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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.

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume IX, Number 192
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About this Author

Professional Support Lawyer

Rachael Markham is the professional support lawyer providing national and global support to the Restructuring & Insolvency team.

Rachael is responsible for precedents and know-how, organising and presenting internal and external training, responding to bespoke research enquiries, drafting and editing the restructuring and insolvency blog, producing articles for journals, providing support for BD projects, marketing and pitches, and producing a weekly bulletin on technical and practical issues that affect the Restructuring & Insolvency team.

Rachael is a member of the...

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John Alderton Financial Services Attorney Squire Patton Boggs Leeds, UK
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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”. ...

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