The final countdown to the new Insolvency Rules is underway
The new Scottish Insolvency Rules will be effective in less than 48 hours and Wylie & Bisset, the leading Glasgow-based chartered accountants with a national reach, says the changes spell short-term pain for long-term gain for Insolvency Practitioners.
The largest single change to insolvency procedure in over 30 years come into effect this Saturday 6th April when the Insolvency (Scotland) Rules 1986, and the associated amendment rules introduced over the last four decades, will be replaced by two new regulations: The Insolvency (Scotland)(Company Voluntary Arrangements and Administration) Rules 2018 and The Insolvency (Scotland) (Receivership and Winding Up) Rules 2018.
David Meldrum, insolvency manager in Wylie & Bisset’s Corporate Recovery team, said: “Although the changes will be onerous on Insolvency Practitioners and their staff in the short term, they do mean that corporate insolvency is a more modern process which is closer to meeting the needs of stakeholders in the 21st century.” “Insolvency firms will need to ensure that any standard documents they currently use are updated in time for 6 April 2019, given that many of the changes apply to existing and new cases.”
The 2018 Rules bring Scotland into line, as far as possible, with England and Wales. This will make life easier for practitioners dealing with appointments on both sides of the border, and those already familiar with the procedures in England and Wales will have a significant head start.
The 2018 Rules bring about immediate changes to the administration of existing and new cases. There are savings provisions within the regulations to cope with overlapping procedures, so these should be carefully reviewed to ensure that the 2018 Rules are not erroneously applied when the 1986 Rules continue to be in force.
The 2018 Rules also bring about changes to the statutory interest payable in Members Voluntary Liquidations which will now apply to both new and existing cases from 6 April. HMRC have also clarified their position in respect of statutory interest that was charged on cases under the 1986 Rules.
“Practitioners have previously argued that there was no rate of statutory interest applicable to debts in an MVL, due to Schedule 2 of the 1986 Rules not applying Rule 4.16E or Rule 4.66,” said Meldrum.
“HMRC had disagreed with this stance and, in some cases, refused to grant clearance for liquidations where statutory interest has not been paid on debts due at the commencement of the winding up. While this was apparently not a change in policy by HMRC, statutory interest was not something they had claimed in years gone by. HMRC have now helpfully updated their guidance regarding to these cases and the interest that applies.”
“The 2018 Rules apply statutory interest, albeit at a reduced rated of 8%, to all winding ups. This means practitioners will need to plan accordingly to minimise any statutory interest that may be owed in respect of debts due for payment by the company.”
For further information please contact David Meldrum on 0141 566 7000.
Issued on behalf of Wylie & Bisset by Liquorice Media tel 01877 382961 www.liquorice-media.com
Date: 4 April 2019