Guidance: Insolvency (VAT Notice 700/56)

Detail

This notice cancels and replaces VAT Notice 700/56 (July 2017). Details of any changes to the previous version can be found in paragraph 1.1 of this notice.

1. Overview

1.1 What this notice is about

This notice explains the:

• basic principles of how we treat insolvent businesses
• procedures which insolvency practitioners are asked to follow when dealing with HMRC

Although this notice details VAT procedures, it can be applied to cases where traders are involved in another indirect tax or duty administered by HMRC.

1.2 Who should read this notice

This notice is for insolvency practitioners and official receivers (office holders) who are dealing with the business activities of VAT-registered traders.

1.3 Status of this notice

The reproduction of the VAT Return (form VAT 100) and final VAT Return (form VAT 193) in Annex A of this notice have the force of law.

This notice does not otherwise have the force of law, but explains how we interpret the law on insolvency processes in relation to VAT.

1.4 More information and advice

If you have a case specific VAT enquiry concerning an insolvent case, for example, whether a pre-insolvency return has been provided, or whether set-off will apply in a particular circumstance, quote the VAT registration number and contact the appropriate insolvency team.

Use these contacts for bankruptcies, sequestrations, administrative receiverships and liquidations (including members voluntary liquidations).

For individual cases

Bankruptcies

Email: vatinsolvencyonly@hmrc.gov.uk

Telephone: 0300 322 9242

Opening times:

Monday to Friday: 8:00am to 5pm

Trust deeds (Scotland)

Email: Trust.Deeds@hmrc.gov.uk

Telephone helpline for trust deeds: 0300 200 3873

Opening times:

Monday to Friday: 8:00am to 5pm

Scottish sequestrations and Northern Ireland bankruptcies (individuals and partnerships)

Email: Trust.Deeds@hmrc.gov.uk

Telephone helpline: 0300 200 3873

Opening times:

Monday to Friday: 8:00am to 5pm

For Company Cases

Creditor Voluntary Liquidations and Compulsory Liquidations

Email: insolvencyhelpdesk@hmrc.gov.uk

Telephone: 0300 322 9241

Opening times:

Monday to Friday: 8:00am to 5pm

Company Voluntary Liquidations and Compulsory Liquidations

Opening times:

Monday to Friday: 8:00am to 5pm

Members Voluntary Liquidations

Email: eisw.mvl.team@hmrc.gov.uk

Telephone: 0300 322 7815

Opening times:

Monday to Friday: 8:00am to 5pm

Company administrations

Email: eisc.administration@hmrc.gov.uk

Telephone helpline: 0300 322 9250

Opening times:

Monday to Friday: 8:00am to 5pm

1.5 Voluntary Arrangement Service

The Voluntary Arrangement Service at Cardiff deals with company voluntary arrangements. All company voluntary arrangement proposals for HMRC as well as VAT 769 notification forms for voluntary arrangements should be sent to:

Email: eisc.cva@hmrc.gov.uk

Telephone helpline: 0300 322 9251

Opening times:

Monday to Friday: 8:00am to 5pm

All individual voluntary arrangement proposals for HMRC as well as VAT 769 notification forms for individual voluntary arrangements should be sent to:

Email: vas@hmrc.gov.uk

Telephone helpline: 0300 322 7838

Opening times:

Monday to Friday: 8:00am to 5pm

2. Types of insolvency

2.1 What is insolvency

Insolvency occurs when individuals or businesses:

• do not have enough assets to cover their debts
• cannot pay their debts when they become due

HMRC refers to the official receiver, or to the insolvency practitioner appointed over an insolvent business’s affairs, as the ‘office holder’.

Office holders are liable to account for VAT in the normal way following their appointment.

2.2 What types of insolvency there are

There are various types of insolvency procedure into which a VAT-registered business may enter.

Insolvencies are defined in law. In this notice we have grouped them into:

• formal insolvencies
• business rescue procedures
• those receiverships which we do not treat procedurally as insolvencies

Where appropriate, the date that establishes our claim in the insolvency (the relevant date) appears after the definition.

2.3 Formal insolvencies

2.3.1 Administrative receivership

An administrative receiver may be appointed to manage the affairs of a company by a secured creditor who holds a debenture agreement containing floating, or fixed and floating, charges over the whole, or substantially the whole, of a company’s assets.

Upon the appointment of the administrative receiver, the floating charges will crystallise.

The administrative receiver must treat the business assets covered by the charges in such a way as to recover the money due to the secured creditor. If the administrative receiver deems it to be in the best interests of the secured creditor, the business will continue to trade.

We take the date of the receiver’s appointment as the relevant date.

2.3.2 Bankruptcy

A bankrupt is an individual against whom the court has made a bankruptcy order.

The court can declare a person bankrupt on petition from the individual, one or more of their creditors, or the supervisor of an individual voluntary arrangement. The order indicates that the person is unable to pay their debts and, subject to certain exceptions, deprives them of their property, which can then be sold in order to pay their creditors.

HMRC takes the date of the bankruptcy order as the relevant date.

2.3.3 Sequestration

This is the bankruptcy process of an individual, or partnership (firm) in Scotland.

If the debtor presents the petition for sequestration, then we treat the date on which sequestration is awarded as the relevant date.

The court issues a citation, or warrant, to order the debtor to appear before the court within 14 days to state their case as to why sequestration should not be awarded, if the petition for sequestration is presented by a:

• creditor
• trustee acting under a trust deed

If the debtor fails to appear, sequestration is awarded.

In such cases, we take the date of the original ‘warrant to cite’ as the relevant date.

2.3.4 Creditors’ voluntary liquidation

A creditors’ voluntary liquidation usually relates to an insolvent company and is commenced by a resolution of the shareholders.

A creditors’ meeting is called so that the creditors of the company may, if they wish, appoint another insolvency practitioner in place of the shareholders’ appointee.

HMRC takes the date of the extraordinary resolution as the relevant date.

2.3.5 Members voluntary liquidation

The directors of a company, or the majority of its directors, make a Declaration of Solvency. In the declaration, the directors state their opinion that the company will be able to settle its debts in full plus interest within a period not exceeding 12 months of its being placed in liquidation. The declaration must be made within the 5 weeks immediately preceding the date of the passing of the resolution for winding-up.

Liquidation takes place when the resolution is passed.

We take the date of the resolution as the relevant date.

2.3.6 Compulsory winding-up

The court orders a compulsory winding-up as the result of the presentation of a petition by:

• the company
• its creditors
• its directors
• one or more of its shareholders
• the Secretary of State

We take the date of the winding-up order as the relevant date.

2.3.7 Partnership winding-up

The court orders a compulsory winding-up as a result of the presentation of a petition by:

• the members of the partnership
• a creditor

We take the date of the winding-up order as the relevant date.

2.3.8 Provisional liquidation

The court may appoint a provisional liquidator after the presentation of a petition for a winding-up in order to protect the assets of a company before a winding-up order is made.

