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BRI Business Recovery and Insolvency

We are an independent company of insolvency practitioners committed to finding the right solutions for businesses and individuals in financial difficulty

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

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.