Banned! Fraudsters!– Terms used by the Insolvency Service for directors who abused the government backed loan scheme which was put in place to help businesses struggling during the pandemic.
On 11 September 2020, the Insolvency Act 1986 (HMRC Debts: Priority on Insolvency) Regulations 2020 were made. The Regulations will come into force on 1 December 2020.
The Regulations set out the debts due to HMRC that will have ‘secondary’ preferential status in insolvencies from 1 December 2020. They are debts in respect of PAYE income tax, employee NICs, construction industry scheme deductions and student loan repayments. VAT debts are to be treated in the same way, though are not covered by these Regulations.
On 4 June 2020, a draft of The Insolvency Act 1986 (HMRC Debts: Priority on Insolvency) Regulations 2020 was provided to the Public Bill Committee. The Regulations are due to come into force on 1 December 2020.
The draft Regulations set out the debts due to HMRC that will have ‘secondary’ preferential status in insolvencies from 1 December 2020. They are debts in respect of PAYE income tax, employee NICs, construction industry scheme deductions and student loan repayments. VAT debts are to be treated in the same way, though are not covered by these draft Regulations.
HM Treasury has provided the Public Bill Committee with a draft copy of The Insolvency Act 1986 (HMRC Debts: Priority on Insolvency) Regulations 2020, to be made pursuant to the current clause 96 of the Finance Bill 2020. The draft regulations have not yet been formally laid before Parliament but are d
On 11 July 2019, HMRC published its summary of responses to its “protecting your taxes in insolvency” consultation.
Following the consultation, the government will legislate in the Finance Bill 2019-20 to make HMRC a secondary preferential creditor for certain tax debts paid by employees and taxpayers. This change is intended to ensure that when a business enters insolvency, more of the taxes paid in good faith by employees and taxpayers go to the Exchequer, rather than being distributed to other creditors. Draft legislation and an explanatory note is also available.
On 11 July 2019, HMRC published a policy paper discussing measures which are aimed at those taxpayers who “unfairly seek to reduce their tax bill by misusing the insolvency of companies”. This will be achieved by making directors and other persons connected to those companies jointly and severally liable for the avoidance, evasion or “phoenixism” debts of the corporate entity.
An explanatory note and draft legislation set out the conditions that must be satisfied in order to enable an authorised HMRC officer to issue a “joint liability notice” to an individual.
On 26 February 2019, HMRC launched a consultation entitled “Protecting your tax in insolvency”, on the government’s proposal to make HMRC a secondary preferential creditor for taxes paid by employees and customers (the new powers are contained in the proposed Finance Bill 2019-20).
External administrators of companies can now assign any right to sue that is conferred on them by the Corporations Act, for example voidable transaction claims and insolvent trading claims. Previously these were considered rights that could only be utilised by the appointed liquidator and so could not be assigned. Now they can.
When did this start?
- This has already begun. It commenced on 1 March 2017.
What legislation brought this about?
Yesterday, in a unanimous 5-0 decision, the New South Wales Court of Appeal knocked out Justice Brereton’s remuneration decision in Sakr Nominees Pty Ltd [2016] NSWSC 709, the sixth in a series of controversial decisions on insolvency practitioner remuneration.
Last Friday, Justice Brereton finally published his reasons in Sakr Nominees Pty Ltd [2016] NSWSC 709, the latest in a series of controversial decisions on insolvency practitioner remuneration.
In Sakr, consistently with his Honour’s previous remuneration decisions: