Crown Preference – The End of Inventory Funding?
|Date & Time Thursday 8 April, 2021 | 10:30 am - 11:30 am|
Under the Finance Act 2020, HMRC regained its status as a secondary preferential creditor in insolvency processes that commenced on or after 1 December 2020. This change has had significant implications for businesses which were funded by working capital facilities reliant on floating charge security, including overdrafts, cash flow loans and inventory funding lines.
The changes reversed the alterations made in the Enterprise Act 2002, with HMRC now ranking ahead of floating charge secured creditors in respect of creditor claims of unpaid VAT, PAYE and Employee’s National Insurance Contributions. Whilst HMRC’s claims rank below employee preferential employee claims, they erode floating charge asset realisations that previously would have been available to secured creditors holding a floating charge.
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