Dear insolvency practitioner > Chapter 8 > Crown departments

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1.    HM Customs and Section 98 Creditors’ Meetings

HM Customs are usually represented at Section 98 meetings by their own staff, but may occasionally be represented by members of another government department or agency, who will vote in accordance with Customs’ instructions.

Customs’ representatives vote at those meetings in whichever manner they feel is in the best interest of Customs and independent creditors. Their decisions will be based on careful evaluation of all the information at their disposal.

Practitioners are reminded that Customs Officers are empowered to vote at creditors’ meetings, and do not need to lodge a proxy. Officers will produce proof of their Commission for inspection upon the request of the Chairman of the meeting.

(First published in Dear IP no 27, August 1993)


2.    Notification: Form VAT 769 and Procedures

ORs and practitioners are reminded to complete a VAT 769 form with details of their appointment. This form will be sent to the local VAT office in the area of the trader’s principal place of business. The only material that should be attached to the form is the Statement of Affairs (if available) and a copy of the practitioner’s Certificate of Appointment.

VAT Notice 700/56/99 provides detailed guidance on the completion of the VAT 769 form and the procedures to follow.

(First published in Dear IP no.26, March 1993)


3.    Notification of H.M Customs

(First published in Dear IP no. 25, January 1993, followed by a second publication in Dear IP no. 26, March 1993)

Article Withdrawn December 2006


4.    VAT 100 Returns for Insolvent Firms

All VAT returns and payments should be submitted directly to VAT Central Unit in Southend in the envelope provided. No correspondence, even covering letters, should be attached to the returns. If you are sending more than one return by all means put them together in the pre-addressed envelope. However, H.M. Customs ask that you send separate cheques to accompany each return.

Where a VAT return has been amended for a formal insolvent trader, (bankruptcies, liquidations and administrative receiverships) it should be sent directly to Insolvency Operations, 3rd Floor N/W, Queens Docks, Liverpool, L74 4AA.

(First published in Dear IP no. 27, August 1993)


5.    Relocation of VAT Insolvency Branch

(First published in Dear IP no 27, August 1993)

Article Withdrawn December 2006


6.    Inland Revenue: The Notification of Petition Costs

The Solicitor's Office of the Inland Revenue has been in contact with the Service concerning unnecessary enquiries received from practitioners about Revenue's petition costs.

It has been the recent practice of the Revenue, when it has petitioned for an insolvency order or has supported such a petition, to provide details of its petition costs in a form numbered 48P (NEW), which is attached to its proof of debt submitted in the insolvency.

A survey of OR's offices, has established that this paperwork is handed over to practitioners, on their appointment as trustee or liquidator. The form detailing the petition costs is probably overlooked by the practitioner, who subsequently asks the solicitor’s office for the very same information.

The Service has suggested to the Revenue that when it receives these requests, it refers the practitioner to the proof of debt, or to general correspondence received from the OR, rather than supply the information again.

When a case is being handed over to a practitioner, ORs have been requested to detach the costs information form from the proof of debt, and place it among the general correspondence so that it might be more obvious to the practitioner.

(First published in Dear IP no. 46, July 1999)


7.    Guidance for Trustees and Liquidators in Dealing with the Inland Revenue

The following guidance on taxes (including, where appropriate, Class 4 National Insurance Contributions due to the Revenue rather than to the Secretary of State for Social Security) has been agreed by the Service and the Revenue. Practitioners should note that this guidance is a statement of best practice for dealing with claims by the Revenue. It does not contradict or prevail over insolvency legislation, and applies to bankruptcy and compulsory liquidation only.

Proofs of Debt

  1. Subject to paragraph 3 proof may be made for all tax liabilities and Revenue debts existing at the date of the insolvency order (i.e. bankruptcy order/winding up order), irrespective of when they are due and payable. Such liabilities include sums due from the insolvent on account of deductions of income tax from emoluments paid, and in respect of deductions from payments to subcontractors in the construction industry.
  2. Although a proof of debt may be based on estimated assessments the tax is legally due and payable on the due date. It is final and conclusive unless an appeal has been made within the statutory 30 day period. Accordingly, it should generally be accepted as part of the claim for voting purposes, but this does not affect the Chairman’s right to reject proofs of debt not considered to be valid.
  3. Excessive Proofs of Debt

  4. a.    Where proof is made but it is claimed that the bankrupt has no income or capital gains assessable for the year concerned, or a company has no liability to tax, and the bankrupt or company consider the assessments are excessive, the Revenue will forego as much of the claim as appears to them to be excessive on receipt of the following:
  1. an affidavit by the bankrupt, or officer of the company, setting out the grounds of claim, and
  2. a certificate by the trustee in bankruptcy or the liquidator, in terms of the first schedule to this guidance.

The form to be used is obtainable from the Inspector of Taxes

Where an affidavit by the bankrupt, or a company officer, cannot be obtained, a certificate by the trustee in bankruptcy, or the liquidator, may instead be submitted, but this must explain the reasons for failure to furnish an affidavit.

