29. Covid 19
Covid 19
This section contains content published after 1 January 2020. Articles published before this date can be found on the National Archives here
The Covid-19 pandemic crisis and the necessary response is a significant challenge to the country with many far-reaching impacts on normal day to day lives. As you will have seen in the news, the Government has already introduced a number of emergency measures to support business and vital sectors of the economy, as well as for individuals expected to be adversely financially affected. You can see some of those measures here.
The Government is also considering what emergency legislation could be introduced to help struggling businesses, and we are very grateful to our stakeholders that have taken time to get in touch and propose possible measures. All of these and more are being considered urgently and we are always open to more suggestions. We are also working closely with other government departments on what measures short of legislation might help.
In the meantime, we ask that you are as flexible as possible when dealing with cases under these extreme circumstances. Some of your clients may experience difficulty in meeting their financial commitments, and where possible we’d ask that you give your forbearance. You may also want to think about the best way to engage with customers, including creditors and the most appropriate forum to meet.
As a reminder for businesses who are struggling to meet redundancy payments in this difficult time, the Insolvency Service’s Redundancy Payments Scheme operates the Financial Difficulty (FD) scheme. This was set up to provide assistance to employers in making statutory redundancy payments while at the same time avoiding additional job losses if the employer became insolvent. More detail about making staff redundant can be found here.
We recognise that this crisis is a significant challenge to the insolvency practitioner sector as many companies and individuals will experience extreme financial shock that may give rise to a sudden increase in the need for your services. We understand that this will put additional pressure on your capacity, and that of your colleagues, to fulfil all of your regulatory responsibilities whilst providing essential services to those most in need.
The Insolvency Service is working closely with your Regulatory Bodies and we know that they are responding to ensure that they are able to provide a continuity of vital services that you rely on. Like the rest of the country, they will also have restrictions on staff working in offices and whilst this may affect some services, they have told us they will remain open and that they will communicate any changes in services and how this may affect certain regulatory responsibilities very soon, in particular ways to help reduce the impact on you in the short term.
As you might expect we are paying close attention to the changing economic circumstances and the implications of that for the insolvency profession and are meeting weekly with the RPBs to discuss possible impacts and any further action that may be needed. We are also conscious that those impacts may potentially mean significantly increased number of cases across the board and now, more than ever, it will be important for us to work in collaboration to make sure that the insolvency framework provides optimum support for those that need it.
This is a time for the country to come together and we are confident that the insolvency sector will do its best to respond to the very significant challenges that will present itself over the next few months in playing its important role. Finally, the Insolvency Service, like many other government departments and regulators, is following government advice on social distancing, home working and non-essential travel. But we are still open and functioning as normally as can be expected providing our services as best we can.
We remain open if you need to get in touch including bringing issues to our attention. We expect to issue further “Dear IPs” in the coming days and weeks.
As a result of the Covid-19 pandemic pandemic, the decision has been made to close all Official Receiver (OR) offices and the Long Term Asset Distribution Team (LTADT). Alternative contact details for each OR’s office can be found here and for LTADT here.
While our offices are closed, we will not be able to process any physical mail sent to the OR. We will aim to deal with emails promptly, but please bear with us as we expect the closure of offices to result in an increase in messages requiring a response. If you need to send us attachments to emails, please ensure you take steps to minimise the file size, for example by zipping the documents.
Whilst our offices are closed, we are currently unable to issue redundancy payments by cheque. In order to ensure that redundancy payments are not delayed we are accepting bank details by email so that electronic payments can be made. Instructions on how to provide this information by email are available on Gov.uk.
As a result of the office closures, our telephones are also closed and are not being monitored. ISCIS online remains available for insolvency practitioners and enquiries can also be made by email to [Customerservices.eas@insolvency.gov.uk](mailto:Customerservices.eas@insolvency.gov.uk]. We aim to deal with emails promptly, but please only email us if absolutely necessary.
As both the Insolvency Enquiry Line and the Redundancy Payments helpline are also closed, we have published a new directory of guidance to enable people to self-serve and this also provides answers to frequently asked questions.
Due to both the office and telephone closures we are now only able to accept complaints online or by email.
New measures introduced in the last week mean that we can now accept Individual Voluntary Arrangement fees electronically and requisitions by email.
Guidance in Chapter 10, Article 48, states insolvency practitioners should ensure the books and records are safe and secure, and that means taking delivery and reviewing the records in order to meet the following requirements of Statement of Insolvency Practice 2 (SIP2):
The office holder should locate the company’s books and records (in whatever form), and ensure that they are secured, and listed as appropriate.
During current COVID-19 restrictions and government instructions to stay at home for all but essential travel, the guidance in Chapter 10 Article 48 has been revised to:
Insolvency practitioners should continue to take all possible steps to locate and secure the records whilst keeping a detailed record of the action taken. They should also keep a record of their communications with directors regarding books and records, whilst the current restrictions are in place.
HMRC is committed to supporting businesses and individuals affected by coronavirus and for the majority, guidance already on GOV.UK will meet their immediate concerns. HMRC recognises that for individuals, companies and partnerships that are already in a voluntary arrangement and for insolvency practitioners who are supervising such arrangements, further guidance may be needed in cases where either contributions cannot be made, or post arrangement tax obligations cannot be met as a result of the impact of COVID-19 on an individual’s health or difficulties it is causing for an individual, company or partnership businesses.
Where the terms of an arrangement allow the supervisor discretion, we would expect that discretion to be exercised to its maximum, with reference to creditors only if essential.
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HMRC will support a minimum three month break from contributions from customers impacted by COVID-19.
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There is no need to contact HMRC to request this deferment.
On conclusion of the initial three months deferment, depending on the COVID-19 situation, further guidance will be issued. If necessary, further discretion could be applied without reverting to creditors.
Where the debtor or company is entitled to a deferral of taxes as explained here:
HMRC will not treat any deferment as a breach of any terms of the arrangement requiring payment of VAT as they come due. HMRC recognises however, that there may be cases where as well as the deferral, there has been serious non-payment of VAT pre-dating the present situation. In such cases, HMRC will notify you so you can deal with that breach in accordance with the arrangement’s terms, although with the need to support the helpline and sometimes limited staff availability, that contact may not be for some time.
HMRC enforcement activity during this period
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HMRC has paused the majority of all insolvency activity for now. That means HMRC will not petition for bankruptcy and winding up orders unless it is deemed to be essential, i.e. fraud, criminal activity.
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HMRC will continue to deal with new company voluntary arrangement (CVA), administration, individual voluntary arrangement (IVA) and trust deed (TD) proposals to allow those businesses who need financial support, to get access to the appropriate insolvency regime.
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HMRC will consider fresh CVA, IVA, administration and TD proposals but will continue to exercise discretion on proposals.
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Where a supervisor or trustee representing a business or individual consider that clients are unable to maintain their IVA, CVA or TD payments, HMRC will support a variation to allow a three-month break from contributions.
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After the deferral period, from 1 July 2020, the supervisor or trustee representing a business or individual should be able to resume payments per the terms of any IVA, CVA and Trust Deed or they can contact Enforcement and Insolvency Service (EIS) to discuss a recovery Time to Pay arrangement depending on the circumstances.
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HMRC has suspended face to face visits to customers during this period.
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HMRC will continue vital work in protecting society from the highest harm criminal threats and attacks on our systems
If calling the coronavirus helpline for assistance relating to any IVA, CVA, TD or administration cases, the collector who deals with your call will take details and forward that information on to an experienced technical advisor who will be able to deal with your enquiry. They will respond to either confirm the request for any deferment, and for how long, or request further information, or decline it.
If you are contacting HMRC in relation to a new IVA, CVA, TD or administration, please continue to use existing communication lines rather than the coronavirus helpline. Details of EIS locations dealing with voluntary arrangements, trust deeds and administrations are detailed below.
EIS Contacts
Trust Deeds (Scotland)
HM Revenue and Customs
Enforcement and Insolvency Service (EIS)
Elgin House
20 Haymarket Yards
Edinburgh
EH12 5WT
Email: Trust.Deeds@hmrc.gsi.gov.uk
Telephone helpline: 0300 200 3873
Members Voluntary Liquidations
HM Revenue and Customs
Enforcement and Insolvency Service Newcastle
MVL Team
Benton Park View
Longbenton
Newcastle upon Tyne
NE98 1ZZ
Email: eisw.mvl.team@hmrc.gsi.gov.uk
Telephone helpline: 0300 322 7815
Company Voluntary Arrangement Service HM Revenue & Customs
Enforcement & Insolvency (EIS)
Company Administrations
Brunel House 2 Fitzalan Road
Cardiff
CF24 0EB
Email: eisc.cva@hmrc.gsi.gov.uk
Telephone helpline: 0300 322 9251
Company Administrations
HM Revenue & Customs
Enforcement & Insolvency (EIS)
Company Administrations
Brunel House
2 Fitzalan Road
Cardiff
CF24 0EB
Email: eisc.administration@hmrc.gov.uk
Telephone helpline: 0300 322 9250
Individual Voluntary Arrangements
HM Revenue and Customs
Enforcement and Insolvency Service (EIS)
Elgin House
20 Haymarket Yards
Edinburgh
EH12 5WT
Email: vas@hmrc.gsi.gov.uk
Telephone helpline: 0300 322 7838
The Business Secretary has announced that the government intends to introduce legislation as soon as possible to enable the insolvency regime to better support businesses during the pandemic. Measures in the bill:
- Introduce a moratorium period for distressed businesses to consider a rescue plan during which they will be protected from recovery action by creditors.
