R3: Press and policy update, August 2019

20 August 2019

R3’s Policy, Press and Public Affairs team has had a busy few weeks. The change in Government has meant we have had an array of new Ministers to write to and brief on key insolvency issues, and a number of announcements have been made about a range of policy matters that will affect the insolvency and restructuring profession.

Crown preference is one such issue. Updates to the most recent round of proposals, which will restore HMRC’s preferential creditor status in insolvencies, were included in the draft Finance Bill, alongside plans to tackle those in business who attempt to avoid their tax liabilities through misusing corporate insolvency procedures.

Within the Crown preference proposals was a win for R3: previously-announced plans to include tax penalties within HMRC’s preferential claim were dropped. However, further concessions are needed. In its current form, this policy will damage business recovery, companies’ access to finance, and the overall economy.

We will continue to campaign for these proposals to be scrapped, or – at the very least – for tax debts eligible for a preferential claim to be capped in terms or age, and for existing floating charges to retain their priority status.

R3’s press and the public affairs team has been busy making sure the views of R3 and its members are heard on this issue. We have written to key MPs from all parties, and held a roundtable event, kindly sponsored by Squire Patton Boggs, to allow a range of stakeholders from the profession, the business community, banks, other lenders, and key creditor groups, as well as representatives from HMRC, to discuss the Government’s proposals. We have a number of face-to-face briefings with parliamentarians coming up, too.

On the media side of things, we were quoted in pieces on the Crown Preference proposals in the Times and the Sunday Times, and R3 president Duncan Swift met journalists from the Sunday Times and the Financial Times to brief them on the proposals.

This press and policy work will continue as the Finance Bill begins its legislative journey through Parliament. Responses to elements of the Bill need to be submitted by September, so they can be reviewed over the autumn of this year and the spring of 2020, before the bill is ratified and receives Royal Assent later in the year.

Reviewing insolvency regulation

Another key policy area for R3 is the Government’s plans to review the UK’s insolvency regulatory framework.

This review covers the part of the 2015 Small Business, Enterprise and Employment Act which allows the Secretary of State to create a single, independent regulatory body in place of the current system for insolvency practitioners. This power expires in 2022, and the Government is looking to determine whether it should consult on a move to a single regulator, or consider other improvements to the regulatory framework.

This is a crucial issue for the profession, and the Government has been clear it is willing to listen to feedback before it takes the next step. R3 will be responding to the consultation and working with a range of parties in the meantime. As part of this process, we will be running workshops to get members’ views on what future regulation may look like. R3 members can book their free places for the London (9 September) or Manchester (11 September) sessions by emailing R3’s Events team ([email protected] – please state in your email which event you wish to attend).

More power for Companies House?

The announcement that the Government would consult on plans to strengthen the role and powers of Companies House was welcome. R3 has long called for Companies House to have greater powers to verify the identities of company directors, which we believe would go a long way towards reducing the number of corporate entities used as vehicles to mask fraudulent activity.

R3 has submitted a response to this consultation, and arranged for R3 members to meet BEIS officials about the proposals in July – an encouraging meeting, as the Business Department representatives left with an understanding of the insolvency and restructuring profession, and how it uses the data from Companies House. We will also continue to brief parliamentarians on this issue while the Government is reviewing submissions prior to announcing the next steps.

R3 in the media

On the wider press side of things, a mixture of high profile insolvencies, requests for comments and briefings on issues like Debt Relief Orders (DROs), pre-pack administrations, Crown preference, and the most recent insolvency statistics has meant that there have been lots of opportunities for R3 to share members’ insights, and to help promote understanding of the insolvency profession and the role it plays in personal and corporate financial recovery.

R3 has been quoted in a number of pieces in the national media over the late spring and early summer – including the Guardian, the Daily Telegraph, MailOnline, the Times, Reuters and the Financial Times – and is regularly quoted in the national, local, and trade press on a wide range of insolvency and restructuring-related issues. Recent examples of our press work include coverage of R3’s comments on the latest insolvency statistics from the Press Association, the Times, Scotland on Sunday and the Scotsman, Reuters, and the R3’s Technical Director Caroline Sumner was interviewed on BBC Radio Four as part of a piece on DROs.

Looking ahead

R3 has progressed with its project on ethics in insolvency and restructuring (thanks to all members who completed the survey), and this autumn we will be kicking off research into the contribution of the profession to the UK economy.