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 distinct types of insolvency procedures that a VAT registered business may enter.
HMRC has recently issued an updated version of Notice 700/56 Insolvency. 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. The notice has been updated with new postal and email addresses.