- Provide for the introduction of a new restructuring framework which will be able to bind creditors to a reorganisation plan.
- Ensure businesses entering insolvency can continue to access essential supplies to keep operating.
- Temporarily suspend wrongful trading rules for three months so that company directors can keep their businesses going without the threat of personal liability.
A copy of the Secretary of State’s announcement can be viewed at:
Enquiries regarding this article may be sent to: policy.unit@insolvency.gov.uk
The COVID-19 Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. It is designed to support employers whose operations have been severely affected by coronavirus. A decision to use the scheme and furlough employees is likely to be a temporary measure to avoid or try to avoid dismissals.
Where employers/ administrators are furloughing their staff and they are not contemplating dismissing 20 or more staff in a single establishment, there is no requirement to carry out a formal consultation and notify the Secretary of State.
Enquiries regarding this article may be sent to: IPRegulation.Section@insolvency.gov.uk
This article provides a summary of the provisions set out in the Temporary Insolvency Practice Direction 2020 (TIPD). The full TIPD is included in chapter 29 article 8 of Dear IP issue 96.
Filing notice of intention to appoint an administrator and notice of appointment of an administrator
Paragraph 3 of the TIPD deals with filing notice of intention to appoint and notice of appointment of an administrator. A different practice will apply depending on whether the notice or appointment is made by a qualifying floating charge holder or a by company or its directors.
First and subject to exceptions, the TIPD provides that where a company or director or a qualifying floating charge holder uses CE-file to give notice of an intention to appoint or notice of appointment of an administrator, the notice will be treated as delivered to the court on the date and at the time recorded in a filing submission email. This is intended to reduce any uncertainty as to timing.
Secondly, the TIPD reflects the policy in the Insolvency Rules 2016 as regards filing notices by a company or director by CE-file. If a filing submission email attaching a notice of appointment of an administrator is sent outside the time period 10:00 hours to 16:00 hours on any day that the courts are open for business, the notice shall be treated as delivered to the court at 10:00 hours on the day that the courts are next open for business. Similarly, if a filing submission email attaching a notice of intention to appoint an administrator is sent outside the time period 10:00 hours to 16:00 hours on any day that the courts are open for business, the notice shall be treated as delivered to the court at 10:00 hours on the day that the courts are next open for business. This is important for the purpose of knowing when the ten-day period in paragraph 28(2) begins. It will be the date on which the courts are next open for business.
Thirdly, all notices filed by CE-file shall continue to be reviewed by the Court, as and when practicable, in accordance with paragraph 5.3 of PD510. The validity and time at which the appointment of an administrator is effective shall, however, not be affected by reason only of any delay in acceptance of the notice.
Fourthly, users are reminded that the procedure in Rule 3.20-3.22 in respect of qualifying floating charge holders still applies, and Electronic Working may not be used to file a Notice of Appointment of an administrator under paragraph 14 of Schedule B1.
Remote hearings
The TIPD (paragraph 6) confirms what is already reality, that insolvency hearings will generally continue to be conducted remotely.
Pending petitions and applications
Pending applications and petitions (except for winding up and bankruptcy petitions) listed for hearing before 21 April 2020 will be adjourned and relisted in accordance with procedures set out in the TIPD. Special provision is made for matters that need to be dealt with on an urgent basis. Further relisting guidance is envisaged, details of which will be available on the internet (a link is given).
Winding up and bankruptcy petitions
Winding up and bankruptcy petitions will continue to be heard but will be dealt with by remote hearing in batches.
Urgent hearings
Detailed guidance is given on how to obtain an urgent hearing before a Chancery or ICC judge (paragraph 5).
Non-London business
The TPID deals with business throughout the Business and Property Courts (save for the treatment of petitions), subject to any modifications provided for in separate guidance issued by the supervising judge for the relevant court centre.
Statutory declarations
Provision is made for statutory declarations to be made by video conference (paragraph 9).
Enquiries regarding this article may be sent to: Policy.Unit@insolvency.gov.uk
TEMPORARY PRACTICE DIRECTION SUPPORTING THE INSOLVENCY PRACTICE DIRECTION**
Introduction
The Temporary Insolvency Practice Direction 2020 (TIPD) has been introduced to provide workable solutions for court users during the COVID-19 pandemic. Its intention is to avoid, so far as possible, the need for parties to attend court in person and to take into account the likelihood of the Court needing to operate with limited staff and resources. It also provides users with guidance as to the type of hearings which the Insolvency and Companies Court list will endeavour to provide during the period for which this practice direction is in force.
1. Definitions
| Term | Definition |
|---|---|
| Acceptance | has the meaning ascribed by paragraph 5.3(1) of PD510 |
| Act | means the Insolvency Act 1986 |
| Business Day | means any day other than a Saturday, a Sunday, Christmas Day, Good Friday or a day which is a bank holiday in any part of England & Wales |
| CE-File | refers to the Court’s Electronic Working portaland "CE-Filing " means the filing with the court of any document using Electronic Working |
| Electronic Working | has the meaning ascribed to it by paragraph 1.1 of PD51O which, in accordance with paragraph 1.1 (2) of PD51O is a permitted means of electronic delivery of documents to the court for the purposes of rule 1.46 of the Rules |
| Temporary IPD | means this Temporary Practice Direction |
| Temporary Listing Procedure for Winding-Up and Bankruptcy Petitions | means the procedure set out at paragraph 7 of this Temporary IPD |
| Filing Submission Email | means the email referred to at paragraph 5.3(1) of PD51O, generated by automatic notification following submission of a document using Electronic Working, which email acknowledges that the document has been submitted |
| IPD | means the Insolvency Practice Direction made by order of the Chancellor on 4 July 2018 |
| PD51O | means Practice Direction 51O – The Electronic Working Pilot Scheme which supplements CPR rules 5.5 and 7.12 |
| Rule and Rules | means the Insolvency (England and Wales) Rules 2016 |
| Schedule B1 | means Schedule B1 to the Insolvency Act 1986 |
2. Application and coming into force
This TIPD supplements the Insolvency Practice Direction (IPD). It will apply to all insolvency proceedings throughout the Business and Property Courts, subject to any variations outside London as directed by the relevant supervising judge. It will come into force on 6 April and remain in force until 1 October 2020 unless amended or revoked by a further insolvency practice direction in the meantime.
3. Filing a notice of intention to appoint an administrator and a notice of appointment of an administrator
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3.1. Subject to paragraphs 3.3 to 3.6 below, for the purposes of Rule 1.46(2), and notwithstanding anything to the contrary in PD510, in the case of a CE-filing of any of the notices identified in paragraph 3.2 below, the notice shall be treated as delivered to the court at the date and time recorded in the filing submission email.
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3.2. The notices to which paragraph 3.1 above applies are: (1) a Notice of Intention to Appoint an Administrator filed by a company or its directors under Paragraph 27 of Schedule B1; (2) a Notice of Appointment of an Administrator filed by a qualifying floating charge holder under paragraph 18 of Schedule B1; and (3) a Notice of Appointment of an Administrator by a company or its directors under Paragraph 29 of Schedule B1.
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3.3. Paragraph 3.1 above shall not apply to a Notice of Intention to Appoint an Administrator filed by CE-File pursuant to paragraph 27 of Schedule B1 outside the time period 10:00 hours to 16:00 hours on any day that the courts are open for business. Any such notice filed by CE-file outside that time period shall, for the purposes of Insolvency Rule 1.46(2), be treated as delivered to the court at 10:00 hours on the day that the courts are next open for business. Accordingly, the date on which the time period of ten days in paragraph 28(2) shall begin is the date on which the courts are next open for business.
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3.4. Paragraph 3.1 above shall not apply to a Notice of Appointment filed by CE-File pursuant to paragraph 29 of Schedule B1 outside the time period 10:00 hours to 16:00 hours on any day that the courts are open for business. Any such notice filed by CE-file outside that time period shall, for the purposes of Rule 1.46(2), be treated as delivered to the court at 10:00 hours on the day that the courts are next open for business.
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3.5. Notwithstanding paragraph 3.1 above, all notices identified in paragraph 3.2 above shall continue to be reviewed by the Court, as and when practicable, in accordance with paragraph 5.3 of PD510. The validity and time at which the appointment of an administrator is effective shall not be affected by reason only of any delay in acceptance of the notice.
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3.6. Electronic working may not be used to file a Notice of Appointment of an administrator under paragraph 14 of Schedule B1 by the holder of a qualifying floating charge outside normal court opening hours. Such a notice may only be filed outside normal court opening hours by the procedure set out in Rules 3.20 to 3.22.
4. Adjournment of pending applications and petitions
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4.1. In the immediate term, it is essential that the court’s resources and time are preserved for genuinely urgent applications. To that end, all applications, petitions and claim forms (save for petitions for winding-up and bankruptcy to be heard before an ICC Judge sitting in the Rolls Building in London) currently listed for hearing prior to 21 April 2020 are adjourned, to be re-listed according to one or other of the following:
- Where one or other of the parties considers that a matter that has been adjourned pursuant to paragraph 4.1 above is urgent, they may apply to have it re-listed pursuant to the listing procedure set out in paragraph 5 below.
