Statutory Interest on MVLs – what is the impact for Shareholders 8 months on?

A recent change in policy has generated substantial interest in the way we deal with Members Voluntary Liquidations. 

We first highlighted this issue regarding Members Voluntary Liquidations in an article which dates back to October 2017 when the change of policy to seek statutory interest by HMRC was first introduced.

Please click here to read our article

The new policy is also being applied retrospectively

Whilst we can only give an overview of the current policies of HMRC, without knowing specific case facts, we have now had the benefit of 8 months to see the policy in action and can confirm that in all Members Voluntary Liquidation cases existing or commenced after October 2017, HMRC are seeking statutory interest on debts due to HMRC from the commencement of the liquidation.  HMRC will not give the tax clearance required for a Liquidator to close a case until the matter has been addressed.  The policy is also being applied retrospectively which appears to be causing particular issues.

It is possible, therefore, that a Liquidator may well be in a position where HMRC requires settlement of statutory interest as a cost that (quite reasonably) could not have been foreseen at the commencement of the liquidation.  However, if there are insufficient funds available to a liquidator (perhaps because capital has already been distributed based on the forecast outcome of the liquidation) then a Liquidator has little choice other than to seek a repayment from a Shareholder, sufficient for the tax interest and charges to be settled.  The liquidation cannot be closed until this is dealt with.

We have adapted our approach to accommodate this change of policy

We have adapted our approach to these liquidations to ensure all HMRC debts are settled on commencement.  We are pleased to report that on all new cases, we have not had to pay much, if any, statutory interest and in most cases have offset this against early settlement discounts.