HMRC as the UK tax authority is often the largest creditor in any insolvency, but has not always been willing to engage in the process. This has caused viable restructuring proposals to fail for lack of support and this sometimes results in HMRC not achieving the best return. HMRC recognise that this stance has frustrated … Continue Reading
There has been very little to indicate how HM Revenue and Customs (“HMRC”) might approach a restructuring plan (RP), following HMRC’s preferential status being restored in 2020. The reinstatement of HMRC as a preferential creditor potentially makes company voluntary arrangements non-viable if HMRC do not support, but what about RPs? RPs introduced for the first … Continue Reading
As part of our business recovery and resilience series, our third video from Rob O’Hare (PSL in our Tax team), responds to the question: How should companies approach HMRC for support and what support might they expect? To listen to Rob’s answer click here. We will also shortly be releasing an alert explaining the situations … Continue Reading
Following the UK business secretary offering assurance that HMRC will take a ‘cautious approach’ to recovering tax debts (see our previous blog), HMRC has now published guidance outlining its approach. This guidance also explains how HMRC might respond where a business has taken advantage of one of the government backed lending schemes (such as a … Continue Reading
We highlighted in our previous blog, the pivotal role that HMRC could play in ensuring the survival of UK businesses when all COVID restrictions are lifted and the government’s various temporary support measures come to an end. The Business Secretary, Kwasi Kwarteng, has now assured business that HMRC will take a “cautious approach” to recovering … Continue Reading
HMRC expect all UK taxpayers to pay the tax they owe, in full and on time, whenever they are able to do so. However, in circumstances where a taxpayer is unable to meet its liability, HMRC are able to exercise a discretion to allow the taxpayer to pay tax after the due date, over an … Continue Reading
In a move that will be greeted with a small sigh of relief by individuals, businesses and insolvency practitioners affected by the coronavirus pandemic (COVID-19), HM Revenue and Customs (HMRC) has published new guidance on its approach to insolvency procedures. The guidance covers: Ongoing voluntary arrangements (VA), and HMRC’s enforcement activity… Continue Reading
Perhaps not surprising, given the recent change of pace with Covid-19 and in the face of both the Chancellor and Bank of England announcing measures to support the UK economy, the proposals to re-instate Crown preference have been delayed until 1 December 2020 BUT extended to Northern Ireland. Our previous blog discussed the issues that … Continue Reading
Following an independent review of HMRC’s loan charge the UK Government has announced that there will be a number of changes to the loan charge, which in some cases will include repayment. Not only will some directors be able to claim back payments made in settlement, others will be able to take advantage of more flexible … Continue Reading
The government announced its intention to reinstate HMRC as a secondary preferential creditor in the 2018 Autumn Budget. Following consultation on this policy, the draft Finance Bill 2019/2020 was published. It was then subject to further technical consultation. Usually a policy is confirmed (or delayed or abandoned) in the Autumn Budget and if confirmed, will … Continue Reading
The Government announced an independent review of HMRCs loan charge in September 2019. In this blog we consider the effect of the review on directors who have or are settling claims with HMRC and highlight that the review does not impact on potential claims against directors of insolvent businesses. Regardless of the outcome of the review, … Continue Reading
We reported last week that the Government intends to proceed with its proposal to reinstate HMRC as a preferential creditor on insolvency, which could spell disaster for UK businesses, lenders and the UK economy. The Government has failed to listen to lenders and others who responded to the Government’s consultation about the impact of … Continue Reading
Today the Government published draft provisions for inclusion in the Finance Bill which will amend the Insolvency Act 1986 and grant HMRC preferential status on insolvency. A status that was removed in 2003 but which will be re-instated (in part) from 6 April 2020. Despite huge concern from the lending market, voiced in responses to the … Continue Reading
The proposal to reinstate Crown preference in insolvency has met resistance from all angles; the insolvency profession, turnaround experts, accountants, lawyers and funders. But despite HMRC’s bold statement in its consultation paper that the re-introduction of Crown preference will have little impact on funders, it is clear following a discussion with lenders that it may … Continue Reading
Crown prerogative dates back to the Magna Carta entitling the monarch to absolute priority for revenue related debt. Come 6 April 2020 will we really be heading back to feudal times and 1215? The proposal to reinstate Crown preference was announced as part of the Autumn Budget last year and came as a surprise to … Continue Reading
It is often common practice for small businesses to structure payments to a director (who is also a shareholder) through a combination of dividend payments and salary, in order to minimize PAYE liabilities and reduce tax. Consequently, rather than be paid a salary, a director is “remunerated” by dividend payments. This works when the company … Continue Reading
Following the Enterprise Act 2002, the preferential status which HMRC had enjoyed in an insolvency was abolished, rendering HMRC the same as any other unsecured creditor. The effect of this was to swell the pot of assets available to be applied to all unsecured creditor claims. Philip Hammond announced in Monday’s budget that HMRC’s preferential … Continue Reading
Remuneration schemes involving Employee Benefit Trusts (EBTs) have become more prevalent over the last 20 years, often as a way of seeking to remunerate key employees without making pay as you earn or national insurance contributions. Given the developments highlighted below, insolvency practitioners are advised to investigate such schemes in matters coming across their desks to see … Continue Reading
Tim Jarvis, one of our tax strategy and benefits partners, was interviewed this month by LexisNexis for his analysis of a new and important case on VAT recovery. The outcome of the case is potentially very good news for customers in insolvency situations who have been incorrectly charged VAT. The circumstances of the insolvency situation … Continue Reading
