VAT – insolvency
Pub Date
Value Added Tax
HM Revenue & Customs

There are special VAT rules concerning the VAT liability of certain services provided by insolvency practitioners. The rules are relevant to insolvency practitioners and official receivers (office holders) who are dealing with the business activities of VAT registered traders. There are also special procedures for insolvency practitioners to follow when dealing with HMRC.

Insolvency occurs when individuals or businesses do not have enough assets to cover their debts or are unable to pay their debts when they become due. There are various types of insolvency procedures that a VAT registered business may enter.

HMRC has recently issued an updated version of Notice 700/56 Insolvency. The latest edition of the notice replaces the version from November 2015. There have been a number of changes to the notice including to the contact details for HMRC and an update on how to obtain the latest version of the VAT 769 form.

The notice explains the basic principles of HMRC’s treatment of insolvent businesses as well as the procedures which insolvency practitioners are asked to follow when dealing with HMRC.