You may be approached for information in insolvency cases by a
variety of third parties. (For detailed guidance regarding the
action to be taken in respect of insolvency cases see the
Insolvency manual – see
IDG90150). The extent to which you may
disclose confidential information depends on who is making the
enquiry. Follow the link for the relevant section:
Enquiries from a liquidator, administrative receiver
or administrator
Pro-active disclosures to insolvency practitioners in
corporate insolvency cases
Enquiries from a former director of an insolvent
company
Enquiries from a trustee in bankruptcy
Pro-active disclosures to a trustee in bankruptcy
Enquiries from the Official Receiver
Further guidance
Liquidators, administrators and administrative receivers are
appointed to companies only. Upon their appointment the individual
insolvency practitioner appointed ‘stands in the shoes of the
company’ i.e. they become the company. Therefore you can
disclose anything to them concerning the company’s affairs
that you would have been able to disclose to the company. However,
you should note that if a receiver is appointed under the Scots law
of receivership, their powers do not extend to authorising the
release of information to third parties.
Disclosure must be limited to information about the company
that it would ordinarily be aware of. For example:
You cannot disclose:
However, as the insolvency practitioner stands in the company’s shoes he or she is entitled to make any Data Protection Act or Freedom of Information Act requests that the company could otherwise have made.
Generally in corporate insolvency cases the information you are
likely to have will relate to the company itself and so can be
disclosed freely to the insolvency practitioner, as outlined above,
because the insolvency practitioner ‘stands in the
shoes’ of the company. So, for example, if a company has
transferred an asset to a third party for less than it was worth
prior to the insolvency, you can provide any information you have
concerning that original transfer by the company because this is
company information. This would include the identity of the person
to whom the asset was originally transferred by the company (but
not details of any subsequent transfer by the person who received
the asset from the company).
However, where the information you have relates solely to a
third party such as another company, or a director, but has a
bearing on HMRC’s likely recoveries from the company, then
you may follow the procedures outlined for pro-active disclosures
to trustees in bankruptcy, but will need to exercise extreme
caution. It is recommended you seek advice in all cases, and
carefully record your reasoning.
Generally upon an insolvency the directors will cease to have
any powers in relation to the company and these powers will vest in
the insolvency practitioner. However in certain situations, for
example an administrative receivership, the directors may retain
some powers, and duties, which would necessitate access to the
company’s tax records held by HMRC if the directors wished to
discharge their duties.
Where directors wish to access information that HMRC holds
about a company it is suggested that the prior agreement of the
insolvency practitioner is sought. This is to avoid the provision
of the information which may cause any prejudice to the conduct of
the insolvency practitioner’s duties (e.g. if the director is
bidding to buy the company’s assets he may be seeking to gain
access to HMRC information that would not be available to other
bidders). If the director or insolvency practitioner are not
content with this approach seek further guidance from Information
Strategy (see
IDG90100).
A trustee in bankruptcy can be appointed prior to the individual being declared bankrupt or after the commencement of the bankruptcy. Disclosure of confidential information to a trustee in bankruptcy can be split into:
If the bankrupt’s pre-bankruptcy tax affairs are settled,
you cannot disclose any information to the trustee in bankruptcy
without the bankrupt’s consent.
However where, for example, the bankrupt person has open,
unsettled tax years the position is different. In these cases you
must deal only with the trustee on any matter about the pre-
bankruptcy unsettled tax affairs. You can provide the trustee with
information about the bankrupt’s pre-bankruptcy tax affairs
so that their outstanding tax liabilities may be settled. There
will usually be no reason for you to disclose anything to the
bankrupt without the consent of the trustee.
The trustee in bankruptcy does not deal with the bankrupt’s affairs post-bankruptcy. So you cannot disclose information about this period to the trustee without the bankrupt’s consent.
In England, Wales and Northern Ireland any repayments of tax
paid for a period before the date of bankruptcy will generally be
paid to the trustee in bankruptcy.
You should contact the trustee in bankruptcy before making
any repayments of tax arising for the period after the date of
bankruptcy. Although repayments can be paid directly to the
bankrupt the trustee may have first call on any funds that arise in
the period after bankruptcy.
In Scotland, the issue of tax repayment in bankruptcy cases
is more difficult and you should seek further advice from
insolvency specialists in Scotland.
Where you become aware that the bankrupt individual has assets
that have been hidden or withheld from the trustee you may be able
to disclose information that will help the trustee to recover these
assets in certain circumstances.
It will be lawful to make a disclosure to the trustee where
the making of the disclosure leads to a realistic chance of the
department increasing its recovery from the bankruptcy. If this is
the case, it can be shown that the information will have been
disclosed for the purposes of HMRC’s functions (see
IDG47000).
Where the making of the disclosure is unlikely to make any
material difference to the department’s recovery then a
disclosure cannot be made as it will not be for the purposes of the
department’s functions.
When considering a proactive disclosure you must ensure that
the reasons behind your decision are properly recorded. Your note
may need to consider factors such as:
You should judge each case on its merits and, in cases of doubt, seek further guidance from Information Strategy (see IDG90100).
The Official Receiver is the name given to officials at the
DTI’s Executive Agency, The Insolvency Service, who act in
various capacities in relation to insolvent individuals and
companies.
Where the Official Receiver is acting in relation to a
company he will be the liquidator of that company and so entitled
to information as described for liquidators above.
Where the Official Receiver is acting in relation to an
individual he will generally be acting as a trustee in bankruptcy
and so entitled to information as described for trustees in
bankruptcy above.
It is important to note that the Official Receiver, or other
Insolvency Service staff, can act in a wide variety of capacities.
Before any information is provided to the Insolvency Service it
will be important to establish what capacity the individual is
acting in and whether they are entitled to the information. See
also
IDG62820.
For further guidance contact Information Strategy, see IDG90100.