  1. Relief from tax on account of personal allowances or other relief should be claimed by the bankrupt in the ordinary manner using forms obtainable from the Inspector of Taxes.

Where claims for relief cannot be obtained from the bankrupt, the Revenue may accept a certificate by the trustee in bankruptcy, provided that includes the information necessary for the Revenue to determine a claim.

Any waiver of claim under paragraph (a) or (b) does not extend to tax which the bankrupt or company was entitled to deduct from any interest, money, annuities, royalties or other sums paid in respect of a patent or copyright, or other annual payment.

[The Inland Revenue has recently asked that IPs be given the following additional information.

  1. Self assessment was introduced from the year commencing 6 April 1996.

It should largely do away with excessive proofs of debt, because:

  1. It applies only to individuals.
  2. These assessments will be based on figures provided by the individual.
  3. The Revenue can make an estimated assessment if an individual does not file a return.

  4. i. Its accuracy can only be judged and corrected by the filing of the return. ii. There is no appeal, but once the Self Assessment Return is filed it replaces the determination.

  5. The route of challenge is to file a return.
  6. Late filing will attract statutory penalties and there is no right of appeal against these. ]

Distress

  1. Where a Collector of Taxes has levied distress on goods before a bankruptcy or winding up order is made, the following will apply (subject to Section 128 Insolvency Act 1986 in the case of a company).
  1. If the distress is completed (i.e. by sale) 3 months before the date of the bankruptcy or winding up order, the Collector will retain enough of the proceeds to satisfy the amount owed.
  2. If the sale of the goods is within 3 months immediately preceding the date of the bankruptcy or winding up order, the goods or proceeds of sale will be subject to Section 176 (2) or 347 (3) Insolvency Act 1986.

    If the distress is complete (i.e. the goods are sold) the Collector, on request of the trustee or liquidator, will surrender the sale proceeds to be applied in payment of preferential debts, (including any part of the distrained tax which is preferential) provided there are insufficient funds or other assets to satisfy the preferential debts by other means.

    In this event the Revenue, as regards that part of its debt which is preferential, will prove as a preferential creditor and, in any event and in accordance with section 176(3) and section 347(4), will become a preferential creditor to the extent of the proceeds of the distress.

  3. If the distress is incomplete (i.e the goods are unsold at the bankruptcy or winding up order date) the Collector, on request   of     the trustee, or liquidator, and upon receipt of an undertaking in the terms of the second schedule to this guidance by the trustee or liquidator, will give up possession of the distrained goods.

Any surplus of sale proceeds, after payment of the preferential debts, will be applied in payment of any non-preferential tax included in the distress.

The Revenue, as distrainer, will become a preferential creditor in the sum of the sale proceeds. In the absence of any requests to the contrary, the Collector will sell the goods while accepting that the provisions of Section 176 and 347 Insolvency Act 1986 may apply.

  1. On the making of a bankruptcy order, the Revenue will not normally levy distress on a bankrupt’s assets despite being entitled to do so under Section 347(8) and (9) Insolvency Act 1986. An exception may be made if other creditors entitled to distrain after the making of the bankruptcy order were doing so to the Revenue’s detriment.

Note: This guidance does not affect any right to payment of outstanding tax liabilities and other debts which the Revenue may have other than by proving in the bankruptcy or winding up, eg in accordance with duties conferred on an administrator or administrative receiver by the Insolvency Act 1986.

(First published in Dear IP no.27, August 1993)


8.    Section 98 Notices to the Inland Revenue

(First published in Dear IP no.19 November 1991)

Article Withdrawn December 2006


9  Revenue And Customs Announce Consultation On Handling Voluntary Arrangements

  1. The Inland Revenue and Customs & Excise announced on 2 November 2000 the creation of a joint single unit to handle Voluntary Arrangements.  This commenced on 2 April 2001 and is known as the Voluntary Arrangements Service (VAS); it is managed by the Inland Revenue and located in Worthing.

  2. The Inland Revenue and Customs & Excise are committed to creating and developing this joint service in partnership with all those who have an interest in Voluntary Arrangements.  Building upon improvements already made through closer working between the two departments, the joint service will make significant contributions towards helping viable businesses to survive.  

  3. The revenue departments are taking action to consult widely so that they can fulfil the challenging package of measures announced on 2 November 2000.  In particular, they welcome views on the proposals to:

    • consider Voluntary Arrangement (VA) proposals in the future in a similar way to commercial creditors. VAS will be considering each proposal on its individual merits and on the basis that approval of the VA will lead to an improved recovery of existing debts. To achieve this VAS will be looking to adopt private sector expertise to augment public sector skills. There will also be a need to build closer relationships to support the efforts of businesses to meet future liabilities after the VA is put in place.  

