Insolvency technical update – February 2023
By Steven Wood, Practice Support Specialist (Insolvency)
9 March 2023
Insolvency technical update – your round-up of recent developments in insolvency
Revised Statement of Insolvency Practice (SIP) 3.1 – Individual Voluntary Arrangements
A revised SIP 3.1 relating to Individual Voluntary Arrangements (IVAs) has been issued following the work of a Joint Insolvency Committee (JIC) working group and the approval of each of the Recognised Professional Bodies (RPBs).
The revised SIP 3.1 applies to IVAs where the nominee is appointed on or after 1 March 2023. A comparison of the revised SIP 3.1 against the current (2014) SIP 3.1 is available along with a summary of the changes.
The Bankruptcy and Debt Arrangement Scheme (Miscellaneous Amendment) (Scotland) Regulations 2023
The above Regulations came into force on 6 February 2023.
The Regulations make amendments to the Bankruptcy (Scotland) Act 2016, the Debt Arrangement Scheme (Scotland) Regulations 2011 and the Bankruptcy Fees (Scotland) Regulations 2018 to:
- Remove the minimum debt level to access MAP bankruptcy:
- Extend the criteria for applying for a payment break in DAS to allow for a reduction in disposable income;
- Extend the application fee waiver for individuals who have been assessed by the Common Financial Tool as having no surplus income; and
- Increase the fee payable for the administration of sequestration where AiB is appointed trustee following the award of sequestration from £300 to £750.
An article looking at the Regulations in more detail is available here.
HMRC Insolvency Guidance – completing and submitting the VAT100
HMRC has issued guidance on completing and submitting VAT Returns.
Each VAT100 return has a unique machine-readable barcode generated for the specific transaction it’s sent for. No alterations should be made to the returns and returns should not be copied and used for other cases.
Financial Conduct Authority (FCA) consultation - Debt packagers: proposals for new rules
In November 2021, the FCA consulted on a proposal to ban debt packagers from receiving referral fees. You can read our response to that consultation here.
The FCA has now published feedback on the original consultation and a further consultation on new rules and perimeter guidance.
Following feedback, the FCA decided it was appropriate to gather more evidence showing how debt packager firms manage the conflict of interest perceived to be inherent due to the debt packager business model.
The FCA states that the evidence obtained supports its original conclusions. They're therefore proposing to make the rules set out in the original consultation paper, with minor amendments.
The short re-consultation (closed 2 March 2023) was to allow stakeholders to comment on the FCA’s analysis of the expanded evidence base, feed back on the proposed implementation period of two months and allow for the opportunity to raise any new issues or developments.
Dear IP
Dear IP157 has been issued by the Insolvency Service. The issue contains information on:
- The new mailbox for VAT deregistration confirmation.
- HMRC’s response to its consultation on potential changes to the processing of Option to Tax (OTT) forms by the OTT national unit.
- Conduct reporting in Bounce Back Loan cases.
- Accessing company law event information in The Gazette’s company profiles.
Dear IP158 has been issued by the Insolvency Service. The edition contains details of HMRC's guidance in relation to VAT100 submissions. It also sets out some format changes to the 'Dear IP' publications, with a return to a more focused and technical format, and a quarterly publication.
United Kingdom Financial Intelligence Unit (UKFIU) guidance
The UKFIU has published revised and updated 'Guidance on Submitting Better Quality SARs'.
The guidance is aimed at all reporters of SARs and is produced in line with the National Crime Agency’s commitment to share perspectives on the SARs regime.
The UKFIU has also published its first SARs reporter booklet of 2023.
Charities (Regulation and Administration) (Scotland) Bill
Our Charities Panel has submitted evidence to the Scottish Parliament on the new Charities (Regulation and Administration) (Scotland) Bill (‘the Bill’). Our written evidence highlights three outstanding insolvency-related matters where we believe improvements in the law would be beneficial to the charity sector:
- Provision for insolvency practitioners to be remunerated when winding up a charity.
- A reduced notice period to OSCR of winding up on insolvency.
- The ability for private sector insolvency practitioners to be appointed in sequestrations involving Scottish Charitable Incorporated Organisation (‘SCIOs’).
The Diligence against Earnings (Variation) (Scotland) Regulations 2023
The above regulations have been laid before the Scottish Parliament and come into force on 6 April 2023.
The regulations raise the threshold beneath which deductions may not be taken from earnings by arrestment.
This means that someone subject to an earnings arrestment will have deductions taken if they earn more than £150.94 weekly rather than the current level of £130.73, or £655.83 monthly rather than £566.51.
The rate used to set the amount to be deducted from earnings subject to maintenance arrestment and conjoined arrestment orders will increase from £18.63 to £21.56.
The Insolvency (Amendment) Rules (Northern Ireland) 2023
The above Rules come into operation on 13th March 2023.
The Rules amend the Insolvency Rules (Northern Ireland) 1991 to provide permanent procedural rules for the company moratorium procedure introduced into the Insolvency (Northern Ireland) Order 1989 by the Corporate Insolvency and Governance Act 2020.
Standard Financial Statement (SFS) Spending Guidelines
The SFS Spending Guidelines for April 2023 – March 2024 are now available on the SFS website. The figures are accompanied by a commentary that highlights a slight change to the inflation policy to make sure the SFS continues to be responsive to inflation.
The new figures will come into effect on 3 April 2023.
Insolvency Service Guidance: applying for redundancy payments as a company director
The Insolvency Service has updated its guidance for company directors who are claiming redundancy-related payments.
The guidance has been rewritten to give clearer information to directors about how the Insolvency Services determines their employment status.
Legal update
Tradition Financial Services Ltd v Bilta (UK) Ltd [2023] EWCA Civ: An English Court of Appeal decision which, amongst other matters, considered the scope of persons liable, per section 213 of the Insolvency Act 1986, where the business of a company in liquidation has been carried on for fraudulent purposes.