Number of company voluntary arrangements falls in 2021-22

The number of company voluntary arrangements (CVAs) agreed by businesses with their creditors has fallen to just 110 in the 12 months to June 2022 down 47% from 206 in the previous year according to statistics from the Insolvency Service.

Company voluntary arrangements have been used as a key tool in previous periods of economic stress to keep businesses afloat and preserve jobs. However after a 2020 change in the law HMRC is now able to reclaim tax debts for VAT PAYE and National Insurance ahead of repayments to other creditors even in a CVA. The impact of the change is that trade creditors and landlords are likely to receive a lower return – or nothing – and suffer a much longer wait for any payment under a CVA. This lower return or delay is likely to result in general unsecured...