HMRC Launches Consultation On New "Secondary Preferential" Status

An old friend

Included amongst the many announcements in the UK's Autumn 2018 Budget (a reminder of which can be found here: Update : Autumn Budget 2018) was the reintroduction of a somewhat familiar friend : a "secondary preferential" status for HMRC in respect of claims for taxes collected by a business on behalf of others (i.e. VAT, PAYE (including student loan repayments), National Insurance Contributions and construction industry scheme deductions) where that business subsequently enters into a formal insolvency process "holding" those funds. Presently, and following the removal of the Crown preference under the Enterprise Act 2002, such claims rank as ordinary unsecured claims in a formal insolvency process. The changes are proposed to take effect from 6 April 2020, with legislation included in the Finance Bill 2019-20. Taxes owed by the business itself (i.e. corporation tax, employer NICs) are not affected, although HMRC will remain entitled to participate in