Where a provisional liquidator has been appointed, HMRC does not treat the case as insolvency until a winding-up order is made and a ‘permanent’ liquidator appointed.

We take the date of the appointment of the provisional liquidator as the relevant date and issue the insolvency claim to the permanent liquidator.

2.4 Business rescue procedures

2.4.1 Company administration

The court may appoint an administrator following an application by either the company, its directors or one or more of its creditors. In addition, an administrator may be appointed out of court by the:

• company or its directors
• holder of a qualifying floating charge

The administrator must perform their functions:

• firstly, to rescue the company
• secondly, if that is not practicable, to achieve a better result for the company’s creditors as a whole than would be achieved in a winding-up
• thirdly, if the second option is not practicable, to do their best for the secured and preferential creditors without unnecessarily harming the interests of the creditors as a whole

We take the date of the administration order as the relevant date.

2.4.2 Partnership administration order

The court appoints an administrator following an application by the members of the partnership or by a creditor, which is intended to allow:

• the partnership, or part of it, to survive in a restructured form
• for the approval of a partnership voluntary arrangement
• for a better realisation of the company’s assets than would be obtained from winding-up the partnership

We take the date of the partnership administration order as the relevant date.

2.4.3 County court administration order

The court:

• makes an order for regular payments to be made over a period of time in settlement of debts
• administers the scheme

The scheme is only available to individuals.

HMRC takes the date of the administration order as the relevant date.

2.4.4 Deceased persons’ administration order

An order made for the administration of a deceased person’s estate.

We take the date of the administration order as the relevant date.

2.4.5 Deed of arrangement

This is a method by which an individual can arrange terms with creditors.

We take the date of execution of the deed as the relevant date.

2.4.6 Scheme of arrangement

A term normally used to describe a compromise or arrangement between a company and its creditors or members or any class of them, which may involve a scheme for the reconstruction of the company.

HMRC takes the date of the creditors’ meeting confirmed by the court order as the relevant date.

2.4.7 Scottish trust deeds

A debtor grants a deed in favour of the trustee that transfers their assets to the trustee for the benefit of creditors.

We take the date the deed is signed as the relevant date.

2.4.8 Voluntary arrangements

A voluntary arrangement provides an alternative to bankruptcy or liquidation without the attached restrictions.

Step	Action
1	The debtor makes proposals through a licensed insolvency practitioner, which are presented to a meeting of creditors. Creditors must be given 14 clear days notice of such a meeting. The proposals will usually entail delayed or reduced payment of debts, and should be advantageous to both the debtor and the creditors.
2	A supervisor will be appointed to monitor the arrangement for its duration. The trader usually continues to be responsible for the business activities unless, in the case of a company, the proposal provided for either an administrator or liquidator to continue trading the company for some or all of the arrangement’s duration.

Company and partnership voluntary arrangements are similar. A moratorium may be sought preventing certain recovery actions in order to grant a breathing space for the business.

We take the date of the creditors’ meeting when the voluntary arrangement was approved as the relevant date.

2.5 Procedures not treated as insolvencies

2.5.1 Agricultural charge receivership

A secured creditor can appoint a receiver under the Agricultural Credits Act 1928 over the assets of a farm estate.

2.5.2 Fixed charge receivership

A receiver, or receiver and manager, is appointed by a secured creditor who holds a fixed charge over the specific assets of a business. The assets will be used for the benefit of the secured creditor.

2.5.3 Law of Property Act receivership

A lender, such as a bank, can appoint a receiver over a mortgaged property under the Law of Property Act 1925 to recover money advanced.

The receiver will usually try to arrange for the property to be sold or will be responsible for collecting rents for the mortgagee. The business may continue to trade independently of the receiver’s appointment.

2.5.4 Court appointed receivership

The court is able to appoint a receiver to collect property over which they are appointed. No property is invested in such a receiver, but his appointment acts as an injunction restraining other parties from realising assets, which the receiver has been appointed to receive.

Do not contact the VAT helpline unless you have a general VAT query. You do not need to contact the VAT helpline to notify HMRC of these appointments. Law of Property Act or fixed charge receivers who wish to enquire whether there’s an option to tax on a particular property should contact the Option to Tax service.

3. Notifications

3.1 How to notify HMRC of insolvency

Complete a form VAT 769 within 21 days of your appointment if you’re appointed as a:

• trustee in the bankruptcy or sequestration of a VAT-registered individual
• liquidator of a VAT-registered company
• receiver in the administrative receivership of a VAT-registered company
• administrator in the administration of a VAT-registered company

Form VAT 769 should also be completed on the approval of a voluntary arrangement (see paragraph 1.5).

The information on the form allows HMRC to quantify the VAT element of our claim in the insolvency quickly and issue split VAT returns for the pre and post appointment accounting.

3.2 When form VAT 769 does not apply

This should be read in connection with paragraph 2.5. You should not use form VAT 769 to notify HMRC of:

• a proposed creditors’ meeting for either a voluntary arrangement or a creditors’ voluntary liquidation
• Law of Property Act receiverships
• the appointment of receivers or managers under a fixed charge only
• the appointment of receivers over the assets of a farm estate under the Agricultural Credits Act 1928
• the appointment of a provisional liquidator
• notification to appoint a liquidator under Section 98 of the Insolvency Act 1986

3.3 Who’s responsible for the information supplied on form VAT 769

Responsibility for ensuring that all the details supplied on the form VAT 769 are accurate, and that they’re proper to the correct VAT-registered trader, lies with the office holder appointed to take charge of the insolvent business.

3.4 How to complete form VAT 769

There are notes for guidance on the reverse of the form.

HMRC cannot process your notification unless you provide the following essential information in boxes 1 to 6 of the form:

• VAT registration number of the insolvent business
• type of insolvency, coded in accordance with the instructions on the reverse of the form VAT 769
• relevant date for the claim (that’s the effective date of insolvency)
• full name of the insolvent registered business
• name and title of the appointed office holder
• full name of firm and postal address, including postcode, of the office holder

3.5 Office holder appointed after an official receiver

If you’re an office holder appointed after an official receiver, we expect you to notify us of your appointment within 21 days and complete the essential information in boxes 1 to 6 of the form VAT 769.

Give the name and phone number of a person to contact about the insolvency in the space provided, and sign and date the form.

You should also try to supply the following information in boxes 7 to 12:

• reference for correspondence, or the court reference
• the date of appointment of the office holder, if it is different from the relevant date for the claim
• the date that trading ceased
• whether or not a dividend is likely
• whether or not the prospects of a dividend will be affected by litigation

If any of this information is not available within the time limit for notification, complete as much of the form as you can and notify us of the missing details at a later date.

3.6 Liquidators appointed after the appointment of an administrative receiver — England and Wales, Scotland and Northern Ireland

If you’re appointed liquidator after the appointment of an administrative receiver, do not complete a form VAT 769 as the administrative receiver should already have completed one.

We will need to be informed of who controls the company’s assets and has responsibility for rendering VAT returns.

