Insolvency Technical Update - September 2017

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david-menzies By David Menzies, Director of Practice, ICAS

9 October 2017

Insolvency technical update – Your round-up of recent developments in insolvency.

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Anti Money Laundering

The ICAS General Practice Procedures Manual (GPPM) has been updated to include new AML forms reflecting changes to the CCAB Guidance following commencement of the 2017 Money Laundering Regulations. The new forms are:

  • A14.3a Identification form – Individual
  • A13.3b Identification form - Company
  • A14.4a Detailed KYC & Risk assessment/review – Individual
  • A14.5a Detailed KYC & Risk assessment/review – Entity

These forms are in draft pending approval by HM Treasury of the revised CCAB Guidance on Money Laundering, but can be used with immediate effect.

Access to GPPM is available free of charge to CA Firms. The AML chapter is also available free of charge to ICAS authorised IPs. Further information is available here.

Criminal Finances Act 2017

HMRC have published guidance relating to the corporate offences of failure to prevent the criminal facilitation of tax evasion. From 30 September 2017, the Criminal Finances Act 2017 makes companies and partnerships criminally liable if they fail to prevent tax evasion by either a member of their staff or an external agent, even where the business was not involved in the act or was unaware of it. A prosecution could lead to both a conviction and unlimited penalties.

A business may avoid criminal liability where it can show that it had implemented reasonable prevention procedures, or where it can show that in the circumstances it would have been unreasonable or unrealistic to have expected it to have had procedures in place.

IPs should ensure that their firms have reviewed their current practices and procedures to minimise any risks, and to put in place appropriate monitoring and training of staff at all levels.

Sequestration applications

The Accountant in Bankruptcy (AiB) has stopped accepting paper based applications for sequestration from 30 September 2017. All applications for sequestration must now be submitted via BASYS. Further details available here.

The AiB have also issued an updated Debtor Application Pack – Part 2 which is used when completing an application on BASYS. Further information is available on the AiB website.

Data Protection

The Information Commissioners Office have updated their self-assessment toolkit for compliance with data protection legislation to include General Data Protection Regulations (GDPR).

Redundancy payments

The Redundancy Payments Service have announced that they will amend the way in which holiday pay is calculated following an Employment Appeal Tribunal decision. Holiday pay should take into account (a) commission if individuals were entitled to commission as part of their employment contract (‘contractual commission’) and (b) voluntary overtime if individuals regularly worked voluntary overtime in the 12 weeks prior to their employer going insolvent. Further information is available on Insolvency Practitioners should ensure that employee claims for holiday pay reflect the decision of the Employment Appeals Tribunal.

The Insolvency Service have also issued an updated RP1 helpsheet to be provided to employees who are made redundant when their employer is insolvent.

SIP 6 (E&W) Consultation

The Joint Insolvency Committee (JIC) is consulting on the operation of Interim Statement of Insolvency Practice 6 (England & Wales) published on 10 March 2017 and effective from 6 April 2017. The consultation was issued on 1 September 2017 will run for 6 weeks, closing on 13 October 2017.

Common Financial Tool (CFT) Consultation

The Accountant in Bankruptcy has issued a consultation on whether the CFT should be changed in Scotland from the Common Financial Statement to the Standard Financial Statement. Further information on the consultation which closes on 27 October 2017 is available here.

Legal Updates

Saw v Wilson [2017] EWCA Civ 1001: The Court of Appeal held that a second ranking floating charge would be valid and enforceable, even if at the time it was created there were no uncharged assets to which the floating charge could attach. Analysis of the judgement is available here. (via Shoosmiths

Randhawa & Anor v Turpin & Anor [2017] EWCA Civ 1201: The Court of Appeal has held the appointment of joint administrators made under paragraph 22 of Schedule B1 to the Insolvency Act 1986 to be invalid because, among other things, the appointment was made following an inquourate board meeting and that the Duomatic principle did not apply. (via Travers Smith LLP

Budniok v The Adjudicator, Insolvency Service [2017] EWHC 368 (Ch)The Chief Bankruptcy Registrar has considered the first appeal against a decision of the Bankruptcy Adjudicator where they declined to award bankruptcy. The decision sets out some useful guidance on the procedural principles arising from the new legislative appeals process. (via Hardwicke)

Frosdick v Fox and Baker Tilly Creditor Services LLP [2017] EWHC 1737 (Ch)The High Court have confirmed that a legal claim can be onerous property capable of being disclaimed. (via Taylor Wessing)

Join us at the ICAS Insolvency & Restructuring Conference 2017 in association with Close Brothers Asset Finance.

Disrupting Financial Distress, 14/15 November 2017, Gleneagles Hotel, Perthshire. 

Take part in the conversation by using the conference hashtag #ICASIRconf


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