    • create a User Forum to bring insolvency practitioners and other stakeholders into the heart of the operation.  Initial terms of reference have been suggested around:

    • the development of a framework for good voluntary arrangement practice within which the VAS can best work;

    • assisting evolving policy and the dissemination of best practice;

    • identifying ways to best serve all stakeholders;

    • enabling stakeholders to inform the target-setting process and to measure with VAS the effectiveness of its performance;

    • developing ways to improve efficiency and effectiveness by making negotiations as meaningful and targeted as possible

  4. In order to ensure that the new organisation is responsive to the needs of all its stakeholders, it welcomes as much input as possible at this early stage of its development. The Inland Revenue and Customs & Excise are keen to hear from any stakeholders in this area, including any expressions of interest from those who are willing to serve as members of the User Forum in a representative capacity. They ask for thoughts, ideas and comments to be sent to Keith Stockman, Voluntary Arrangements Service, address as below, or by email to Keith.Stockman@ir.gsi.gov.uk

  5. As part of a programme to improve its service, the Inland Revenue also launched an email service for insolvency practitioners dealing with Voluntary Arrangements in July 2000. This service is continuing at eovasupport@ir.gsi.gov.uk

  6. All VA proposals for the Inland Revenue and/or Customs and Excise should be sent to:

    The Voluntary Arrangements Service, Durrington Bridge House, Barrington Road, Worthing, West Sussex BN12 4SE.

If you have any queries concerning the forwarding of proposals to the VA Service contact Jenny Gilbert on 01903 701424, or Fax 01903 701402.  If you want to know more about the VA Service generally contact Dick Ivory on 01903 701077, or email Dick.Ivory@ir.gsi.gov.uk


10.   Further Guidance for trustees and Liquidators in Dealing with the Inland Revenue.

Article Withdrawn December 2003


11.   Improving the time taken to lodge the Inland Revenue’s claim – how IPs can help 

The Inland Revenue is looking for the assistance of insolvency practitioners as part of its continuing drive to improve customer service, and particularly the time taken to lodge claims in relation to PAYE and NIC in insolvency proceedings.  An important element in achieving this improvement is for the Revenue and insolvency practitioners to work together to ensure PAYE and NIC returns are completed and filed when an employer becomes insolvent. 

If returns are completed and filed this will significantly speed up the claims lodging process, thereby avoiding any delay in the making of distributions to creditors. 

Information on how to go about filing the returns is set out below.  However should you require any further information or guidance please do not hesitate to contact the appropriate office, detailed below. 

Administration, administrative receivership, liquidation and bankruptcy Returns for the pre insolvency period 

The Insolvency Claim Handling Unit (ICHU), Newcastle is responsible for lodging any claim when an employer becomes insolvent. 

ICHU will as part of this process write to the IP (administrator, administrative receiver, liquidator or trustee) asking for completion of the Employer’s Annual Return. 

The Employer’s Annual Return comprises forms P14 which are individual summaries of each employee’s tax and NI for the period, plus form P35 which is a summary of the employer’s position as it contains summarised details for each employee.  

While the Revenue recognises that completion of these forms is not strictly the insolvency practitioner’s duty, practitioners are in the best position to see that returns are submitted, often making use of staff retained in the business.  Without these returns it takes longer calculate the claim and it becomes more difficult to ensure employees’ National Insurance accounts are updated accurately. 

The Revenue would therefore appreciate the prompt submission of completed returns to enable the claim to be formulated quickly and to ensure employees do not lose any future entitlement to benefits or the state retirement pension. 

If there are real problems which mean completion and sending of these pre appointment returns will not be possible, please contact ICHU to discuss a way forward. 

How to obtain blank returns 

Forms P14 change every year and are made available to employers at the beginning of the tax year.  Practitioners may wish to order stocks of these forms at the beginning of each tax year in order that they are to hand for insolvency appointments taken throughout the year.  Forms P14 can be obtained from the Employer’s Orderline, telephone 0845 7 646 646 or www.inlandrevenue.gov.uk/employers/ordeline.htm

Form P35 is intended to cover a specific tax year. But as pre insolvency returns will not be for a full tax year it may not be possible for the standard forms to be used (for example Form P35 for 2003/04 is significantly different from previous years).  Forms P35 can be obtained from ICHU on request. 

Where to send the completed returns 

Forms P14 and P35 for the pre insolvency period are to be sent to ICHU at Newcastle and not any other Revenue office.  

Administration, administrative receivership, liquidation and bankruptcy
Returns for the post insolvency period (if appropriate)
 

When an insolvency practitioner engages or retains employees, or makes payments to former employees, please state this when responding to ICHU’s letter which asks for completion of the pre appointment Employer’s Annual Return.  Once ICHU is advised, the Revenue will set up a new PAYE scheme with a specific reference. 

Separate returns are needed for each of the pre and post appointment periods so that the responsibilities of the insolvent business as employer, and insolvency practitioner as employer, can be distinguished. 

