INSURANCE AND REINSURANCE DISPUTES
2020 REVIEW
The contents of this publication are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
INSURANCE AND REINSURANCE DISPUTES 2020 REVIEW
Contents
Preface
The Court of Appeal has unanimously upheld an order refusing to strike out a claim by a “one-man” company in liquidation, which had been the vehicle for a VAT fraud, against its former directors and overseas suppliers alleged to have been involved in the fraud.
UK REIT Horizon Scanner Q4 2021
UK REIT Horizon Scanner Q4 2021
Key Issues
Key issues coming up for UK Main Market REITs in corporate, financial regulatory, planning, real estate, securities law and regulation and tax1 in England (including retained EU law2).
Issue/status/timing: New developments since our March 2021 edition are shown in green text. Impact: urgency/impact rating for REITs admitted to London Stock Exchange Main Market (including the Specialist Fund Segment3)
From 1 December 2020 onwards, HMRC will be treated as a preferential creditor of companies for certain taxes including PAYE, VAT, employee NICs and Construction Industry Scheme deductions. In the event that a company enters administration or liquidation, HMRC's claim for these taxes will rank ahead of any floating charge holder.
This reflects recent changes made to the Finance Act 2020.
The impact on floating charge holders
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.
Alongside the permanent reforms to English insolvency law introduced by the Corporate Insolvency and Governance Act 2020, the government introduced a temporary suspension of certain provisions of the Insolvency Act 1986 (the IA) to address the economic turbulence caused by the COVID-19 pandemic.
Background
In the 2018 Autumn Budget, the Chancellor announced his intention to reintroduce Crown Preference with effect from 6 April 2020. Due to the attempts to prorogue Parliament and the General Election last year, the necessary legislation was not passed. However, it has now been introduced in the Finance Bill 2020, with the later start date of 1 December 2020.
In This Issue:
The Year in Bankruptcy: 2020
A brief chronicle of the year's notable developments in corporate bankruptcy and restructuring. [read more …]
Focus on Health Care Provider Bankruptcies
With effect from December 1, 2020, Her Majesty's Revenue and Customs ("HMRC") ranks ahead of floating charge holders and unsecured creditors with respect to recovering certain pre-insolvency taxes from an insolvent business ("Crown preference"). Directors can also now incur personal liability for the unpaid taxes of an insolvent company where they are involved in tax avoidance, evasion, or phoenixism.
The Finance Act 2020 provides that directors, managers, shareholders, lenders and others can be made jointly and severally liable for the outstanding tax debts of insolvent (or potentially insolvent) companies and limited liability partnerships (LLPs).