HMRC’s latest Insolvency Guidance on 6 December 2023 announced that HMRC will no longer provide pre- and post- tax clearances in members’ voluntary liquidation (MVL) cases. 

Instead, insolvency practitioners (IPs) must close cases without tax clearance subject to their professional judgement. 

The reason cited for this decision is that there is no statutory or best practice framework for HMRC to provide tax clearance. 

The guidance refers to various ways that insolvency practitioners could gain alternative assurance about the accuracy of the company’s tax liabilities. For the pre-liquidation period, these include: 

• the sworn declaration made by the company’s directors of the company’s assets and liabilities;
• any HMRC compliance checks that are in progress; and
• claims from HMRC for pre-insolvency debt.  

In assisting with the preparation of the declaration of solvency, it is expected that IPs would establish the tax position in any event. They will be aware of the post-appointment position by virtue of being in office. 

Some insolvency practitioners will be unhappy with this development. However, it will assist the conclusion of a large number of MVLs that have been held up as HMRC did not have the capacity to process the requests for clearance.  

Given the heavily caveated terms in which clearance letters were framed, the value of obtaining tax clearance from HMRC was open to some debate.