A couple of years
ago, when HMRC stopped requiring CT returns in CVLs unless there had been
taxable income in the period, they went on to say that any previous local
agreements in place regarding de minimis CT limits that need not be accounted
for, or accepting receipts and payments accounts in lieu of CT600s, were a
thing of the past. Subsequently, when HMRC announced its decision that closure
clearance would no longer be given in MVLs, they again made it clear that they
expected liquidators to submit CT600s and account for all CT due on the
company’s post appointment taxable income. As a result, in cases where the
company receives any post appointment taxable income you now need to submit a
CT600 for each 12 month post appointment accounting period, together with a
final one prior to closing the case covering the period since the last post
appointment return, or your appointment, as appropriate. Conversely though, if
the company has no post appointment taxable income, there is no requirement for
the liquidator to submit a CT600 return.
The post
appointment taxable income that a liquidator is most often going to come across
in routine liquidations is bank interest. So the fact that the liquidator only
has to submit a CT600 if the company receives any taxable income is a factor to
consider when deciding whether to operate interest bearing or non-interest
bearing estate accounts, or to open a deposit account where the current account
is not interest-bearing. The last thing that you want to do is incur time costs
in submitting a CT600 to account for a minimal amount of interest received
where the costs of submitting it outweigh the benefit to creditors of the
interest received. That certainly cannot be said to be in the interests of the
creditors.
Time costs will
also be incurred in making entries in the financial records for interest
received and in reconciling an additional estate account if a separate deposit
account needs to be opened. Each practice is different, so it is a matter of
working out the point where the costs of processing bank interest and
accounting for CT due on such interest are outweighed by the interest received
on an estate account. That will depend on the interest rate paid by your bank,
the amount held in the estate account and how long you anticipate holding the
estate funds for. Keep that calculation as part of your central practice policies
and then prepare a file note on each case, say as part of your case strategy
note on appointment, to record how you are applying that practice policy to the
case in question.
Not all banks seem
to offer interest-bearing estate accounts, so if yours does not, and will not
operate a separate interest-bearing deposit account, then it is time to find a
different home for your estate monies in cases where the interest likely to be
received on the case outweighs the costs of processing it.
