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Draft Finance Bill Published: HMRC Preferential Status on Insolvency Confirmed

Today the Government published draft provisions for inclusion in the Finance Bill which will amend the Insolvency Act 1986 and grant HMRC preferential status on insolvency. A status that was removed in 2003 but which will be re-instated (in part) from 6 April 2020.

Despite huge concern from the lending market, voiced in responses to the Government’s consultation on this measure, the only material change we can see is confirmation that preferential status will not apply to insolvency proceedings commenced before 6 April 2020.

Unfortunately for businesses and lenders, this does not address real concern about the impact of this change on existing facilities and future lending.

The Government’s news announcement confirms that the draft legislation is subject to consultation which concludes on 5 September 2019.   However there has already been consultation on the proposal and concerns from the lending community have not been addressed in the draft legislation.

Click here to read the draft legislation and click here to read the explanatory note.

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About this Author

Professional Support Lawyer

Rachael is the professional support lawyer for the Restructuring & Insolvency team, based in Leeds and responsible for providing training, support and updates to all UK offices and working with international colleagues to deliver legal knowledge and know-how to clients and contacts.

Rachael has over 10 years’ experience working as a senior associate in the corporate recovery market and has a wealth of experience working with accountants, insolvency practitioners, banks and directors in the region and nationally on transactional and restructuring matters.

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John Alderton, Squire PB, Insolvency and Restructuring, Business Lawyer
Partner

John Alderton is the managing partner of our Leeds office. His particular expertise covers restructuring, reorganisation and business support, lender security reviews and enhancement, as well as contentious and non-contentious insolvency and cross-border issues.

John advises banks and other financiers, insolvency practitioners and other insolvency professionals, directors and management teams, as well as creditors, on all issues arising in stressed and distressed scenarios both within the UK and cross-border.

Chambers UK describes John as “practical and pragmatic”.  Commentators say he “focuses on the end result”. The Legal 500 UK says John is “Amongst the most commercial insolvency lawyers in Leeds”.

John is listed in the 2013 edition of Chambers UK as a leading individual for restructuring and insolvency.

John is a fellow of the Association of Business Recovery Professionals.

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