Government relaxes insolvency rules

Posted on 30th March 2020 by Alexis Outram


Image to represent Government relaxes insolvency rules

These changes are designed to give business owners more breathing space if their business is hit by the impact of the Coronavirus.

Business Secretary Alok Sharma announced on Sunday 29 March 2020, that struggling companies would be able to access supplies and raw materials whilst restructuring their finances.

In addition to this, the wrongful trading provisions have been temporarily suspended for three months with this measure backdated to 1 March 2020.

Previously, under the Insolvency Act 1986, boards had a strict duty to announce whether the company had stopped trading if the company was insolvent or if the insolvency could not realistically be avoided in the future, and company directors could be held personally liable for continuing to trade if they knew the business is facing insolvency.

Now as a result of the suspension, company directors will be allowed to continue trading without facing potential threat of personal liability for their decisions during this pandemic. However, it was made clear that all of the other checks and balances that help to ensure directors fulfil their duties properly will remain in force.

 


No Advice

The content produced and presented by Streets is for general guidance and informational purposes only. It should not be construed as legal, tax, investment, financial or other advice. Furthermore, it should not be considered a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. The information provided by Streets is of a general nature and is not specific for any individual or entity. Appropriate and tailored advice or independent research should be obtained before making any such decisions. Streets does not accept any liability for any loss or damage which is incurred from you acting or not acting as a result of obtaining Streets' visual or audible content.

Information

The content used by Streets has been obtained from or is based on sources that we believe to be accurate and reliable. Although reasonable care has been taken in gathering the necessary information, we cannot guarantee the accuracy or completeness of any information we publish and we accept no liability for any errors or omissions in material. You should always seek specific advice prior to making any investment, legal or tax decisions.


Expert insight and news straight
to your inbox

Related Articles


Entitlement to carer's allowance

Carer’s credit is a National Insurance credit that can help carers to fill gaps in their National Insurance record. Carers who don’t qualify for Carer’s Allowance may qualify for Carer’s Credit. This may also help carers increase their State Pension entitlement. The Carer’s Credit is available to qualifying applicants caring ...


Rent a Room Scheme - another income stream

The rent-a-room scheme is a set of special rules designed to help homeowners who rent-a-room in their home to create a valuable tax free income stream. If you are using this scheme, you should ensure that rents received from lodgers during the current tax year do no exceed £7,500. ...


HMRC to accept service of legal proceedings by email

HMRC has issued an updated ‘news story’ to confirm that, where possible, new legal proceedings and pre-action letters can be served on the department using email instead of post. This measure was originally introduced in April 2020 in response to the COVID-19 pandemic. The update confirms that this is a ...


You might also be interested in...