The Business Bulletin
What superpower would you have if you could? As a direct result of this, The
evasion. It is not aimed at those who
Association of Business Recovery
have missed the payment deadline
Professionals estimate that future new
for this month’s PAYE (provided you
lending by banks will be £1 billion
do still pay that is) or your overall
less, making recovery and turnaround
circumstances demonstrate, as a
harder. To make things worse, the
director, you have acted honestly and
ability to use a formal insolvency
fairly to creditors as a whole.
vehicle (such as a company voluntary arrangement) may no longer be a
Invisibility? Being able to fly? Teleportation?
viable option as the unpaid taxes rank
Or how about being able to re-write the
likely there will be a significant HMRC
law to suit yourself and ensure you are
debt as generally HMRC are the first
always on the right side? That’s exactly
creditor businesses and individuals
what the government has done with
stop paying – indeed this is one of
two measures in the Finance Act 2020.
the Government’s main reasons for
The first is the position where HM Revenue & Customs rank for
ahead of the general body of creditors, reducing the amount available to unsecured creditors. Furthermore, it is
introducing the measure. The second new measure contained
dividend purposes. For insolvencies
within the new law is where HMRC
commencing after 1 December
can issue personal liability notices
2020, HMRC shall rank as a secondary
against company directors following
preferential creditor for the majority
tax avoidance and evasion penalties
of taxes owed by the insolvent
and repeated insolvencies. There are
party where that party has acted
various conditions which must be
as a collector of taxes. This includes
met before HMRC can issue personal
PAYE, VAT, CIS and employee’s NI
liability notices, but all involve scenarios
contributions (but not any penalties
where the company is insolvent (or
associated with those debts).
likely to be). In the tax avoidance and
“Secondary preferential” means their preferential status ranks after existing preferential claims (generally employee claims for wages and accrued holiday pay) but in priority to the holder of floating charge security. HMRC will remain an unsecured creditor for other taxes including corporation tax and employer’s NI contributions. To
evasion cases, the directors can be held liable for all of the tax avoided (and any penalties as a result). However, in the circumstances following repeated insolvencies, the directors can be held liable for debts of the failed companies as well as for any future tax debt of a new company. Before you come over all Lance
summarise, HMRC have therefore
Corporal Jones (Don’t Panic!) this
jumped to pretty much the top of the
legislation is aimed at those who act in
priority order in one fell swoop.
a deliberate manner of tax avoidance/
16 | Issue 1 – Finance
Having said that, the key message that should be derived from this legislation is if you feel there is an increasing difficulty in managing the company tax affairs or liabilities as a whole, then seek early advice. Creditors, including HMRC, are generally understanding where they learn of a possible issue at an early stage rather than wait until the need for enforcement procedures commences. In addition, the earlier advice is sought the more options there are available.
Jamie Cochrane PBC Business Recovery PBC is a specialist business rescue and insolvency practice that provides practical, helpful advice with financial problems. Our approach is friendly, professional and effective and has resulted in us becoming a trusted and respected firm in the business community. 07525 807225 jamiecochrane@pbcbusinessrecovery.co.uk pbcbusinessrecovery.co.uk
