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You must notify HM Revenue & Customs (HMRC) if you, your business partner or your business becomes insolvent.
HMRC will calculate the VAT that you owe based on the amount outstanding at the date on which the business became insolvent. VAT will be claimed up to the day before the date of insolvency. The claim may also include penalties and interest for late or missed payments.
When you stop trading because of insolvency, you must cancel your VAT registration. Once your registration is cancelled, a final return will be issued covering the period from the first day after the end of the last accounting period, up to the day before the date of de-registration.
This guide explains what VAT HMRC will claim and what VAT returns you have to make.
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If your business goes bankrupt then your affairs will be taken over by a court-appointed representative and they will be responsible for dealing with HMRC. They'll notify HMRC of your insolvency.
Certain procedures are not treated as insolvencies. These procedures are:
In these cases, your VAT affairs will continue to be dealt with by your local VAT office.
Read guidance for insolvency practitioners in Notice 700/56
HMRC will calculate the VAT that you owe based on the amount outstanding at the date on which the business became insolvent. VAT will be claimed up to the day before the date of insolvency.
The person appointed to take over the affairs of an insolvent business is responsible for paying VAT from the date of his appointment.
Read guidance for insolvency practitioners in Notice 700/56
You're responsible for submitting the pre-insolvency returns for your business. However, if you haven't submitted a return for any pre-insolvency period, then the person appointed to handle your affairs may do this. Neither they nor you should sign the return - instead, they must write 'completed from the books and records of the company/trader' on it.