It is important that any reference given for a new scheme is used when corresponding with the Revenue or making payment in relation to that scheme.  This avoids any confusion with the company’s pre appointment scheme. 

How to obtain blank returns 

When payments to employees cease (perhaps because the appointment has ended, or all employees have been transferred to a new employer) please notify the Revenue office which set up the scheme.  That office will then send a Form P35 to the insolvency practitioner for completion.  If the period for which payments to employees were made straddles two tax years then two Forms P35 will be sent, one for the period up to 5 April. 

Forms P14 can be obtained from the Employer’s Orderline, details as above.  

Where to send the completed returns 

Completed Forms P14 and P35 should be sent to the office which issued the Form P35 and not to ICHU. 

Voluntary arrangements (individual, company and partnership) 

The Voluntary Arrangements Service, Worthing is responsible for submitting pre appointment claims in all Voluntary Arrangements, but the local Revenue office will remain responsible for issuing and processing returns. ICHU has no involvement in Voluntary Arrangements. 

When a VA is approved a new PAYE scheme is created (no notification by the insolvency practitioner is required) and separate returns are needed for the pre approval period and post approval period. 

Most VAs make it a requirement that all outstanding returns will be completed and submitted within a specified period, and that returns for subsequent periods will be submitted as and when due.  If this requirement is not complied with it may bring the arrangement to an end. 

Even if, exceptionally, there is no such requirement, a failure to submit returns can delay the submission of claims and the payment of dividends, or make it necessary to raise determinations to put in a claim. 

In all cases, therefore, the Revenue anticipates the supervisor will require the debtor, company or partnership to submit returns promptly and accurately.


12.   Enterprise Act 2002 and Finance Act 2003; Tax Changes

PAYE and NI in administration

PAYE and NI is one area where Finance Act changes have not been made. The case of CIR v Lawrence (Re Falmer’s Jeans Ltd) held that an administrator who retains employees to keep the business trading has a responsibility, when paying the employees’ emoluments, to deduct and pay over the appropriate tax and NI from those emoluments. Although this case did not address specifically the employer’s Class 1 Secondary NI.

The Inland Revenue consider that there is no reason why this existing case law should not remain good for new administrations.

Corporation Tax in administration

It has generally been the practice for administrators not to file CT returns for the post administration period. Any CT accruing during this period has also not tended to be paid.

With the introduction of EA The Insolvency Service has addressed this and provided for the payment of expenses for the purpose of administration at Rule 2.67 of The Insolvency (Amendment) Rules 2003. The rule broadly mirrors Rule 4.218 of The Insolvency Rules 1986 which deals with the priority of expenses in liquidations.

Case law relating to Rule 4.218, principally CIR v Kahn (Re Toshoku Finance Ltd) has held that CT on income and gains is included in the expenses to be paid under the Rule. Given that the same wording is used for new Rule 2.67 it is considered this new Rule means administrators must pay any CT on income or gains arising during the administration as an expense of the administration.

Accounting periods

Finance Act 2003 changes the accounting period rules that previously applied to administrations; commencement of an administration now automatically starts a new accounting period.

This new accounting period is different to liquidation where the accounting period always runs for 12 months. In administrations although a new accounting period starts on commencement of administration, the accounting period runs only until the company’s next accounting date, not for a full 12 months. So there will be one short period pre-appointment and one short period post-appointment followed by a restoration of the company’s normal 12 month accounting period on its historical accounting date.

Proper officer

A further change has been made to the provisions at S108 Taxes Management Act 1970 regarding a company’s ‘proper officer’.

S108 has now been amended in relation to administrators to ensure that where a company is in administration its administrator will be its proper officer. Although the Department may continue to deal with people who have the ‘express, implied or apparent authority of the company to act on its behalf’. This includes directors who may be retained by the administrator to run the business. If the administrator wishes to deal with the Department exclusively, i.e. the directors do not have authority to deal with the Department, the administrator can inform the Inland Revenue of this.


13.   New Administrations – Information to the Inland Revenue

Article Withdrawn March 2004


14.   Date of Budget Resolution

Article Withdrawn December 2006


15. New Administrations – Information to the Inland Revenue 

Article Withdrawn December 2006


16. Insolvency Claims

The Inland Revenue and HM Customs and Excise will be brought together in a new Department, HM Revenue and Customs.  Subject to the progress of legislation through Parliament, this is expected to occur on or about 1 April 2005. 

Suitable arrangements for making combined claims are being considered with appropriate consultation being part of that process.  Until these arrangements are finalised, claims will continue to be lodged by the offices that currently lodge them.  This means that you will continue to receive separate claims from different parts of the new Department. 

Please therefore continue to send separate dividends and correspondence about claims to the offices making the claims.  

The Voluntary Arrangement Service (VAS) and the Enforcement & Insolvency Service Offices in Edinburgh and Belfast already lodge claims on behalf of Inland Revenue and Customs & Excise and will continue to do so for the new Department.  