Provide us with this information, making sure that you include:

• the trader’s VAT registration number
• the date of your appointment
• your name and address

Send it to:

Email: insolvencyhelpdesk@hmrc.gov.uk

Telephone helpline:

Creditors and Compulsory Liquidations: 0300 322 9241

Members Voluntary Liquidations: 0300 322 7815

Opening times:

Monday to Friday: 8:00am to 5pm

Do not send a completed form VAT 769 in this circumstance.

3.7 Liquidator or trustee appointed after an official receiver

If you’re appointed liquidator or trustee after an official receiver, notify HMRC of your appointment using the form VAT 769. Make sure that you fill in box 3 and box 8 to provide the relevant date for the claim and the date of your appointment as, in this instance, they’ll usually be different.

3.8 Advice or help

Before you fill in the form VAT 769, read the guidance notes printed on the reverse of the form.

If you need further advice or help, contact the appropriate HMRC office as shown in paragraphs 1.4 and 1.5 of this notice.

4. Claims

4.1 Calculation of claims

Once notified that a VAT-registered business has become insolvent, HMRC will calculate our claim based on the amount outstanding at the date on which the business became insolvent. You can obtain a more detailed breakdown of the claim from the issuing office.

4.2 Relevant date

The relevant date is the date which establishes our claim in the insolvency. The claim will include VAT up to the day before the relevant date.

Where the business continues to trade, the office holder will have responsibility for the VAT affairs of the business from the relevant date onwards. Exceptions to this are:

• bankrupts continuing to trade
• voluntary arrangements
• deeds and schemes of arrangement
• county court administration orders

4.3 Amended claims

We will issue an amended claim if there are any adjustments made to the insolvent trader’s pre-appointment VAT account which affect our original claim.

The amended claim liability will supersede the original claim notification.

4.4 Tax assessments

If a VAT Return has not been submitted for any VAT accounting periods falling prior to the relevant date, the tax liability for the periods may be assessed by means of a computer calculated assessment.

We may withdraw this type of assessment once an acceptable VAT Return has been submitted. If you require a duplicate return you should contact the appropriate HMRC insolvency team for the insolvency type concerned using the contact details contained at paragraph 1.4. HMRC reserves the right to verify the accuracy of any returns received.

Assessments relate to individual prescribed accounting periods. They’re normally issued as the result of:

• under or over declarations of VAT discovered during an inspection of the VAT records
• the best available means in the absence of records
• a declaration by the trader

Each assessment line corrects the liability previously declared or assessed for the relevant accounting period.

Error correction notifications (formerly known as voluntary disclosures) by the registered trader, or by the insolvency practitioner, of amounts which have been under or over declared follow the same pattern.

Subject to time limits HMRC has the right to assess the tax liability for any period where a return has not been submitted or if there’s evidence that tax is due.

4.5 Penalties

Part of HMRC’s claim may consist of:

• default surcharge
• default interest
• penalty interest
• a civil penalty

4.5.1 Default surcharge

This is a penalty calculated as a percentage of the VAT due for the tax period covered by the return which remains unpaid by the due date. Surcharge can increase on every subsequent default up to a maximum of 15%.

You can find further information on default surcharge in Default surcharge (Notice 700/50).

4.5.2 Default interest

This may be charged on assessments or voluntary disclosures for VAT under declarations or over claims. The interest will be calculated as a percentage of the under declaration or over claim. It’s charged from the day after the due date of the return which understates the VAT due, to the date the assessment or voluntary disclosure is paid. If VAT is overpaid by us following a repayment claim, interest is charged from 7 days after the date we authorised your repayment, until the date the assessment to recover the over payment is paid.

You can find further information on default interest for VAT in Default interest (Notice 700/43).

Interest is also chargeable on assessments and voluntary disclosures for:

• air passenger duty
• Insurance Premium Tax
• Landfill Tax
• Climate Change Levy
• Aggregates Levy

4.5.3 Civil penalties or criminal penalties

Civil penalties can be raised for a variety of reasons including:

• late notification of a liability to be registered
• inaccuracies on taxpayer’s returns or documents
• breaches of regulations
• dishonesty

Criminal penalties can also be raised if a criminal offence is committed. These penalties will be raised by the courts and will not be included in our insolvency claim.

4.6 Penalty interest

Penalty interest can also be charged for late payment of:

• Landfill Tax
• Climate Change Levy
• Aggregates Levy returns

It’s also chargeable on tax or levy assessments, penalties, interest and penalty interest in relation to Landfill Tax, Climate Change Levy and Aggregates Levy.

4.7 Proof of debt

In bankruptcies and compulsory liquidations the office holder can request a proof of debt from the Insolvency Claims Handling Unit. You can find their address in paragraph 1.4.

5. Returns

5.1 The VAT Return

The great majority of businesses must file their returns online and pay any VAT due electronically. The only exceptions to this are businesses subject to an insolvency procedure and businesses run by practicing members of a religious society, whose beliefs prevent them from using computers.

5.2 Pre-insolvency returns

The insolvent business has responsibility for submitting pre-insolvency returns. But, the office holder may submit a return for any pre-relevant period for which the trader has not rendered a return.

Leave the return unsigned, but add the legend, ‘completed from the books and records of the company or trader’.

The final pre-insolvency return covering the period up to the relevant date will be issued automatically to the office holder. This return will not be subject to default surcharge.

5.3 Split period returns

Where the relevant date falls within a prescribed VAT accounting period for which no tax liability has been declared, VAT returns will be issued covering the immediate pre and post appointment accounting periods.

The VAT Return issued for the	will run from	to
outstanding pre-appointment period	the beginning of the prescribed accounting period	the day immediately prior to the date of appointment.
first post-appointment VAT accounting period	the date of appointment	the end of the next prescribed accounting period.

5.4 Post-insolvency returns

Returns will be issued automatically to the office holder on a monthly or quarterly basis as appropriate.

The office holder has legal responsibility for completing and submitting post-insolvency returns and accounting for any tax due, with the following exceptions:

• voluntary arrangements
• deeds and schemes of arrangement
• county court administration orders

5.5 Application of penalties

5.5.1 Penalties due under VAT Act 1994

VAT default surcharge, VAT civil penalties and VAT default interest are not normally applied to post-insolvency VAT returns, except in the case of:

• administrations
• partnership administration orders
• deceased persons’ administration orders
• deeds and schemes of arrangement
• Scottish trust deeds
• county court administration orders
• voluntary arrangements

5.5.2 Inaccuracy penalties due under Schedule 24 FA 2007

Inaccuracy penalties due under this act are applied to both pre and post insolvency VAT returns and relevant documents in all cases. Factsheet CC/FS7a provides details of the penalty for the inaccuracies regime.

5.6 Repayments

Returns submitted showing a repayment due to the business will be repaid in the name of the insolvent business, care of the office holder.

