Insolvency technical update: January 2024
We share our latest insolvency technical update – your round-up of recent developments in insolvency.
HMRC insolvency guidance: VAT deregistration mailbox changes
HMRC has issued guidance advising that the dedicated mailbox service for insolvency practitioners to request VAT deregistration confirmation ceased on 15 January 2024.
The mailbox will not be required as, from that date onwards, a VRT23 letter should be issued within 40 days of submission of a VAT 7 form.
HMRC insolvency guidance: Recording tax and national insurance for former employees of an insolvent entity
HMRC has issued guidance setting out changes to the way tax and national insurance due to former employees is reported in insolvency cases.
An Employment Protection Act (EPA) scheme must be set up by contacting the HMRC employer helpline.
HMRC insolvency guidance: Tax returns and payments in administrations
HMRC has published information clarifying the operation of PAYE registration post-appointment in trading administrations.
The Payment and Electronic Money Institution Insolvency (Amendment) Regulations 2023
The above regulations came into force on 4 January 2024.
The regulations extend the application of the insolvency regulations for the special administration procedure established by the Payment and Electronic Money Institution Insolvency Regulations 2021 to institutions formed in Northern Ireland and limited liability partnerships formed in Scotland.
The Water Industry (Special Administration) Regulations 2024
The above regulations have been laid in draft.
The purpose of the regulations is to update the special administration regime for water industry companies in light of developments in the general insolvency and restructuring legislative regimes since the water industry special administration regime was introduced.
The Money Laundering and Terrorist Financing (Amendment) Regulations 2023
The above regulations came into force on 10 January 2024.
The regulations clarify the explicit difference between domestic and non-domestic politically exposed persons (“PEPs”) for the purposes of the money laundering regulations (‘MLRs’).
The regulations clarify in law that for the purposes of applying the MLRs, domestic PEPs pose a lower risk of money laundering and terrorist financing than non-domestic PEPs and must be subject to a lesser extent of enhanced due diligence (EDD) by firms regulated under the MLRs, in the absence of other risk factors unrelated to their position as a domestic PEP.
The Money Laundering and Terrorist Financing (High Risk Countries) (Amendment) Regulations 2024
The above regulations came into force on 22 January 2024.
The regulations amend the definition of high-risk third countries (HRTCs) for the purposes of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLRs). The MLRs require the UK regulated sector to apply enhanced customer due diligence in relation to HRTCs.
The regulations have removed Schedule 3ZA containing the list of HRTCs in the MLRs. Instead of referring to a separate schedule, regulation 33(3)(a) of the MLRs now defines a HRTC as:
"a country named on either of the following lists published by the Financial Action Task Force (FATF) as they have effect from time to time—
(i) High-Risk Jurisdictions subject to a Call for Action;
(ii) Jurisdictions under Increased Monitoring"
There is no practical change at present as the former Schedule 3ZA, which contained the UK list of HRTCs, mirrored the current FATF lists. Firms will however have to ensure that they are aware of changes to the FATF lists as they are made.
The Economic Crime and Corporate Transparency Act 2023: Companies House changes
Initial changes to Companies House powers under the above Act are expected to come into effect on 4 March 2024. These include:
- new rules for registered office addresses
- companies register an email address
- powers to query information, request supporting evidence, and remove inaccurate information
Further information is available in a Companies House blog.
The Economic Crime and Corporate Transparency Act 2023 (Commencement No. 1) Regulations 2023
By virtue of the above regulations certain provisions of the Economic Crime and Corporate Transparency Act 2023 came into force on 15 January 2024.
Business documents: disclosures
A recent complaint assessed by the ICAS Investigation Committee, originating from an insolvency case, has highlighted the requirement to be mindful of the statutory requirements concerning disclosures on letters and other business documents. This includes where third party mailing services are used. A reminder of the requirements can be viewed here.
Standard Financial Statement (SFS) Spending Guidelines
The SFS Spending Guidelines for April 2024 – March 2025 are now available on the SFS website. The new figures will come into effect on 1 April 2024.
Accountant in Bankruptcy website
The new AiB website is now live.
Mental health moratorium consultation
The Bankruptcy and Diligence (Scotland) Bill contains powers to allow Scottish Ministers to create a mental health moratorium. This measure would protect people with serious mental health issues from debt recovery action.
The Scottish government launched a consultation seeking views on the proposed process for a mental health moratorium.
The consultation closed on 22 January 2024 and our response can be viewed here.
The Bankruptcy and Diligence (Scotland) Bill
The Economy and Fair Work Committee has published its stage one report on the Bankruptcy and Diligence (Scotland) Bill.
The Committee has made several recommendations on the moratorium provisions and on the additional reforms set out in the Bill.
Those recommendations include a proposal for an extension of the entry criteria to allow more people who are experiencing a mental health crisis to access the mental health moratorium. The committee also made clear that it has significant concerns at the lack of detail made available to it during its stage one consideration on how the moratorium will operate.
Drummond’s Trustee v Drummond: A decision of the Sheriff Appeal Court relating to the debtor’s appeal against the trustee’s action to realise his heritable property. (via BBM Solicitors)