- In the case of petitions for bankruptcy or winding up (other than those to be heard before an ICC Judge sitting in the Rolls building in London), the temporary listing procedure for winding-up and bankruptcy petitions shall apply, immediately in the case of petitions to be heard before an ICC Judge sitting in the Rolls building in London, and as from the date that it is brought into effect for each other relevant hearing centre of the Business and Property Courts by a further guidance note to be issued by the supervising Judge for that hearing centre.
- All other matters shall be re-listed pursuant to such procedure as is notified as soon as possible for the relevant hearing centre of the Business and Property Courts by a further guidance note to be issued by the supervising judge for that hearing centre.
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4.2. The further guidance notes to be issued pursuant to paragraphs 4.1.2 and 4.1.3 above will be published on the Insolvency List web page for the relevant hearing centre(s) (https://www.judiciary.uk/you-and-the-judiciary/going-to-court/high-court/courts-of-the-chancery-division/insolvency-and-companies-courts/).
5. Listing Urgent hearings before a High Court Judge or an Insolvency and Companies Court Judge
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5.1. Email the ICC Judges’ clerks at Rolls.ICL.Hearings1@justice.gov.uk , or relevant High Court Judge clerk setting out
- the nature of the application/claim form/petition ("Application");
- why it is urgent;
- estimated time for hearing and pre-reading;
- number of parties who will need to attend; and
- your confirmation that the hearing can be conducted by Skype for Business, another stated remote communication application, or telephone.
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5.2. Subject to further amendments to deal with practical issues as they arise, the ICC clerk or High Court Judge clerk will:
- allocate the hearing to a judge and send a Skype (or other application) meeting invitation or dial-in details to the parties;
- confirm whether the application should be issued and paid for via CE-File or whether an undertaking to issue and pay the fee will be required due to limitations with CE-File processing;
- either endorse the application via CE-File in the usual way or provide an email setting out the time and date of hearing which shall be treated for all purposes as if endorsed on the application.
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5.3. The applicant/claimant/petitioner must send only those documents which are essential for the hearing by PDF (or by sending a link to an online data room) to the clerk for forwarding to the judge, confirming the pre-reading time required.
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5.4. The judge will join the hearing by Skype or other means at the allotted time.
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5.5. The judge will make directions for the filing of a draft minute of order which, as soon as practicable, will be sealed and returned to the serving party in the usual way.
6. Remote Hearings
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6.1. Unless ordered otherwise, all insolvency hearings will be conducted remotely by way of Skype for Business or such other technology as the parties and the court agree in advance of the hearing.
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6.2. In the event that the judge determines, for whatever reason, that it is inappropriate to continue the hearing, the hearing shall be adjourned and a new hearing date and time will be fixed by the court.
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6.3. Where the circumstances described at 6.2 apply, a notice of adjournment will be issued by the court.
7. Temporary listing procedure for winding-up and bankruptcy petitions
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7.1. As from the date this paragraph is brought into effect the Court will list for hearing all winding-up and bankruptcy petitions (whether adjourned pursuant to paragraph 4.2 above or otherwise) in the manner described in this paragraph 7.
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7.2. The Court shall allocate time slots for groups of two or more petitions. Each time slot shall be given a designated meeting link using Skype for Business, or such other video conferencing technology as the relevant Court decides, or BT MeetMe, or such other telephone conferencing technology as the relevant court decides. The links shall be published on the daily cause list. The onus is on the parties to ensure they are able to utilise the link provided.
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7.3. In the event that one or more of the parties is unable to use the link designated by the Court, subject to the judge’s availability, they may arrange an alternative link via the Court clerks.
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7.4. Any person who intends to appear on the hearing of the petition must deliver a notice of intention to appear on the petition in accordance with Rule 7.14, providing an email address or telephone number for the purposes of being invited to join the hearing remotely pursuant to paragraphs 7.1 or 7.2 above
8. Other insolvency hearings
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8.1. Judges, clerks, and/or officials will, in each case, wherever possible, propose to the parties:
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a Skype for Business (or other video conferencing technology) call at the allocated time by sending an invitation or otherwise making available a link;
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a BT MeetMe (or other recordable telephone conferencing facility) to be arranged by the court or one or other of the parties at the court’s direction in good time before the allocated time for the hearing.
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8.2. If the parties disagree with the court’s proposed method of hearing, they may make submissions in writing by email or CE-file (if available), copied to the other parties, as to what other proposal would be more appropriate. On receipt of submissions from all parties, the judge will make a determination as to the way in which the hearing will take place, and give all other necessary directions.
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8.3. It will also be open to the court to fix a short remote case management conference in advance of the fixed hearing to allow for directions to be made in relation to the conduct of the hearing, the technology to be used, and/or any other relevant matters.
9. Statutory Declarations
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9.1. Where Schedule B1 requires a person to provide a statutory declaration, a statutory declaration that is made otherwise than in-person before a person authorised to administer the oath may constitute a formal defect or irregularity. Pursuant to Rule 12.64 it is open to the court, on objection made, to declare that such a formal defect or irregularity shall not invalidate the relevant insolvency proceedings to which the statutory declaration relates, unless the court considers that substantial injustice has been caused by the defect or irregularity which cannot be remedied by any order of the court.
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9.2. Where a statutory declaration is made in the manner described in sub-paragraphs 9.2.1 to 9.2.3 below then the defect or irregularity (if any) arising solely from the failure to make the statutory declaration in person before a person authorised to administer the oath shall not by itself be regarded as causing substantial injustice.
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9.3. The person making the statutory declaration does so by way of video conference with the person authorised to administer the oath;
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9.4. The person authorised to administer the oath attests that the statutory declaration was made in the manner referred to in 9.2.1 above; and
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9.5. The statutory declaration states that it was made in the manner referred to in paragraph 9.2.1 above.
Enquiries regarding this article may be sent to: Policy.Unit@insolvency.gov.uk
The RPS is currently receiving fee requests and voting forms from insolvency practitioners with one- or two-day deadlines attached. We would like to remind practitioners that there is a 15 working days turnaround for insolvency practitioner fee requests and voting forms.
In light of the unusual circumstances caused by the COVID-19 pandemic we will continue to work towards processing requests within 15 working days, however we are unable to meet next day requests. Enquiries regarding this article may be sent to: RPS.POD@insolvency.gov.uk
It has been brought to our attention that a parliamentary hub app has been launched with claims that it can provide up-to-date information on governmental and parliamentary initiatives and contact information to provide quick and efficient connection points between government and industry.
Promotional material via email relating to the parliamentary hub app invites potential users to pay a one off fee of £2,500 plus VAT in order to gain access.
We have been advised by the Cabinet Office Fraud Advisory Panel that this is a scam related to the COVID-19 pandemic and therefore insolvency practitioners should not respond to any such communications nor make any payment.
Enquiries regarding this article may be sent to: IPRegulation@insolvency.gov.uk
Guidance has been produced by the IVA Standing Committee (IVASC), to provide support for consumers who are currently in a protocol compliant IVA and to those who are proposing a new IVA during the COVID-19 pandemic. It should be read in conjunction with whichever issue of the protocol the IVA proposal was prepared under. The IVASC consists of representatives from insolvency practitioner firms, advice agencies, major creditor institutions, R3, and two Recognised Professional Bodies (RPBs).
RPBs that license insolvency practitioners at volume IVA providers support this guidance and will be able to use it to ensure that consumers are being assisted through this pandemic appropriately and consistently. The COVID-19 pandemic is a unique situation and all members of the IVASC have recognised that flexibility to support consumers through this financially difficult period is required.
A statement of support from the creditor representatives of the IVASC has also been published as part of the guidance. If a supervisor wishes to use their discretion under the guidance to vary an IVA for COVID-19 related reasons a meeting of creditors need not be called. All variations that do not fall within the parameters of the guidance should be dealt with as per the terms of the IVA.
The guidance will initially be in place for six months commencing 20 April 2020 and will be regularly reviewed by the IVASC to ensure it remains relevant to the circumstances and appropriate. The IVASC will withdraw the guidance when appropriate to do so.
The key features of the guidance are:
- A three-month payment break can be granted without the need for a formal variation.
- A reduction in contributions into the IVA by up to 25% to be granted without the need for a formal variation at the discretion of the supervisor.
- Critical workers who receive overtime of more than 10% of their usual salary will not have to increase their monthly contribution into the IVA.
- The supervisor will have the discretion not to issue a notice of breach if it can be shown to be as a result of financial difficulties stemming from the COVID-19 pandemic.
The IVASC hope that this guidance will assist with many of the challenges consumers will inevitably face at this time and will enable practitioners to make appropriate changes to IVAs quickly. Practitioners are urged to utilise the guidance first, when possible, before proposing alternative variations to IVAs as a result of pandemic specific issues.
Enquiries regarding this article may be sent to: IPRegulation.Section@insolvency.gov.uk
HMRC is committed to supporting businesses and individuals affected by coronavirus (COVID-19). As a result of the current circumstances, HRMC is introducing electronic banking across its Debt Management, Enforcement & Insolvency Service (EIS) with immediate effect.
HMRC is aware that not all insolvency practitioners will be ready to use electronic banking, but if they are, please start using this facility as soon as possible. Electronic banking is a quick, safe and secure method of making payments and reduces the reliance on cheques and payable orders.
If insolvency practitioners are unable to move to Electronic Banking immediately, please do not send HMRC cheques, hold on to them. HMRC will inform practitioners when this request changes.
HMRC has many colleagues working from home however those colleagues working at home cannot process cheques.
