COM42210 - Case records: maintaining case records: dealing with potential strike offs at the end of an insolvency procedure

How companies in an insolvency procedure are dissolved

The Information Notes about creditors’ voluntary liquidation, members’ voluntary liquidation, ​compulsory liquidation, and administration provide advice about how these procedures may end and the notice requirements for the liquidator or administrator.

In summary, once the liquidator or administrator believes that the winding up or administration is complete, they must send a final account to the Registrar who will publish it on the company record. 3 months after the notice is published the company is deemed dissolved.

How to stop dissolution at the end of an insolvency procedure

There is a prescribed 8-week window from the date of the notice that the company’s affairs are fully wound up to object to the liquidator’s release, often earlier than the date of the final account. If appropriate, objecting to their release avoids the need to defer dissolution.

Otherwise, within the 3-month period, creditors and others can apply to defer the dissolution. In administration and voluntary liquidation cases the application is made to court and in compulsory liquidation to the Secretary of State. The dissolution may be deferred for as long as either sees fit.

When should HMRC consider preventing dissolution?

A tax compliance officer or an insolvency case worker may have an ongoing interest in a company in an insolvency procedure. Where there has been good communication between HMRC and the Insolvency Practitioner (IP), it should not be necessary to object to the IP’s release or defer the dissolution of the company.

This may not always be the case, however, and officers may:

  • have unresolved concerns at the time of the IP seeking release or of the final report being filed and want the insolvency to continue with an alternate IP as liquidator
  • only become aware of a potential debt or a compliance risk to investigate during the 3-month period to dissolution at the end of the insolvency procedure

Where the risk assessment confirms that there is financial or wider benefit to HMRC in the company not being deemed dissolved at that time, the officer should:

  • object to the liquidator’s release for companies in liquidation
  • seek to defer the dissolution of the company, by an application to court for voluntary liquidations and administration, or the Secretary of State for compulsory liquidations

Considerations for HMRC about the IP appointment

For liquidations, the previous liquidator will have had their release from office and may not want to resume the appointment and so HMRC officers will need to think about the appointment of a new IP as liquidator. In addition, HMRC officers may have had concerns about the work or conduct of the previous liquidator and may want the appointment of a new IP as part of the wider case strategy.

For administrations, the appointment of an administrator ceases upon registration of the final notice. HMRC officers may decide it better to seek the compulsory winding up of the company during the 3-month period to dissolution and the appointment of a new IP as liquidator. The other option is to keep the company in administration and seek the re-appointment of the same IP as administrator.

In any of these circumstances, the officer should address the appointment of a new IP as well as deferring the company’s dissolution.