Almost 20 years ago the Government decided to abolish Crown Preference bringing it into step with other western jurisdictions such as Germany and Australia. It was considered at the time "inequitable" to elevate the public purse above ordinary unsecured creditors for whom the impact was potentially far greater.
Astonishingly, in the midst of a global pandemic and a looming "No Deal" Brexit, absent a dramatic last minute "U-turn" by the Government (let's face it, it wouldn’t be the first !), Crown Preference will return with effect from December 1st 2020.
In ordinary times, a supplier of goods looks to customer-specific underwriting considerations to weigh the benefit of extending credit to a new or existing customer against the risk that the customer will fail to pay for the goods or services supplied. These are not ordina
There has been much mention in the press in recent times about the amount of allegedly incorrect or fraudulent claims made by employers under the Government’s Coronavirus Job Retention Scheme (“CJRS”) (furlough scheme).
The Court of Cassation recently delivered an important decision regarding the accounting and tax treatment of debt restructuring operations performed by way of a debt-equity swap. Although the decision has the merit of being clear, its effective consequences are that tax will remain a key consideration for deciding whether to perform such operation. One may wonder whether that is sensible at a time when company groups may have to envisage such operations to save related entities from bankruptcy.
Debt waiver - Basic principles
The re-introduction of Crown preference and the resulting change in the order of priority of creditors on insolvency was announced as part of the Autumn budget in 2018, way before anyone had heard of coronavirus or COVID-19, and was originally due to come into force on 6 April 2020. It was delayed until 1 December 2020 in terms of the 2020 budget which was presented to Parliament on 11 March 2020, the same day as the World Health Organization declared the outbreak of COVID-19 a pandemic.
Secured lenders across the UK are unhappy with the government’s decision to push through a new law which could partly or fully wipe out their security in favour of HMRC debts in a liquidation or administration. In this article, Tim Symes, a partner in our Insolvency and Commercial Litigation teams, considers the return of HMRC’s Crown preference.
Status as of 3/11 11:40 am CET
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The past year has seen some important judgments and hearings (with judgment awaited at the time of writing) on several subjects, some of which may shape the future of UK litigation for years to come. Litigants and litigators have also spent a good part of the year getting used to a new way of conducting litigation—remotely and fully electronically. Starting with contract law, while there has been little by way of Supreme Court guidance on the subject, the lower courts continue to issue interesting judgments.
As part of the legislative changes brought about by the Finance Act 2020, the Treasury drafted the Insolvency Act 1986 (HMRC Debts: Priority on Insolvency) Regulations 2020 (the Regulations) and laid these before parliament on 14 September 2020. View a copy of the regulations.