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HMRC and corporate insolvency

Speaking on corporate insolvency at the Chartered Institute of Taxation autumn conference yesterday, I uncovered some interesting points about HM Revenue & Customs’ current attitude to distressed businesses and insolvency.

·        most tax advisors are finding that HMRC is less willing now than over the last 9 – 12 months to facilitate business cashflow problems by agreeing to defer tax payments;
 

·        one senior tax advisor suggested that although there has been no recent policy or strategy change, HMRC is worried that it may have been encouraging wrongful trading in companies that end up going into liquidation despite its forbearance;
 

·        HMRC’s underlying position remains that, despite supporting the rescue culture, its role is to collect taxes and it is reluctant to agree to insolvency solutions involving creditors (including HMRC) writing off significant debt; and
 

·        an insolvency practitioner (who I hope could withstand regulatory scrutiny and who is not from Mercer & Hole!) had suggested to one tax advisor that HMRC would not bother to pursue a £60k tax debt being left unpaid when a company’s business and assets were sold back to the director-shareholders through a pre-pack administration with all the trade creditors being paid in full.
 

What is your experience of HMRC supporting business rescue, either outside or within formal insolvency procedures?

 

 

Date: 6th September, 2009
Author: Chris Laughton

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