Moving to electronic banking - what HMRC needs you to do
Payments relating to a claim should be made through BACS/CHAPS using the following details:
- Sort code: 20-20-48
- Account number: 30944793
- Account Name: HMRC NIC Receipts
- EIS reference number: The EIS reference number will be quoted on all new HMRC claims and letters and will be used as a reference for the lifetime of the claim. Payments cannot be accepted without a reference
Payment reference number
The unique case reference number can be found on HMRC claims. Practitioners need to use this 13-character payment reference when making a payment. This is the customer's 10-digit unique case reference number, followed by a three-letter suffix to show the type of insolvency the dividend refers to. The following table details the dividend types and their unique three-digit suffixes:
| Dividend Type | Suffix |
|---|---|
| Individual Voluntary Arrangement | IVA |
| Sequestrations | SEQ |
| Trust Deeds | TRD |
| Irish Bankruptcy | IBY |
| Members Voluntary Liquidations | MVL |
| Company Liquidation Cases | LIQ |
| Individual Bankruptcy or Partnerships | BKY |
| Company Voluntary Arrangement | CVA |
| Partnership Voluntary Arrangement | PVA |
| Administration | ADM |
Note: HMRC unique case reference numbers start with 623 or 075 or 880 followed by seven digits.
Example 1:
Reference number from claim: 623/1234567
Dividend type: Individual Voluntary Arrangement
Payment reference: 6231234567 IVA (13 characters)
Example 2:
Reference number from claim: 075/7654321 /XXX
Dividend type: Members Voluntary Liquidation
Payment reference: 0757654321 MVL (13 characters)
Example 3:
Reference number from claim: 880/1357911 /XXX 26 VA
Dividend type: Administration
Payment reference: 8801357911 ADM (13 characters)
Enquiries regarding this article may be sent to: louize.brady@hmrc.gov.uk
On 7 April, Companies House advised that, in response to the COVID-19 pandemic, it would accept filing of statutory insolvency documents via emailed PDF attachments.
Due to operational impacts of the pandemic, Companies House currently has a backlog of insolvency forms to process for England and Wales. This has led to many insolvency practitioners submitting duplicate emails, which is further slowing down its processing capability. Companies House respectfully requests that practitioners do not send duplicate emails whilst it is working through the backlog.
If 15 working days have elapsed from the date of the original email and the documents have not been processed, please contact Companies House via: enquiries@companieshouse.gov.uk.
Practitioners should note that this only relates to companies registered in England and Wales. Companies House is up to date with processing its insolvency filings for companies registered in Scotland and Northern Ireland. Companies House thanks you for your continued support.
HMRC is aware that some employers have had their JRS claim for financial support refused because they are in arrears with some of their tax liabilities.
This is an error and claims should not have been rejected. HMRC requests those employers who have had their claim rejected for this reason to reapply.
HMRC has updated its guidance and advised colleagues to ensure that there is no repeat of the situation. HMRC apologises for any distress this may have caused.
In the communication dated 7 April 2020, it was advised that as a response to the COVID-19 pandemic, Companies House will accept the filing of statutory insolvency documents via emailed PDF attachments. The communication also advised that Companies House was in the process of developing a system that will allow documents to be directly uploaded.
Work is currently progressing in relation to this new document upload filing service and Companies House is particularly interested in seeking feedback from insolvency practitioners who would potentially be using this service in the future.
Such feedback would help shape the development of this service. If you are interested in taking part, you are invited to join the Companies House user panel www.gov.uk/government/news/help-improve-companies-house Companies House will issue a further communication when this new filing service is available.
Companies House thanks you for your continued support.
The IVA Standing Committee published guidance to support the IVA Protocol in view of the COVID-19 pandemic on 20 April 2020.
The guidance is a tool for supervisors to use if the terms of the IVA require further flexibility in the current circumstances. The guidance does not form part of the IVA terms and has not been legally incorporated into existing IVAs. The Recognised Professional Bodies (RPBs) fully support the guidance and, as such, are content for supervisors to use it.
One of the intentions of the guidance is to avoid the need to hold mass variations at cost to the estate. Supervisors are reminded to check whether the guidance already covers the changes they require before putting any draft variations to creditors. When a supervisor determines that use of the guidance may be required based on the consumer’s circumstances, they should ensure that they document that decision and the reasons why it has been made. The consumer must always consent to the use of specific terms in the guidance, except as noted below, usually by approaching the supervisor to request it.
The supervisor should consider, and document, if they have 75% by value support of the creditors who have already signed up to the guidance by way of public statement. If they do not, then the relevant creditors who do not fall under the statement should be contacted to confirm if they are willing to agree. If that agreement cannot be obtained the supervisor should revert to the terms of the IVA. They should follow the necessary provisions to use any discretion that is already available to the supervisor under the terms of the IVA or obtain agreement from the creditors to any changes.
Paragraph 1.12 of the guidance about not realising a consumer’s home equity during the pandemic is the only term which assumes IVAs will not proceed as they were drafted (if the consumer has a property) and that a consumer would need to agree to proceed during the pandemic. The insolvency practitioner should retain a record of the consumer’s agreement.
The supervisor should make sure that the consumer is aware of the guidance when they reach the stage at which they would be expected to release the net worth in their property. The supervisor should document the consumer’s intended route forward, including how and when it was explained to the consumer that additional payments would be required in lieu of equity release.
The RPBs will consider any use of discretion in the context of the terms of the IVA, the law, the guidance and Protocol principles, and applicable professional standards (Statements of Insolvency Practice and the Code of Ethics) and will expect to see a record of how the supervisor arrived at any decision. Enquiries regarding this article may be sent to: IPRegulation.Section@insolvency.gov.uk
The Corporate Insolvency and Governance Bill passed through the House of Commons on Wednesday 3 June 2020 and is expected to proceed to the House of Lords on Tuesday 9 June 2020. Updates on the passage of the Bill can be followed online.
Guidance for monitors (who will oversee the new moratorium) is being refined and has been shared with RPBs, ready for publication as soon as possible.
Factsheets which explain the detail of the Bill have been published on GOV.UK. These are designed to explain the detail of the Bill in a more accessible way, and answer some of the questions people may have.
The factsheets cover:
-
Overview of the Corporate Insolvency and Governance Bill
-
Summary of Retrospective Provisions
-
Financial Services Exclusions
-
Moratoriums
-
Restructuring
-
Statutory Demands and Winding Up Petitions
-
Wrongful Trading
-
Termination Clauses
-
Annual General Meetings
-
Filings
-
Delegated and Henry VIII powers.
If you have any feedback or queries about the factsheets, please contact Policy.Unit@insolvency.gov.uk.
In order to speed up communications with HMRC, insolvency practitioners can now use its secure email system to contact the IVA team.
The IVA team’s email address is vas@hmrc.gov.uk
Secure email is a safe and tested method and can speed up processes. HMRC have rules and protocols in place to safeguard personal information when using email to contact customers.
Even with secure email however there is an element of risk and emails may not carry the same evidential weight as a letter. For this reason, HMRC is asking that those insolvency practitioners wanting to use email communications confirm they accept these risks.
What insolvency practitioners need to do
When sending a first email to the IVA team, please can practitioners please include the following disclaimer;
‘I understand that if I correspond with HMRC by e-mail, I accept the risks associated with using e-mail and I am happy for HMRC to send my company e-mails containing personal information. I understand that HMRC will reply to the e-mail address we have used, unless I specify an alternative’.
HMRC is also planning to expand the use of secure email across its Enforcement and Insolvency divisions. HMRC will provide further details about this as it becomes available.
Enquiries regarding this article maybe sent to: louize.brady@hmrc.gov.uk
Insolvency practitioners will be aware that the Corporate Insolvency and Governance Bill was introduced to Parliament on the 20 May and is currently proceeding through the House of Lords. The Bill includes a number of measures to support business including the introduction of a new moratorium to give companies breathing space from their creditors whilst they seek a rescue. The new moratorium will be overseen by an insolvency practitioner acting as a monitor although the directors will remain in charge of running the business (and as such it will be a debtor-in-possession process). During a moratorium no legal action can be taken against a company without leave of the court.
In order to assist practitioners undertaking the role of monitor, the Insolvency Service will be publishing guidance as soon as the Bill has completed its passage through Parliament.
Practitioners may find it helpful to have early sight of the proposed guidance document even though it is not finalised. The moratorium provisions will be operational immediately on commencement of the Act, without having to wait for secondary legislation to be passed as one of the schedules to the Bill includes temporary rules for the operation of the moratorium.
We have sought input into the guidance from the Recognised Professional Bodies, R3, HMRC and other stakeholders and we are very grateful for all the helpful feedback and suggestions received to date.
A link to the draft guidance can be found on https://www.gov.uk/government/publications/insolvency-act-1986-part-a1-moratorium-draft-guidance-for-monitors
Enquiries regarding this article may be sent to: Policy.Unit@insolvency.gov.uk
The Insolvency and Corporate Governance Act received Royal Assent on 25 June 2020 and commences on 26 June 2020. Following publication of a draft guidance document for monitors,a final version has now been published on GOV UK.
The moratorium provisions are operational immediately and we hope that practitioners found it helpful preparation to have early sight of the guidance.
