Changing UK insolvency priorities

As part of the UK Budget the Treasury announced that as of April 2020 HMRC will have greater priority to recover particular taxes paid by employees and customers but held in its words ‘in trust’ by a company that goes into insolvency. At present there is no detail as to how this change will be implemented other than that the taxes covered by the preference will include VAT PAYE employees’ National Insurance contributions and construction industry scheme (CIS) deductions. However other taxes payable by a company on its own behalf – such as corporation tax and employer’s NICs – would not have priority status.

Regime reversal

It is worth noting at the outset that in the strict legal sense VAT PAYE employees’ NICs and CIS deductions are not held ‘in trust’ by a...