Syon Associates – Tax

HMRC’s Bold Move Ends Tax Clearance For MVLs and Tax Consultants


HMRC recently announced that it was ending its tax clearance service, marking a significant change in how it approached Members’ Voluntary Liquidations (MVLs). The most recent insolvency advice, which was released on December 6, 2023, indicates a shift in the role of insolvency practitioners (IPs), placing more emphasis on their need to use professional judgment when making conclusions. With this action, HMRC hopes to speed up the resolution of cases that have been delayed because of its capacity limitations while also streamlining the MVL procedure.

The Failure Of A Structure

The lack of an ideal procedure or regulatory framework for providing tax clearance is the basis for HMRC’s decision. IPs should now rely on alternate means to confirm a company’s tax responsibilities, according to the guidelines. Sworn statements made by the directors of the firm, continuous HMRC compliance audits, and HMRC claims for pre-insolvency debt are some of these techniques.

Quickening MVL's Conclusion

Although insolvency professionals may disagree with this modification, it is anticipated to increase MVL completion efficiency. Many firms have been frustrated by delays that they blame on HMRC’s capacity limits; nevertheless, removing the tax clearing procedure is expected to relieve some of these bottlenecks.

Discussions Regarding Tax Clearance's Value

In the context of insolvency, there has been discussion on the need to receive tax clearance from HMRC. IPs have been advised to exercise caution while using the clearing service since it frequently contains highly restrictive restrictions. The new guidelines may streamline the procedure and provide practitioners greater freedom by putting the onus on IPs to use their professional judgment.

Tax Advisor's Role in MVLs

Since HMRC is no longer offering tax clearance, tax advisors play an even more important role. Rather than depending on HMRC approval as in the past, tax consultants are now crucial in helping firms navigate the MVL process and ensure that all tax responsibilities are fulfilled.

Tax-Free Investment And Capital Gains Tax Relief

Tax consultants can be crucial in helping firms explore tax-efficient solutions, including as capital gains tax relief choices and tax-free investments, as they negotiate MVLs without HMRC tax clearance. To maximize rewards for stockholders during the liquidation process, this is essential.

Tax Relief On Charity Donations

Businesses may want to look into tax relief on charitable gifts. Tax experts may help them with this process, ensuring that all applicable requirements are followed and that the impact of charitable contributions during the MVL is maximized.

Location-Specific Guidance

For example, companies in London may want to consult with a tax adviser in London who is knowledgeable about local laws and may offer customized guidance in light of recent adjustments made by HMRC.

Emerging Trends: Electric Car Tax

In light of the growing focus on sustainability, tax advisers may also advise companies on new developments, including tax advantages for electric vehicles, encouraging them to make ecologically beneficial decisions throughout the winding down process.


HMRC has ceased its tax clearance service for MEMBERS’ VOLUNTARY LIQUIDATIONS (MVLs), seeking to accelerate cases hindered by capacity issues. This change emphasizes the role of insolvency practitioners (IPs) in verifying a company’s tax responsibilities. Tax advisors now play a pivotal role in guiding businesses through MVLs, exploring tax-efficient strategies, charitable donations tax relief, and staying abreast of emerging trends. Seeking professional advice and collaborating with seasoned tax advisors are crucial for businesses navigating the intricacies of MVLs in this new landscape shaped by HMRC’s decision.
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