Crown creditor preference under insolvencies from 1 December
Readers are reminded that for an insolvency commencing on or after 1 December 2020, HMRC is a secondary preferential creditor in respect of certain tax debt. The NI Tax Committee was not supportive of this change in its response to the consultation which preceded this legislation. In addition, the Institute, in its Next Financial Year position paper recommended that this measure be delayed for two years until 2022 because of the economic impact of the pandemic.
This change impacts on the following fiduciary taxes:-
- VAT;
- PAYE Income Tax;
- employee National Insurance contributions;
- Student loan deductions; and
- Construction Industry Scheme deductions
The rules remain unchanged for taxes owed by businesses themselves such as corporation tax and employer National Insurance contributions.