HMRC should make the repayment within 30 days of receipt of the return, subject to verification of the declaration. Repayments will be delayed if:

• the form VAT 769 is inaccurate
• you have failed to notify us of the appointment of the office holder

HMRC may make repayments for:

• businesses in voluntary arrangements
• deeds and schemes of arrangement
• county court administration orders

Repayments will be sent to the address of the registered business unless the trader has given written permission for the payment to be sent to the office holder.

5.7 Repayment supplement

Repayment supplement is a form of compensation paid in certain circumstances when we do not authorise payment of a legitimate claim within 30 net days of the receipt of the VAT Return.

Normally, the 30 day repayment supplement clock will start on the day that we get a return. However, if we get your return before the end of the accounting period, the clock will not start until the end of the period. This is because you’re not entitled to any input tax claimed on the return until the end of an accounting period.

All VAT repayment claims are subject to potential verification enquiries in order for HMRC to be satisfied of their validity. In addition, in the case of VAT repayment claims for pre-appointment periods, we’ll conduct set-off enquiries to establish whether there are any pre-appointment debts owed by the insolvent taxpayer to the Crown against which the VAT repayment claim may be set-off. See paragraph 13.1 dealing with ‘Crown set-off’). The time taken to conduct such enquiries will be in addition to, and not count for the purpose of the 30 day repayment supplement clock. The office holder may still request repayment supplement if they believe there to have been an unreasonable delay in dealing with the VAT repayment claim.

You can find further information about repayment supplement in Treatment of VAT repayment returns and VAT repayment supplement (Notice 700/58).

5.8 Compliance

HMRC has the right to check the accuracy of all returns submitted and to require that the books and records of the business be made available for inspection. In certain circumstances, where it can be shown that an office holder has consistently not complied with regulations, a report may be made to the appropriate licensing authority.

6. Cancel your VAT registration

6.1 What is VAT registration cancellation

VAT registration cancellation is the process by which a VAT-registered business is removed from the VAT register and the VAT registration number cancelled.

6.2 When VAT registration cancellation applies

A registered person who satisfies HMRC that they’ve ceased to make (or ceased to intend to make) taxable supplies is entitled to cancel their VAT registration from the date they ceased to make (or intend to make) taxable supplies, or from such later date that might be agreed with HMRC.

Further information about cancelling your VAT registration can be found in Cancelling your registration (Notice 700/11).

‘Taxable supplies’ in this context includes sales of assets. You should therefore not apply to cancel your VAT registration immediately upon your appointment over a business, even if that business has ceased to trade, as the VAT arising from asset sales will still need to be included on a post-appointment VAT Return. The sale of assets must be evidenced by a legally valid VAT invoice and, for a VAT invoice to be legally valid, the business must be VAT registered at the point that the invoice is issued.

6.3 How to cancel your VAT registration

You should apply to cancel the VAT registration of the business concerned by completing a VAT 7. The completed form should be sent to the address shown at the bottom of the form.

6.4 VAT group registrations

Where a VAT group is being cancelled, forms VAT 50 and VAT 51 must be used for this purpose rather than a VAT 7.

6.5 Cancel your registration online

You can cancel your registration online and make other changes by using the online service provided by HMRC. You can ask an agent to do this for you. As the VAT-registered person, you will still be responsible for the accuracy of the information.

7. Post VAT registration cancellation

7.1 Input tax

Post VAT registration cancellation input tax may be claimed on form VAT 426: insolvent traders claim for input tax after cancellation of VAT registration).

This form is to be used only by office holders referred to in section 7.2.

7.2 Who can use form VAT 426

The form is available for use by:

• trustees in bankruptcy
• trustees in sequestration (in Scotland)
• official receivers
• liquidators
• administrative receivers

7.3 Who cannot use form VAT 426

Form VAT 426 may not be used by solvent traders to cancel their VAT registration, office holders in business rescue procedures and other incapacitated traders. These categories include:

• supervisors in voluntary arrangements
• administrators in company administrations
• trustees appointed under a trust deed (in Scotland)
• Law of Property Act receivers
• receivers appointed in a partnership dispute
• receivers appointed by a court
• receivers appointed under the Agricultural Credits Act 1928
• office holders appointed for a scheme of arrangement
• administrators appointed for a deceased person’s administration order
• liquidators in a members’ voluntary liquidation

7.4 What you can and cannot claim on the form VAT 426

You’ll find the basic rules about input tax in The VAT guide (Notice 700).

You can claim input tax	You cannot claim input tax
on services supplied after cancellation of VAT registration but relating to business carried on before cancellation if VAT registration	relating to pre-insolvency tax periods
on goods and services supplied and invoiced before cancellation of VAT registration which has not already been claimed on a VAT Return	on charges made by, for example, solicitors, estate agents and stockbrokers relating to exempt supplies
on the services of agents (for example, solicitors or estate agents)	on pro forma invoices which cannot be claimed as input tax correctly
on realisation fees	relating to a petitioning creditor’s costs
on bad debt relief (see Section 10)

The following general rules also apply:

• you’re entitled to claim only tax which relates to goods and services used in the making of taxable supplies (you should calculate exempt input tax in accordance with the guidance given in Partial exemption (Notice 706))
• you can only claim relief from VAT on those services which, though supplied after the registration was cancelled, relate to taxable activities
• there’s no relief from VAT on goods supplied to you after the date of VAT registration cancellation or on services which are not attributable to taxable supplies
• you must keep all invoices supporting your claim with the relevant books and records in case your claim is selected for verification

7.5 Where to send completed form VAT 426 claims

You should send your completed form VAT 426 claims to:

You can contact the VAT 426 Team on telephone: 0300 322 9246.

Provide supporting invoices for amounts claimed of £20,000 or over. Claims for amounts of £20,000 and over will be paid by Bacs (Bankers Automated Clearing System) so provide Bacs details for these claims. You can expect to receive a payable order within 30 working days from the date HMRC get your completed claim at this address, subject to the verification of your claim.

7.6 Verification of claims

HMRC will select some claims for verification. This may be carried out by the local VAT office that will make arrangements to visit you within 30 working days from the date the VAT 426 processing team receives your claim. Most verification visits will be made after we have authorised your repayment claim. But in some instances, we may decide to withhold repayment until we have completed our enquiries.

If we disallow any part of your claim, you may be held liable to bear the cost of any VAT we’ve disallowed.

7.7 Form VAT 427 (claim for input tax made post VAT registration cancellation relating to goods and services supplied prior to VAT registration cancellation)

This is to be used in the following circumstances:

• members voluntary liquidations
• administrations
• Scottish trust deeds
• deeds or schemes of arrangement
• voluntary arrangements

The completed form VAT 427 should be sent to the following address:

Telephone number: 03000 583 936

The criteria for reclaiming input tax on a form VAT 427 is the same as that for a form VAT 426 as outlined at paragraph 7.4.

7.8 Output tax

VAT on taxable stocks and assets remaining at the date of insolvency must be accounted for on post-appointment returns including the final return form – VAT 193.