17. The House of Lords judgment on 4 March 2004 in the case of ‘Leyland DAF Limited’ 

The following Statement is issued on behalf of HM Revenue & Customs and the DTI Insolvency Service (‘The Crown Departments’). It is also available on The Insolvency Service website at www.insolvency.gov.uk . 

This statement is issued on behalf of the Crown Departments in light of the judgment made in the House of Lords on 4 March 2004. The judgment alters the way in which liquidators of companies may attempt to recover the payment of liquidation expenses and pay the (liquidation) preferential creditors, where the companies have granted floating charges over their assets. 

In cases where the company has granted a floating charge, the costs and expenses of the liquidation will rank after sums payable to both the preferential creditors and to holders of a floating charge and will not be payable ahead of the floating charge security. We are aware of the implications of this decision on insolvency practitioners, who face the prospect of not being paid their costs and expenses, in respect of the winding up. 

The Crown Departments, whilst understanding the predicament that the insolvency practitioners may find themselves in, wish to make it clear that we cannot deviate from the underlying principles of this judgment. However, because we have been asked to confirm our policy, we are issuing this statement by way of clarification, to confirm how we will apply the judgment to cases being worked by insolvency practitioners. 

In practice we will take no action to disturb cases where costs/fees etc. were paid before the date of the House of Lords judgment. But if other creditors take such action, which results in payment of a Crown dividend, the payment will be accepted. In all other instances we expect the terms of the judgment to be strictly applied. 

Signed on behalf of the Crown Departments by 

Paul Heggs (HM Revenue & Customs)    

Mike Lowell (DTI Insolvency Service) 

Generals enquiries may be directed to Redundancy.Payments@insolvency.gov.uk


18. The House of Lords judgment in the Spectrum Plus case 

This statement was issued at the beginning of September 2005 on behalf of HM Revenue & Customs and the DTI Insolvency Service (The Crown Departments) in light of the House of Lords’ judgment in the case of National Westminster Bank plc v Spectrum Plus Limited and others and others [2005] UKHL 41 (Spectrum Plus). It explains the implications of the judgment and how the departments will proceed.  It may also be viewed in the immediate future on the Insolvency Service website at http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/insolvencylaw.htm

Background

The Privy Council, in the case of Agnew v Commissioners [2001] 2 AC 710 (Brumark), ruled that a fixed charge over book debts requires the collected book debts to be paid into a blocked account, i.e. an account from which the chargor company has no right to withdraw monies without the consent of the charge holder. The account must be operated as a blocked account. 

This case raised serious doubts about the decision in Siebe Gorman v Barclays Bank Limited [1979] 2 Lloyd's Rep 142 (Siebe Gorman). That case decided that a debenture which required the proceeds of book debts to be paid into a company's general trading account, with the debenture containing no express restrictions on the company's ability to withdraw monies from the account, created a fixed charge over book debts. The Spectrum Plus case concerned a debenture which in material respects was in the same form as the debenture in Siebe Gorman.      

Legal judgment

The House of Lords ruling in Spectrum Plus established that the debenture created only a floating charge over book debts and that Siebe Gorman was incorrectly decided. It restated the principle that, for a charge to qualify as a fixed charge over book debts, the book debt proceeds must be paid into a blocked account, which is operated as such. The House of Lords decided that the debenture under consideration, and the debenture in Siebe Gorman, did not create blocked accounts, and therefore created only floating charges over book debts.

Effect of the House of Lords’ judgment

The Crown Departments consider that the standard form of debentures used by many banks are Siebe Gorman-type debentures and therefore create only floating charges over book debts.

The Crown Departments also consider that charges which formally appear to meet the criteria for a fixed charge as they appear in the debenture but fail to do so are, in reality, floating charges. These criteria include the opening of a separate designated blocked account into which book debt proceeds are to be paid and operating the account as a blocked account.  

In addition, pre-insolvency tax credits will only be paid to companies subject to insolvency procedures, in preference to other Crown creditors, in cases where the charge over book debts is a fixed charge in accordance with the House of Lords’ judgment.

The Crown Departments now expect the House of Lords’judgment to be applied to book debt proceeds in insolvency cases as follows: 

·        Book debt proceeds covered by a Siebe Gorman-type debenture where no distribution has been made pending resolution of this issue must be distributed to creditors in the relevant order;  

·        Funds distributed to chargeholders since the date of the Privy Council decision in Brumark (5 June 2001) on the basis of a Siebe Gorman-type debenture must be repaid by  chargeholders and distributed to creditors in the relevant order; 

·        The Crown Departments will take no action to disturb cases where distributions were made prior to the Brumark decision on 5th June 2001. But if other creditors take such action, which results in payment of a dividend to the Crown, the payment will be accepted.   

Any distribution of monies representing the proceeds of book debts subject to a debenture of the type referred to in the preceding paragraphs will be carefully scrutinised, and may be  challenged. Additionally, any other debentures or scenarios involving book debts in which the status of the charge (fixed or floating) would have a material affect on creditors’ (including the Crown Departments’) rights, and which do not fall within any of the categories above, may also be challenged.  

