Our first RNB merchandise purchase, ready to be delivered! Don’t forget, all of the proceeds are going to The Air Ambulance Charity, so head over to our Ebay page to see what we are offering. #Ebay #Charity #TheAirAmbulanceCharity

The bridal store ‘Berketex Bride’ which has 11 outlets in the UK and 1 in Dublin has announced that it has gone into administration. On Tuesday 13^th November the store said it was closing and will not reopen.

The company has been trading for over 50 years selling bridal dresses and accessories.

The director of the company sends his ‘sincere apologies for the abrupt closure of the store’.

A notice of intent to appoint an administrator was lodged with the court on 9 November. Anybody who has purchased items that have not yet been received should telephone 01143491388.

For more information on bankruptcy, liquidation, administration and all the other insolvency procedures, or to take advantage of our free consultation, please telephone Stella Flemmings on 01377 257788, 01724 230060 or 01904 520116 and she will make you an appointment with one of our insolvency professionals at our Driffield, Scunthorpe or York offices.

New research has shown that families in the UK are still facing financial difficulties and not seeking professional help soon enough.

A report from the National Debtline said that around 43% of individuals in debt had not sought help as they were too stressed and embarrassed about the debt.

It seems that people are taking out too much credit and then struggling to make the repayments, job losses and ill health are contributing factors to having difficulty paying it back.  Worryingly the National Debtline say they are seeing an increase in tenants struggling to pay rent, utility bills and council tax.

StepChange, a debt charity says that for four out of five people, once they have sought professional advice and faced up to their problems, feel the benefit healthwise, after just 3 months.

The finance industry accepts it should do more and is looking into ways in which it can provide easily accessible and understandable guidance.

For more information on bankruptcy, liquidation, administration and all the other insolvency procedures, or to take advantage of our free consultation, please telephone Stella Flemmings on 01377 257788, 01724 230060 or 01904 520116 and she will make you an appointment with one of our insolvency professionals at our Driffield, Scunthorpe or York offices.

The seven lines issued in the recent Budget received little attention but they have the potential to cause an economic armageddon.

“3.87 Protecting your taxes in insolvency – From 6 April 2020, when a business enters

insolvency, more of the taxes paid in good faith by its employees and customers, and temporarily

held in trust by the business, will go to fund public services rather than being distributed to

other creditors. This reform will only apply to taxes collected and held by businesses on behalf

of other taxpayers (VAT, PAYE Income Tax, employee NICs, and Construction Industry Scheme

deductions). The rules will remain unchanged for taxes owed by businesses themselves, such as

Corporation Tax and employer NICs.”

Why?

Adding to the preferential creditor status massively undermines the security which banks rely on when they provide loans and overdraft facilities. When banks provide loans and overdraft facilities they often take security in the form of a floating charge.

The example below shows the distributions to the respective creditor groups now and after April 2020 when the proposed changes come into force.

Statement of affairs of XYZ Limited

                                                     £’000

Assets                                           1,000

Liabilities

Bank overdraft

(secured by floating charge)         (1,000)

Preferential creditors –

employees                                       (90)

HMRC                                             (200)

Trade creditors                               (800)

Position in a formal insolvency now                  

£’000

Assets                                               1,000

Preferential creditors –

employees                                             (90)

Balance available for

creditors                                              910

Balance available for

unsecured creditors via

prescribed part                                         (185)

Balance available for

bank under floating

charge                                                    (725)   

Position in a formal insolvency post April 2020             

£’000

Assets                                          1,000

Preferential creditors

– employees                                     (90)

Preferential creditors –

HMRC                                             (200)

Balance available for

creditors                                       710

Balance available for

unsecured creditors via

prescribed part                             (145)

Balance available for

bank under floating

charge                                          (565)

The bank receives £160,000 less in the insolvency post April 2020!!!

So what?

One of the things that banks rely on is their security i.e. the bank wants to know how much it will be repaid in the event that their customer gets into financial difficulties. In seven fairly bland Budget lines the Chancellor has massively weakened the bank’s position and therefore potentially caused the next economic downturn!