VAT must not be charged post VAT registration cancellation, since a cancelled VAT registered business cannot legally issue a VAT invoice. The VAT registration will therefore be kept open until all trading has ceased and asset realisation is complete (though insolvent businesses that continue to trade may cancel their VAT registration voluntarily on turnover grounds if they can satisfy the conditions laid out in paragraph 3.2 of Cancelling your registration (Notice 700/11)).

Any cases of difficulty, for example, difficulty in selling a property on which there is an option to tax, may be discussed with the appropriate HMRC insolvency team using the contact details in paragraph 1.4 of this notice.

See paragraph 17.3 for details of the method Law of Property Act receivers should use to account for output tax.

7.9 Form VAT 833

The form VAT 833 (goods sold in satisfaction of a debt) must not be used to account for output tax post VAT registration cancellation for the reason outlined in paragraph 7.8. But, form VAT 833 may still be completed for use in these processes:

• deeds and schemes of arrangements
• County Court administration orders
• Scottish trust deeds
• deceased persons’ administration orders

In all cases you should submit form VAT 833 to:

8. Dividends

8.1 Declaring a dividend

Payments relating to a claim should be made through Bacs or CHAPS (Clearing House Automated Payment System) using the following details:

Sort code: 20 20 48
Account number: 30944793
Account Name: HMRC NIC Receipts

Reference number: The EIS reference number will be quoted on all new HMRC claims and letters and will be used as a reference for the lifetime of the claim.

Payments cannot be accepted without a reference.

Payment reference number — the unique case reference number can be found on our claims. You’ll need to use this 13-character payment reference when you pay. This is the customer’s 10-digit Unique case reference number followed by a three-letter suffix to show the type of insolvency the dividend refers to. The following table details the dividend types and their unique 3-digit suffixes.

Dividend Type Suffix	3 digit suffix
Individual Voluntary Arrangement:	IVA
Sequestrations:	SEQ
Trust Deeds:	TRD
Northern Ireland Bankruptcy:	IBY
Members Voluntary: Liquidations	MVL
Company Liquidation: Cases	LIQ
Individual Bankruptcy or Partnerships:	BKY
Company Voluntary Arrangement:	CVA
Partnership Voluntary Arrangement:	PVA
Administration:	ADM
Petition Costs:	PET

Our unique case reference numbers start with 623 or 075 or 880 followed by seven digits.

You can contact us if you are unsure how to use the reference format, or our claim does not have a reference number.

8.2 What happens when part of a claim is paid as a dividend

When part of a claim is paid as a dividend, the claim figure on which any subsequent dividend payments are calculated is not reduced. The claim that’s calculated at the relevant date stands, and all dividend payments must be based on that figure.

Dividends for businesses subject to	should be sent to
any form of administration	Enforcement and Insolvency Service. See paragraph 1.4 for the full addresses.
Scottish trust deeds and deeds or schemes of arrangement	Debt Management — EIS E HM Revenue and Customs BX9 1SD
voluntary arrangements	the Voluntary Arrangement Service. See paragraph 1.5 for the full addresses.

9. Bankrupt continues to trade

9.1 Who’s responsible

When trading continues after bankruptcy, the bankrupt retains responsibility for the submission and payment of VAT returns covering post-bankruptcy periods. It is therefore important that the trustee informs the Enforcement and Insolvency Services Newcastle (see paragraph 1.4) if the bankrupt continues to trade beyond the date of bankruptcy.

HMRC will establish the pre-bankruptcy position to allow us to lodge a claim, make a repayment to the office holder, or operate Crown set-off as appropriate.

9.2 Accounting for tax in your period of office

If you have tax to account for in respect of your period of office, you must not include this tax on the business’ post-bankruptcy returns. We’ll issue forms to you on request to allow you to account for the tax. Completed forms should be returned to the Enforcement and Insolvency Services Newcastle.

10. Bad debt relief

10.1 What bad debt relief is

If you have made supplies of goods or services to a customer and you have not been paid for them, you may be able to claim relief from VAT on the debts you have incurred as long as you can meet all the statutory requirements of the bad debt relief scheme. You’ll find further information about the scheme in Relief from VAT on bad debt (Notice 700/18).

10.2 Claiming bad debt relief

Bad debt relief claims made for insolvent traders can be made on VAT returns in cases where the VAT registration remains open. Where the VAT registration has been cancelled, use form VAT 426.

A letter scheduling the bad debt relief claim details, together with copies of the relevant invoices, must be submitted for approval.

An extra-statutory concession has applied from 26 November 1996 which relieves office holders or insolvent traders from the need to repay HMRC input tax where:

• supplies were made to the insolvent trader prior to the relevant date
• no payment has been made
• notification that bad debt relief has been claimed by the supplier is received on or after the insolvency date

11. Cash accounting

11.1 What cash accounting is

The Cash Accounting Scheme allows VAT-registered businesses with a turnover limit up to £1,350,000, to account for VAT on the basis of payments received and made rather than on tax invoices issued and received.

Details of how the scheme operates can be found in Cash accounting (Notice 731).

11.2 How insolvency affects cash accounting

The office holder is responsible for the Cash Accounting Scheme adjustment described in paragraph 11.3. The office holder responsible for the business may use the scheme in the post relevant period if the insolvent business was eligible to use the scheme pre-insolvency and continues to be eligible to do so. This may be appropriate in cases where trading has continued after the relevant date.

11.3 Post-insolvency cash accounting adjustment

The cash accounting regulations were amended with effect from 3 July 1997.

For insolvencies where the relevant date falls	then
prior to 3 July 1997	the office holder will be required to account for tax on all supplies made or received in the 6 months immediately prior to the relevant date which have not already been accounted for.
on or after 3 July 1997	tax must be accounted for, within 2 months of the relevant date, on all supplies made and received up to the date of the insolvency which has not previously been accounted for.

For businesses in:

• administration
• voluntary arrangements
• deeds and schemes of arrangement
• county court administration orders

Where the relevant date falls	then
on or after 1 January 1998	tax must be accounted for on all supplies made and received up to the date of the insolvency
prior to 1 January 1998	no adjustment at the relevant date is required.

This tax should be entered on to the VAT Return for the period immediately preceding the relevant date, and is treated as a liability arising before the insolvency.

12. Credit notes

12.1 Information about credit notes

General guidance on credit notes can be found in The VAT guide (Notice 700).

12.2 Time limit

Where a credit note evidencing a decrease in consideration is received or issued by an office holder after the relevant date, adjustments of VAT resulting from such credit notes will relate to the VAT accounting period in which the original supply was made or received.

12.3 Pre-insolvency supplies

If you issue a credit note evidencing a decrease in consideration for supplies made in a pre-insolvency VAT period, the effect is to reduce the output tax due in that period and thus to reduce our claim in the insolvency.

If you receive such a credit note which relates to supplies made in a pre-insolvency VAT period, the effect is to reduce the input tax which can be claimed in that period and so to increase our claim in the insolvency.