The Crown Departments ask Insolvency Practitioners to bear in mind all these observations when deciding to whom monies should be distributed.  

Signed on behalf of the Crown Departments by: 

Paul Heggs (HM Revenue & Customs)  

Mike Lowell (DTI Insolvency Service)  

Generals enquiries may be directed to Redundancy.Payments@insolvency.gov.uk


19. Enquiries addressed to DVLA 

As insolvency practitioners may be aware the Driver & Vehicle Licensing Agency (DVLA) now require any enquiry about the ownership of a motor vehicle to be made on their form V888/2 together with payment of the appropriate fee, currently £5. 

DVLA has confirmed that insolvency practitioners will not have to pay such a fee where evidence of their appointment as office holder of a relevant estate accompanies the request for information. Although insolvency practitioners are not required to provide full details of their own business they are still required to provide brief details confirming the reason for the request. 

Insolvency practitioners should address their requests to Non Fee Paying Enquiries (or NFPE), DVLA, Longview Road, Morriston, Swansea, SA99 1AN. The postcode is for the relevant section and must be used for the requests to be delivered.

 

Any enquiries regarding the above should be directed towards Catherine Salmon telephone: 01792 78381; email: catherine.salmon@dvla.gsi.gov.uk


20. Book debt proceeds subject to floating charge security being paid to and retained by banks 

Following the Privy Council’s Brumark decision of June 2001, in February 2002 the Crown Departments (now the Insolvency Service’s Redundancy Payments Directorate (RPD), and Her Majesty’s Revenue & Customs (HMRC)) issued a joint statement setting out their position as a result of that judgment. 

In May 2002 R3 issued relevant guidance to insolvency practitioners by means of Technical Bulletin 50. 

In June 2005 the House of Lords approved the Brumark decision in the Spectrum case and a further Crown statement was issued. 

Banks’ position post Brumark/Spectrum 

Since the Brumark and Spectrum judgments insolvency practitioners have brought to the Crown Department’s attention some instances where book debt proceeds had been received by the banks and despite requests from the insolvency practitioners for the monies to be remitted to them in order to distribute the funds to preferential creditors the banks have declined to do so.  One of the bank’s grounds for not remitting the funds is that the insolvency practitioner has no locus standi to seek/demand the return of the funds.  As such the Crown Departments are actively taking this matter forward as the Crown Departments do have locus standi (in cases where there is a joint crown debt, RPD is taking the lead in seeking recovery of the funds). 

The Crown Departments want to be made aware of all such cases where funds that should be used to pay preferential claims are paid to floating charge-holders, whether or not the payment was made direct to the floating charge-holder or by the insolvency practitioner. The notification to the Crown Departments should be made as soon as possible in order to ensure that any action is not prejudiced under the Limitation Act 1980. 

In cases where both RPD & HMRC have a preferential claim, or only the RPD has such a claim, insolvency practitioners should contact: 

Dave Rowan or Barbara Roberts, RP Policy Unit, Insolvency Service, Redundancy Payments Directorate, Area 5.8, 21 Bloomsbury Street, London WC1B 3QW. Tel:  020 7637 6448, fax: 020 7637 6619. 

E-mail: dave.rowan@insolvency.gov.uk

E-mail: Barbara.Roberts@insolvency.gov.uk  

If only HMRC is a preferential creditor the contact is:  

Maddy Butler, HMRC, Queens Dock, 2nd Floor, Liverpool, Merseyside L74 4AA.

Tel: 0151 703 8394, fax: 0151 7038459. 

E-mail: maddy.butler@hmrc.gsi.gov.uk

 


21. New address for all VAT returns and payments  

Insolvency practitioners are asked to note that with effect from 16 June 2008 all VAT returns and payments for both solvent and insolvent taxpayers are to be sent to the following address: 

VAT Controller
VAT Central Unit
BX5 5AT 

The address on the back of the VAT returns will also be updated to reflect the new details. 

Any enquiries regarding this article should be directed towards Maddy Butler, HM Revenue & Customs, Debt Management & Banking, Queens Dock, Liverpool L74 4AA; telephone: 0151 703 8394 

General enquiries may be directed to IPPolicy.Section@insolvency.gov.uk;

Telephone: 0207 291 6772

22. New correspondence address for HMRC Insolvency Claims Handling Unit (ICHU) 

The Insolvency Claims Handling Unit of HM Revenue & Customs has moved from Room BP 2302 (Lindisfarne House) to Room BP 3202 with effect from 8 September 2008.  All future correspondence that would previously have been sent to the old address should be sent to the following address with immediate effect: 

Room BP3202
Warkworth House
Benton Park View
Longbenton
Newcastle Upon Tyne
NE98 1ZZ
 

Any enquiries regarding this article should be directed towards Maddy Butler, HM Revenue & Customs, Debt Management, Queens Dock, Liverpool L74 4AA telephone: 0151 703 8394, email: Maddy.Butler@hmrc.gsi.gov.uk


23. Book debt proceeds subject to floating charge security being paid to and retained by banks 

Since Issue 35 of Dear IP in March 2008 (Chapter 8, Article 20) further cases have been brought to our attention where banks are retaining book debt proceeds subject to floating charge security, involving funds of approximately £42,000. We will actively pursue any such cases and ask that you inform either Dave Rowan or Maddy Butler (contact details are provided below) of any insolvencies you are, or have, dealt with where a bank is refusing to return book debts subject to a floating charge. To date, a sum in the region of £200,000 has been returned from the banks and a further £30,000 is expected shortly.

