作者
Nick Moser

Nick Moser

合伙人

Read More
作者
Nick Moser

Nick Moser

合伙人

Read More

2020年12月10日

R&I update - December 2020 – 2 / 4 观点

Reintroduction of UK tax authority preferential claim – how could it affect you?

  • Quick read

In a widely criticised move, the UK tax authority, HMRC, has become a second ranking preferential creditor regarding certain taxes in insolvency proceedings commenced on or after 1 December 2020.

This means that in the new insolvency waterfall, HMRC ranks behind the claims of holders of fixed charges and first ranking preferential creditors (most notably employees) but ahead of floating charge holders' claims and unsecured creditors.

The tax debts given priority include VAT, employee NIC and PAYE (but not corporation tax). There is currently no time limit or cap on the size of the tax debts eligible for preferential status and such debts will likely include significant VAT deferrals granted in accordance with the COVID-19 response measures.

While there is provision for regulations to be made limiting the amounts which will be given preferential status to those referable to a particular period, no such regulations have been made yet.

How this could affect you

  • HMRC's claim will reduce the realisations available to floating charge holders and unsecured creditors who will essentially pay for tax deferrals.
  • This is likely to reduce lenders' appetite to lend and/or increase the cost of funding at a time of economic emergency when access to finance is critical. 
  • A requirement to pay HMRC in full may limit the availability of company voluntary arrangements as a restructuring tool. HMRC will have a veto over the approval of a CVA as preferential creditors can't be bound by a CVA unless they consent.

Find out more

To discuss the issues raised in this article in more detail, please reach out to a member of our Restructuring & Insolvency team.

Call To Action Arrow Image

Latest insights in your inbox

Subscribe to newsletters on topics relevant to you.

Subscribe
Subscribe

Related Insights

phone-booths
重组和破产

Virgin Atlantic becomes first company to use UK government's new restructuring plan

2021年3月9日
Quick read

作者 Nick Moser

点击此处了解更多
退休金破产

Pensions in Restructuring Survey – our analysis

2021年1月14日
Quick read

作者 Mark Smith 以及 Nick Moser

点击此处了解更多
重组和破产

English High Court provides clarity for assignees of insolvency claims

2021年1月7日
Quick read

作者 Nick Moser

点击此处了解更多