Thursday, March 19, 2015

Delays in obtaining HMRC closure clearance

Following the recent restructuring of HMRC so that all tax matters relating to insolvencies are handled in offices dependent upon the case type rather than the type of tax involved, there have been particular problems with obtaining tax clearance in MVLs.  I understand that there was no proper handover plan or training provision so the HMRC staff are under pressure and not coping.

Since we are talking about MVLs it is just too risky for you not to obtain positive closure clearance from HMRC before holding the final meeting and being released as liquidator.  As a result, you will need to factor in this likely delay when seeking closure clearance.  Remember that if you do not get closure clearance in time then you will have to issue an annual progress report if the final meeting is not held until after the anniversary date.  For more information on this see our recent Blog Article, “It’s all in the timing”, by clicking here.

In order to maximise your chance of getting closure clearance in time you could try indicating the proposed date of the final meeting in your clearance letter to them and asking them for clearance by a specific date.  That date should be early enough for you to still be able to issue your final report and hold the meeting by the anniversary date, and ideally early enough to give you a chance to chase them should they not reply by the date requested.  Also consider highlighting that date in the letter and explaining why clearance by that date is required.  This approach should also help HMRC prioritise their work

If you need to chase HMRC for a response I understand that HMRC are currently not giving out specific names or direct lines to staff so that you have to go through the main switchboard.  That makes chasing them by phone difficult, so for the moment you might find it better to chase them by letter.  Again include and highlight the date by which you want closure clearance.

If you do need to issue an annual progress report then try and be smart when preparing it.  Include in it all the information you will need to include in your final report so that all you have to do when preparing your final report is to refer to having obtained closure clearance and update your receipts and payments account with a new date.  Remember though that you will also have to include the extra column in the final receipts and payments account for the reporting period, i.e. the post anniversary period, as well as a cumulative column.  If you are on a fixed fee, as opposed to time costs capped at £x, then remember that there is of course no need to include SIP 9 disclosure about time costs incurred or a SIP 9 table in your reports.