The Crown Departments still wish to be made aware of all such cases where funds that should be used to pay preferential claims are paid to floating charge-holders, whether or not the payment was made direct to the floating charge-holder or by the insolvency practitioner. The notification to the Crown Departments should be made as soon as possible in order to ensure that any action is not prejudiced under the Limitation Act 1980.

In all cases where either Redundancy Payments Services (RPS) and HM Revenue & Customs have a preferential claim, insolvency practitioners should contact: 

Dave Rowan or Tohel Miah, RP Policy Unit, Insolvency Service, Redundancy Payments Service, Area 5.8, 21 Bloomsbury Street, London WC1B 3QW. Tel:  020 7637 6477, fax: 020 7637 6619.

General enquiries may be directed towards redundancy.payments@insolvency.gov.uk

Where only HM Revenue & Customs is a preferential creditor the relevant contact is:

Maddy Butler, HMRC, Queens Dock, 2nd Floor, Liverpool, Merseyside L74 4AA.

Tel: 0151 703 8394, fax: 0151 7038459. E-mail: maddy.butler@hmrc.gsi.gov.uk


24. Book debt proceeds subject to floating charge security being paid to and retained by banks - update 

Since publication of Issue 37 of Dear IP in October 2008 (Chapter 8, article 23) further relevant cases have been brought to attention where book debt proceeds have been retained by banks and further sums in the region of £45.5k have been returned to insolvency practitioners for distribution to creditors. We would like to thank those insolvency practitioners who brought these cases to our attention. As indicated in previous articles we will actively pursue any such cases and ask that you continue to inform the relevant contacts (details provided below) of any insolvencies you are, or have, dealt with where a bank is refusing to return book debts subject to a floating charge. To date, a total sum of circa £245.5k has now been successfully challenged. 

The Crown Departments still want to be made aware of all such cases where funds that should be used to pay preferential claims are paid to floating charge-holders, whether or not the payment was made direct to the floating charge-holder or by the insolvency practitioner. The notification to the Crown Departments should be made as soon as possible in order to ensure that any action is not prejudiced under the terms of the Limitation Act 1980. 

In all cases where Redundancy Payments Services (RPS) and HM Revenue & Customs have a preferential claim, or only the RPS has such a claim, insolvency practitioners should contact: 

Dave Rowan or Ian Facer, RP Policy Unit, Insolvency Service, Redundancy Payments Service, Area 5.8, 21 Bloomsbury Street, London WC1B 3QW. Tel:  020 7637 6477, fax: 020 7637 6619. 

Alternatively, where only HM Revenue & Customs is a preferential creditor the relevant contact is:  

Maddy Butler, HMRC, Queens Dock, 2nd Floor, Liverpool, Merseyside L74 4AA.

Tel: 0151 703 8394, fax: 0151 7038459. E-mail: maddy.butler@hmrc.gsi.gov.uk  

General enquiries regarding this article should be directed towards: redundancy.payments@insolvency.gov.uk


25.  DX and HMRC

HMRC would like to alert insolvency practitioners who are users of the DX Service that HMRC: Enforcement & Insolvency DX 90957 WORTHING 3 are no longer subscribing to the service.  Any communication sent via this DX address will no longer be delivered.

In future insolvency practitioners should use the full postal address which is:

HM Revenue & Customs
EISW
Durrington Bridge House
Barrington Road
Worthing
BN12 4SE  

Please ensure HMRC references are clearly entered on any communication sent.

Any enquiries regarding this article should be directed to: eisw.teamgiu@hmrc.gsi.gov.uk


26. HMRC – New mailbox

Changes introduced under Part 6 of the Insolvency Rules 2016 in relation to Creditor Voluntary Liquidations (CVLs) have led to challenges for HMRC being able to formally engage in the deemed consent process for meetings called under S100 IA 1986. More specifically, IR 6.14(3) allows for the decision date, for the decision of the creditors on the nomination of a liquidator, to be as little as three business days after the notice is delivered. Feedback from colleagues dealing with ongoing enquiries has found that although the notification may be received into the department, very often they fail to reach the HMRC officers in time for them to actively engage, and we are unable to trace if and where the notification has been made.

