Insolvency technical update: December 2023
By Steven Wood, Practice Support Specialist (Insolvency)
5 January 2024
We share our latest insolvency technical update – your round-up of recent developments in insolvency.
HMRC insolvency guidance: Cessation of tax clearance in members' voluntary liquidations (MVLs)
HMRC has announced that, with immediate effect, it will no longer provide pre and/or post-insolvency tax clearance in MVL cases.
IPs should close cases without tax clearance subject to their own professional judgement. This means any requests for clearance already received by HMRC will not be responded to, and any future requests will not be actioned.
An earlier ICAS article may be of assistance to IPs looking for guidance on relevant considerations under the new approach.
HMRC insolvency guidance: Plastic packaging tax
HMRC has issued guidance setting out how it deals with insolvency in relation to plastic packaging tax.
Insolvency (VAT notice 700/56) has also been updated with information relating to the new process.
Dear IP
Dear IP 162 has been issued by the Insolvency Service. The issue contains details of a best practice protocol to be followed when Insolvency Practitioners are vacating office on Official Receiver bankruptcy and company cases.
The Payment and Electronic Money Institution Insolvency (Amendment) Regulations 2023
The above regulations came into force on 4 January 2024.
The regulations extend the application of the insolvency regulations for the special administration procedure established by the Payment and Electronic Money Institution Insolvency Regulations 2021 to institutions formed in Northern Ireland and limited liability partnerships formed in Scotland.
The Money Laundering and Terrorist Financing (Amendment) Regulations 2023
The above regulations come into force on 10 January 2024.
The regulations clarify the explicit difference between domestic and non-domestic politically exposed persons (“PEPs”) for the purposes of the money laundering regulations (‘MLRs’).
The regulations clarify in law that for the purposes of applying the MLRs, domestic PEPs pose a lower risk of money laundering and terrorist financing than non-domestic PEPs, and must be subject to a lesser extent of enhanced due diligence (EDD) by firms regulated under the MLRs, in the absence of other risk factors unrelated to their position as a domestic PEP.
Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) (No.2) Regulations 2023
The above regulations came into force on 5 December 2023 and substitute the list of high-risk third countries specified in Schedule 3ZA of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘MLRs’) with a new list.
The regulations add Bulgaria, Cameroon, Croatia, Nigeria, South Africa and Vietnam and remove Albania, Cayman Islands, Jordan and Panama from Schedule 3ZA.
The Insolvency (Amendment No. 2) Rules (Northern Ireland) 2023
The above statutory rule was made on 19 December 2023 and comes into operation on 1 February 2024.
The Rule amends Rule 5A.14, of the Insolvency Rules (Northern Ireland) 1991, which lists property the official receiver must disregard for the purposes of determining the value of a person’s property in connection with a Debt Relief Order. This includes a single domestic motor vehicle where the maximum potential realisable value is less than £1,000. The Rule changes that amount to £2,000.
The Economic Crime and Corporate Transparency Act 2023 (Commencement No. 1) Regulations 2023
The above regulations were made and published on 13 November 2023.
These are the first commencement regulations made under the Economic Crime and Corporate Transparency Act 2023 (‘the Act’). They bring section 214 of the Act into force on 15 November 2023 and certain other provisions into force on 15 January 2024.
ISCIS Online
The Insolvency Service issued an update on the ongoing technical issues affecting ISCIS Online.
Unfortunately, the fix being worked on has not been successful and a new option is being explored.
Mental health moratorium consultation
The Bankruptcy and Diligence (Scotland) Bill contains powers to allow Scottish Ministers to create a mental health moratorium. This measure would protect people with serious mental health issues from debt recovery action.
The Scottish government has launched a consultation seeking views on the proposed process for a mental health moratorium.
The consultation closes on 22 January 2024.
The Judicial Factors (Scotland) Bill
A Bill to reform and modernise the law relating to judicial factors has been published.
The Judicial Factors (Scotland) Bill introduces a statutory framework setting out the essential features of the office of judicial factor, and the broad parameters within which it should operate.
The Bill follows on from the Scottish Law Commission’s (‘SLC’) 2010 discussion paper, its 2013 report of recommendations and the Scottish government’s subsequent consultation.
Legal update
Re Grove Independent School Limited [2023]: An English High Court decision approving an application for a Part A1 moratorium. The decision provides useful guidance on how the court will exercise its discretion when considering moratorium applications by financially distressed companies (via Burges Salmon).
