I recently expressed an opinion that the forthcoming return of elements of the HMRC preferential creditor status in formal insolvency proceedings is a good thing. In doing so I was very much a lone voice.
My justification was based on HMRC being an “involuntary creditor” for taxes collected by 3rd parties on behalf of HMRC which are in effect trust monies belonging to the Government.
My opponents argue that corporate funding and rescue processes would be seriously affected by the return of HMRC preference.
HMRC estimate the sum of taxes to be so protected at some £175m by 2023/24 which under either opinion is not great in the overall scope of things. In my opinion HMRC will succeed in their objectives, recover more taxes but the corporate funding and rescue processes will hardly be affected.
On 11th July 2019 the Government published a Policy document on Tax abuse using company insolvencies which in outline proposes personal liability on directors and others for certain corporate taxes to be implemented along with revisions to the Company Directors Disqualification Act 1986.
This is to further protect the taxpayer against HMRC revenue loss but aimed at schemes which in part are designed to cause loss and the personal liability of those involved in such schemes. The disqualification of directors involved in such schemes will also be reinforced.
Both advances by HMRC are quite different in format but taken together directors are more likely to disclose and discharge corporate taxes when due. Whether those who actively plan to deceive HMRC will be dissuaded remains to be seen.
5th November 2019