Chapter DMBM656210
| Published date | 29 April 2016 |
| Record Number | DMBM656210 |
If you learn of a liquidation after the papers have been passed to the auctioneer, instruct your auctioneer to take no further action but to retain the papers whilst you correspond with the liquidator.
There are two types of voluntary liquidation.
Members Voluntary Liquidation (MVL)Companies that go into Members Voluntary Liquidations (MVLs) have to provide a ‘declaration of solvency’ so they should not, in practice, go into MVL while their assets have been impounded.
Creditor’s Voluntary Liquidation (CVL)If a company goes into voluntary liquidation after you have levied distraint, you are entitled to complete the distraint by sale provided the date of your levy precedes the date of the resolution calling for the winding-up of the company.
This principle was upheld by the House of Lords in the case of:
Herbert Berry Associates Ltd v Commissioners of Inland Revenue (1978) ALL ER 161
You should establish the date that the resolution was passed. It should be a clearly documented and minuted, not just an informal meeting of directors. The creditor’s meeting should take place no more than 14 days after the passing of the resolution but, in practice, the resolution is passed at the creditor’s meeting usually just prior to the liquidator being appointed.
If your levy was after the date of the resolution, you should withdraw the distraint.
If your levy precedes the date of the resolution, you should tell the liquidator:
- the distraint will be completed in the normal way
- any excess sale proceeds will be refunded
- any shortfall will form part of HMRCs claim in the liquidation.
If there is no response within 7 days, pass the papers to the auctioneer, if he does not already have them, and tell him to sell the goods.
When you are advised that the sale is complete, send a memo to ICHU:
* saying the distraint has been completed
* advising them of any part of the debt that remains outstanding so they can include it in HMRCs claim
If the liquidator accepts our position, but states that they want to sell the assets, we can allow this providing:
- it is beneficial to HMRC; the liquidator may get more for the assets if the business is sold as a going concern
- the liquidator signs an undertaking.
The...
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