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VAT Insolvency HMRC UK

What is your VAT responsibility if your business becomes insolvent? Check the UK rules on pre-insolvency and de-registration for Value Added Tax.

INSOLVENCY & VAT REGISTRATION: Discover how to pay your final VAT bill to HM Revenue and Customs?

Your insolvency practitioner will help if you or your small business become insolvent or bankrupt.

As a rule, they will cancel your VAT registration and then help you make a closing payment.

HM Revenue and Customs calculate your final bill for Value Added Tax. The ending figure comes from the amount you owe up to the day immediately before insolvency.

You must use paper version forms and documents for VAT insolvency issues. HMRC will send you current and correct versions for this purpose because you cannot use your online account.

Do not sign this paper version final VAT Return. The insolvency practitioner (or yourself) should write this declaration instead.

‘Completed from the books and records of [name of the company/trader].’

Exceptions to VAT Insolvency

There are some exceptions to VAT insolvency rules. You will remain responsible for Value Added Tax if:

  • You continue trading after being declared as bankrupt.
  • You pay off your debts by setting up a voluntary arrangement (called a ‘trust deed’ in Scotland).

HMRC will provide you with two VAT Returns in paper format if you set up a trust deed or voluntary arrangement.

One form is for your current VAT period leading up to the day before the special arrangement. The other operates from the date of the arrangement and finishes at the end of your next VAT period.

After this process you can then continue to use your online VAT account for future VAT Returns.

Note: You or your insolvency practitioner must send any pre-insolvency VAT Returns to the HMRC VAT Controller.

HM Revenue and Customs – VAT Controller
VAT Central Unit
United Kingdom

VAT Insolvency: Dealing with Value Added Tax after Bankruptcy in the United Kingdom