Are we seeing a slow return to Crown preference (including for corporation tax) by the back door? Recent legislative changes have strengthened HMRC’s position in company insolvencies: FA 2020 restored HMRC’s position as a preferential creditor for certain taxes, and the Corporate Insolvency and Governance Act 2020 introduced a new way of restructuring a corporate through a ‘Part 26A restructuring plan’, which benefits ‘in the money’ creditors like HMRC. This has led to several cases where HMRC have opposed Part 26A restructuring plans brought for court approval and, worryingly, in some cases HMRC appears to be succeeding merely because they are HMRC. HMRC’s recent guidance also suggests they expect to be fully consulted alongside secured creditors ahead of any restructuring plan.
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Are we seeing a slow return to Crown preference (including for corporation tax) by the back door? Recent legislative changes have strengthened HMRC’s position in company insolvencies: FA 2020 restored HMRC’s position as a preferential creditor for certain taxes, and the Corporate Insolvency and Governance Act 2020 introduced a new way of restructuring a corporate through a ‘Part 26A restructuring plan’, which benefits ‘in the money’ creditors like HMRC. This has led to several cases where HMRC have opposed Part 26A restructuring plans brought for court approval and, worryingly, in some cases HMRC appears to be succeeding merely because they are HMRC. HMRC’s recent guidance also suggests they expect to be fully consulted alongside secured creditors ahead of any restructuring plan.
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