Insolvency technical update: April 2024
By Steven Wood, Practice Support Specialist (Insolvency)
3 May 2024
Read our latest insolvency technical update – your round-up of the recent developments in insolvency.
The Bankruptcy (Scotland) Amendment Regulations 2024
The above regulations came into force on 6 April 2024.
The regulations have amended regulation 26 of the Bankruptcy (Scotland) Regulations 2016, which prescribes the rate of interest payable on creditors’ claims in sequestration (bankruptcy) under section 129(10)(a) of the Bankruptcy (Scotland) Act 2016 (‘the 2016 Act’), where there are sufficient funds to settle those claims in full. This interest is payable for the period from the date of sequestration until the creditors’ claims are paid.
Section 129(10) of the 2016 Act previously specified that the rate of interest payable was the greater of:
a) The prescribed rate at the date of sequestration.
b) The rate applicable to that debt apart from the sequestration.
These regulations have amended the mechanism for calculation of the prescribed rate of interest from a fixed percentage (previously 8% per annum) to a rate more closely aligned to the prevailing rate of interest at the date of sequestration.
It is based on the Bank of England base rate at the date of sequestration, plus 2% to compensate creditors for delays in recovering sums due to them. However, creditors continue to be entitled to interest at their contractual rate if this is greater than the prescribed rate.
The amended prescribed rate is only applicable in cases where the date of sequestration falls on, or after the date the regulations came into force (6 April 2024).
HMRC insolvency guidance: Process for directors’ loan accounts written off in corporate insolvency procedures
HMRC has issued updated guidance on the process for directors’ loan accounts written off in corporate insolvency procedures.
The dedicated mailbox introduced as part of the previous process was decommissioned from 1 April 2024. Where IPs wish to engage with HMRC regarding DLAs, they should now write to Corporation Tax Services, HM Revenue and Customs, BX9 1AX.
ICAS has written to HMRC seeking urgent clarification regarding the position for correspondence submitted to the dedicated email address after 1 April 2024, but before notification of the mailbox closure by HMRC (24 April 2024).
Debt relief order (DRO) changes
The £90 administration fee for DROs was removed with effect from 6 April 2024.
From 28 June 2024, the maximum debt value threshold is to be raised from £30,000 to £50,000. The maximum value of motor vehicles that an individual can retain will increase from £2,000 to £4,000.
Changes to Companies House fees
Companies House fees increased with effect from 1 May 2024. A table setting out the new fees has been published.
Common Financial Tool
Trigger figures under the Common Financial Statement (which remains designated as the Common Financial Tool under the Bankruptcy (Scotland) Act 2016 have been updated from 1 April 2024.
Further information is available from the AiB website.
Standard Financial Statement (SFS)
The SFS guidance has been updated with two amendments designed to provide clarity when using the SFS. The new guidance came into effect on 1 April.
New spending guidelines also came into effect on the same date.
The Employment Rights (Increase of Limits) Order 2024
The above Order came into force on 6 April 2024.
The Order has increased the limits (maximum or minimum) applying to certain awards of employment tribunals and other amounts payable under employment legislation, as specified in the schedule to the Order.
For individuals made redundant on or after 6 April 2024, their weekly pay is capped at £700 (up from £643).
National minimum wage
The amounts payable under national minimum wage (NMW) legislation changed from 1 April 2024. The new rates are as follows:
| NMW rate from 1 April 2024 | Increase in pence | Percentage increase | |
|---|---|---|---|
| National Living Wage (21 and over) | £11.44 | £1.02 | 9.80% |
| 18-20 Year old rate | £8.60 | £1.11 | 14.80% |
| 16-17 Year old rate | £6.40 | £1.12 | 21.20% |
| Apprentice rate | £6.40 | £1.12 | 21.20% |
| Accommodation offset | £9.99 | £0.89 | 9.80% |
Changes to employment legislation
Several changes to employment legislation applicable to England and Wales and Scotland came into effect on 6 April. These changes may be relevant when trading an insolvent entity or considering redundancies.
Under the current law, employees on maternity leave, shared parental leave or adoption leave already have special protection in a redundancy situation. From 6 April, the Protection from Redundancy (Pregnancy and Family Leave) Act 2023 extends that priority status to pregnant employees and those who have recently returned from maternity or adoption leave and shared parental leave.
The Employment Rights (Flexible Working) Act 2023 states that employees will be entitled to request flexible working arrangements from the very first day of their employment, with up to two requests in any 12-month period permitted. This includes requests for part-time, term-time, flexitime, compressed hours, and varied working locations. Before they reject any request for flexible working arrangements, employers will have to explain the reasons behind their decision and respond to the request within two months.
The Carer’s Leave Act 2023 makes provision for unpaid leave for employees with caring responsibilities. This is available to all employees without any qualifying period. It applies to anyone caring for a spouse, civil partner, child, parent or other dependant, who needs care because of a disability, old age or any illness or injury likely to require at least three months’ care. The maximum duration of the leave is one week per year. While employers can’t deny an employee’s request for carer’s leave, they can postpone it if their assessment shows that approval of the request would cause undue disruptions to the business.
Legal update
Re VE Global UK Ltd (In Administration) [2024] EWHC 749 (Ch): The England and Wales High Court considered the circumstances in which a certificate of registration issued by Companies House can be relied on as conclusive evidence of due registration of security.
