Introduction of changes to protect your tax in insolvency
Overview of measure
From 1 December 2020, when a business enters insolvency, more of the taxes paid in good faith by its employees and customers, and temporarily held by the business, will go to fund public services rather than being distributed to other creditors.
This reform only applies to taxes collected and held by businesses on behalf of other taxpayers, including:
- VAT
- PAYE Income Tax
- employee National Insurance contributions
- student loan deductions
- Construction Industry Scheme deductions
The rules remain unchanged for taxes owed by businesses themselves, such as:
- Corporation Tax
- employer National Insurance contributions
Who will likely be affected?
It is likely that the following is likely to be affected by:
- businesses
- individuals
- shareholders
- directors
- lenders
- companies
- insolvency practitioners
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