Here's the Q&A from the recent Restructuring & Insolvency community webinar on Tax for IPs, which took place on 5 October. Some of these questions were answered during the webinar. For completeness, we've included these, and also the answers to others that the speakers didn't get chance to address on the day.
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Are you able to provide the contact details for this lady at HMRC who is dealing with long due Vat de-registrations? Thanks
IPs should continue to contact HMRC in the first instance or when initially chasing responses. If there are particular ongoing cases with which you're having issues getting a response and / or particular themes, then your RPB / R3 can act as a conduit to report these to HMRC. Your Regulator and R3 are not the contacts for any routine case queries, which you should continue to send to HMRC via the normal contact channels.
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Agree with above question - we have cases that are over 18 months since requesting deregistration and subsequently HMRC have issued assessments in the interim for not filing VAT returns. Absolutely unacceptable but cannot get in touch with anyone who understands what an insolvency is let alone deregistration.
As above.
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Can we obtain a copy of this diagram?
We'll be sharing the slides with the audience after. Thanks
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We have had several cases where the De-Registration Team are creating their own dates for de-registration, rather than the date requested on the VAT7. Has anyone else experienced this?
Unfortunately, we have experienced examples of this and it can take some time to correct. Your Regulators / R3 will feed this back to HMRC.
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Connected to capital allowances and that most of the businesses we see have a zero pool is how you deal with situations where HP providers uplift and sell the assets separately outside the Administration crystalising balancing charges? Any tips?
This was answered during the webinar itself. In brief, this is a good example of when there is value in preparing the pre-appointment CT returns in order to demonstrate losses brought forward into the Administration. Equally important is ensuring that any appropriate expenses of the Administration are claimed as a deduction for tax purposes.
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Does anyone have any information regarding section 455 refunds in respect of director loan accounts in solvent liquidation procedures?
Thank you for this question, although given its breadth, we're unable to comment here. Many IPs can obtain the necessary information from the entity's incumbent accountant.
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Should a supplier issue a credit note, where IPs continue to trade an insolvency business, and may want to use goods supplied prior to and invoiced prior to the insolvency, which may otherwise be subject to ROT claims?
Credit notes should only be issued in two instances; where there is a mistake such as incorrect pricing, or where there has been a genuine credit ie. goods have been returned. Suppliers should not provide credit notes for goods which remain with the customer post-insolvency. For an IP that wants to make funds available to pay to use those goods, the supplier may be able to issue a VAT invoice for waiving various rights. The supplier may still retain some ROT rights and may also be able to claim Bad Debt Relief in respect of the original, unpaid invoice.
If the supplier cannot provide a VAT invoice, the IP may need to make funds available as he would for ransom payments, and won't be able to recover any VAT in respect of those payments (but should be able to use the goods).
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In an administration, the end of an accounting period is triggered by various events, including for example, the administration itself, cessation of trade, a subsequent liquidation. CT returns are filed for accounting periods ending on those trigger dates, or ending on the company's historical usual accounting period. In a liquidation, the IP simply files CT returns for any 12 month period from the date of appointment, until the end of the liquidation. Absent any other triggers before the end of an administration, can an administrator simply file returns for 12 month periods from the date of appointment as in a liquidation (which obviously assumes the administration has been extended), or must the IP always file in accordance with the company's historical accounting period end date (which may therefore result in a first short period from the date of appointment to the AP end date)? If the IP can elect 12 month periods, what notice to HMRC, if any is required?
Whilst the position is not as clear cut for an Administration as it is for Liquidation, s10(1)(c) CTA 2009 does provide for a practical option. A company in Administration will not generally be making up accounts in the normal sense and as such, and absent any of the other triggers mentioned, the position could be taken that the maximum accounting period of 12 months applies in the scenario described, overriding the original accounting date of the company. No election is possible for this but, if left to their own devices, HMRC will often in fact take this position when sending notices to deliver tax returns.
- Introduction of the revised Insolvency Guidance Paper – Control of Cases
- HMRC Insolvency Bulletin: Specified Charges in Insolvency
- HMRC Insolvency Bulletin: Confidentiality and disclosure in personal insolvencies
- HMRC Insolvency Bulletin: HMRC Digital Platform Reporting Service
- HMRC Insolvency Bulletin: Members Voluntary Liquidation Updates