HMRC has just issued some helpful guidance on existing and future company voluntary arrangements (CVA’s) in the wake of the current pandemic. This advice can be downloaded from; https://www.icaew.com/-/media/corporate/files/technical/insolvency/regulations-and-standards/covid-19-support/hmrc-insolvency-guidance-voluntary-arrangements.ashx?la=en
We suspect that this advice is a precursor of things to come. Economists are in agreement that corporate insolvencies will increase exponentially in the last quarter of this year and throughout the next, with CVA’s being used as an essential restructuring tool. This guidance is helpful as it indicates more flexibility on behalf of the Crown.
However please bear in mind that HMRC’s position will revert to that of a preferential creditor status (ranking ahead of the trade or unsecured creditors) effective from 1 December 2020, meaning that any CVA’s commencing before this time will benefit from the current creditor priority although, quite interestingly, HMRC are attempting to gain quasi preferential status now in relation to Job Retention Scheme payments and it will be interesting to see how this issue evolves.
Bearing in mind the significant Crown debt that is building up in most companies, any CVA’s post 1 December 2020 may not be viable due to the Crowns preferential status.
Please feel free to call any of the team members below to discuss this or any of the other services we provide.
Robert Keyes 07500 933 022 / firstname.lastname@example.org
Gareth Roberts 07979 706 392 / email@example.com
Paul Ellison 07967 471211 / firstname.lastname@example.org
David Taylor 07855 231 103 / email@example.com