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HMRC internal manual

COTAX Manual

HM Revenue & Customs
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Returns / notices: notices and returns: company end of life - types

Company end of life case types

Creditors’ Voluntary Liquidation

In a creditors’ voluntary liquidation, the company is insolvent and the shareholders have decided to wind it up. A meeting of the creditors confirms the appointment of a liquidator.

Compulsory liquidation

In a compulsory liquidation, the court makes a winding up order on the petition of an unpaid creditor. The company is usually insolvent. If there is a risk that the directors of the company will dissipate its assets before the winding up petition can be heard in full, the court may appoint a provisional liquidator. For technical reasons, a provisional liquidator is also sometimes appointed to an insolvent insurance company.

A provisional liquidator may be either a licensed insolvency practitioner (IP) or the Official Receiver.

Members’ voluntary liquidation

In a members’ voluntary liquidation (MVL), the company is solvent but the shareholders have decided to realise and distribute the company’s assets and wind it up.


Banks and other specific lenders normally appoint receivers to recover loans secured by a charge over a company’s assets. A receiver may be appointed in respect of a specific asset under a fixed charge. A receiver appointed in respect of all, or substantially all of a company’s assets under a floating charge is called an administrative receiver.

The receiver’s main obligation is to preferential creditors and to the lender who appointed him. He usually intends to dispose of the business as a going concern, but if this fails, he will sell the assets to satisfy first the preferential creditors and then other creditors.

Receivers are under no obligation to pay any CT. which is a non-preferential debt, and most will not deliver returns.

Strictly, the Corporation Tax obligations remain those of the company, but in reality the company is usually unable to meet them while the receiver is in place.

Liquidation often follows receivership.


Under the Enterprise Act 2002, as long as a company can convince an insolvency practitioner that it is insolvent, it can declare itself in administration. The administration must be filed at court but is not considered by the court; it is simply stamped and filed away.

The status of administration protects the company from its creditors while allowing it to restructure and become solvent. At that point it can be handed back to the directors to continue in business. If these efforts fail, the administrator may realise and distribute assets before the company goes into liquidation.

Administrators are the proper officers of the company in legal terms and are wholly responsible for the tax affairs of the company during their period of appointment.