IDG50840 - Information disclosure Gateways with other government departments: the Department for Business and Trade (DBT): Insolvency Service Investigations and Enforcement Services
the Department for Business and Trade (DBT) Insolvency Service Investigations and Enforcement Services
Insolvency practitioners and Official Receivers report unfit conduct by directors of insolvent companies to the Insolvency Service’s Investigations and Enforcement Services. The Insolvency Service is an Executive Agency of DBT. Their Investigations and Enforcement Services determine whether to commence disqualification proceedings to prevent a person from acting as a company director in the future.
Why share information with the Insolvency Service?
The Investigations and Enforcement Services may need tax information to show a course of conduct by the director, for example details of the director’s failure to keep PAYE up to date or to issue VAT invoices. This information may not always be available from the company’s own records.
Ensuring information is shared lawfully
As set out at IDG40630 liquidators, administrative receivers and administrators ‘stand in the shoes of’ the company. However Investigations and Enforcement Services are not acting as the liquidator of the company. They are an investigative function which sits within a separate part of the Insolvency Service and so the method of disclosure outlined at IDG40630 does not apply for this purpose.
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Company Directors Disqualification Act
Section 7(4) of the Company Directors Disqualification Act 1986 (CDDA) provides the Secretary of State (which includes the Insolvency Service’s Investigations and Enforcement Services) or the Official Receiver may require any person (including HMRC) to:
· furnish him with information in respect of a person's conduct as a director of a company which has at any time become insolvent, or been dissolved without becoming insolvent and
· to produce and permit inspection of such books, papers and other records as are considered by the Secretary of State or the Official Receiver to be relevant to that person's conduct as such a director
for the purposes of:
· making an application for a disqualification order, or determining whether to make an application for an order; or
· accepting a disqualification undertaking, or determining whether to accept an undertaking
Section 7(4) of the CDDA is a binding information power that the Insolvency Service can use to require HMRC to provide information to them for the purposes above. Because this is an information power that the Insolvency Service uses upon HMRC in order to make the disclosure lawful, it cannot be used by HMRC to proactively disclose information which HMRC wants to pass to the Insolvency Service. There must be an Insolvency Service request to HMRC.
Which part of HMRC can disclose this information?
Standard requests for information, using S7(4) of the CDDA, from the Insolvency Service are centralised at Debt Management Directorate’s Enforcement and Insolvency Services Team in Newcastle, as part of a written agreement. However, where specific detail regarding a compliance intervention is needed, the Insolvency Service may approach an officer direct. If you are unsure how to proceed please contact your Directorate’s Insolvency Team or alternatively, contact Insolvency Governance & Professionalism, Inbox (SOLS) (please see IDG80100).
Information which can be disclosed
Examples of the type of information which can be disclosed:
· - correspondence between HMRC and the company,
· - details of payments made by the company,
· - reports of meetings attended.
Legislation which allows proactive disclosure
If HMRC wishes to proactively disclose information to Insolvency Service, for example because HMRC believes a director’s conduct should be investigated for potential disqualification, S7(4) CDDA cannot be used.
Instead, Part 9 of the Enterprise Act 2002 provides several gateways for the disclosure of HMRC information. It enables information collected by HMRC in the course of officers’ duties under the Customs & Excise Management Act 1979 (CEMA) or the Value Added Tax Act 1994 (VATA) to be disclosed to anyone having functions under certain legislation. For further information see IDG55200 where we reproduce the scheduled legislation including the Insolvency Act 1986 and the CDDA.
Proactive disclosures of information, collected using VATA or CEMA, are permitted using this legal gateway.
If the information HMRC wishes to disclose is not collected using VATA or CEMA, Section 18(2)(a) CRCA may allow proactive disclosures of director misconduct to the Insolvency Service if it can be shown that the disclosure is for the purposes of a function of HMRC (see IDG 40410).
Alternatively, proactive disclosure may also be made with the consent of the office holder (e.g. liquidator or administrator), see IDG30210.
Note: The Insolvency Service may ask you to provide them with documents or information under powers conferred on them by section 447(3) of the Companies Act 1985 (as amended) for the purposes of an investigation of the company. This provision is not binding on the Crown and you cannot disclose any requested information using that section. Instead, please refer to the guidance above in respect to Part 9 of the Enterprise Act 2002 and IDG55200
Devolved administrations
This guidance applies to the whole of the United Kingdom.
Further guidance
Please also read the Insolvency Helpcardand if necessary contact Insolvency Governance & Professionalism, Inbox (SOLS) if you have any further queries (please see IDG 80100).