Any adjustments of VAT are to be related back to the period in which the original supply took place for:

• bankruptcies
• company administrations
• administrative receiverships
• compulsory and voluntary windings-up

Since the adjustment of VAT arising from the credit note applies in the VAT accounting period in which the original supply took place, the VAT Return for the period in question will often already have been submitted once the credit note comes to light. In that event, the credit note adjustment should be declared either by letter or by means of a voluntary disclosure to the relevant office. Provide details of the VAT element and the date of the original supply. If you have not yet rendered a VAT Return for the period concerned and you’re intending to do so, the return must include the credit note adjustment.

12.3.1 Voluntary arrangement

In the case of a company voluntary arrangement the adjustment should be made on the normal basis, that is, in the period the adjustment takes effect in the business accounts of either the taxable person issuing the credit note or the customer receiving one.

12.3.2 Scottish trust deeds

For Scottish trust deeds credit notes should be treated on the normal basis outlined in paragraph 12.3.1.

12.3.3 Other insolvencies

Credit notes for all other types of insolvency should be accounted for on the normal basis outlined in paragraph 12.3.1.

13. Crown set-off

13.1 What a Crown set-off is

HMRC is entitled to set-off any pre-insolvency credits against pre-insolvency debt owed by the debtor in respect of other duties administered by us. We can offer any remaining credits arising from insolvent traders’ VAT repayment claims accruing before the relevant date to other government departments. This will allow other government departments to reduce or satisfy their claims against the same insolvent trader.

The credits may arise from VAT repayment claims, credits for Insurance Premium Tax, Landfill Tax or Air Passenger Duty. We’ll undertake such set-off wherever it is cost-effective for us to do so, this will usually mean that set-off enquiries will not be initiated for credits below £250. The balance of any credit remaining following such set-off will be repaid automatically to the insolvent estate, care of the office holder, or to the trader if the business is in a voluntary arrangement, deed or scheme of arrangement or county court administration order. Crown set-off will take place after either all pre-relevant returns have been received or assessments raised and set-off, or both.

Crown set-off will not apply if the credit is secured by a valid fixed charge on book or other debts.

14. Taking Control of Goods or distraint

14.1 What Taking Control of Goods or distraint are

Distraint (attachment in Scotland) is a commonly used method of recovery by taking possession of a debtor’s goods and selling them, usually at public auction, after which the proceeds are set against the debt and costs. Distraint does not require the sanction of a court order. Distraint will no longer be used in England and Wales with effect from 6 April 2014 when the relevant legislation will be repealed but will continue to be used in Northern Ireland.

Taking Control of Goods (TCoG) replaced distraint in England and Wales from 6 April 2014. Taking Control of Goods is the process under which a debtor’s goods are seized and sold in settlement of outstanding costs, tax and interest. The relevant legislation is in Part 3 (‘enforcement by taking control of goods’) of the Tribunals, Courts and Enforcement Act 2007 (TCEA07) and supporting regulations. This is Ministry of Justice legislation binding on the whole bailiff industry in England and Wales.

14.2 Bankruptcies and compulsory winding-up

Once a bankruptcy order or compulsory winding-up order has been made, any incomplete ‘taking control’ (England and Wales) distraint (Northern Ireland) action (that is, the goods seized have not been sold), may be completed by us with the authority of the trustee in bankruptcy or liquidator, or the trustee or liquidator may insist on the goods being released to him to sell subject to an undertaking provided by HMRC.

If taking control or distraint has been completed by sale within the 3 months immediately preceding the date of a bankruptcy or winding-up order, the proceeds of taking control or distraint may be surrendered to the trustee in bankruptcy or liquidator if the trustee or liquidator is unable to pay the preferential creditors in full from other realisations. The trustee or liquidator must satisfy HMRC that such a shortfall regarding preferential creditors exists.

Where taking control or distraint is completed by sale more than 3 months before the making of the bankruptcy or winding-up order HMRC is entitled to retain the sale proceeds.

In Scotland, attachment will not be taken against a sequestrated trader for the duration of the sequestration.

14.3 Creditors’ voluntary winding-up, members’ voluntary winding-up, administrative receivership, voluntary arrangements and company administrations

If taking control or distraint has been completed (goods in possession of HMRC, either physically or under a Controlled Goods Agreement (England and Wales) or walking possession (Northern Ireland) before the appointment of a liquidator, administrative receiver or administrator, then the distraint or attachment remains valid and will be maintained and may be completed (see paragraph 14.3.3).

14.3.1 Voluntary arrangements

Taking control or distraint action will normally be suspended once an interim order has been made, a moratorium granted or proposals for a voluntary arrangement have been received and a creditors meeting arranged unless there are exceptional circumstances which justify not suspending, for example evidence of fraud or lack of probity.

Where a Controlled Goods Agreement or walking possession has been entered into, our support for a proposal is likely to be on terms such that the element of our claim equivalent to either the value of that claim or the agreed valuation of the controlled goods (whichever is lower) shall be a priority claim in the arrangement. Where the proposals are rejected at the creditors’ meeting HMRC will proceed to complete the seizure by sale.

14.3.2 Administrations

Once an administrator has been appointed, taking control or distraint may not be instituted or continued against the company or the property of the company except either with the:

• consent of the administrator
• leave of the court

Although, in view of the special rights taking control or distraint gives us over the seized goods, HMRC will generally try to reach a financial settlement with the administrator without the need to seek court directions. The process of ‘binding goods’ under TCEA07 by issuing an enforcement notice considerably strengthens HMRC’s position in this respect.

14.3.3 Sale of controlled or distrained goods

In many cases we’ll agree to the office holder selling the seized goods if it is likely to be to our benefit and, or to the creditors in general. This is subject to the office holder providing us with a written undertaking to remit the proceeds of the sale of the seized goods directly to us.

We reserve the right to remove and sell controlled or distrained goods at any time.

Any money we receive for the sale of controlled or distrained goods will be set against costs and then against the earliest pre-insolvency liability, with our claim amended accordingly.

14.4 Floating charges

Where a floating charge crystallises on the appointment of an administrative receiver or some other event specified in the debenture, control or distraint will still be maintained and completed if HMRC has already seized goods which are subject to the floating charge. We may choose to let the administrative receiver sell the goods, subject to an undertaking, and pass the proceeds to us (see paragraph 14.3.3).

15. Partial exemption

15.1 When is a business partly exempt

If a business is registered for VAT and incurs input tax relating to exempt supplies, that business is partly exempt. This means that it may not be able to claim all the input tax it incurs and that it will normally have to use a partial exemption method to work out how much input tax can be claimed.

You can find further information about partial exemption and methods of calculation in Partial exemption (Notice 706).

Partial exemption requirements apply to all VAT traders including those which are insolvent or in receivership or administration. As office holder you must comply with these requirements in respect of any returns you complete for pre or post relevant VAT periods.

