Key tax consequences of an administration
Produced in partnership with Anthony Davis and Julia Fox of Deloitte LLP
Key tax consequences of an administration

The following Tax practice note produced in partnership with Anthony Davis and Julia Fox of Deloitte LLP provides comprehensive and up to date legal information covering:

  • Key tax consequences of an administration
  • What is an administration and what is its purpose?
  • Change in priority of tax liabilities in an administration
  • Provable debts
  • Expenses of the administration
  • Set-off
  • Accounting periods for companies in administration and the effect on use of tax losses
  • Beneficial ownership
  • Group relief
  • Personal responsibility of the administrator
  • More...

This Practice Note outlines:

  1. the main corporation tax consequences when a UK incorporated company goes into an administration process in the UK, and

  2. some tax considerations which arise during the course of the administration

Administrations are a highly flexible process and have become very popular as an effective way of dealing with, and in many cases rescuing, insolvent businesses.

Administration is purely a statutory procedure. When the process was reformed by the Enterprise Act 2002 (EnA 2002), which introduced Schedule B1 to the Insolvency Act 1986 (IA 1986) on administration, HMRC also introduced specific tax legislation covering certain issues (though unfortunately these are not comprehensive).

For further discussion of the administration process, see: Administration—overview and below: What is an administration and what is its purpose?

The impact of administration, from a tax perspective, can be wide-ranging and there are several areas that can, in the absence of careful consideration, result in unexpected and (occasionally) unnecessary tax liability.

Particular areas of concern, each covered in more detail in this Practice Note, include:

  1. the priority under which tax liabilities are payable in administration

  2. the rules about the company’s accounting periods

  3. the question whether the company ceases to be beneficial owner of its assets

  4. group relief which would have been available to the company as a member of a corporate group may cease to be available

  5. the administrator’s responsibility for the company’s

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