DMBM580030 - Pre-enforcement: alternative rights of recovery: VAT

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Prompt action is vital in cases where insolvency is suspected. In certain circumstances, security action may be appropriate.

Considerations for pre-insolvency action

Who	What	Action to take
DMU and Local and National Compliance Staff	VAT Large Payers Unit (LPU) monitoring trader: Review Code 443 set on VISION?	Report all facts to LPU immediately via e-mail to ‘LPU Team {QD}’
DMU and Local and National Compliance Staff	There is a suspicion of contrived insolvency	See RIS COIR referrals Assurance sharepoint site
DMU and  Local and National Compliance Staff	Payments are becoming less frequent or ad hoc	Is the case suitable for monthly returns? HMRC can require a trader to submit monthly returns, which can be an effective tool to limit any potential tax loss. If you encounter a trader who is displaying any insolvency warning signs, refer to the SCI Insolvency & Securities sift team in Southampton using the form (Word 34KB) attached or contact a member of the sift team (contact details provided on the form). They will consider and monitor if suitable for monthly returns.
-	-	If insolvency proceedings have already commenced, monthly VAT returns will not be appropriate. In these circumstances there is nothing that can be done immediately. Keep a careful watch for any new VAT registration by the principals of the liquidated company, and on the activities of associated companies. Refer any linked new VAT registrations to the SCI Insolvency & Compliance and Securities sift team in Southampton using the form (Word 34KB) attached, or contact a member of the sift team (contact details provided on the form).
DMU and Local and National Compliance Staff	Where there is a debt on file and case is not being monitored by LPU and is not suitable for referral to VAT Security.	Hasten any action already started. If no debt advice is held and the debt is enforceable, initiate recovery action. DMU/DMO contacts can be found on the DMB homepage under contacts.
Local and National Compliance Staff	No debt on file.	Make discreet enquiries of the trader do not discuss the trader’s financial - affairs with employees. Keep a record of the full details in EF/DTR
Local and National Compliance staff, Insolvency Compliance and Securities and DMU	For businesses about to or have already entered insolvency and it has been identified that there is a risk that they may start up again with a new registration	Add names, contact addresses and other relevant information from the insolvent company onto CAVIAR. This will help the SCI Insolvency & Securities sift team/Registration teams identify phoenixism and thus protect future revenue.
-	-	For direct taxes, refer to INS1121 and DMBM522700 for guidance on how to identify phoenix cases and the action to take.
-	-	For indirect taxes, refer to INS12000.
Local and National Compliance Staff	Where we suspect that director has moved assets/money to a third party’s name or bank account or is planning to moves funds out of the country	Urgent consultation with the SCI Insolvency & Securities who will consider application for a freezing order against directors and/or company’s assets; please contact Simon Chaplin if you have any queries relating to freezing orders. Such application may need to be indemnified. See guidance at INS12400 on provision of indemnity. Where serious crime is suspected it may be necessary to consult Criminal Investigations.