott to contact and set up the income payments. In the event of non co-operation it will also allow Clarke Willmott to trace or implement the payment via the bankrupt’s employer; reducing the need for further instruction.

14. Who do I contact at Clarke Willmott?

(Amended July 2014)

The case clerk who is the assigned case owner should send any instructions to Clarke Willmott using the ‘instruct us’ screen on Debt View. If you have a case related query that you wish to discuss over the phone rather than through Debt View you can talk to one of the Clarke Willmott team listed on the contacts link from the Clarke Willmott intranet page.   

Where Clarke Willmott has been instructed on a case, the official receiver or LTADT office receiving an Income Payment query should refer the caller to Clarke Willmott using the contact number below;

Telephone: 08452091679.

Clarke Willmott provides an online enquiry facility for staff which allows owning offices full access to cases for monitoring progress, viewing payments received, to see all letters and case history and receive and send instructions via their Debt View website at https://debtview.clarkewillmott.com. Each case in Debt View has an assigned ‘case owner’. In an IPA case this will be a case officer who has a login account and password to allow access.

Where the bankrupt has already started making payments to the official receiver direct, details should be passed to Clarke Willmott via the ‘payments’ screen on Debt View, so that these payments can be taken into account.

If the case is an NT tax coding IPA or there is an element of NT tax coding Clarke Willmott will be informed via the corporate report (IPA/O Clarke Willmott Referral), so that once the NT tax code has been applied the collection of payments can start as soon as possible.    

15. What if the individual defaults in making payments?

(Amended July 2014)

Clarke Willmott will ensure that a standard reminder letter is sent to any bankrupt who misses any payment within three days. If Clarke Willmott makes an arrangement for the bankrupt to make good missing payments and the bankrupt fails to adhere to the arrangement, Clarke Willmott must notify the official receiver within three days of the failure.

If an individual contacts Clarke Willmott to make him/her aware that there are temporary financial difficulties which in the opinion of the contractor will be overcome within two months, the contractor will have the discretion to agree the terms under which any missed payments are made good and to ensure that the schedule of payments is brought up to date without the need to refer the matter back to the LTADT.

If a bankrupt contacts Clarke Willmott to inform them of a more permanent change in their financial circumstances, Clarke Willmott will issue an IPOQ Once received notification will be sent to the owning OR/LTADT office via Debt View. The completed form will be available to view online via the Debt View ‘case history’ screen. Reassessment is then performed by a member of the OR/LTADT office. Confirmation of the result of this reassessment is then returned to Clarke Willmott via the ‘Instruct us’ screen on Debt View.

If a bankrupt fails to maintain payments under the IPA (or any subsequently agreed variation) the agent has discretion to pursue payment at source, directly from the bankrupt’s employer, using the details supplied with the initial instruction. It is not necessary to apply to court for variation of the agreement where payment is sought from an employer, as the bankrupt has already agreed to this by signing the IPA form, no additional instruction is required from the official receiver/LTADT.  Where the third party is not the bankrupt’s employer, the official receiver/LTADT will need to apply to court to vary the IPA to seek payment directly from the third party which could, for example, be the bankrupt’s pension provider.   

16. What happens if the situation cannot be resolved by Clarke Willmott?

(Amended July 2014)

Where any situation cannot be resolved by Clarke Willmott, the matter will be referred to the LTADT. If the LTADT is satisfied that an IPA is no longer appropriate, because of the loss of a job or substantial reduction in income, the LTADT will inform the individual that payments will be suspended until the situation improves, with a reminder that the individual must notify the LTADT if things improve before the term of the IPA expires. Once the individual is in a position to make payments again, the official receiver will issue fresh instructions to Clarke Willmott. The payments will continue from that point and no attempt will be made to collect the missed payments. If the circumstances of the bankrupt do not improve and no further payments are made, the LTADT will treat the IPA as having lapsed and no further action will be taken.

If the official receiver makes the decision to suspend collection under an IPA because of a change in the bankrupt’s circumstances, Clarke Willmott will be notified of that decision via Debt View within 7 working days and the matter will be deemed concluded.

