UK LEGAL HIGHLIGHTS 2014 AND BEYOND Welcome to our 2014 edition of UK Legal Highlights. This publication is a reminder of some of the most important and significant developments DLA Piper reported in 2014, along with some forthcoming developments to look out for in 2015 and beyond.

The vast majority of UK taxpayers pay what they owe in full and on time. Her Majesty’s Revenues and Customs (HMRC) thinks that a persistent minority choose not to pay which provides an undeserved advantage to those who are wilfully seeking to play the system, and creates costs which are ultimately borne by the compliant majority.

When undergoing a restructuring, a borrower/officeholder's main focus is often the company's lenders. However, there are occasions when HMRC's agreement can be just as key to ensuring any process runs smoothly. In this article, Sonia Jordan and Hayley Çapani discuss some key areas where HMRC's agreement is essential to ensuring a smooth restructuring or insolvency process.

Key Point

A provisional liquidator may be appointed if the evidence justifies it even where the tax assessments upon which the winding up petition is based are under appeal.

Facts

Key Point

The Court of Appeal has held that a UK company undergoing a financial restructuring was not entitled to recover VAT charged by accountants who prepared reports for the company's lenders use during the restructuring process.

The facts

Court of Appeal denies input tax on accountancy services relating to arefinancing and restructuring process: Airtours Holiday Transport Limited vHMRC5

This update considers the recent High Court decision in Thomasand Another v Edmondson (12/05.2014) concerning the court’s ability to make an income payment order against a bankrupt who is already subject to an income payment agreement.

The background

Key Point

Neither failure to obtain debtor's consent to modifications to an IVA proposal, prior to the creditors' meeting; nor the unauthorised exercise of a proxy at a creditors' meeting render an approved IVA a nullity.

The facts

Since the Welfare Reform and Pensions Act 1999 (“1999 Act”), it has been understood that the rights of a bankrupt under a tax approved pension plan are excluded from the bankruptcy estate and do not vest in his Trustee in Bankruptcy.

That said, where a Bankrupt was already drawing an income from his pension, his Trustee could seek an Income Payments Order over that income.

In the past, HMRC has allowed insolvency practitioners to cancel the VAT registration of businesses at an early stage and account for VAT on any subsequent supplies using form VAT 833. HMRC has received legal confirmation that a deregistered business cannot issue a valid VAT invoice, which could result in VAT registered buyers of assets from insolvent businesses being denied claims for input tax. As a result, HMRC will no longer allow the early deregistration of insolvent businesses.