SI 2020/983 – The Insolvency Act 1986 (HMRC Debts: Priority on Insolvency) Regulations 2020

Released 14 September 2020

SI 2020/983 specifies deductions on account of tax, NICs and student loan repayments as priority debts for insolvency purposes from 1 December 2020.

The Insolvency Act 1986 (HMRC Debts: Priority on Insolvency) Regulations 2020 specifies certain debts owed to HMRC to be included as preferential debts for insolvency purposes. The Finance Act 2020 amends the Insolvency Act 1986, the Bankruptcy (Scotland) Act 2016 and the Insolvency (Northern Ireland) Order 1989 to make provision for certain debts owed to HMRC to be included in a category of preferential debt (or, in Scotland, preferred debt) for insolvency purposes. The amounts are those in respect of value added tax or a relevant deduction. A deduction is a relevant deduction if certain conditions are met. One of those conditions is that the deduction is of a kind specified in regulations. The regulations specify the following deductions for those purposes:

deductions under the Finance Act 2004, s. 61 (deductions on account of tax from contract payments);

deductions under the Social Security (Contributions) Regulations 2001 (SI 2001/1004), Sch. 4, para. 6(1)(b) (deduction of earnings-related contributions);

deductions under the Income Tax (Pay As You Earn) Regulations 2003 (SI 2003/2682), reg. 21 (deduction and repayment of tax by reference to employee’s code); and

deductions under the Education (Student Loans) (Repayment) Regulations 2009 (2009/470), reg. 50 (deductions of repayments).

The regulations come into force on 1 December 2020.

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