Reading the ongoing budget news releases by the national press regarding many small and populist items it would be easy to miss it but despite coronavirus and other more long term threats to the UK economy, the government has ignored all consultation responses to its proposals to reintroduce Crown Preference and announced that it will be reintroduced from December 2020.
Thus HM Revenue & Customs will be a preferential creditor for all taxes perceived as collected on their behalf such as VAT CIS and employees’ NIC for an unlimited period.
HMRC considered that it would reap £185m pa by this change whilst banks have warned that it will produce a reduction in lending liquidity by over a billion. Can the new Chancellor do maths?
The changes regarding Tax abuse in Insolvency are absent from announcements though included in the earlier Finance Bill- under those proposals directors and others including loan creditors were to be made personally liable in cases of serial (3) phoenixism, or cases where there has been tax evasion or avoidance (in the opinion of HMRC). We continue to watch this space.
About the author:
Frances Coulson is a Senior Partner and Head of Insolvency & Litigation at Moon Beever LLP.
If you have any questions regarding this update, please contact Frances on firstname.lastname@example.org.