Insolvency technical update: June 2024
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Read our latest insolvency technical update – your round-up of the recent developments in insolvency.
Insolvency and Restructuring Conference 2024, sponsored by Sweeney Kincaid
Registration is now open for this years insolvency profession focused conference which will be held online during the mornings of 17 and 18 September 2024. With a practical focus and free of charge, the conference is ideal for anyone involved with the insolvency and restructuring profession at whatever level.
Debt relief order (DRO) changes
From 28 June 2024, the value of a single motor vehicle that can be disregarded from the total value of assets an individual seeking a DRO is permitted to own increased from £2,000 to £4,000. The total debt allowable for a DRO was also increased from £30,000 to £50,000.
The changes were brought into force by the Insolvency (England and Wales) (Amendment) Rules 2024 and the Insolvency Proceedings (Monetary Limits) (Amendment) Order 2024.
The Protected Trust Deeds (Miscellaneous Amendment) (Scotland) Regulations 2024
The above regulations come into force on 1 July 2024.
They amend Part 14 of the Bankruptcy (Scotland) Act 2016, the Protected Trust Deeds (Forms) (Scotland) Regulations 2016 and the Bankruptcy Fees (Scotland) Regulations 2018 to:
- Require that, where a dividend is payable, it will be paid to creditors at month 12 and quarterly thereafter.
- Require a trustee to seek the agreement of the AiB when refusing to discharge a debtor from a PTD.
- Allow for the removal of the protected status of a PTD where there has been a material error made in the process for the trust deed gaining protected status.
- Remove any time limitation for a trustee refusing to apply for a debtor’s discharge.
- Allow early discharge of the debtor in extenuating circumstances.
- Allow AiB to act as trustee of last resort where a trustee can no longer act in that capacity and a replacement trustee cannot be found.
- Increase the supervision fee of a trustee under a PTD from £100 to £120.
- Place beyond doubt that anyone or a legal entity applying for the protection of a trust deed will have to have been habitually resident in Scotland or an established place of business in the year prior to the granting of the trust deed. Alternatively, a body or entity applying will have to be constituted or formed under Scots law and at any time have carried out business within Scotland.
Further commentary on the Regulations is available in this article.
Accountant in Bankruptcy Notes for Guidance
The Accountant in Bankruptcy has updated the Notes for Guidance in relation to protected trust deeds to reflect changes brought in under The Protected Trust Deeds (Miscellaneous Amendment) (Scotland) Regulations 2024.
Bankruptcy and Diligence (Scotland) Bill
The Scottish Parliament has passed the Bankruptcy and Diligence (Scotland) Bill which now awaits Royal Assent.
The Bill introduces enabling provisions for a mental health moratorium which will be set out in separate Regulations. It also makes minor and technical amendments to the Bankruptcy (Scotland) Act 2016 including when statutory interest is payable in relation to a recall of sequestration and allowing the AiB to be appointed as replacement trustee where a debtor has failed to co-operate and where otherwise the trustee would have had to remain in office.
The Bill also introduces changes to protected trust deeds, requiring a trust deed information document to be provided to the debtor (in addition to the debt advice and information pack) and requiring the debtor to be provided with a ‘cooling off period’ to consider the advice and information provided before signing the trust deed.
It is not known at this stage when the various provisions within the Bill will be commenced.
Insolvency Service case management system update
The Insolvency Service have advised that spreadsheets which Ips will require to be used as part of their new case management system (INSSight) are likely to be released in July but will not require to be used until Autumn 2024. Guidance will be provided on the use of the new spreadsheets. The Insolvency Service are also working with Turnkey and Aryza to ensure they can support IPs that use these systems with the new requirements. Any IPs using other software should contact Laura Bardsley to discuss further.
HMRC Insolvency Guidance – VAT mailbox
HMRC have issued an Insolvency guidance PDF [128 KB]highlighting that the VAT mailbox facility operates on an automated basis and the failure to use the correct email header key words and format will likely result in delay or more the email not being processed by HMRC systems.
While we are all aware of concerns about HMRC customer service standards, it is incumbent on the profession to play our part in good customer service by ensuring that protocols required to facilitate HMRC service are adhered to.
Insolvency Service Levy 2025
The Insolvency Practitioners and Insolvency Services Account (Fees) (Amendment) Order 2024 has been made, increasing the levy charged to recognised professional bodies in respect of each IP authorised from £470 to £610. The increased amount payable will come into effect on 31 December 2024 and as a result will be applied to IPs authorised by ICAS on 1 January 2025.
Review of Scotland’s statutory debt solutions – Stage 3 Consultation
A consultation has been published to seek stakeholder views on Scotland's statutory debt solutions.
Responses should be sent to the stage 3 lead, Yvonne MacDermid OBE, at yvonnemacdermid@yahoo.co.uk by 18 July 2024.
HMRC guidance – advisory fuel rates
HMRC has updated the advisory fuel rates for company car users. The new rates apply from 1 June 2024.
Regulatory helpsheets
3 new ICAS helpsheets have been published explaining regulatory processes in relation to Publicity of regulatory decisions, Adverse decisions of the Authorisation Committee and Regulatory penalties.
Legal update
Re Pindar Scarborough Ltd (In Administration) [2024] EWHC 908 (Ch) The High Court considered whether a secured creditor which had been paid in full post-administration was a secured creditor who was required to give consent to extend an administration, concluding that they were not a secured creditor and their consent was not required. (via Pinsent Masons)
Boughey & Anor v Toogood International Transport and Agricultural Services Ltd (Re Insolvency Act 1986) [2024] EWHC 1425 (Ch) Following closely after the Pindar case, this second High Court case considered similar issues, with the same conclusion reached. (via Squire Paton Boggs)