Insolvency technical update: October 2024
Read our latest insolvency technical update – your round-up of the recent developments in insolvency.
Insolvency and Restructuring Networking Event, sponsored by Sweeney Kincaid
Join us for an evening of networking at the spectacular The Exchange in Glasgow on Thursday 14 November between 16:30 and 19:30 GMT.
The evening will include a topical session led by Michael Locke, Prism 339, entitled ‘Discovering complex transactions: SIP 2 and challengeable transactions’, and will be followed by drinks and canapés.
This event is free to attend and open to ICAS members and non-members. Reserve your place.
Energy price cap – amendment to Common Financial Tool Notes for Guidance
The price cap for energy increased from 1 October. The Accountant in Bankruptcy has amended their guidance for the use of the Common Financial Tool (CFT) as a result. From 1 October no evidence is required if the monthly gas and electricity cost is below £143. This has been incorporated into paragraph 6.8 of the CFT notes for guidance.
HMRC VAT Notice 700/56
Several amendments have been made to HMRC’s Insolvency Notice (VAT 700/56). Information about what to do when contacting the Members Voluntary Liquidations (MVL) mailbox has been added to section 1.4. Section 2.3.5 has been updated with additional information about pre-MVL situations. Information about applying for a company moratorium where a company cannot pay its debts has been added at section 2.5.5. and information about temporary Customer Compliance Managers (tCCMs) has been added at section 26.
HMRC Insolvency Guidance
HMRC have issued several Insolvency Guidance notes:
Insolvency Customer Services Mailbox (issued 3 October 2024) outlines how their email mailbox service operates and announces a new trial of the mailbox to support repayment/refund requests where repeated attempts via normal channels have been exhausted.
Members Voluntary Liquidation Update (issued 18 October 2024) provides a reminder of various matters concerning HMRC and MVLs.
HMRC Digital Platform Reporting Service (issued 21 October 2024) highlights matters which insolvency practitioners appointed over businesses that operate digital platforms should make themselves aware of in relation to reporting requirements.
Specified Charges in Insolvency (issued 28 October 2024) provides information on planned changes to their reporting mechanism for pre-appointment RTI or CIS returns.
Confidentiality and disclosure in personal insolvencies (issued 28 October 2024) provides clarification on HMRC’s ability to disclose and provide information to office holders in relation to personal insolvency appointments.
Protected Trust Deed Bulletin – Autumn 2024
The Accountant in Bankruptcy have issued their latest PTD update which includes information on annual statistics 2023-2024, updates on ASTRA and policy matters, reminders from the PTD team and some top tips.
AML News - Updated High-Risk Third Countries
The Financial Action Task Force (FATF) met for their plenary session during October and have amended their lists of high-risk jurisdictions subject to a call for action and jurisdictions under increased monitoring. As a result, the High-Risk Third Countries under UK AML legislation (where enhanced due diligence is required) have automatically been amended.
Algeria, Angola, Ivory Coast and Lebanon have been added to the lists. Senegal has been removed.
The full list is now: Algeria, Angola, Bulgaria, Burkina Faso, Cameroon, Croatia, Democratic Republic of the Congo, Haiti, Iran, Ivory Coast, Kenya, Lebanon, Mali, Monaco, Mozambique, Myanmar, Namibia, Nigeria, North Korea, Philippines, South Africa, South Sudan, Syria, Tanzania, Venezuela, Vietnam, and Yemen.
Autumn Budget announcements
The Chancellor made her Autum Budget statement on 30 August and several measures which might impact insolvency practitioners were announced.
Changes to tax rates payable under Capital Gains Tax (CGT) and Business Asset Disposal Relief (BADR) will require to be considered in the context of MVL planning.
Changes to tax rules on liquidations of LLPs – Changes to the way capital gains are taxed when a LLP is liquidated, and assets are disposed of to a contributing member or person connected to them. These changes take effect from 30 October. Currently section 59A of the Taxation of Chargeable Gains Act 1992 provides that assets held by a LLP are treated as if held by its members in a normal partnership. Consequently, no chargeable gains accrue when a member contributes an asset to the LLP. It goes on to provide that this treatment ceases to apply on appointment of a liquidator and that the cessation of treatment does not give rise to a disposal of any assets by its members. The Finance Bill 2024-25 will add a new section 59AA into the Taxation of Chargeable Gains Act 1992. This will deem that a disposal arises when a LLP is liquidated and assets a member has contributed are disposed of to the member, or to a company or other person connected to them. The amount of chargeable gain that is to accrue to the member is to be that amount equal to the amount that would have accrued (absent section 59A) at the time they contributed the asset to the LLP. The LLP will be liable in the normal way for gains from that time on their actual disposal of the asset.
Tackling rogue company Directors – The government will increase collaboration between HMRC, Companies House, and the Insolvency Service to tackle those using contrived corporate insolvencies and dissolutions, often referred to as “phoenixism”. No further details have been announced at this stage about what this may involve.
Appointment of Covid Corruption Commissioner – This may well be a largely symbolic appointment with IPs already aware of the significant interest the Insolvency Service has taken in this area. It remains to be seen whether the new Covid Corruption Commissioner and their work will result in any further impact, directly or more likely indirectly, on the work IPs are undertaking.
Additional HMRC debt recovery resources – Around 1,800 new staff are to be recruited with a focus on debt collection. This may either result in enforcement cases being passed through quicker or result in taxpayers seeking advice from IPs sooner than would otherwise have been the case.
Scottish Court fees amended
Fees payable in Scottish Court processes will change from 1 November:
The Sheriff Court Fees Order 2024
The Sheriff Appeal Court Fees Order 2024
The High Court of Justiciary Fees Order 2024
Insolvency Service Case Management System rollout delay
The Insolvency Service have announced a delay to the planned roll-out and implementation of their new case management system INSSight. Changes for insolvency practitioners will not come into effect in November 2024 as planned with no new date announced at this stage.