Companies House notification requirements
Links to the relevant forms to send Companies House regarding commencement, extension or end of the moratorium are provided for below. A link to Companies House guidance regarding notification requirements can be found here
| MT01 | Notice of commencement of moratorium |
|---|---|
| MT02 | Notice of extension of moratorium |
| MT03 | Notice of early end of moratorium |
| MT04 | Notice of end of moratorium by a monitor |
| MT05 | Notice of end of moratorium by a court |
| MT06 | Notice of end of moratorium following disposal of application for extension by the court or following CVA proposal taking effect or being withdrawn |
| MT07 | Court order permitting disposal of property or goods |
| MT08 | Notice of appointment of replacement or additional administrator following court order |
| MT09 | Notice of monitor ceasing to act following court order |
Notification to HMRC
HMRC is likely to be a creditor in most cases where a moratorium is sought, and as a result they have set up a specific team to handle such cases. For all notifications and subsequent contact regarding the moratorium, the monitor may notify HMRC using following contact details:
Tel: 0300 322 9251
Any written correspondence should be sent to:
| Debt Management - EIS C |
|---|
| HM Revenue and Customs |
| BX9 1SH |
Email: eisc.cva@hmrc.gov.uk
Enquiries regarding this article may be sent to: Policy.Unit@insolvency.gov.uk
Several Government financial support schemes are available to individuals and businesses during the COVID-19 pandemic. This article provides guidance on dealing with those funds on insolvency.
Self-Employment Income Support Scheme
HMRC will pay self-employed individuals whose business is affected by COVID-19 a taxable grant of 80% of their average monthly trading profits, to be paid as a single sum capped at £7,500 for a three-month period (subject to extensions of the scheme).
If these funds were paid before a bankruptcy order, as far as they remain, they are a bankruptcy asset (cash at bank).
If the individual subject to an Individual Voluntary Arrangement (IVA) when this payment is made, it can be used to continue to pay the monthly contributions agreed by creditors. If the 20% reduction in income means that the payments are unsustainable, the supervisor should use their discretion and the IVA protocol COVID-19 guidance to assist the individual where appropriate.
Small Business Grant Fund, and Retail, Hospitality and Leisure Grant Fund
To be eligible for the small business grant a business had to be eligible for Small Business Rate Relief (SBBR) or rural rates relief on 11 March 2020. There is no application process. Grants are made on the basis of information held by the local authority on SBRR. If offered the grant, the company or individual must confirm their eligibility.
To be eligible for the retail, hospitality and leisure grant the business must be based in England, in the retail, hospitality or leisure sector and had a rateable value of under £51,000 on 11 March 2020.
A company or individual is not eligible for these grants if they are subject to liquidation or the business has been dissolved. The guidance which has been published is clear that any individual or business found to be falsifying documents to claim a grant will be prosecuted and the monies will be subject to claw-back.
Where a winding-up order or bankruptcy order is made against a company or individual who has already received grant monies from either of these schemes, the balance of the funds held are an asset (e.g. cash at bank).
If, post-bankruptcy, the bankrupt has received a grant, the monies should be claimed as after acquired property if the bankruptcy is still in force.
Business Interruption Loan Scheme and Bounce Back Loan Scheme
These are commercial bank loans in part guaranteed by the Government. If the loan has been made prior to the date of a bankruptcy or winding-up order, then the bank is a creditor.
Where an individual or company has made an application for a loan prior to insolvency but the funds have not been received, the bank should be advised immediately of the winding-up / bankruptcy order.
If it appears that a person has applied fraudulently for any of the business schemes it is the duty of the insolvency practitioner to consider their reporting obligations under SIP 2.
Employers/employees receiving funds on furlough (Coronavirus Job Retention Scheme)
The Government is making payments to employers to cover 80% of their staff payroll for retained staff (up to a maximum of £2,500 per month for each individual retained). These monies must be passed on to employees or if the employer has already made a payment to the employee, a record should be kept. Any funds not paid over to staff are repayable to HMRC. This may represent a debt in an insolvency or if the funds remain in the hands of the employer they will need to be traced and will be monies recoverable by HMRC. Any unpaid wages at the date of insolvency should be claimed through the Redundancy Payment Service (RPS).
When drafting an IVA proposal for an individual who is on a furlough payment, the practitioner should be mindful of the individual’s ability to be able to sustain the contributions being proposed.
Enquiries regarding this article may be sent to: IPRegulation.Section@insolvency.gov.uk
On 30 June 2020 the Government laid the Insolvency (Amendment) (EU Exit) Regulations 2020 (the “2020 Regulations”).
As insolvency practitioners will be aware, the UK left the EU at 11pm on 31 January 2020 and we are currently in a transitional period, during which there is no change to the insolvency framework that operates between the UK and the EU. EU rules continue to apply until the end of this period on 31 December 2020. As part of the Withdrawal Agreement with the EU it was agreed that the EU legal framework will continue to apply after that date to all main insolvency proceedings that are opened before the end of the transitional period.
The 2020 Regulations implement that Withdrawal Agreement in the UK and remove the conflicting provisions contained in the Insolvency (EU Exit) Regulations 2019 (the “2019 Regulations”).
In particular the 2019 Regulations (which anticipated the UK leaving the EU without a withdrawal agreement) included an incompatible power for use by the courts when dealing with insolvency cases commenced under the EU rules. The power in question permitted a court to depart from applying the EU Insolvency Regulation, where for example creditor interests were prejudiced by a member State not treating the UK as a member State. That power is no longer needed, as the Withdrawal Agreement itself provides that the EU rules will continue to be applied by both the UK and the EU in respect of insolvency proceedings opened before the end of the implementation period.
Enquiries regarding this article may be sent to: Policy.Unit@insolvency.gov.uk
This article explains HMRC’s approach to variations and new proposals in respect of Individual Voluntary Arrangements (IVAs), Partnership Voluntary Arrangements (PVAs) and Company Voluntary Arrangements (CVAs) from 1 July 2020 until 30 November 2020.
Existing arrangements
Some companies or individuals subject to voluntary arrangements (VA), believe they’ll continue to have difficulty in paying contributions because of COVID-19. In these cases, supervisors can use any discretion within the terms of the arrangement to allow a contribution break without reference to creditors.
For IVAs where the IVA Protocol Standard Terms and Conditions apply, clause 8(8) allows flexibility. For arrangements where this isn’t an option, the supervisor should work with the consumer or company to understand whether the arrangement as it stands remains viable, or whether it would be viable if varied. This is a matter for case-by-case consideration and HMRC will not support ‘mass variations’ in connection with COVID-19.
For companies and individuals where the HMRC liability arises from on-going trading, HMRC support is given provided payment of post voluntary arrangement (VA) taxes is a priority.
HMRC recognises that paying these taxes whilst maintaining VA contributions will be a challenge for some as we emerge from the pandemic. HMRC will support variation of proposals:
- to allow contribution breaks in each of the two years following approval of the variation; these can be taken in aggregate or as on cases where the supervisor is satisfied that they are necessary and that they will enable post-VA taxes to be paid on time and in full,
- to allow any fixed duration to be extended to allow a catch-up of missed contributions.
HMRC may also:
- support a longer contribution break in appropriate cases, where this is likely to ensure the longer-term viability of the arrangement,
- agree to the deferral of equity realisation where the current situation prevents the debtor or company from complying with the existing deadline.
HMRC will look critically at variations that seek to end the arrangement early. HMRC is unlikely to support the removal of asset realisation clauses in any but the most exceptional circumstances.
New proposals
HMRC will continue to look at proposals within the framework set out in the VAS help-sheet.
The impact of COVID-19 means that a good history of paying taxes on time may no longer be a reliable indicator for individuals or companies proposing a VA. HMRC is reliant on insolvency practitioners reporting as fully as possible on the nature of the business, the impact of COVID-19 on its trade, what countermeasures have been taken and to bring their professional judgment to bear on the viability of the business and VA.
For those with a longer, less positive history, this objective reporting is even more critical. It should explain pre-COVID-19 tax arrears, as well as the impact of the pandemic on that business.
On new proposals, HMRC views the payment of post-arrangement taxes as vital. HMRS asks that practitioners look critically at how this can be achieved. Depending on the circumstances of the company or individual, HMRC would support a flexible approach, looking positively at:
- Variable contributions from the outset to accurately reflect cash-flow variations, and some limited flexibility for supervisors to reduce contributions temporarily,
- Contribution breaks in years one and two, as outlined above.
Given the substantial support that has been provided, HMRC would also expect to see that PAYE and National Insurance Contributions (NICs) arising from Coronavirus Job Retention Scheme (CJRS) payments have been paid. If not, these must be treated as priority payments in the arrangement, ahead of all other unsecured creditor claims (including other elements of HMRC’s claim).
A condition of the CJRS grant is that related PAYE tax, employer NICs and pension contributions due on wages are paid. Until 31 July, a claim can be made for these for the hours the employee is on furlough. From 1 August employers will no longer be able to claim for employer NICs and pension contributions.
If practitioners become aware that a taxpayer may struggle to pay outstanding tax liabilities, they should contact HMRC as soon as possible. The taxpayers concerned may be eligible to receive support with their tax affairs through HMRC’s Time to Pay service.
The Lord Chancellor of the High Court, Sir Geoffrey Vos, with the approval of the Lord Chancellor the Justice Secretary, has by Order made new Court Practice Directions for the Corporate Insolvency and Governance Act 2020.
A new Schemes Practice Statement has also been published for the new Restructuring Plan under Part 26A of the Companies Act 2006.
Both of these documents are attached below.
