Insolvency technical update: April 2025

Read our latest insolvency technical update – your round-up of the recent developments in insolvency.

Tax avoidance scheme facilitated through MVL 

HMRC's Spotlight 69 warns against a tax avoidance scheme for landlords involving transferring a property business to an LLP followed by a subsequent MVL. The scheme is an attempt to avoid capital gains tax. 

HMRC has warned that its view is that this scheme does not work. People who use this scheme may have to pay more than just the tax they tried to avoid as well as paying interest, penalties and fees for using such schemes. 

As HMRC has put on record that it doesn’t believe the scheme works, then it’s possible that any IP involved in such schemes could be facilitating tax evasion which carries criminal liability. At the very least involvement in tax avoidance schemes carries significant professional risk and IPs should be alert to either wittingly or unwittingly being involved in such schemes in any capacity. 

The Bankruptcy and Diligence (Scotland) Act 2024 (Commencement No.2, Transitional and Saving Provisions) Regulations 2025  

These Regulations will bring into force sections 4, 5, 11 and 12 of the Bankruptcy and Diligence (Scotland) Act 2024 (“the 2024 Act”), subject to transitional and savings provisions, on the 25 June 2025. 

They primarily make modifications to the Bankruptcy (Scotland) Act 2016 by: 

• Making minor amendments to clarify the process for applying for recall of sequestration. These will only apply where an application for recall hasn’t been made before 25 June 2025. 
• Where a debtor is seeking a recall of sequestration, it won’t be a condition for recall for interest to be paid on their debts if the whole of those debts is paid in full within 6 months of the award of sequestration. For existing cases interest accrued on the debt between the date of sequestration and the date of payment of the debt isn’t payable if payment of the debt is made in full within 6 months after 25 June 2025. 
• Allowing a trustee in sequestration to resign if the debtor cannot be traced and clarifies that the trustee is entitled to take outlays and remuneration from the ingathered estate up to the date of their resignation. 
• Introducing a new process for a trustee to resign from office, when a debtor has failed to cooperate, by applying for the Accountant in Bankruptcy to take over as trustee. 

Individual Voluntary Arrangement Protocol 

A new version of the IVA Protocol has been published, along with all annexes. At the same time a new IVA factsheet for consumers has been published and Annex 4 withdrawn.  

Dear IP 167 

This edition of Dear IP provides information about the 2025 IVA Protocol. 

FCA Guidance for insolvency practitioners on how to approach regulated firms 

The FCA has issued updated guidance (FG 25/2) for insolvency practitioners on handling insolvencies of regulated firms. The guidance aims to aid compliance with FCA rules and legislation, ensuring better outcomes for consumers and market participants. 

HMRC Insolvency Bulletins 

HMRC has issued three Insolvency Practitioner Bulletins (IPB).  

IPB 3 (2025): Industrial action and delays to services gives an update on delays to HMRC's employer services due to industrial action. 

IPB 4 (2025): Individual Voluntary Arrangements mailbox provides details about the new mandatory subject headings when sending emails to the IVA mailbox, and how correspondence will be processed. 

IPB 5 (2025): Excise and insolvency provide information about excise approvals and duty for insolvent customers. 

Changes to statutory employment rights  

The National Minimum Wage and National Living Wage rates increased on 1 April 2025. The new rates payable are as follows: 

21 and over	18 to 20	Under 18	Apprentice
£12.21	£10.00	£7.55	£7.55

The Employment Rights (Increase of Limits) Order 2025 increased the maximum weekly rates for redundancy and other employment entitlements from £700 to £719 in England and Wales, and Scotland as part of broader increases under employment legislation which came into effect on 6 April 2025.  

The equivalent cap in Northern Ireland increased from £729 to £749 with effect from 6 April 2025 as part of change to multiple employment rights rates contained within The Employment Rights (Increase of Limits) Order (Northern Ireland) 2025. 

Moveable Transactions (Scotland) Act 2023 

The above Act came into effect on 1 April 2025 allowing parties to grant the new statutory pledge security over their moveable assets and register statutory pledges and assignations in the new Register of Statutory Pledges/ Register of Assignations. 

IPs should ensure that checklists and other documentation are updated to check the relevant registers on appointment and to ensure that relevant assets subject to security are identified and creditors dealt with appropriately as a secured creditor. 

Special administration of water companies 

The Water (Special Measures) Act 2025 and includes an amendment to section 25 of the Water Industry Act 1991(power to make special administration order on winding-up petition). The provisions came into effect on 24 April 2025.  

Common Financial Statement (CFS) trigger figures update 

The trigger figures for the CFS, used for statutory debt solutions in Scotland, were updated on 1 April 2025. The Accountant in Bankruptcy have advised that they’ll adopt a flexible approach for a period of one month after 1 April 2025 as a transitional arrangement for advisers updating their systems and processes.  

Standard Financial Statement (SFS) Spending Guidelines for 2025/26 

The SFS spending guidelines for 2025/26 changed on 7th April 2025 and an updated SFS Excel Tool is available. 

AML Regulatory Actions Guidance 

New guidance has come into effect from 7 April 2025 setting out how relevant ICAS committees will apply regulatory penalties where non-compliance with AML responsibilities is found. Supervised firms are encouraged to review the eight categories of non-compliance in the guidance and take immediate action if there are any areas whether further work is required to achieve compliance. Further information is available in this article. 

Legal update 

Ingrid Gray and Catherine Deeney or Sweaton vs. The Accountant in Bankruptcy In a rare appeal against the Debt Arrangement Scheme (DAS) administrator’s decision and subsequent review, which was also dismissed, the Sheriff Court has instructed the Accountant in Bankruptcy (AiB) as the DAS administrator to undertake a fresh review of the DAS proposal considering all relevant factors.