As you are aware, under paragraph 83 of Schedule B1 for an administration to exit via creditors’ voluntary liquidation (CVL) it is a pre-requisite that a distribution will be made to non-preferential unsecured creditors. If no distribution is to be made to the non-preferential unsecured creditors then only the Court can authorise the exit via CVL following an application by the administrator, as happened in the recent case of TM Kingdom Ltd. However, we have recently been made aware of various instances where HM Revenue and Customs have been requesting IPs to exit via CVL in circumstances where there is no possible chance of a distribution being made. If an IP bows to such a request then they will, of course, be criticised by their regulators for acting contrary to the provisions of the legislation.
We have raised this issue with the Insolvency Service, and they in turn have raised it with their colleagues within the policy division of HM Revenue and Customs. HM Revenue and Customs have indicated that there is no official policy to request an exit via CVL in such circumstances, but believe that this is possibly local offices taking such action. Consequently, they want to find out which local offices are involved in enforcing this exit route.
We have been asked by the Insolvency Service to provide them with information to assist HM Revenue and Customs in identifying the local offices involved and we would ask you to e-mail Gareth with the name of any office of HM Revenue and Customs who have requested you to exit administration via CVL when no distribution will be made to non-preferential unsecured creditors. We then propose to collate this information and provide it to the Insolvency Service in order to hopefully stop such requests being made. We would stress that we will only be providing information about locations of HM Revenue and Customs offices and NOT the names of the IPs providing us with the information.
Replies received to date suggest that it is only one national unit in Worthing that is causing the trouble, but we need more evidence.
