New Tax Rules for Members’ Voluntary Liquidations – Deadline 5th April 2016

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The UK Government is concerned that the current capital distribution regime is being used as a tax avoidance measure and therefore has brought about new legislation, effective from 6th April this year, which will impact companies who are distributing funds to non-corporate shareholders using the MVL process.

From 6th April 2016 a MVL process cannot be used for tax advantage purposes and the beneficiaries of a distribution cannot be involved in a similar trade or business for two years after the distribution in order to qualify for the distribution being treated as a return of capital.

Distributions from an MVL process not meeting the above criteria will be considered as income rather than capital so act now to ensure the the MVL process can be implemented and funds distributed before the deadline in order that shareholders benefit from a capital distribution.

Please contact Hayley Maddison or Andrew Weston for further information and/or a quotation to place a company into Members Voluntary Liquidation.

Corporate insolvencies fall 7.5 per cent

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The level of corporate insolvencies in the second quarter of 2015 has fallen 7.5 per cent year on year, as many practitioners continue to see fewer formal appointments.

The Insolvency Service’s latest statistics show that a total of 3,908 companies entered into formal insolvency between April and June 2015, which was 2.9 per cent less than the previous three months and 7.5 per cent lower than the same period in 2014.

A total of 765 companies were subject to a compulsory winding-up order in the second quarter, a 15 per cent decrease on the last quarter and 21.9 per cent lower than Q2 2014. This was the main driver of the decrease in total company insolvencies.

The statistics also show that the liquidation rate in the 12 months ending in the second quarter of 2015 was 0.48 per cent of active companies, the lowest since comparable records began in the fourth quarter of 1984.

As most of the industry will be aware, the number of company insolvencies has been on a decreasing trend since 2013.

For the full story click here

Corporate insolvencies at lowest level since 2007

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Company insolvencies in England and Wales have fallen to the lowest number since the end of 2007, according to the Insolvency Service.

The agency’s latest statistics show that 4,052 companies entered into formal insolvency in the first quarter of 2015. This was one per cent less than the last quarter of 2014 and 11 per cent lower than a year ago.

The figures also show that creditors’ voluntary liquidations were at their lowest since June 2008.

Some 2,481 companies entered into a creditor’s voluntary liquidation in the first quarter of 2015, a four per cent drop on the previous quarter and six per cent down on the same period in 2014.

However, a total of 904 companies were subject to a compulsory winding-up order in the first quarter, a nine per cent increase on the previous period but 16 per cent lower than a year ago.

In a similar trend, there were 432 administrations from January to March 2015. This is nine per cent higher than the previous three months but 17 per cent lower than a year ago.

The number of company insolvencies has been falling since the beginning of last year.

For the full story click here

County court judgments increase 20%

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The number of county court judgments (CCJs) against consumers in England and Wales has increased more than 20 per cent to over 209,000.

The increase, in the first quarter of 2015 compared to a year ago, emerged in figures from the Registry Trust – a non-profit organisation that collects CCJ and high court data.

There has not been more than 200,000 consumer CCJs in the first quarter of the year since 2008.

While many people are struggling with unmanageable debt, the average value of a CCJ in the three months to March (£2,171) fell for the sixth consecutive year.

This average value is 41 per cent down on the same period in 2009, the recent high point.

The total value of all debt judgments against consumers in the first quarter was £514m, to which CCJs contributed £455m.

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Court fees rise up to 600%

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Civil court fees for money claims over £10,000 have risen to five per cent of the value of the claim.

The controversial fee increase, of up to 600 per cent in some cases, affects both specified and unspecified claims. They will be capped however at £10,000 for claims of £200,000 or more.

There will also now be a fee of 4.5 per cent of the claim’s value for claims over £10,000 issued in the County Court Business Centre. A 10 per cent discount remains on all money claims made online.

The changes come after a series of objections from parties including The Law Society, which claimed the new fees are tantamount to “selling justice.”

Despite widespread opposition, a final House of Lords vote approved the changes last week.

The Law Society is now mounting a legal challenge in a bid to kick-start a judicial review. It has sent a pre-action protocol letter and is waiting for the government’s response.

