Revenue Note for Guidance

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Revenue Note for Guidance

960O Winding-up of companies: priority for taxes

Summary

This section deals with the priority attached to certain taxes owed to Revenue where a company goes into liquidation or receivership.

Details

(1) Terms used in the section (i.e. “Act of 2014”, “Act of 2010”, “relevant date”, “relevant period” and “relevant subsection”) are defined.

(2) Corporation tax and capital gains tax are deemed to be included among the taxes that have priority on the winding up of a company. Capital gains tax is included as companies pay capital gains tax for gains realised on the disposal of development land. (Companies pay corporation tax rather than capital gains tax in respect of gains realised on the disposal of other chargeable assets.)

(3)(a) VAT (and interest charged on that tax under section 114 of the Value-Added Tax Consolidation Act 2010) for which a company is liable for taxable periods (as defined in that Act) are to be paid in priority to all other debts on a winding up of a company.

(3)(b) For the purposes of section 440 of the Companies Act 2014 (which relates to the preference attaching to certain payments when a receiver is appointed under a floating charge), paragraph (a) is deemed to be included in section 621 of the Act, which refers to the preferential status of PAYE debts.

(4)(a)(i) Unpaid amounts of an authorised employer’s PAYE liability have preferential status on the winding up of a company.

(4)(a)(ii) to (v) Where a company goes into liquidation or receivership, arrears of relevant contracts (i.e. subcontractors) withholding tax under Chapter 2 of Part 18 and regulations made under that Chapter and arrears of tax due under PAYE assessments made under section 990 for the 12-month period ending on the date the company went into liquidation or receivership are deemed to be preferential PAYE arrears and, therefore, rank along with other tax debts for priority payment.

(4)(b) Where arrears referred to in paragraph (a)(ii) to (v) are for a period that straddles the 12-month preferential period, only the amount of the tax apportioned on a time basis falling within that 12-month preferential period is to be treated as preferential.

(4)(c) The employer’s liability for a period of 12 months includes all tax which the employer is obliged to deduct from emoluments paid to the employees during that period (including any amounts of PAYE and interest on such amounts which would have been due to be remitted by the employer if that employer had been sending in remittances on the normal basis), reduced by any repayments which the employer is required to make under the PAYE system in that period, together with any interest payable in respect of that tax.

Relevant Date: Finance Act 2019