Taxes Consolidation Act 1997 section 960O

Winding-up of companies: priority for taxes

Section 960O provides that certain unpaid taxes owed by a company in the 12 months before liquidation or receivership are treated as preferential debts, giving Revenue priority over other creditors.

• Corporation tax, capital gains tax, VAT (including interest on VAT), employer PAYE and relevant contracts tax (RCT) are all treated as preferential debts in a winding up or receivership.
• The preferential period is generally the 12 months ending on the date that is 14 days after the end of the income tax month in which the relevant date (commencement of winding up) occurred.
• Where a tax period straddles the boundary of the preferential period, the liability is apportioned on a time basis so that only the portion falling within the 12-month window ranks as preferential.
• An authorised employer's PAYE liability (where the employer accounts for PAYE less frequently than monthly) is calculated using the formula (A + B − C) + D, covering PAYE deducted, notional pay (BIK), repayments and interest.