CIGA Insolvency Practice Direction 2020
Schemes-Practice-Statement Part 26A
Enquiries regarding this article may be sent to: Policy.Unit@insolvency.gov.uk
After a successful trial, insolvency practitioners can now use the Dropbox file sharing service to submit VAT426 forms. By using Dropbox, practitioners will know that HMRC has received the form, and it guarantees that any supporting documentation will not become separated from the claim.
This is part of HMRC’s work to help insolvency practitioners by speeding up and simplifying processes. HMRC takes the security of personal information very seriously. To keep risks to a minimum, one of the preferred methods of data transfer for HMRC is Dropbox.
There is a risk attached to all forms of electronic data transfer and some remain with Dropbox. Insolvency practitioners will need to confirm with HMRC that they have a clear understanding and acceptance of any associated risks and that they are content to send information concerning their business details. HMRC will provide guidance throughout this process.
What insolvency practitioners need to do
If practitioners would like to sign up to this service, please email your details to dmvat426team@hmrc.gov.uk and HMRC will contact you to go through the process.
Following previous communications in Dear IP about a new digital service allowing certain documents to be directly uploaded, Companies House is now pleased to confirm that users will be able to upload all statutory insolvency documents using the ‘Upload a document to Companies House’ service from Tuesday 1 September.
The service will run in parallel with the current email filing service for a short period, however Companies House plans to decommission the email system on Friday 11 September. From this date insolvency practitioners will need to use the ‘Upload a document to Companies House’ service.
To access the upload service for the first time, insolvency practitioners will need to do the following:
- Firstly, if practitioners have not already done so, they will need to register for a Companies House Service (CHS) account. Practitioners can register for a CHS account.
- Practitioners must ensure that the username provided matches the email address provided to Companies House by the Insolvency Service otherwise they will not be able to use the uploading service to submit insolvency documents.
- Once practitioners have registered and activated a CHS account, they will then be able to access the uploading service.
- Once signed into the service, providing the username matches the email Companies House has been provided with, insolvency practitioners will be able to access the insolvency part of the system. Practitioners will then be able to choose the relevant insolvency type (for example, liquidation, company voluntary arrangement etc.) and then select the appropriate completed document for submission.
- The system is only designed for the submission of PDFs. Therefore, to submit a document, practitioners will need to save it and convert it to a PDF.
- Further guidance.
Companies House respectfully requests that practitioners do not submit the same documents in both the upload and email services. This results in duplication of work and contributes to processing delays.
Companies House thanks insolvency practitioners for their continued support.
EIS, Edinburgh, are refreshing the list from which they nominate insolvency practitioners as interim liquidators in Scottish liquidations. Such insolvency practitioners may also be asked to accept nominations as provisional liquidators, interim trustees, and other appointments e.g. as administrators. Insolvency practitioners may also be asked to carry out preliminary investigative work from time to time.
This refers only to proceedings instigated by EIS Edinburgh and not other areas of HMRC, such as the Fraud Investigation Service.
It is expected that insolvency practitioners will recover fees, outlays and disbursements where there are sufficient assets. Where there are insufficient funds to cover reasonable insolvency practitioner fees, outlays and disbursements, HMRC will pay the outstanding amount up to a maximum of £5000 + VAT per appointment.
When additional funding over £5000 is required, requests will continue to be considered on a case by case basis. Such requests should be emailed to IPFundingcontact@hmrc.gov.uk.
Fees for other cases, e.g. administrations and provisional liquidations, will be negotiated on a case by case basis.
The insolvency practitioner should be able to demonstrate that if the interlocutor is received before noon, they or a suitable member of their direct staff are able to secure assets the same day. If received after noon, assets should be secured before noon the following day. For businesses in outlying areas, such as the Highlands and Islands, an additional 24 hours will be accepted.
If any insolvency practitioner wishes to be considered for nomination, please email a request on headed paper to ipso@hmrc.gov.uk. Practitioners should also specify the Sheriffdoms in which they are able to accept appointments.
HMRC is helping insolvency practitioners by streamlining the way it deals with forms and letters it receives. HMRC has now introduced Digital Mail Service DMS across all of Debt Management and EIS teams. Correspondence is now digitally scanned and can be worked by teams across HMRC.
This also means that, if needed, staff can access and view the digital version remotely, helping it deliver a more efficient customer service.
What HMRC needs from insolvency practitioners
HMRC has updated Insolvency (VAT Notice 700/56) with the latest contact details for each of our EIS teams.
HMRC asks that insolvency practitioners do not send cheques for dividend payments by post as they cannot be processed via DMS. Section 8 of the Insolvency (VAT Notice 700/56) outlines the process that practitioners should follow.
Guidance published on 20 April 2020 to support consumers currently in individual voluntary arrangements (IVAs) through the COVID-19 pandemic has been revised by the IVA Standing Committee (IVASC).
The revised guidance was published on 7 September 2020 and can be found here.
The key changes are:
- The extension of the guidance until 20 April 2021, subject to continued review by the IVASC.
- Discretion for the supervisor to grant a further three-month payment break after the initial three months having preformed a review of the consumer’s circumstances.
- Discretion for the supervisor to allow reduction of up to 50% of contributions into the arrangement.
The focus of these changes is to ensure that consumers can continue their IVA successfully and allows discretion for the supervisor to decide as to the best way to achieve this. Supervisors should, where possible, try to ensure consumers take payment reductions rather than breaks which will in turn mean that the consumer has less shortfall to make up.
Supervisors should, at all times, document decisions and reasons when using the guidance.
This guidance will continue be monitored and reviewed by the IVASC and further amendments will be made where appropriate.
Enquiries regarding this article may be sent to:
Companies House have advised they will be extending the email service for submitting insolvency forms for two weeks until 25 September when the service will be decommissioned.
Companies House respectfully asks that insolvency practitioners do not submit the same documents in both the upload and email services. This results in duplication of work and contributes to processing delays.
Companies House thanks insolvency practitioners for their continued support.
The temporary measures introduced by the Corporate Insolvency and Governance Act are due to expire on 30 September 2020. The Government has listened to the concerns raised by stakeholders and has announced that it will extend some temporary measures into the coming months as the economy continues to recover from the COVID-19 lockdown. The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the relevant Period) Regulations 2020/1031 was laid 24 September.
The insolvency measures that will be extended are:
- Suspension of serving statutory demands and restrictions on winding up petitions – extended until 31 December 2020
- Small business exemption from the termination clause requirement is extended until 30 March 2021
- Temporary moratorium rules – extended until 30 March 2021
-
Modifications to moratoriums being extended to 30 March 2021:
*Companies subject to a winding up petition can access a moratorium by filing papers at court (rather than having to make an application to court) * Companies which have been in a CVA or administration within the last 12 months can obtain a moratorium (usually they would not be eligible)
The following measures are not being extended and will cease to have effect after 30 September 2020:
- The modification to moratoriums that relaxes the criteria for the monitor to assess that the company is likely to be rescuable in order to enter a moratorium/for a moratorium to continue.
- The suspension of wrongful trading.
The temporary moratorium rules in Schedule 4 to the Corporate Insolvency and Governance Act 2020 were limited to those essential for the moratorium provisions to work on commencement of the Act. We are now developing amendments to the Insolvency (England and Wales) Rules 2016 and the Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018 to incorporate permanent rules for the moratorium. We would welcome comments from practitioners and stakeholders to identify areas where the temporary rules may have resulted in any uncertainty about the procedure to be followed. Please provide comments by 12 October 2020. We would also welcome comments on the guidance for monitors (Insolvency Act 1986 part A1: moratorium - guidance for monitors) and would appreciate if feedback on these could be provided by 31 October 2020. When submitting comments please direct them to Policy.Unit@insolvency.gov.uk.
Dear IP 91, issued in March 2020, advised that due to the government advice to work from home, the Insolvency Service would be unable to print cheques for the foreseeable future. We are now be delivering services both remotely and through offices and therefore the Insolvency Service is pleased to confirm that with immediate effect requests for cheque payments can now be accepted. This article sets out the new cheque payment process.
The new cheque payment process is as follows:
- The insolvency practitioner or agreed requisition submitter will send a signed CAU 101 requisition by email to Requisitions@insolvency.gov.uk.
- The subject header of the email should read ‘IP Requisitions’ to ensure it is identified as a payment request and processed without delay.
- Each requisition must be sent on a separate email.
- The signature on the requisition will be checked against the signature that is held on our database and we will be validating that the requisition has been received from the insolvency practitioner’s email address that we have on our records
In order to ensure our offices are COVID secure workplaces there will be a reduced staff capacity. This means cheque printing will initially be carried out on a weekly basis on Tuesdays. So that insolvency practitioner’s requisitions can be processed, and a cheque produced within the week, please ensure it is emailed to us by no later than midday on Mondays. Any requisitions received after this time will be processed the following week.
Should practitioners wish to nominate others from within their firm to submit requisitions on their behalf, we need an email from the practitioner sent from the email address we have on our records to authorise them as requisition submitters.
Please note that the agency will only accept requisitions sent from an email account that has been authorised by a licensed insolvency practitioner. It remains the insolvency practitioner’s responsibility to ensure access to this account remains secure and is not used by unauthorised parties. The agency can accept no liability if requisition emails are submitted from this account by persons who are not the authorised email account holder.
The Insolvency Service will continue to process BACS payments on a daily basis, and we would encourage you to use BACS as the payment method where possible.
