Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
, see all updates

Pre-enforcement: alternative rights of recovery: VAT

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    
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  
Local and National Compliance Staff There is a suspicion of contrived insolvency Is the case suitable for VAT security?

Refer to the SCI Insolvency & Securities sift team in Southampton immediately for consideration of VAT Security action using the attached form (Word 34KB), or contact a member of the sift team (contact details provided on the form).

   
  DMU
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
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

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.