The published judgment in Abbey Forwarding[1] will not make for comfortable reading for HMRC. Having instigated the winding up of a profitable business, which led to the dismissal of 23 employees, and accused  innocent directors of fraud, HMRC then withdrew all assessments made against the company and attempted to avoid undertakings it had given to the court when seeking the original winding up order.

This article provides an essential update for insolvency practitioners on the proposed Insolvency Rules 2015 and the end of the insolvency exemption on Conditional Fee Agreements.

The end of the CFA?

The High Court has held that a bankrupt’s unexercised rights to draw his pension did not represent income to which the bankrupt was entitled and so refused to make an income payments order, contradicting the controversial decision in Raithatha v Williamson which held that a bankrupt’s right to draw income from a personal pension may be subject to an income payments order even if the individual has yet to draw his pension.

Horton v Henry [2014] EWHC 4209 (Ch)

With the Insurance Act 2015 receiving Royal Assent on 12 February 2015, we take a look at the consequential amendments to the Third Parties (Rights Against Insurers) Act 2010 (the “2010 Act”). These amendments were aimed at rectifying the failure to include certain insolvency circumstances in the original 2010 Act (which due to these defects was not brought into force after Royal Assent) and it is hoped that the act may finally come into effect by autumn 2015.

Background

In the recent decision of Horton v Henry [2014] EWHC 4209 (Ch) the High Court held that a Bankrupt’s unexercised rights to draw his pension did not represent income to which the Bankrupt was entitled within the meaning of section 310(7) of the Insolvency Act 1986 and so refused to make an Income Payments Order. This contradicted the controversial decision in Raithatha v Williamson [2012] EWHC 909 (Ch) and has created uncertainty as to which is the correct position. The Horton case is being appealed.

We welcome the Government’s announcement today that the insolvency exemption to the Jackson reforms will remain in place for the foreseeable future, although it will be reviewed later in the year.

Following the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act 2012, success fees under “No Win, No Fee” conditional fee agreements are generally no longer recoverable from opponents and neither are premiums under after the event (ATE) legal expenses insurance policies.

Congratulations to all those who lobbied government to extend the carve out for insolvency from the restrictions imposed by the Jackson Reforms. We have just received confirmation from the Ministry of Justice that the exemption granted to Insolvency Practitioners has been extended indefinitely.

A real shot in the arm for Insolvency Litigators across the UK.

House of Commons: Written Statement (HCWS303)

Ministry of Justice

Key Point

The Court of Appeal has overturned a first instance decision (discussed in our April 2014 Update) that the Companies Court should not normally make an order upon a winding up petition based on tax assessments that are under appeal.

The Facts

Key point

Pensions in payment were within the ambit of section 310(7) of the Insolvency Act 1986 (the "Act"), but pensions not in payment were not payments to which a bankrupt was “entitled” as the right to draw had not been excerised. The court therefore refused to make an income payments order ("IPO").

The Facts

In a recent decision, the High Court held that legal advice taken in relation to certain transactions was not protected by privilege, as there was prima facie evidence that the purpose of the advice was to structure the transactions in a way that avoided the client’s liability to pay local authority care charges and/or as a transaction defrauding creditors: London Borough of Brent v Kane [2014] EWHC 4564 (Ch).