Please be aware that if government advice about working from offices changes at either a national or local level there is a possibility that we may need to cease cheque printing again until our staff can access offices. BACS payments would however continue to be unaffected and would be processed as normal.
Enquiries regarding this article may be sent to: customerservices.EAS@insolvency.gov.uk
Summary
When considering liability for wrongful trading, directors may not be held responsible for any worsening of the financial position of the company between 26 November 2020 and 30 April 2021. The latter date is subject to change if the suspension of wrongful trading liability is no longer required to prevent companies which would be viable but for the impact of the pandemic from entering insolvency proceedings unnecessarily.
In addition, the period during which temporary relaxations to the manner in which company AGMs and other meetings must be held, as provided for by the Corporate Insolvency and Governance Act 2020 (the CIG Act), has been extended to 30 March 2021.
Background
The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020 were laid before Parliament on Wednesday 25 November 2020. This instrument is subject to the “made affirmative” procedure, so comes into force on 26 November, but is subject to debate and approval by both Houses.
The instrument uses the power in section 20 of the CIG Act to modify the effect of sections 214 and 246ZB of the Insolvency Act 1986, so that they do not apply to any worsening of the financial position of the company between 26 November 2020 and 30 April 2021 inclusive. The purpose of this is to remove the deterrent of personal liability so that directors do not have to take it into account when deciding whether or not a company whose business has been impacted by the effects of the pandemic should continue trading, preventing companies from entering insolvency proceedings unnecessarily.
The instrument effectively revives the previous suspension between 1 March and 30 September under the CIG Act.
One of the requirements for using the section 20 power is that the change made is kept under review and removed if no longer needed. Therefore, if the suspension is no longer required to achieve the stated purpose before 30 April 2021, it will be removed.
Certain bodies, such as financial institutions, are excluded from this provision, as they were from the previous suspension in the CIG Act.
Paragraph 3 of Schedule 14 to the CIG Act allowed companies (and other qualifying bodies) to temporarily hold AGMs and other meetings in a manner which was consistent with both public health measures and their constitutional requirements, for example by electronic means. Those temporary relaxations were extended until 30 December 2020 in light of the continued need for public health measures in response to the pandemic, and this instrument now extends the easements to 30 March 2021.
Enquiries regarding this article may be sent to Policy.Unit@insolvency.gov.uk
## 37. HMRC: New IT platform update
In October, HMRC informed insolvency practitioners of problems caused by the introduction of a new IT platform that was specifically affecting insolvency cases. In particular, the problems were affecting Insolvency Practitioners who were:
- Notifying HMRC of insolvency
- Submitting paper returns
- Requesting repayments
- Awaiting confirmation that all matters are concluded
Temporary solution
HMRC has introduced a temporary solution which will improve its service to insolvency practitioners by reducing the number of outstanding cases so HMRC can progress new cases. This includes issuing and processing paper returns, enabling those cases to be progressed. HMRC has increased the number of staff working on this solution and insolvency practitioners should start to receive returns for completion shortly.
Whilst HMRC fully understands why insolvency practitioners are making contact to find out what is happening with cases, HMRC would be grateful if insolvency practitioners do not follow up these cases. This will enable HMRC to allocate more time to work through the original requests and reduce the backlog, rather than spending time responding to duplicate requests.
HMRC will also be closing telephone lines for EIS Newcastle from the 30 November until the 11 December to enable staff to undertake the essential training required to deliver this temporary solution.
What happens next
Following the completion of the initial steps taken to address the backlog, HMRC will be able to provide insolvency practitioners with a timescale for completion of cases as soon as possible and through the Dear IP newsletter.
HMRC is very grateful for insolvency practitioners’ patience and is sorry for the impact the delays are having on them.
The Insolvency Service has received reports of a number of corporate insolvencies in which there appears to have been abuse of the various COVID-19 Government financial support schemes, such as:
- Bounce Back Loans
- Coronavirus Job Retention Scheme (support for employees on furlough)
- Small Business Grant Fund
- Retail, Hospitality and Leisure Grant Fund
- Local Authority Discretionary Grants Fund
It is appreciated that other support schemes are available and misconduct involving the abuse of any will be considered as part of the investigation targeting process.
The Director Conduct Reporting Service does not have any specific questions relating to COVID-19 and IT constraints prevent these from being added.
If office-holders identify any possible abuse of the COVID-19 support schemes (please see examples below) they should report this by answering yes to the question in section 12 of the conduct report: “Have you identified any potential criminal matters; statutory or regulatory breaches that are not currently being investigated by other regulators or the police?”.
This will ensure that the report is sifted in and office-holders will be contacted for further information. Office-holders should answer yes to the question, even if they are aware that the police or another regulator is investigating.
If office-holders are dealing with any cases where the conduct report has already been submitted and they are aware of a COVID-19 support scheme being abused which has not been identified on the Directors Conduct Report, they should report this as new information via the “Contact Us” link which can be found on every page of the application.
Examples of COVID-19 support scheme abuse already reported include the following:
- Bounce Back Loans obtained, and the proceeds removed by the directors for their personal benefit in close proximity to the company entering into formal insolvency proceedings
- Using the Coronavirus Job Retention Scheme for purposes other than paying employees on furlough, or claiming support for employees who continue to work contrary to the terms and conditions of the scheme
- Providing false information in connection with any application for a COVID-19 support scheme
Insolvency practitioners should also report any suspected fraud in relation to HMRC-administered coronavirus relief schemes (such as the Job Retention Scheme) directly to HMRC so that HMRC can consider criminality or personal liability:
www.gov.uk/government/organisations/hm-revenue-customs/contact/report-fraud-to-hmrc.
To comply with anti-money laundering requirements, where insolvency practitioners are aware, or have suspicions, of any criminal activity resulting in the entity being in possession of proceeds of crime, they should also submit a Suspicious Activity Report (SAR). Office-holders are reminded that where they intend to deal with the assets of, or make any payments from, an entity which they know or suspect includes proceeds of crime, they should also consider whether they should submit a Defence Against Money Laundering SAR to the National Crime Agency, to obtain consent to proceed with the transaction.
Enquiries regarding this article may be sent to: intelligence.insolvent@insolvency.gov.uk
General Data Protection Regulation (GDPR)
A query was raised concerning the absence of guidance on the application of the GDPR in relation to any obligations the monitor is under to comply with those regulations. The Guide for Monitors explains a monitor’s obligations under Part A1 of the Insolvency Act 1986 and is not intended to be an exhaustive summary of all of the legal obligations to which a monitor will be subject.
The Recognised Professional Bodies have previously issued guidance and FAQs on the practical considerations of the GDPR and data protection more generally for insolvency practitioners. It may be helpful for practitioners (including those who intend to take appointment as monitor) to review these (see below) and any updated guidance issued by their RPB.
Guidance:
https://insolvency-practitioners.org.uk/uploads/documents/efe03f9987513fae5a37f9bd54f8ff4b.pdf
https://www.icaew.com/technical/legal-and-regulatory/information-law-and-guidance/data-protection
https://www.icas.com/regulation/guidance-and-helpsheets/preparing-for-gdpr
FAQs:
As the information Commissioner’s Office website notes, during the transition period the GDPR will continue to apply in the UK and core data protection principles, obligations and rights will remain the same. Practitioners should, therefore, continue to abide by the regulations and monitor the ICO website for developments in guidance.
Extension by creditor consent– tight timescales where creditors request a physical meeting
We acknowledge stakeholder concerns about tight time-scales for notice to creditors where creditors request a physical meeting. We are looking to ameliorate this in the permanent rules (work on amendments to the Insolvency (England and Wales) Rules 2016 to provide permanent procedural rules for the moratorium is currently ongoing).
Bonding
A query concerning how the bond will be calculated was raised given the practitioner in their capacity as monitor will not be handling assets. The prospective monitor should know the estimated value of the company's assets as the guide sets out clearly that the prospective monitor will need to ascertain information about the company’s assets and liabilities in order to assess the company’s eligibility to enter a moratorium.
Service debts
Further guidance was requested concerning section A18(3) and how the portion of service debts (such as rent) which are excluded from the payment holiday should be calculated. As an example, we consider the wording of A18(3)(c) “rent in respect of a period during the moratorium” indicates that quarterly rent should be pro-rated.
Secured creditor voting rights
Clarification was requested regarding which secured creditors may be considered secured pre-moratorium creditors for the purposes of voting on an extension in light of section A18(3)(f) of the Insolvency Act 1986. Some secured creditors will not be able to vote in a decision procedure to extend a moratorium due to the exemption from a payment holiday in A18(3)(f) which applies to liabilities involving financial services (as defined in Schedule ZA2). However, there are secured creditors who do not fall into these exemption provisions, and so who would be able to vote, such as directors who have made loans to the company secured by a debenture, Pension Funds that have taken a charge on company assets to secure a pension deficit and landlords for a rent deposit charge.
Opt out provisions
Confirmation was requested as to whether the opt out provisions apply as the Guide is silent on this. The temporary rules do not apply the opt out provisions in the Insolvency (England and Wales) Rules 2016 as most moratoriums will be fairly short in duration with limited communications sent to creditors.
End of the moratorium
There is no legislative requirement on the monitor to inform creditors (or the Registrar of Companies or the court) that a moratorium has ended at the end of the initial or extended period unless the moratorium is brought to an end prematurely. Otherwise (as explained in section 2 of the Guide) the monitor is required to inform creditors and the Registrar of Companies of the start of the moratorium, the end date, any change to the end date and the appointment of a replacement or additional monitor.
