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Who is responsible for a business’ VAT affairs when it becomes insolvent?

VAT law says that from the date that a person becomes ‘bankrupt or incapacitated’, or in the context of companies going into liquidation, receivership or enters administration, HMRC can treat the office-holder (that is, an official receiver or insolvency practitioner) as a taxable person. HMRC refers to this date as ‘the relevant date’. In general terms, this means that upon insolvency, an office-holder becomes responsible for the VAT affairs of the business from the relevant date onwards (albeit it should be noted that this is not the case for bankrupts continuing to trade, voluntary arrangements, deeds and schemes of arrangement, and county court administration orders).

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