In addition to the tax that will not be paid, the Official Receiver will notify the HMRC of the bankruptcy, resulting in the HMRC issuing a zero tax code if the insolvent is subject to PAYE. The code remains in effect until the end of the tax year in which you were declared insolvent.
The result of a nil tax code is that your employer will not withhold any additional taxes from you for that year. The reason for this is that HMRC will recover your entire tax liability for the current year.
As a nil tax code can be issued for a variety of reasons, it does not necessarily follow that your employer will know you are insolvent. It does not imply that no tax is owed.
The Official Receiver will now collect any tax that was not collected through the PAYE system through an income payments agreement of order. If, for example, you have an income payments agreement for £200 and uncollected tax for £300, the Official Receiver will collect both the £200 and the £300. When your tax code changes again at the beginning of the new tax year, the additional tax will cease to be collected.
If you are unable to handle a tax demand from HMRC, you should first seek professional assistance. Do not disregard your inability to pay.""
" - https://www.affordablecebu.com/