For the full story click here

HMRC halves its DCA spend

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HMRC has halved its spend on debt collection agencies (DCAs) during the past year, with £6.8m spent on them in 2014 compared to £14.8m in 2013, according to new research.

The study by chartered accountants UHY Hacker Young tracks HMRC’s usage of DCAs, since it started outsourcing tax collection to external agencies in 2009.

The accountancy firm said HMRC’s use of these agencies reached a record high in 2013.

For the full story click here.

How much debt are British adults managing?

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The latest edition of R3’s Personal Debt Snapshot report is due to be published shortly and, besides detailing the current levels of debt, it will give an insight into spending and saving behaviours among British adults. In R3’s Christmas debt report a significant proportion of adults said they struggled to make their money last until the next payday. The report will be set against recent calls by David Cameron at the British Chambers of Commerce conference for bosses to give British workers a pay rise. 
The report will appear on R3’s website at https://www.r3.org.uk/ 

Bankruptcy and DRO changes to ease debt burdens

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Charities and groups working with the indebted have welcomed government plans to enable easier access to debt relief for financially vulnerable people.

The changes will allow approximately 3,600 more people a year with problem debt to enter into a Debt Relief Order (DRO) – a low cost alternative to bankruptcy for those with very low assets and income and debt which they are unable to pay. The maximum amount of debt that can be covered by these plans will increase from £15,000 to £20,000.

This will enable around 3,600 more people with low level debt to use DROs instead of opting for bankruptcy. DRO asset limits will increase to £1,000, plus a vehicle (worth not more than £1,000).

Mike O’Connor, chief executive of StepChange Debt Charity, said: “Increasing the DRO threshold to £20,000 is an important widening of access to this crucial form of debt relief for those on low incomes and with limited assets. Raising the creditor petition for bankruptcy to £5,000 is a much needed change that will prevent creditors making people bankrupt for an unreasonably small debt.”

Gillian Guy, chief executive of Citizens Advice said the changes would “help people who are in serious, unmanageable debt to find a way out. Raising the bankruptcy debt threshold and the debt relief order limit will increase options for people who would previously have had no choice but to declare themselves bankrupt.”

The government is also increasing the minimum level of debt for which someone owed money can force a person into bankruptcy from £750 to £5,000.
The limits were last revised in 1986. The maximum surplus income a person can have to qualify for a DRO will remain at £50 per month.

The changes come against a background of falling insolvency numbers since 2010. There have been140,861 DROs since their introduction in 2009. In 2013/2014 26,876 orders were made and 310 were revoked for a variety of reasons including exceeding asset limits.

Business minister Jo Swinson said: “Struggling with unresolvable debt can cause immense stress for families. These changes will ensure that our debt relief schemes are updated so that they still meet their original goal of providing access to those who need them. They also ensure that bankruptcy, which has the most significant consequences, is reserved for those with sizeable debts.”

The changes come as a survey of DRO users showed 96% would have been unable to deal with their debts without DROs, and 79% said the process had a positive impact on their mental health.

Personal insolvencies fall to lowest level for 10 years

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The number of people being declared insolvent in England and Wales has fallen to its lowest level since 2005.

Last year, 99,200 people were declared insolvent, either through bankruptcies, debt relief orders or individual voluntary arrangements.

That was a 2% fall from 2013 and the fourth annual drop in a row.

Meanwhile the number of companies going into administration fell to its lowest figure since 2004, at just 1,790.

That was a 24% fall from 2013.

The number of companies going into receivership, the other main form of corporate insolvency, dropped by 21% last year to 724, the smallest number since 2007.

The falling figures for both people and companies reflect the improved state of the economy, with fewer firms going under and fewer individuals seeking insolvency to resolve insurmountable debts.

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New Office Address

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We are very pleased to announce that we have moved offices to the address below with effect from 7th April 2014:

The Old Brewhouse
49-51 Brewhouse Hill
Wheathampstead
St Albans
Herts   AL4 8AN
 

All contact telephone numbers / email addresses remain the same.

Please feel free to pop in to see our new offices if you happen to be in the area and we will be happy to provide a guided tour!