17. Can the bankrupt’s discharge still be suspended?

There is no reason why the official receiver may not apply to the court for an order suspending the bankrupt’s discharge if he/she defaults. Such an application could encourage the bankrupt to get the IPA back on track. However, as a bankrupt will be discharged generally within 12 months of the date of the bankruptcy order, this may not be a particularly effective way of seeking compliance. A better route may be to seek a variation of the agreement to allow for the payments to be made via a third party such as an employer.   

18. How is an IPA varied ?

An IPA can be varied by written agreement between the parties. However, where it has not been possible to obtain written agreement, the official receiver, as trustee, may apply to court for the agreement to be varied.  Such an application may also be made by the individual subject to the IPA.

The court may order a variation of the IPA (form IPAVO). The application to vary must be accompanied by a copy of the original agreement and the applicant must send a copy of the application and notice of the venue to the other party to the agreement, at least 28 days before the date fixed for the hearing (for the official receiver this is form IPANVA). If the court orders that the IPA  is varied so that a third party is to make payments under the IPA to the official receiver or trustee, notice of the amended agreement must then be sent to that third party.

The amounts to be collected can be changed under an agreed variation, but the period of the agreement cannot exceed three years from the date the original agreement came into force. See TM 31.7.186 and 31.7.187 regarding varying the agreement to meet arrears or to collect a reduced amount.

An application to vary an IPA may be made after discharge although the earlier the application is made, the better chance of recovering the arrears.

For further information please see TM Chapter 31 Part 7.

19. What if the bankrupt is not co-operating ?

Further guidance will be issued in due course regarding enforcement remedies available to official receivers where the bankrupt or former bankrupt does not co-operate, both before and after discharge. In the meantime any matters of this nature should be referred to Technical Section.

20. Income review in ‘early discharge’ cases (updated October 2013)

In those cases where the insolvency order was made on or after 1 April 2004, section 256 of EA2002 allows the official receiver to reduce the 12 month period of the bankruptcy further, by filing a notice stating that an investigation of the conduct and affairs of the bankrupt is unnecessary or concluded. This process will only be relevant to those cases marked NFI (early discharge) which have met the criteria set out in the CHM part : Discharge from Bankruptcy paragraph 4. Full instructions for the ‘early discharge’ process can be found there for cases which meet the criteria.

These early discharge provisions were repealed by the Enterprise and Regulatory Reform Act 2013 ( section 73 and Part 3 of Schedule 21) which came into force on 1 October 2103. Early discharge will not apply to any case where the bankruptcy order is made on or after 1 October 2013.

Where can I find out more?

Insolvency Act 1986

Sections 310 and 310A.

Insolvency Rules 1986

Rules 6.189 - 6.190, Rules 6.193A – C

Income Payments Calculators and Household Expenditure Guidance – Technical Section homepage

Technical Manual 

Chapter 31.7 – Income Payments Agreements and Income Payments Orders

Case Help Manual 

Book Debts

Discharge from Bankruptcy 

Income Payments Orders 

Tax Refunds

Technical Notices

Technical Notice T54-10 – ‘Revision to the way in which Income Payment Agreements (IPAs) and Income Payment Orders (IPOs) are sought’

ISCIS Protocols

Asset Recording

Standard Wording Guidance

Forms to be used 

IPA – Pro forma agreement and variation agreement

IPALET- Letter to bankrupt enclosing IPA

IPAPAY - Letter to bankrupt enclosing signed effective IPA with agent’s details

IPANVA -Notice to bankrupt of application for variation

IPAVO - IPA variation order

IRNTMB– Letter to Inland Revenue re Nil Tax coding  

IPOQ – income and expenditure questionnaire 

TNIDIS – Tax and NI Disclosure Authority

 

IPA Flowchart  

 

Procedure

ISCIS tabs that must be used to record/view information are given in brackets e.g. (‘Docs’ tab).  

1 The examiner will have identified whether the case is suitable for an IPA (via a workflow) and recorded details within section 6 of the ‘Datastore’ tab in ISCIS.

