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.
For further reading please see our previous blogs which set out in detail the impact of this measure on business rescue, the UK economy and lenders.
Back to the future? The return of Crown Preference
HMRC, preferential treatment and insolvency – uncertain times for funders