The great majority of businesses must file their returns using functional compatible software and pay any VAT due electronically. The only exceptions to this are businesses subject to an insolvency procedure and businesses who have been granted an exemption.

If a business is exempt from submitting a software return or an online return then the alternative is a paper return.

5.1.2 Pre-insolvency returns

The insolvent business has responsibility for submitting pre-insolvency returns. But, the office holder may submit a return for any pre-relevant period for which the trader has not submitted a return.

Leave the return unsigned, but add the legend, ‘completed from the books and records of the company or trader’.

The final pre-insolvency return covering the period up to the relevant date will be issued automatically to the office holder. This return will not be subject to default surcharge.

5.1.3 Split period returns

When the relevant date falls within a prescribed VAT accounting period for which no tax liability has been declared, VAT Returns will be issued covering the immediate pre and post appointment accounting periods.

VAT Returns issued for the:

• outstanding pre-appointment period run from the beginning of the prescribed accounting period to the day immediately prior to the date of appointment
• first post-appointment VAT accounting period run from the date of appointment to the end of the next prescribed accounting period

5.1.4 Post-insolvency returns

Returns will be issued automatically to the office holder on a monthly or quarterly basis as appropriate.

5.2.1 Penalties due under VAT Act 1994

VAT late submission and payment penalties apply for VAT periods starting on or after 1 January 2023. This replaces VAT default surcharge. For more information, you should refer to VAT penalties and interest.

5.2.2 Inaccuracy penalties due under Schedule 24 FA 2007

Inaccuracy penalties due under this act are applied both before and after insolvency VAT Returns and relevant documents in all cases. Factsheet CC/FS7a provides details of the penalty for the inaccuracies regime.

Returns submitted showing a repayment due to the business will be repaid in the name of the insolvent business, care of the office holder.

We aim to make the repayment within 30 days of receipt of the return, subject to verification of the declaration. Repayments will be delayed if:

• you have failed to notify us of the appointment of the office holder

We may make repayments for:

Read about repayment interest on VAT credits or overpayments.

You must file a Company Tax Return (CT600), if you get a ‘notice to deliver a Company Tax Return’ (CT603) from HM Revenue and Customs (HMRC).

How you submit your return depends on the type of insolvency the company is in.

For most insolvencies you can submit the returns either online or using a paper return unless the company is in members’ voluntary liquidation (MVL)

5.2.1 If the company is in members’ voluntary liquidation (MVL)

You must submit the Company Tax Return online. You cannot submit a paper return.

You’ll need to sign in or set up an HMRC online services account before you can send the returns. To register, you need:

• the name of the company in an MVL
• the company’s registration number
• the company’s Unique Taxpayer Reference (UTR)
• your (or your insolvency firm’s) email address
• your (or your insolvency firm’s) contact phone number

When you register for a company in an MVL, do not use your personal details to set up the account.

If you have more than one company in an MVL, you will need to set up an online account for each one, using the company’s details.

You should allow 30 days from when Companies House is updated with the details of the MVL before you register with HMRC.

You’ll then need to use commercial software to submit the returns.

We have the right to check the accuracy of all returns submitted and to require that the books and records of the business be made available for inspection.

In certain circumstances, when it can be shown an office holder has consistently not complied with regulations, a report may be made to the appropriate licensing authority.