An insolvent business may seek approval from its local VAT office for a change of method to calculate its entitlement to input tax recovery, given the change in circumstances. HMRC will apply its normal policy, as set out in paragraph 6.11 of Partial exemption (Notice 706), to when any new method can apply from with the exception that the method cannot be applied to any pre-insolvency returns.

15.2 Annual adjustments for insolvent businesses that are partly exempt

Where a business is already partly exempt it may seek approval from HMRC to end its current tax year at the relevant date and to make its annual adjustment in the VAT period ending with the relevant date. Such applications should be clearly marked ‘VAT partial exemption query’ and sent to the VAT Written Enquiries Team:

If HMRC does not allow approval for a change, the annual adjustment is to be made in accordance with the normal rules set out in Partial exemption (Notice 706).

15.3 Insolvent traders and the Capital Goods Scheme (CGS)

If the insolvent business had assets covered by the CGS (see Capital Goods Scheme (Notice 706/2)) then those assets pass to the office holder on insolvency. If the use of the assets changes whilst under the office holder’s control then adjustments may arise, which must be declared on returns due from the office holder.

The office holder will need to establish the following information:

• what assets covered by the CGS are held
• when they came into use in the business
• how much input tax was initially incurred and deducted on them

15.3.1 Asset still used within the business

Any adjustments are likely to be modest as they will only address the time of use by the office holder and the difference between their use and that originally made by the business prior to insolvency.

If the office holder brings the company out of insolvency or sells its assets as a transfer of a business as a going concern then any CGS items will pass on to the new owners at that point.

15.3.2 Assets no longer used within the business but held for eventual sale

If the original use was taxable and the sale will be exempt then there may be substantial adjustments due. As the sale will be made by and under the direction of the office holder adjustments must be declared by them on returns that they submit. If the asset is a building then it may be possible to prevent the sale from being exempt by opting to tax (see Opting to tax land and buildings ( Notice 742A)), although this may restrict what buyers may be interested.

If the original use of the assets was partly exempt, and if the sale is to be taxable, then adjustments in the office holder’s favour may arise.

If the business cancels their VAT registration without a sale of the asset taking place then an adjustment may arise at that time.

15.4 Insolvent traders’ circumstances which may be affected by partial exemption

15.4.1 Insolvent business formerly fully taxable or treated as fully taxable continuing to trade

Where a business remains fully taxable or continues to be treated as fully taxable, the input tax on the office holder’s fees, and all other overheads, will be recoverable. Where the business carries on trading and becomes partly exempt, it will have to apply a partial exemption method in the normal way. Recovery of input tax, including that on the office holder’s fees, could be subject to restriction in accordance with the partial exemption method used.

15.4.2 Insolvent business formerly partly exempt continuing to trade

Where the business remains partly exempt, recovery of input tax, including that on the office holder’s fees, could be subject to restriction in accordance with the partial exemption method in place in the normal way. You should request a change of method from your local VAT office if, due to changing circumstances, the method in place no longer produces a fair and reasonable attribution of input tax to taxable supplies.

15.4.3 Insolvent business which was fully taxable, or formerly treated as fully taxable, ceases to trade but remains registered pending sale of assets

Where the business has ceased to trade, the principal activity will be the sale of assets. If the assets which are sold are exempt, the business may become partly exempt. Any input tax relating to the sale of the exempt assets would then need to be restricted according to a method. But the office holder’s fees should be treated as an overhead to the business prior to insolvency and, since that was fully taxable, they’re fully recoverable subject to the separation of any third party costs.

15.4.4 Insolvent business, which was partly exempt, ceases to trade, but remains registered pending sales of assets

Where the business has ceased to trade, the principal activity will be the sale of assets. Recovery of input tax is subject to restriction in accordance with the partial exemption method which is in place in the normal way. But the office holder’s fees should be treated as an overhead of the business prior to insolvency and, since that was partly exempt, they will be subject to restriction. The business should continue to use the method in place in the normal way. A change of method should be requested from the local VAT office if, in the light of changing circumstances, the method in place no longer produces a fair and reasonable attribution of input tax to taxable supplies.

15.4.5 Insolvent business that have cancelled their VAT registration

VAT is only recoverable on services which, although supplied after the registration was cancelled, relate to former taxable supplies made by the business.

16. Partnerships

16.1 How we deal with partnerships

Where a partnership becomes insolvent, we may pursue any of the partners for any liability due.

16.2 All partners insolvent

HMRC will lodge one claim with the insolvency practitioner in the name of the partnership. This claim should stand in the joint estate and separate estates of all the insolvent partners. We should therefore be included in any dividend declared in any of the insolvent estates.

16.3 One or more partners remain solvent

Responsibility for rendering and paying returns remains with the solvent partner(s).

We may lodge a claim with the office holder of the estate of the insolvent partner for any debts accrued up to the date of insolvency.

If you have tax to account for on the administration of the insolvent estate you must not account for it on the solvent partner’s return. We will issue forms to you on request to allow you to account for the tax direct to us.

16.4 Partnership wound up but individual partners remain solvent

The office holder will be treated as the taxable person with effect from the date of the winding-up. They will be responsible for rendering and paying any tax due on returns for the period after the date of winding-up.

A claim will be lodged with the office holder in the name of the insolvent partnership for any liabilities due to us up to the date of winding-up.

16.5 Insolvent partners with different relevant dates

HMRC will lodge individual claims in the individual estates of the partners calculated from their respective relevant dates.

17. Law of Property Act

17.1 Receivers appointed under the Law of Property Act 1925

Where a receiver is appointed under the Law of Property Act, the receiver is unable to register separately for VAT as they’re appointed under a legal charge and are deemed to be the agent of the VAT-registered business. This business retains responsibility for its own VAT registration, and all taxable supplies made and expenditure incurred by either it or the receiver must be accounted for on the VAT Return for the business’ registration.

17.2 Option to tax

You should ask the VAT office which controlled the business to confirm whether an option to tax has been taken out on the land or building. You will need to supply a valid VAT registration number to obtain this information and if the business has opted to tax, any supplies of the land or building will normally be standard rated. You can find further information in Opting to tax land and buildings(Notice 742A).

17.3 Accounting for VAT

HMRC considers that:

Law of Property Act (LPA) receivers making third party payments to HMRC in respect of the management of specific properties are discharging their obligations under the Law of Property Act. This obligation is limited to accounting only for the net amount that would be due from the borrower. It is therefore acceptable for receivers to calculate that net amount by reference to any VAT credit that the borrower is entitled to claim in connection with the supply. But as the payment made on account by these receivers is simply made on behalf of a borrower, the borrower is still obliged to submit a VAT Return stating their liability, including the credit for any input tax. In VAT account terms, the borrower must then pay the amount owed, taking into account anything already paid by the receiver.

The Law of Property Act receiver should account for the net tax calculated by means of form VAT 833.

