COM1020 - Accounting periods: company accounting periods: administration periods

This subject is presented as follows

General
Automatic AP changes and Technical Caseworker review 

General

Schedule 41 FA 2003 introduced important changes to the way that company Administrations are handled.

These changes were necessary because of amendments to insolvency law made by the Enterprise Act 2002 (Word 30KB). The amendments were made

  • To provide the environment for viable companies in financial difficulties to recover

And

  • For other companies to achieve the best result for creditors

For Administrations commencing on or after the 15 September 2003 the following rules apply to determine the APs at the start and end of an Administration.

  • When a company enters and leaves a period of Administration
    • A new AP begins on the Administration start date and an AP ends on the day before
And
    • An AP ends on the Administration end date and a new one begins on the day after
Note: Unlike the rules for APs when a company goes into Liquidation, there is no obligation on a company to alter its normal accounting reference date when it enters a period of Administration.
For more information about Liquidations see the Company Taxation Manual, CTM01520 and CTM36105 onwards.
  • An Administrator is treated as the ‘proper officer’ of the company, having the same responsibility for a company’s tax affairs as that of a Liquidator
  • Companies can go into Administration without a court order
  • An Administrator can be appointed at any time in the life of a company, including during Liquidation. The rules for changes to APs by reference to Administration start and end dates apply in all circumstances
  • Administrators can distribute all of the assets of a company to its creditors, with no obligation to move into Liquidation
  • Administration could result in a company being dissolved without going into liquidation or any other procedure
  • Administrators can deliver returns before the end of the final AP of the Administration

Further information on Administrations is available in The Insolvency Manual.

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Automatic AP changes and Technical Caseworker review

When a company goes into administration COTAX is notified automatically by Companies House and enters the case on the Case Records Changes List (CRCL). The details of the administration are not entered onto COTAX automatically and have to be reviewed by the case worker. The Administrator may tell you too. You will not normally know the AP end date until the return is submitted for the first Administration AP.

COTAX automatically creates APs of 12 months duration.

You must use Function ACTP (Amend CT Payer Details) to enter the Administration start date onto the record. COTAX will normally

  • Automatically supersede the AP into which the Administration start date falls, setting up a shorter AP to end the day before that date

And

  • Supersede all later APs, setting up new 12 month APs from the Administration start date, up to and including an AP ending after the session date

The Administrator normally tells you when the Administration has ended.

You must use Function ACTP to enter the Administration end date onto the record. COTAX normally

  • Automatically supersedes the AP into which the Administration end date falls, setting up a shorter AP to end on that day

And

  • Supersedes all later APs, setting up new 12 month APs from the day after the Administration end date, up to and including an AP ending after the session date

Note: You must use Function ACTP to enter Administration start and end dates as using Function MAPD before entering the dates in Function ACTP leads to

    • COTAX superseding the APs you have created
And
    • If a return is logged on an AP ending after the Administration start date, COTAX will not then allow you to enter the date in Function ACTP

To prevent the issue of output to the incorrect address, you should not cease the Administrator’s capacitor role using Function ACAP (Add / Amend Acting in Capacity) until all output relevant to the Administration APs has been issued.

Each time an Administration start or end date is entered, amended or deleted using Function ACTP, COTAX displays screen COT102D to prompt the Clerical Caseworker to print the screen and pass the case to a Technical Caseworker.

The screen print tells you why a review is necessary. You should carry out the review and make any necessary changes using Function MAPD.

For a list of functions to use in particular situations, see COM1021.

For legislation applying to this subject, see COM1022.

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