Move expected to produce an extra £185million in taxes for the government.
From 6 April 2020, the government will change the rules so that when a business enters insolvency, more of the taxes paid in good faith by its employees and customers, but held in trust by the business, go to fund public services as intended, rather than being distributed to other creditors.
Currently, many creditors have a higher priority claim on the assets of an insolvent and so the budget announced that from April 2020, HMRC will have greater priority to recover taxes paid such as value added tax, Pay-As-You-Earn income tax, employee national insurance contributions and construction industry scheme deductions. This will help to ensure that an extra £185m in taxes already paid each year reaches the government.
In addition, following Royal Assent of Finance Bill 2019-20, directors and other persons involved in tax avoidance, evasion or phoenixism will be jointly and severally liable for company tax liabilities, where there is a risk that the company may deliberately enter insolvency.
Article from ACCA In Practice