Would wife be liable for husband's debt?

[jokerini]

Person A is a sole trader who has just ceased trading. His only creditor is the Revenue Commission for VAT.

The wife of person A now wants to set as a sole trader in the same industry as her husband. Would she be liable for her husband's debts when he traded as a sole trader. Would it be regarded as a genuine new business with a new VAT number or just a continuation of her husband's business?

Would it make any difference if she traded under a new limited company instead?

 

[Brendan Burgess]

Mrs A is not liable for her husband's debts.

Is she starts a similar business and takes over his assets and trading name and employs him, I would hope that the Revenue system would pick it up for investigation.

They would make sure that everything was done at arm's length.

I presume you understand that he continues to be liable for the Revenue debt whether he has stopped trading or not. If he has a house, they could lodge a judgement against it.

Brendan

 

[jokerini]

Thanks for the response.

It would be a new business (same industry) with new premises and trading name. No assets taken over because it had none.

 

[Nige]

If they are jointly assessed, the Revenue can withhold refunds due to her that relate to her husband's tax. She may also have difficulties getting tax clearance certificates.

 

[Brendan Burgess]

Hi Nige

Very good point.

What are the implications of joint assessment when one party is insolvent?

Are taxpayers who are jointly assessess jointly and severally liable for their taxes?

Presumably, if someone is running up debts with the Revenue, they should opt for separate assessment as soon as possible to disentangle their affairs?