On 6 December 2023 HMRC published a bulletin about its decision to cease providing tax clearance in a Members’ Voluntary Liquidation. Insolvency Practitioner, Matt Hoy, explains what this means in practice.

HMRC has always played a key role in any insolvency process, after all, how many times are they one of the largest creditors?

Thankfully my Insolvency exams are a distant memory but one thing that always stuck in my mind was how a CVL (Company Voluntary Arrangement) and an MVL (Members’ Voluntary Liquidation) were the same bar the declaration of solvency (tell that to the shareholders!) For any exam question, you’d easily gain half a mark for “obtain tax clearance” – very valuable indeed!

HMRC has now confirmed that they will no longer be providing tax clearance in the MVL process. It never said anywhere that they had to before, but it was expected.

In practice what does that mean? Well, you can be sure the Insolvency Practitioner will want some comfort that nothing is outstanding with HMRC. Let’s not forget though, as a matter of course HMRC is notified and a notice to claim is filed in the Gazette, so really why do we need to ask them again when we know how busy they are?

If there is any potential matter outstanding with HMRC, it doesn’t mean we can’t contact them and in a straightforward MVL it’s probably reduced the time and cost of producing an annual report in all but the fewest of cases (liquidation closed before needing one).

Sounds like good news to me. Oh, and maybe add a file note (another half mark!)

Any business owner considering an MVL can download our free guide here.