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How will HM Revenue and Customs vote on Company Voluntary Arrangements?


8 December 2017:  BRI Business Recovery and Insolvency assist and advise company directors in preparing a proposal for Company Voluntary Arrangements (“CVA”). A CVA is a formal insolvency process where the CVA allows a company that is insolvent to reach a voluntary agreement with its creditors regarding repayment of all, or part of its debts and to continue trading. If 75% (by debt value) of creditors who vote agree on the proposal then the CVA is accepted

In most CVAs, HMRC are a creditor and have a deciding vote as to whether the proposal for a CVA is approved. Indeed, HMRC have a designated department that solely consider proposals for a CVA and will always cast their vote. One of the most common questions raised by directors when considering a CVA is “how will HMRC vote?”

In our experience, HMRC will generally look to support a CVA proposal where:

  • The financial disclosure is honest
  • The offer is the best that is available
  • Provision is made for payment of all future debts on time.
  • All creditors within the same class are treated equally (unsecured/non preferential creditors)
  • There are no exceptional reasons for rejection
  • All previous overdue tax returns have been submitted

Should you or your clients be experiencing financial difficulty and require advice in respect of a CVA or any other insolvency procedure, please contact any of BRI’s management team who will be more than happy to help.