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
