Advice and guidance for Members receiving financial assistance due to the coronavirus crisis
Clarification is issued on the regulatory obligations of Members who may make use of the various business support measures being offered by the government and other bodies as part of the response to the coronavirus crisis.
Members making use of any of the various business assistance measures (e.g. HMRC Time to Pay arrangements, VAT deferrals, mortgage payment holidays etc.) which have been put in place to support businesses affected by coronavirus are not required to inform ICAS. Making use of assistance on offer in itself does not constitute ‘insolvency’ under the ICAS Rules.
Definition
Rule 3.13 of the ICAS Rules states:
Insolvency
3.13 If at any time any Member or Affiliate becomes insolvent, such Member or Affiliate shall:
- 3.13.1 immediately cease to be entitled to engage in insolvency practice in the United Kingdom and any insolvency permit issued to the person shall be withdrawn; and
3.13.2 unless he has submitted an application to Council to retain Membership or Affiliate status, cease to be a Member or Affiliate on the expiry of fourteen days from the date of being made insolvent or on the expiry of such extended period or periods as Council in its discretion may decide.
‘Insolvency’ is defined within the Rules as any form of arrangement (statutory or non-statutory) for the purpose of management and repayment of a Member or affiliate’s debts to his or her creditors.
This definition includes bankruptcy (sequestration), trust deeds, IVAs and debt payment plans (either via the government-run debt arrangement scheme or a non-statutory solution). These are all essentially collective arrangements which cover all (or substantially all) of an individual’s creditors.
Financial difficulties
Sadly, as a result of the coronavirus crisis on business it is likely that some CAs and their firms will face financial difficulties, and some may even become insolvent.
Members or Firms facing the prospect of financial difficulties or who are at risk of insolvency are advised to contact ICAS at the earliest opportunity to seek help and advice.
We accept that Firms are not immune to the threats presented by the current crisis. It is important, however, that ICAS is seen to act in the public interest, in order to protect the strong reputation of our Members and the accountancy profession.
If the position is likely to involve insolvency, we will discuss the impact and likely outcomes of insolvency with you, help you make informed decisions about the next steps and may also be able to direct you to sources of professional advice.
ICAS regulations state that, if insolvency is unavoidable, you must formally confirm this to allow us to take the necessary steps as a professional regulator. It is a sad fact that we sometimes hear of an insolvency event when it is too late to offer meaningful support.
Retention of membership
Per ICAS Admission Regulations, a Member of ICAS who becomes insolvent will automatically be removed from Membership 14 days from the date of insolvency, unless an application to retain Membership is submitted.
If a Member’s financial problems are deemed to be outwith the Member’s control, it is possible for membership to be retained. Each application will be considered on its individual facts and merits.
The ICAS Investigation Committee and ICAS Council will determine applications. Further information on the retention process, including details of factors that will be taken into account, can be found within ICAS' Admission Regulations and Retention Application Guide.
Contact and further guidance
Our Practice Support team can be contacted in confidence by emailing practicesupport@icas.com.
Further guidance on some of the issues facing business and individuals can be found on below: