In Focus Collections
will have, and the costs to the economy of proceeding.
This will almost certainly make floating-charge lenders less willing to lend. This means less money available in risky situations, particularly rescues, and less money available for the healthy businesses which depend on floating-charge finance: retailers, and small and growing businesses among others
Floating-charge funding Floating-charge funding, where money is lent against a changing asset like stock (rather than a fixed asset like a building), is one area that is expected to be hardest hit by the proposals. Floating-charge lenders will be less likely
to see their money back if a business becomes insolvent under these proposals because a huge chunk of any insolvency repayments will now go to HMRC. This will almost certainly make floating-
charge lenders less willing to lend. This means less money available in risky situations, particularly rescues, and less money available for the healthy businesses which depend on floating-charge finance: retailers, and small and growing businesses among others. Tighter access to finance means lower
business growth, fewer tools for businesses to use to rescue themselves, and lower government tax receipts. Simply put: these proposals could do more harm than good.
October 2019
www.CCRMagazine.com
The letter The business groups want to see the government’s proposals scrapped – or at least amended to counteract the potential consequences. Our letter continued: “At the very least,
the government must take steps to limit the worst side effects of its policy, including capping the age of tax debts eligible for a preferential claim, or allowing existing floating charges to retain their precedence over HMRC’s new claim. “The government should also consider
alternatives to its proposed policy: proactive, consistent, and commercially- minded engagement from HMRC in insolvency and restructuring situations would improve the repayment of tax debts and would benefit other creditors, too.”
A step back We hope by writing to the chancellor he will take a step back, re-evaluate, and come to the conclusion there are better alternatives than a quick insolvency cash- grab. CCR
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