Filing Pre-Liquidation Tax Returns In MVLs

Filing all pre-liquidation tax returns in MVLs before the commencement of liquidation seems to have much merit.

If it is left until afterwards, then it has to be dealt with by the liquidator.

A liquidator may well not wish to sign such returns because the same relates to a period to which the liquidator was not in office and has no knowledge of the company and its affairs.

The case of Cedar Securities Ltd & Anor v Phillips & Ors [2025] EWHC 2760 (Ch) shows what can happen when a pre-liquidation corporation tax return has not been filed on a timely basis. 

In this case, a tax return for the period to 29 September 2016 was not filed until three years (16 October 2019) after the joint liquidators were appointed on 30 September 2016.

The problem is the consequence of this delayed filing of the relevant tax return culminated in the following:

• Tax penalty of £133,939.92
• Interest of £273,077.77

The upshot of this was that a claim has been lodged against the former joint liquidators by the estate of the former 100% shareholder:

The claim concerns Cedar’s obligation to file a corporation tax return for the period up to 29 September 2016 in respect of its liability to tax for the period prior to liquidation and payment of the tax that fell due. The return had to be filed within 9 months of Cedar entering into voluntary liquidation although the obligation to pay any tax due arose on the date of the liquidation. The way the liability to pay tax has been described in the claim varies between the parties but, to state the obvious, the return could not have been filed prior to 29 September 2016 and equally the tax due could not have been paid until it had been assessed by HMRC. The return was for a pre-appointment period, but the process of establishing the sum due could only be undertaken after the appointment.

The claimants allege that the defendants were in breach of their duties and obligations (including fiduciary duties and obligations) that led to the late filing of Cedar’s corporation tax return. The return was not filed until 16 October 2019, three years after the defendants were appointed. Tax of £615,000 was paid on the same date the return was filed and the balance of tax due was paid on 30 November 2020. A tax penalty of £133,939.92 levied by HMRC was paid by Ann Cedar’s estate on 9 May 2022 and interest of £273,077.77 was paid by the estate on 21 September 2022. The claimants seek to recover the penalty and interest paid by the liquidators to HMRC.

The case continues.