HMRC’s reinstatement as a preferential creditor in relation to certain debts in corporate insolvencies was included in the draft Finance Bill 2019-20, published on the 11th July 2019.
From the 6th April 2020, HMRC will rank behind fixed charge holders and ordinary preferential creditors (employees). The preferential status will only apply to certain taxes owed by the business to HMRC and there will be no cap on the age of the eligible debts or the amount HMRC can claim as a preferential creditor.
The Government is aware that these proposed changes will have an impact on creditors (apart from fixed chargeholders) in insolvencies where HMRC is involved as a preferential creditor. They do not expect there to be a serious impact on lending which is contrary to the belief of many trade and professional bodies.
It is now important that all commercial stakeholders, existing and future, take steps to ensure they are aware how the reinstatement of HMRC as a preferential creditor will impact on them in practice. Consultations on the draft legislation will run until 5th September 2019.
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