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Tuesday 4 April 2017

MH Restructuring

“Targeted Anti Avoidance” – The Fall and Rise (again) of “Phoenixism”?

The recent Finance Act 2016, which came into force on 15 September 2016, introduces a new “targeted anti avoidance” (“TAAR”) provision with a sweeping, and yet potentially unintended, scope in the context of company winding up.

The intention behind the new provision in section 35 of the Act is to ensure that the rules around the payment of tax on a distribution in a company winding up are not abused.  Such a distribution, in the hands of the former company owner, will typically attract capital gains tax (CGT) as a gain on the return of capital at the rate of 10% or 20%. Conversely, dividend payments from the company would usually attract income tax at a much higher rate (potentially up to 38%).

HMRC considers that this tax differential is being exploited by close company stakeholders who contrive to wind up a company, pay a lower amount of CGT on distributions made to them and then start up a new company operating the same or a very similar business (and perhaps repeat the same process routinely). The new TAAR is focused on inhibiting such “phoenixism”. Unfortunately, the new TAAR rules have introduced significant uncertainty.

Friday 9 December 2016

MH Restructuring

“Brexit”– Implications for Business Rescue?

As with everything else EU-related at the moment, it is hard to discern the full scope of the legal framework which will apply to UK businesses which succumb to financial troubles in the coming months and years.

The purely domestic legislation governing insolvency and restructuring is about to undergo some changes with a wholesale update of the Insolvency Rules. The current Insolvency Rules date back to 1986 and have been subject to revision on no less than 23 occasions since then. The new Insolvency Rules will come into effect in April 2017 as a fully revamped consolidation of the detailed rules which complement the broad provisions of the Insolvency Act 1986, which remains the central piece of legislation governing insolvent debtors (both corporate and individual) in the UK.

 

Friday 13 May 2016

MH Restructuring

A recent case has shed some light on the question of what constitutes an effective surrender of a real estate lease. This was decided in the context of a tenant company in administration and provides some useful guidance on various factors to be borne in mind when contemplating a surrender. A short note summarising the position is attached for your information.

If you would like to discuss any aspects of this, please do contact Brett Israel.

no surrender 2

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