Extract from an article by Adrian Rudd (of PricewaterhouseCoopers, Tax Adviser's representative on Technical Committee) regarding companies in liquidation (published in the July 2000 issue of Tax Adviser.) The Institute wrote to the Revenue, pointing out that with the advent of CTSA practical problems are being experienced in obtaining Revenue clearance for closing liquidation cases where clearance is sought before the end of an accounting period without the submission of form CT600. The problem is somewhat analogous to the difficulties encountered in closing the tax affairs of deceased individuals when self-assessment was introduced. That difficulty was alleviated by the practice set out in Inland Revenue press release dated 4 April 1996. The Institute requested that a similar procedure should be introduced for companies.
The Inland Revenue advised that its procedures have not changed under CTSA. In outline their approach is as follows:
- Section 342(5) allows a liquidator to self-assess before the end of an accounting period.
- The Revenue will accept an informal return, such as a letter, from liquidators wishing to finalise affairs before formal completion of winding-up (although if there are positive entries to be made it may be more practical if the liquidator makes the return on a CT600).
- The Revenue will provide a clearance in liquidation cases, if appropriate, that they will not take the return up for enquiry. This is recognised in para 6.2.5 of the Revenue’s guide to CTSA as the only exception to the principle that the Revenue will not give notice that a particular return has been ‘accepted’ and that no enquiries will be made.
- A company which is to be struck-off informally can still ask for clearance under ESC C16 to treat distributions as though they had been made in the course of a winding-up. Paragraph CT3222 of the Inland Revenue manuals is relevant to this situation.
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