You may see some banks in the coming months looking to reduce their exposure to your clients i.e. by reducing overdraft / loan facilities which may put your clients’ currently healthy businesses under significant distress. Banks may also be more reluctant to facilitate new lends as the value of their security is now worth significantly less.

Will these seven lines in the Budget cause the next economic slowdown? We do not have a crystal ball but if banks do start trying to reduce their exposure to your clients then this is main reason why.

IR35 & MVLs

In his budget yesterday, the Chancellor announced changes to the off-payroll working rules (known as IR35) for those working in the private sector. The responsibility for operating the off-payroll rules will move from the individual to the organisation, agency or other third party engaging the worker. This change will not be introduced until April 2020. Small organisations will be exempt and HMRC will apparently offer support ahead of the implementation.

Some of your clients who have historically used personal service companies may now become employees under the changes.

Your clients may consider using a members’ voluntary liquidation (MVL) in order to extract their monies from their company. At Redman Nichols Butler, our MVLs start from a very competitive £750 plus disbursements plus VAT.

Entrepreneurs relief

From 6 April 2019 the minimum period throughout which the qualifying conditions for relief must be met will be extended from 12 months to 24 months.

The Chancellor’s Halloween Horror show for unsecured creditors…..

From 6 April 2020, the government will move its VAT, PAYE, Income Tax, employee NICs and Construction Industry Scheme deductions to preferential status. Currently these claims rank as unsecured claims in insolvency proceedings together with the trade creditors meaning all creditors rank equally.

The changes mean that when a company enters into formal insolvency proceedings the unsecured creditors are less likely to be paid anything at all as the government will have the first (and largest) claim on any funds.

Employer NICs and corporation tax will still rank as unsecured claims.

Chancellor spooks directors…… with tax abuse and insolvency

Following Royal Assent of The Finance Bill 2019-20, directors and other persons involved in tax avoidance, evasion or phoenixism will be jointly and severally liable for company tax liabilities, where there is a risk that the company may deliberately enter insolvency.

There will be more details on this to follow shortly but we would urge any of your clients in financial difficulties to seek advice at the earliest opportunity in order to avoid personal liability as a result of the non-payment of HMRC’s debts.

If you consider that your clients would benefit from advice from us, please do not hesitate to call.

Redman Nichols Butler are looking for enthusiastic committed team members to join our existing team across our three offices in Driffield, Scunthorpe and York.

If you are an experienced insolvency case administrator and are looking to join a well-established forward thinking team, please give us a call.

Ask for Stella Flemmings 01377 257788.

The Government have recently announced reforms to insolvency and corporate governance. The reforms are set to be the biggest changes to the insolvency and restructuring legislation since 2002.

What are the changes?

Corporate insolvency

A new moratorium will be introduced.  This will give companies a period of time during which creditors will be unable to take any action against the company giving the company time to arrange restructure or seek investment. Suppliers of contracts or goods will be prohibited from pursuing debts as the company has sought to enter into an insolvency or restructuring procedure.

The Government are also proposing the introduction of a new insolvency procedure which will bind all creditors even those who wish to vote against it.

Corporate governance

Directors are to be held more accountable for their own actions.

Insolvency practitioners to be given more powers in relation to value extraction schemes.

The Insolvency Service to be given more powers to investigate when it suspects that directors of dissolved companies have acted in breach of their duties.

Conclusion

The Government proposals are currently under consultation and it will be really interesting to see what new legislation emerges. The corporate governance reforms  have been drafted largely in response to cases like BHS. If the reforms are implemented then it will make the former owners of BHS (Philip Green) more accountable for their actions.

It will also be interesting to see whether the new moratorium gives struggling business much needed breathing space from certain creditor groups such as HMRC and banks who can adopt an aggressive approach when a business enters into difficulty.

Winter is creeping up on us, fairly quickly to say the least!

So we are making life that little bit easier for you as the icy mornings approach

If you’d like a complimentary Redman Nichols Butler Ice Scrapper, contact stella.flemmings@redmannicholsbutler.co.uk