The Department for Work and Pensions has issued a consultation paper which seeks to strengthen the powers of TPR in connection with defined benefit pension plans, coming in response to recent corporate failures which had pension plans with significant deficits.

The proposals introduce four new “notifiable events” in addition to those that already exist, the introduction of hefty (potentially unlimited) fines, through the introduction of new civil and criminal penalties and widening the net of those potentially liable for an offence, to include directors.

Will your business be financially viable at the end of lockdown? What challenges does 2021 pose? What are the next steps

There was a magical place that’s now in administration. It’s called ‘Toys R Us’, Toys R Us’, Toys R Us’.

In the final part of our predictions for 2021 for the UK insolvency market we look at pensions, the National Security and Investment Bill and cross border matters.

“There’s a magical place, we’re on our way there, with toys in their millions, all under one roof – it’s called… Toys R Us!”

The lyrics resonate with millions worldwide. The advert is as iconic as Coca Cola’s “Holidays Are Coming” commercial or the Sainsbury’s “Christmas is for sharing” World War 1 cinematic ad. Sadly, there is no longer a magical place aura emanating from the retail giant, but a sobering reality that its financial disarray may lead to the company’s demise.

The Pensions Schemes Act received Royal Assent yesterday (11 February).

For those involved in restructuring it is important to be aware that the Act introduces new offences, carrying hefty fines and the possibility of imprisonment that apply to “any person”. Given the wide scope of the drafting the new offences could capture directors, insolvency practitioners, lenders and other professional advisors commonly involved in a restructuring whose only defence to such a claim is that they acted with “reasonable excuse” – a term not defined in the legislation.

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 whether funds can be clawed back for the benefit of creditors.

HM Revenue and Customs’ opinion on EBT schemes

Despite vaccines now being available, tough measures remain in place to deal with the ongoing COVID-19 pandemic, creating uncertainties for businesses and owners about what the future holds.

The recent Court of Appeal decision in Horton v Henry has highlighted the protection afforded to a bankrupt holding a private pension to the detriment of his bankruptcy creditors.

Facts

Ongoing uncertainties about the COVID-19 pandemic, coupled with the looming deadline of Brexit, mean businesses and owners are in for a tough ride over the next few months, possibly much longer if the UK continues to face restrictions.