HMRC has issued new guidance explaining its expectations for the proportionate and appropriate use of Notices of Intended Dividends (NOIDs) in an MVL in light of what it says are challenges created by practitioners issuing a NOID at the start of an MVL where doing so might be inappropriate.
Much of the guidance echoes HMRC’s expectations covered in insolvency practitioner bulletin 10 – namely that enquiries should be made before a company enters into MVL to establish the company’s tax position, and that outstanding returns will need to be submitted before HMRC can submit a proof of debt.
The aim of the guidance is to encourage effective engagement with HMRC so that an MVL can be concluded within the 12-month statutory time limit – which is timely, given the findings in NOAL (see our blog).
In short, HMRC will notify practitioners about three months after their appointment if there are any outstanding returns. If practitioners have not been notified by month four, they should contact the MVL team (whose details can be found in the guidance). If practitioners issue a NOID before all outstanding returns have been issued, HMRC will not respond.
HMRC will only know what the company’s tax liabilities are, once all returns have been filed, which explains why HMRC takes the position that it cannot submit a proof of debt until all returns have been filed.
In practice, this may not leave much time to finalise the tax position before the expiry of the 12-month time limit, but sensibly, if enquiries are made before the company enters MVL, and (if needed) any outstanding tax returns are submitted before the appointment or shortly thereafter, the position taken by HMRC in this latest guidance is unlikely to cause any difficulties. In fact, it is helpful in setting expectations for all parties.
This guidance, the decision in NOAL are all covered in our MVL update, that is available in our Thought Leadership Library.