Rule 15.34 B1 (requisite majorities)
A query was raised concerning the meaning of “a majority of the pre-moratorium creditors” in the amended rule 15.34 (B1) of the IR 2016 and whether the reference to a majority means a majority in value or to a majority in number. We can confirm that a majority in this context refers to a majority in number.
Enquiries regarding this article may be sent to: Polic.Unit@insolvency.gov.uk
HMRC has advised the Insolvency Service that due to the COVID-19 pandemic it is unable to cash cheques. This is due to reduced staffing levels in its post room and finance department.
As a result, HMRC is requesting that all payments are submitted via BACS to its Barclays account:
Account name: HMRC NIC Receipts Sort Code: 20-20-48 Account number: 30944793
HMRC has requested that, when paying via BACS, you quote the 075 or 880 reference number to avoid any delays in allocating funds.
The Insolvency Service will not process any requests for cheque payments to HMRC for the foreseeable future. Where a request for a cheque payment to HMRC is received, we will return the requisition and ask that a BACS payment be submitted instead.
Further information can be obtained from our Customer Services team at Customerservices.eas@insolvency.gov.uk
We wrote to you in September to advise that the Insolvency Service could resume cheque printing on a weekly basis, subject to any further lockdown restrictions imposed by the government.
As a result of the latest national lockdown that came into force on 4 January 2021, our Estate Accounts and Scanning team now has limited access to the office and can only offer a cheque printing service on a fortnightly basis.
The next cheque run will commence on Tuesday 19 January. Going forward, cheques will be printed fortnightly on a Tuesday and the deadline will be the preceding Friday before 11am. Any cheques received after the deadline will be processed in the next cheque run.
These arrangements will be reviewed continually, taking into consideration available resources and government guidance.
We are continuing to process BACS payments remotely and encourage you to use BACS where possible, especially where a payment is urgent.
We aim to process BACS payments in-line with existing targets. With the current challenging circumstances, however, our response times may be affected. We therefore ask for your continued patience.
Please note that we will only accept requisitions sent from an email account that has been authorised by a licensed Insolvency Practitioner. It remains your responsibility to ensure that access to the registered email account remains secure and is not used by any unauthorised parties. We cannot accept liability if requisition emails are submitted from a registered email account by persons who are not the authorised email account holder.
Further information can be obtained from our Customer Services team at Customerservices.eas@insolvency.gov.uk
The IVA Standing Committee (IVASC) has agreed that guidance published on 20 April 2020 to support consumers currently in individual voluntary arrangements (IVAs) through the COVID-19 pandemic should be extended until 30 April 2021.
The revised guidance was published on 22 January 2021 and is available on GOV.UK
Supervisors should, at all times, document decisions and reasons when using the guidance.
This guidance will continue to be monitored and reviewed by the IVASC and further amendments will be made where appropriate.
Enquiries regarding this article may be sent to: IPRegualtion.section@insolvency.gov.uk
The IVA Standing Committee (IVASC) has agreed that guidance published on 20 April 2020, to support consumers currently in individual voluntary arrangements (IVAs) through the COVID-19 pandemic, should be extended until 31 July 2021.
The revised guidance was published on 8 April 2021 and can be found here.
Supervisors should, at all times, document decisions and reasons when using the guidance.
This guidance will continue be monitored and reviewed by the IVASC and further amendments will be made where appropriate.
Enquiries regarding this article may be sent to: IPRegulation.Section@insolvency.gov.uk
The Government has announced that it will extend the temporary suspension of the service of statutory demands and the restrictions on winding-up petitions until 30 September, in order to support businesses as they continue to recover from the pandemic. The extension was made by Statutory Instrument on 21st June and can be found here.
Two measures are not being extended and will expire automatically on 30 June 2021. These are: -
- The small business exemption from the termination clause (ipso facto) requirement, prohibiting the use of termination clauses in contracts for the supply of goods and services where a company enters a relevant insolvency procedure; and;
- The suspension of personal liability for wrongful trading.
Any enquiries regarding this article should be directed towards email:
[policy.unit@insolvency.gov.uk](mailto:policy.unit@insolvency.gov.uk
The IVA protocol Covid-19 support guidance which was extended earlier this year, to 31st July 2021, has been further extended to 31st December 2021. The revised guidance was published on 30th July 2021 and can be found at [https://www.gov.uk/government/publications/covid-19-individual-voluntary-arrangement-iva-protocol-guidance(https://www.gov.uk/government/publications/covid-19-individual-voluntary-arrangement-iva-protocol-guidance)
There are some updates to this guidance, most notably:
- Given the revised IVA Protocol, effective from 1st August 2021, the COVID-19 protocol guidance should not be applied to any IVAs agreed after 31st July 2021. It is expected that new IVAs should be proposed on the basis that they have a reasonable prospect of success and are sustainable.
We would not expect the consumer to need a reduction in payment or a payment break within the first 6 months of the arrangement and, if one is needed for unforeseen circumstances that the nominee and/or the consumer could not have foreseen, the provisions in the IVA protocol 2021 (including up to 9 months of payment breaks) should be used.
- The provision at paragraph 1.12 on the release of equity does not apply to IVAs agreed after 31st July 2021.
Paragraph 1.12(a) on the use of discretion to add additional payments to an existing IVA, instead of releasing equity because the consumer has been adversely affected by the pandemic, continues to apply to all existing IVAs.
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Removal of the provision relating to critical workers overtime not forming part of contributions.
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Removal of the provision relating to redundancy payments as a result of job loss because of Covid-19. Supervisors should continue to use their discretion in respect of redundancy payments above 6 months salary, as set out in the 2021 protocol.
The regulators will continue to monitor IVAs and use of this guidance by supervisors.
Enquiries regarding this article may be directed to IPRegulation.section@insolvency.gov.uk
This article should be read alongside Dear IP Chapter 29, Article 38. For further information about the schemes offered as part of Covid support measures, please see Chapter 29, Article 23.
Please note: this article deals primarily with the Bounce Back Loan (BBL) scheme, although similar principles will apply with other Covid-19 financial support schemes. Further guidance will be issued as more information becomes available.
Further to the launch of the Bounce Back Loan (BBL) scheme, loans are now approaching their first anniversary, with first repayment instalments becoming due. Whilst it is expected that most of these loans will have been accessed and utilised correctly, it is anticipated that the commencement of repayments may lead to an increase in directors and debtors reassessing the position of their businesses and considering formal insolvency, some as a way of avoiding repayment.
Insolvency Practitioners are reminded to familiarise themselves with the terms of BBLs, and to review company books and records to verify receipt and disposal of BBL funds. Where concerns are identified or BBL abuse suspected, Insolvency Practitioners should ensure that these are reported under the Director Conduct Reporting Service (DCRS), in line with their obligations under SIP 2.
Any concerns not otherwise covered in the compulsory online return should be reported via the DCRS contact button or via email to DCAS@insolvency.gov.uk. Where concerns are identified in relation to a bankrupt trader, these should be reported to the owning Official Receiver’s office.
Some indicators of potential BBL abuse may include:
- failure to disclose a BBL in the statement of affairs;
- minimal creditors, e.g. a BBL and bank overdraft, and/or HMRC;
- funds not being used for the benefit of the business;
- where there was no intention after receipt of the BBL to carry on trading or make attempt to repay;
- businesses not trading in the UK or resident for UK tax;
- businesses not trading as at 1 March 2020;
- company dormant, i.e. filing dormant accounts for 2019 and/or 2020;
- sole traders falsely declaring start date of trading;
- businesses overstating turnover by more than 25%, or a loan of more than 25% of turnover;
- multiple applications to different lenders for a BBL (N.B.: Companies can apply for other Covid support loans such as a Coronavirus Business Interruption loan (CBIL) but must use those funds in part to repay the BBL);
- knowledge of insolvency prior to application;
- applications close to, or after, insolvency event, including post-petition or post-liquidation;
- sole traders who were bankrupt, in an IVA or DRO at date of application.
The Insolvency Service will review conduct concerns for potential disqualification and bankruptcy restriction action and, where appropriate, refer to the relevant prosecution authority.
Queries regarding reporting potential misconduct and the DCRS may be sent to: DCAS@insolvency.gov.uk
General enquiries regarding this article may be sent to: IPRegulation.Section@insolvency.gov.uk
The Covid-19 support guidance for IVA Protocol supervisors, agreed and published by the IVA Standing Committee, has been in place since April 2020.
The aim of the guidance was to support individuals to continue with their IVAs throughout the periods of national lockdown when a reduction in income might impact on individuals’ ability to make their monthly contributions.
The statement of support from creditors has meant that supervisors could action payment breaks, reductions in payments and other agreed amendments to IVA arrangements without having to call a variation meeting. These measures have been successful in preventing a rise in IVA failures resulting from the pandemic.
The IVA Standing Committee has concluded that it is now an appropriate time to remove the guidance and it will cease to have effect on 31st December 2021.
Any supervisors who have debtors who are currently using the guidance, i.e. are part way through an agreed payment beak running until after 31st December 2021, may continue with that agreement. Use of the guidance for debtors making a new request under its provisions, however, will not be permitted from 1st January 2022, and should instead be considered as a business as usual request. The relevant permissions should be sought from creditors if it falls outside of the terms of the original Proposal.
Any enquiries regarding this article should be directed towards email: IPRegulation.section@insolvency.gov.uk