Insolvency Practitioners - Members Volantary Liquidation

[PostHeads123]

Hi,

Any insolvency practitioners in the place ?

I'm in the process of winding up my company via a Memeber Volantary Liquidation to do it in a tax efficent way. I'm due to get the funds distributed to me shortly but I've been told that once they do the Insolvency Practice will write to the HMRC Self Assessment tax office to tell them they paid out x to me, they say its a governing body requirement and they must do this is this true ?

I've got nothing to hide and fully intended to pay the tax due on via my Self Assessment, but I don't like the fact the insolvency firm are getting involved in my personal tax affairs like this, plus the fact its a letter in to them will require manual intervention on HMRC side to log it, making it more likely I get pick for review etc. Again nothing to hide Im squeaky clean on the tax front just dont want the hassle of dealing with HMRc and anything I can do to avoid this I will do, hence I don't want them to send the letter.

thanks

[James P]

PostHeads123 said:

Hi,

Any insolvency practitioners in the place ?

I'm in the process of winding up my company via a Memeber Volantary Liquidation to do it in a tax efficent way. I'm due to get the funds distributed to me shortly but I've been told that once they do the Insolvency Practice will write to the HMRC Self Assessment tax office to tell them they paid out x to me, they say its a governing body requirement and they must do this is this true ?

I've got nothing to hide and fully intended to pay the tax due on via my Self Assessment, but I don't like the fact the insolvency firm are getting involved in my personal tax affairs like this, plus the fact its a letter in to them will require manual intervention on HMRC side to log it, making it more likely I get pick for review etc. Again nothing to hide Im squeaky clean on the tax front just dont want the hassle of dealing with HMRc and anything I can do to avoid this I will do, hence I don't want them to send the letter.

thanks

I'm an IP and regularly deal with Members' Voluntary Liquidations.

I am not aware of any regulatory requirement and it may be something that the firm you have used has decided to put in place as their "best practice." No need to name the firm but could you say who they are regulated by eg ICAEW, ACCA or IPA?

Our engagement letter sets out what we will and will not do in connection with the assignment and explains where these are due to legal or regulatory reasons or where it is simply our firm's policy.

If nothing else, they are making work for themsleves that they will not get paid for. Assuming that their ethical and money laundering checks did not turn up any oddities, it sounds to me like they are being over zealous. Perhaps ask them to show you the regulation they are saying causes it?

[PostHeads123]

Hi, thanks for the reply its the IPA they are authorised by, I did ring the IPA today and tried to talk to someone there about but they were not very helpful.

They state the following reason for writing to the SA office,

"Every Insolvency Practice has a duty to inform the self assessment department of any dividends paid in a Members Voluntary Liquidation. Those insolvency practices which do not inform the revenue risk disciplinary action from their governing body if the case is chosen for inspection."

I've read the letter of engagement and its doesn't mention anything specific about the letter to SA, its pretty generally really.

At the moment I'm not pushing the issue too hard as they still have the funds to distrubute to me. Seeing as they now control the company is there anything I can say / do to stop them sending this letter to the SA office ?

Edited by PostHeads123 on Wednesday 23 January 13:03

[James P]

PostHeads123 said:

Hi, thanks for the reply its the IPA they are authorised by, I did ring the IPA today and tried to talk to someone there about but they were not very helpful.

They state the following reason for writing to the SA office,

"Every Insolvency Practice has a duty to inform the self assessment department of any dividends paid in a Members Voluntary Liquidation. Those insolvency practices which do not inform the revenue risk disciplinary action from their governing body if the case is chosen for inspection."

I've read the letter of engagement and its doesn't mention anything specific about the letter to SA, its pretty generally really.

At the moment I'm not pushing the issue too hard as they still have the funds to distrubute to me. Seeing as they now control the company is there anything I can say / do to stop them sending this letter to the SA office ?

Edited by PostHeads123 on Wednesday 23 January 13:03

I am not IPA regulated and (for the time being at least) there are some differences in the approach by different regulators - this is mostly in the timing of information provided to the regulator by the IP rather than quality.

I have checked with our technical support team and they are not aware of any specific requirement (they do also deal with IPA regulated firms) to notify.

We would notify HMRC of dividends paid as part of the process to obtain clearance to close the liquidation but it would be for HMRC to then link this information to the individual shareholders if they wanted to do so.

The term "self assessment department" is unhelpfully vague and it is entirely possible that the IP does not even know where your self assessment returns are processed or your taxpayer reference. Our feeling is that the IP is being extremely cautious but it is unlikely to impact on you provided that your SA return is correctly and fully completed.

You will be relying on the IP to ensure that any information he provides to HMRC is accurate so I would suggest asking him for a copy of whatever information is sent to HMRC, a copy should also be sent to your accountant.