No-one likes a queue barger – guest blog by Emma Lovell, Chief Executive of R3, with introduction from Philip King FCICM
01 November 2018
Better brains than mine usually comment on the intricacies and complexities of budgets, and there are few better brains than those belonging to the Chief Executive of R3, Emma Lovell. She has highlighted the Chancellor’s intention to give HMRC preferred status in company insolvencies, a move that will partially reverse legislation introduced in 2002. Here is what Emma has to say as our guest blogger:
“The announcement that HMRC is to partially regain its preferred creditor status in business insolvency could potentially be a retrograde and damaging step to UK plc if not thought through carefully. It will amount to a tax on creditors, including small businesses, pension funds, suppliers, and lenders, and reverses a status quo that has been encouraging business rescue since 2002. It may also make borrowing for small businesses harder to come by.
“R3’s members report that HMRC could do more to engage actively in insolvency procedures, and at an earlier stage. HMRC has a wide-ranging toolkit to help it to tackle abuse and evasion, which could be used more fully, instead of forcing its way to the top of the queue by legislation.
“HMRC considers itself to be an ‘involuntary creditor’ of businesses, because it cannot choose which companies to engage with. However, all suppliers to businesses are ‘involuntary creditors’ and have to take commercial risks, and this announcement will hugely increase the risks taken by small enterprises trying to do business.
“The Government has moved in recent months to improve and strengthen the UK’s business rescue framework, which R3 has welcomed. However, this announcement risks throwing away much of the recent progress that has been made.
“We hope that the Government will reconsider this move and listen to concerns of the insolvency and restructuring profession as it consults on the issue over the coming months.”
More information about R3 can be found at its website: https://www.r3.org.uk