In a recent announcement, HMRC revealed the immediate withdrawal of its clearance service for members' voluntary liquidation (MVL) cases.
The latest insolvency guidance, issued on 6 December 2023, stated that HMRC will no longer provide pre- and post-tax clearances, placing the responsibility on insolvency practitioners (IPs) to make decisions based on their professional judgment.
The rationale behind this move is the absence of a statutory or best practice framework for HMRC to offer tax clearance.
The guidance suggests alternative methods for IPs to ensure the accuracy of a company's tax liabilities, including relying on sworn declarations by company directors, ongoing HMRC compliance checks and claims from HMRC for pre-insolvency debt.
While this decision may not sit well with some IPs, it is anticipated to expedite the conclusion of numerous MVLs that faced delays due to HMRC's capacity constraints. The value of obtaining tax clearance from HMRC, often subject to heavily caveated terms, has been a point of debate within the insolvency landscape.
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