The Law of Property Act receiver’s duty in relation to VAT is limited to accounting for tax received. It is not part of the receiver’s obligations under the Law of Property Act to obtain repayments of VAT in connection with the property, nor does he have any legal right, under either the Law of Property Act or VAT legislation, to make such a claim. Thus, while HMRC accepts that the receiver can reduce the amount of VAT to be accounted for by setting off any VAT credit that the borrower is entitled to claim in respect of that supply, if this results in a repayment claim then it is the responsibility of the borrower to claim on their VAT Return.

If assets are sold, then the VAT due must be accounted for and paid to us using form VAT 833. The business’ VAT registration number should be used on sales invoices and quoted on form VAT 833. Payment may be made electronically, with the exception of card payments via online or phone payment service and online direct debit. Use the following details:

• electronic payment to the CITI MISC Account, sort code: 08 32 00, account number: 12000903
• reference to quote CAT2 V833 and then the VAT registration number

Law of Property Act receivers cannot make a separate claim for the input tax which should properly be claimed via the trader’s VAT Return.

18. Transfer of a Business as a Going Concern (TOGC)

18.1 The implications of a TOGC

There may be a TOGC if the assets of the business are transferred to a different legal entity where they continue to be used in the same type of business as that of the transferor.

18.2 How office holders may apply for a TOGC

An office holder may treat the transfer of the assets of a business as not being a supply where the business is transferred as a going concern and the transfer can meet the criteria set out in Transfer of a business as a going concern(Notice 700/9).

19. Retention of insolvent trader’s records

19.1 How to keep books, papers and records

The liquidator may destroy the books, papers and records, including the VAT records, of the insolvent company 1 year after the date of dissolution of the company.

A concession has been granted to official receivers to allow them, on request and with our approval, to destroy the books and records of a company after 6 months.

Normal rules for retention of records apply to other insolvencies.

20. VAT Group registrations

20.1 What a VAT group registration is

A VAT group registration allows 2 or more companies or limited liability partnerships, known as ‘bodies corporate’, to account for VAT under a single registration number.

20.2 How VAT group registration works

The group is registered in the name of the representative member, who is responsible for completing and rendering the single return on behalf of the group. Whilst the representative member is responsible for paying the VAT or receiving any repayment due, all the group members are jointly and severally liable for VAT debts incurred during the period of their membership.

20.3 The criteria for VAT group membership

Only corporate bodies established, or with a fixed establishment, in the UK can be members of a VAT group. Such corporate bodies must also satisfy the control condition.

20.4 The control condition

The control condition is that all members of the group are controlled either by one member of the group or a single other ‘person’ who is not one of the members of the group. That person can be a body corporate, an individual or a partnership. That person is known as the controlling body.

20.5 Where to find out more about VAT group registrations

Further information can be found in Notice 700/2: group and divisional registration.

20.6 The impact of insolvency on existing VAT groups

20.6.1 Insolvency of the controlling body

Where an insolvency practitioner is appointed over the controlling body and the controlling body is a member of the VAT group, they will also assume control of all of the group members within the VAT group. The impact on the VAT group will depend on whether the insolvency practitioner decides to retain control over of the group.

In most circumstances, the controlling body is also the representative member and the following principles will apply:

• if the insolvency practitioner wishes not to retain control of the group, HMRC will remove the solvent members which then have the option of registering separately or forming another group, as appropriate, leaving only the insolvent members in the group
• the insolvency practitioner can choose to retain control and keep the solvent members within the VAT group, in which case the insolvency practitioner must inform HMRC of their decision immediately. If the insolvency practitioner does choose to keep the solvent members in the VAT group then the post-appointment VAT returns must encompass the whole group

20.6.2 Insolvency of a group member

If the insolvency practitioner has been appointed over any VAT group member other than the controlling body, it must be removed from the VAT group with effect from the date they are appointed. This is because the insolvent member is now controlled by the insolvency practitioner and not by the controlling body of the group, that is, it no longer meets the criteria for VAT group membership.

If appropriate, the group member should be registered for VAT separately. If the insolvent group member being removed is the representative member, it will be the responsibility of the VAT group to nominate a new representative member and inform HMRC accordingly.

21. Submission of VAT forms

21.1 Where do I send VAT forms

New style VAT100 2021 VAT Returns

VAT 100

VAT7 — Applications to cancel your VAT registration

VAT 426 — Insolvent traders claim for input tax after deregistration

VAT 427 — Claim for input tax relief from VAT on cancellation of registration

VAT 50/51 — Apply for VAT Group registration or amend your details

VAT 193

VAT 769 — Notification of insolvency details (for bankruptcies, creditor voluntary, compulsory and members voluntary liquidations forms)

VAT 769 (Scotland and Northern Ireland) — for sequestrations, trust deed and receiverships (excluding members voluntary liquidations)

VAT 769 (Cardiff) — company administration and voluntary arrangements

22. Funded pension schemes

When a company is being wound up, VAT is deductible on supplies under Section 94 of the VAT Act 1994 if the company:

• still exists as a legal entity
• is still receiving supplies for which it’s liable for VAT

This includes VAT on costs incurred in winding up the company’s occupational pension scheme.

The company can reclaim the balance of the VAT deductible on these supplies for the relevant period if this is more than the tax the company owes to HMRC for that period. Claims are made through its insolvency practitioner.

You can find more information in Funded pension schemes (VAT Notice 700/17).

23. Unincorporated associations and clubs, and payment of Corporation Tax

Insolvency practitioners must take the following steps when they’re appointed to an unincorporated association or club (for example, a voluntary group or a sports club):

1. Find out when HMRC will treat clubs and unincorporated organisations as dormant.

2. Write to HMRC to confirm the date of your appointment and to give instructions for us to update the registered office address held with your main address or principle place of business. As an unincorporated association does not need to be registered with Companies House, HMRC will not be automatically notified of your appointment.

3. Use form CT61 to make a return of Income Tax on company payments. You can request CT61 online.

If you have any queries about the CT61, contact HMRC on Telephone: 03000 518371.

Your rights and obligations

Read Your Charter to find out what you can expect from HM Revenue and Customs and what we expect from you.

If you have any feedback about this notice email: customerexperience.indirecttaxes@hmrc.gov.uk.

You’ll need to include the full title of this notice. Do not include any personal or financial information like your VAT number.

If you need general help with this notice or have another VAT question you should phone our VAT helpline or make a VAT enquiry online.

Putting things right

If you’re unhappy with HMRC’s service, contact the person or office you have been dealing with and they’ll try to put things right.

If you’re still unhappy, find out how to complain to HMRC.

How HMRC uses your information

Find out how HMRC uses the information we hold about you.

Annex A VAT Return forms

The forms in this Annex are reproduced for information only, and should not be used for the submission of returns. If you’re entitled to file a paper return, we will send you one.

This is the VAT Return (VAT 100). This form is published by the Commissioners under Regulation 25A(9) of the VAT Regulations 1995.

This is the VAT final return (VAT 193). This form is published by the Commissioners under Regulation 25A(9) of the VAT Regulations 1995.