EM4004 - Interest: Bankruptcy and Liquidation
Interest under the Taxes Acts or VAT Acts ceases to run when a taxpayer becomes bankrupt or an insolvent company goes into liquidation, see s322(2) IA 1986 and Rule 14.23(1) Insolvency Rules 2016.
If there is a surplus after paying all expenses and claims in bankruptcy or liquidation there is separate provision in the Insolvency Act for all creditors to be paid interest from the relevant date to the date of payment at the judgment interest rate, to the extent of the available funds.
In a liquidation, see the Insolvency Act 1986 Section 189.
In a bankruptcy, see the Insolvency Act 1986 Section 328 and The Bankruptcy (Scotland) Act 1985 Section 51(1) in a sequestration.
There is further guidance about insolvency in general in the Insolvency Information Notes.
Further advice should be sought from DMB, Process and Strategy.
Members Voluntary Liquidation
Where a company is in Members Voluntary liquidation (MVL) HMRC will claim the appropriate amount of interest due up to the date of liquidation line with the provisions of the Insolvency Act 1986. However statutory interest would not be included our claim in a MVL.
In all settlements involving a MVL you must liaise with DM’s Enforcement and Insolvency Team in Edinburgh (EISW) before proceeding with any settlement.
The EISW team can be contacted
- (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
- by phoning 0300 322 7815 (for external customers).