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29/11/2013

2013 Autumn Statement R3 recommendations

Ahead of the Autumn Statement, R3, the insolvency trade body, is calling on the Chancellor of the Exchequer to

  • Grant a permanent exemption from the government’s ‘no-win, no-fee’ changes for the insolvency profession – reversing a decision that could cost taxpayers and businesses millions of pounds;
  • Pledge to review the way personal insolvency works in the United Kingdom.

‘No-win, no-fee’

Liz Bingham, president of R3, says:

“HMRC could miss out on reclaiming millions of pounds worth of unpaid taxes every year if the insolvency profession’s exemption from the changes to ‘no-win, no-fee’ rules ends in 2015*.”

“At the moment, Insolvency Practitioners can use ‘no win, no fee’ rules to pursue delinquent directors of failed companies through the courts to return money to creditors, including taxpayers and small businesses.”

“Without ‘no-win, no-fee’ from 2015, it will no longer be financially viable for Insolvency Practitioners to take most directors to court. This will leave millions of pounds in the hands of dodgy directors and out of reach of creditors – to whom the money belongs.”

“Time is running out for the government to make the insolvency profession’s exemption from the ‘no-win, no-fee’ changes permanent.”

“Insolvency Practitioners’ use of ‘no-win, no-fee’ rules is entirely in the public interest. They are not the frivolous claims the changes were designed to prevent. Insolvency Practitioners and creditors have been caught in the crossfire of someone else’s fight.”

“It’s a complete no-brainer. Who would the Government rather have the cash: honest businesses and HMRC, or discredited directors that have tried to cheat their creditors?”

*The Legal Aid, Sentencing and Punishment of Offenders Act 2012 severely curtailed the use of ‘no win, no fee’ cases from April 2013. The insolvency profession was granted an exemption from the changes until April 2015.

Personal insolvency landscape

Liz Bingham, president of R3, says:

“A conversation has been started about the cost of living, the struggles of those living on the limits of their income and the growth of the payday loan industry, but we need to start talking too about what happens once these people cannot cope any longer.”

“England & Wales’ personal insolvency landscape is in need of a ‘reboot’. Its different parts – from bankruptcy, to Individual Voluntary Arrangements, and Debt Relief Orders – were created piece-by-piece over a period of almost thirty years. Comprehensive review is needed to make sure our personal insolvency landscape reaches its potential in the 21st century.”

“Although it’s welcome that personal insolvency numbers have generally fallen since the recession, we’re concerned that these numbers don’t tell the full story.”

“The rules on asset and debt levels that govern entry to DROs and the costs of entering bankruptcy can be insurmountable barriers and leave vulnerable people unable to access a debt relief solution that’s right for them.”

“The alternatives can be equally inaccessible or are unappetising. Individual Voluntary Arrangements will only work for those with a reasonable level of spare income or assets – and require creditors’ approval. If someone can’t access an IVA, DRO, or bankruptcy, an unregulated Debt Management Plan is often their only option or they don’t address their debts at all, making a difficult situation even worse.”

“With the cost of living beginning to pinch, and a rise in interest rates likely to come sooner rather than later, the Chancellor needs to take action now.”

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see www.r3.org.uk for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
     
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.