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In Focus Consumer Credit


One key Budget announcement will be whether the government intends to proceed with plans to make HMRC a priority creditor in insolvency procedures. This would effectively ensure HMRC gets more money back from insolvencies at the expense of lenders, trade creditors, and pension schemes


lead to a better outcome for schemes in the long-run. The government’s 2018 White Paper promised to consult on this, but there has been little movement so far.


HMRC’s cash grab: changing the status of HMRC as a creditor in insolvencies Ultimately, some of the government’s most important legislative announcements are missing from the Queen’s Speech – they will be in this year’s. One key Budget announcement will be


whether the government intends to proceed with plans to make HMRC a priority creditor in insolvency procedures. This would effectively ensure HMRC gets more money back from insolvencies at the expense of lenders, trade creditors, and pension schemes.


January 2020 www.CCRMagazine.com


The policy will be a disaster for access to


finance. Key types of lending, like stock finance and asset-based lending, would become much riskier if the government proceeds with its changes, and the value of lending facilities available to small businesses and retailers will shrink. HMRC enjoyed priority status until


2003, and the decision to scrap this to aid business rescue contributed to a boom in the flexibility and availability of business lending in the years afterwards. Any of the efforts the government has


just announced to help UK businesses will be completely undermined by its nonsensical decision to reinstate HMRC’s priority status. It will create a short-term boost for


HMRC at the expense of long-term damage to the economy. CCR


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