Furthermore, changes to the way in which notices are now advertised in the Gazette means that HMRC are no longer able to monitor companies entering into CVL in advance and so review for the purposes of determining if HMRC should engage in the process, in the same way as the department was able to in relation to meetings called under S98 IA 1986, prior to the Insolvency Rules 2016 being introduced.

In order to remedy this, HMRC would like to propose that all insolvency practitioners provide the initial pre-appointment notifications for the deemed consent or virtual meeting procedures for all CVLs to a designated HMRC mailbox that will be set up and provided for practitioners specifically in relation to CVL notifications only. This would then provide more clarity for members in terms of where in HMRC to forward all notifications and help ensure that HMRC can actively engage in the process when deemed appropriate.

The mailbox will be available for use with effect from 01 January 2018 and the address is as follows:

notifications.hmrccvl@hmrc.gsi.gov.uk

It would be very much appreciated if the subject line of the email could include the company name, CRN, and the decision date. 

Please note that this mailbox is only for the initial pre-appointment notifications under the deemed consent or virtual meeting procedures.

 

 

 

[Chapter 1] [Chapter 2] [Chapter 3] [Chapter 4] [Chapter 5] [Chapter 6] [Chapter 7] [Chapter 8] [Chapter 9] [Chapter 10] [Chapter 11] [Chapter 12] [Chapter 13] [Chapter 14] [Chapter 15] [Chapter 16] [Chapter 17] [Chapter 18] [Chapter 19] [Chapter 20] [Chapter 21] [Chapter 22] [Chapter 23] [Chapter 24] [Chapter 25]

1">In order to ensure that the new organisation is responsive to the needs of all its stakeholders, it welcomes as much input as possible at this early stage of its development. The Inland Revenue and Customs & Excise are keen to hear from any stakeholders in this area, including any expressions of interest from those who are willing to serve as members of the User Forum in a representative capacity. They ask for thoughts, ideas and comments to be sent to Keith Stockman, Voluntary Arrangements Service, address as below, or by email to Keith.Stockman@ir.gsi.gov.uk
  • As part of a programme to improve its service, the Inland Revenue also launched an email service for insolvency practitioners dealing with Voluntary Arrangements in July 2000. This service is continuing at eovasupport@ir.gsi.gov.uk

  • All VA proposals for the Inland Revenue and/or Customs and Excise should be sent to:

    The Voluntary Arrangements Service, Durrington Bridge House, Barrington Road, Worthing, West Sussex BN12 4SE.

  • If you have any queries concerning the forwarding of proposals to the VA Service contact Jenny Gilbert on 01903 701424, or Fax 01903 701402.  If you want to know more about the VA Service generally contact Dick Ivory on 01903 701077, or email Dick.Ivory@ir.gsi.gov.uk


    10.   Further Guidance for trustees and Liquidators in Dealing with the Inland Revenue.

    Article Withdrawn December 2003


    11.   Improving the time taken to lodge the Inland Revenue’s claim – how IPs can help 

    The Inland Revenue is looking for the assistance of insolvency practitioners as part of its continuing drive to improve customer service, and particularly the time taken to lodge claims in relation to PAYE and NIC in insolvency proceedings.  An important element in achieving this improvement is for the Revenue and insolvency practitioners to work together to ensure PAYE and NIC returns are completed and filed when an employer becomes insolvent. 

    If returns are completed and filed this will significantly speed up the claims lodging process, thereby avoiding any delay in the making of distributions to creditors. 

    Information on how to go about filing the returns is set out below.  However should you require any further information or guidance please do not hesitate to contact the appropriate office, detailed below. 

    Administration, administrative receivership, liquidation and bankruptcy Returns for the pre insolvency period 

    The Insolvency Claim Handling Unit (ICHU), Newcastle is responsible for lodging any claim when an employer becomes insolvent. 

    ICHU will as part of this process write to the IP (administrator, administrative receiver, liquidator or trustee) asking for completion of the Employer’s Annual Return. 

    The Employer’s Annual Return comprises forms P14 which are individual summaries of each employee’s tax and NI for the period, plus form P35 which is a summary of the employer’s position as it contains summarised details for each employee.  

    While the Revenue recognises that completion of these forms is not strictly the insolvency practitioner’s duty, practitioners are in the best position to see that returns are submitted, often making use of staff retained in the business.  Without these returns it takes longer calculate the claim and it becomes more difficult to ensure employees’ National Insurance accounts are updated accurately. 

    The Revenue would therefore appreciate the prompt submission of completed returns to enable the claim to be formulated quickly and to ensure employees do not lose any future entitlement to benefits or the state retirement pension. 

    If there are real problems which mean completion and sending of these pre appointment returns will not be possible, please contact ICHU to discuss a way forward. 

    How to obtain blank returns 

    Forms P14 change every year and are made available to employers at the beginning of the tax year.  Practitioners may wish to order stocks of these forms at the beginning of each tax year in order that they are to hand for insolvency appointments taken throughout the year.