At today's R3 SPG Forum, Myrtle Lloyd, Director General of Customer Services at HMRC announced that HMRC has decided that they will no longer give tax clearance in MVLs. At the end of her talk, in the Q&A section, her colleague (sorry, I did not catch her name or title) said that although it was something that HMRC were considering in the light of the ICAS technical update published earlier in the year
here, in which ICAS explained that tax clearance was not a legislative requirement in MVLs, it was not yet policy and was just something that was being considered. Requests for tax clearance had dropped off after the ICAS article and HMRC is deciding whether to stop giving tax clearance. In our experience from talking to clients, part of the reason for clearance requests dropping off is that HMRC were way too slow responding, if they responded at all, so liquidators had simply decided to take the risk, after taking the facts of the case into account and deciding when it was safe to do so.
If HMRC turns its current thinking into policy, which seems likely based on today’s talk, it will be up to liquidators to decide when to release any final balances and close MVLs that they had been keeping open pending tax clearance. It is early days to be advising on the possible implications of something that may not happen, but any indemnities may take on additional significance, so we suggest that you seek legal advice to tighten them up if necessary. You are also likely to need to keep a detailed file note justifying any decision to release monies and close the case or retain funds until further investigation is completed and/or indemnities are strengthened. We might even see IPs looking for other protection before releasing any final balances, such as some form of bond or surety against future claims.
Although it was nice to get the heads-up at SPG, we will watch out for any announcement of it becoming formal policy in Dear IP or wider communication channels.
