HM Revenue and Customs have asked us to circulate the following message to members:
‘HMRC has held discussions with the Redundancy Payments Service (RPS) on the subject of Crown set-off in Members’ Voluntary Liquidations (MVL). Currently, where there is a pre-appointment credit owed by HMRC to a company in MVL, HMRC conduct enquiries to establish if there are debts owed by the company to the RPS against which the HMRC credit may be set-off under insolvency legislation. However, given that companies in MVL are required to pay all creditors in full with interest, HMRC has queried whether undertaking such enquiries in MVL cases is a cost effective use of public resources.
‘A recent sampling exercise conducted by HMRC has shown that the risk of public funds being lost as a result of not carrying out set-off enquiries in an MVL that subsequently converts to a CVL is negligible. Following subsequent discussions with the RPS, they have agreed they are content for HMRC to cease set-off enquiries in MVL cases.
‘Consequently, and with immediate effect, where there is a valid pre-appointment credit owed by HMRC to a company subject to MVL, that credit will be repaid to the company in full via the liquidator’s office. It will then be for the liquidator to deal with any claim from the RPS in the normal course of the liquidation.’