2 An IPA form will have been prepared for consideration by the bankrupt  (‘Docs’ tab). The form will specify how long the IPA will run for (not more than 3 years from the date of the agreement) and the amount to be paid each month. If the bankrupt is self-employed or has an income that fluctuates, e.g. landscape gardener, the agreed amounts together with the relevant period which they are to cover will be included in the form. Details of the amounts should be entered as a note on the ‘Assets’ tab within ISCIS using the standard wording guidance (see Protocols).

3 Where agreement is obtained at interview in the office, the bankrupt should sign form IPA and be given a copy to take away with him/her. Form IPALET should also be handed to the bankrupt explaining that there is a 14 day 'cooling off period' during which time he/she can contact the official receiver if he/she changes his/her mind. (‘Datastore’ tab Section 6 to be noted).

4 If within the cooling off period the bankrupt contacts the official receiver to withdraw his/her consent, the matter must be referred immediately to the examiner/AOR. Where possible the examiner will re-negotiate the amount concerned and send any re-drafted agreement to the bankrupt for signature and return within 14 days. If consent cannot be obtained, the case should be re-considered for a possible IPO. (‘Datastore’ tab Section 6 to be noted).

5 At the end of the 14-day period where the signed IPA has been received from the bankrupt, the official receiver will sign the agreement. This becomes the effective date of the IPA(‘Datastore’ tab Section 6 to be noted). A copy of the IPA signed and dated by the official receiver must then be sent to the bankrupt with form IPAPAY which explains how the bankrupt may make the contributions. Where the IPA directs a third party, such as an employer, to deduct the monthly payments at source, a copy of the agreement must also be sent to the third party. (Make a note in the ‘Assets’ tab).

6 Where the bankrupt is interviewed by telephone, the IPA form will be posted to the bankrupt under cover of form IPALET. N.B. Where the form is sent to the bankrupt by post, the 14-day period will run from the deemed date of receipt by the bankrupt, which is to be 2 days after the date of dispatch by the official receiver and not from the date on which the bankrupt signed the agreement. This means for example, that if the IPA is sent to the bankrupt for signature on 1 June, the 14-day period will run from 3rd – 17th June. If the official receiver receives the agreement signed by the bankrupt before that date, he/she still has to wait until 17 June to sign. Once the 'cooling off period' has expired a copy of the IPA signed and dated by the official receiver must be sent to the bankrupt with form IPAPAY explaining how the bankrupt may make the contributions. If the IPA directs a third party, such as an employer, to deduct the monthly payments at source, a copy of the agreement must also be sent to the third party.

7 At the end of the 14 days, where the official receiver has not been contacted by the bankrupt to withdraw his consent, the official receiver should sign and date the agreement. The signing of the document by the official receiver causes the agreement to become legally binding. (‘Datastore’ tab Section 6 to be noted).

8 (Amended July 2014)

Once the IPA is effective, and if there are no other assets in the case that would justify the appointment of a trustee, the case must be transferred to the appropriate LTADT to monitor collection Clarke Willmott, the collection agents, should be instructed by the originating official receiver’s office via their Debt View website. See introduction 13 and 14 above.

Information on the service provided by Clarke Willmott and full guidance on using their website is available on the Clarke Willmott intranet page.

9 (Amended July 2014)

If the IPA is an NT tax coding IPA or contains an NT tax coding element issue form IRNTMB to HMRC, PO Box 1000, Newcastle upon Tyne, NE98 1WY.  A copy of form TNIDIS should be sent separately by e-mail to Tnidis.ptopsbankruptcy@hmrc.gsi.gov.uk. Clarke Willmott must also be informed via the Clarke Willmott Debt View website so that once the NT tax coding has been applied they can start collecting the payments without delay.  

10 (Amended July 2014)

If the bankrupt has already made payments direct to the official receiver before the case has been passed to Clarke Willmott, the ‘payments’ screen on Debt View  should be noted accordingly so that any such payments can be taken into account.