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With effect from December 1, 2020, Her Majesty s Revenue and Customs ( HMRC ) ranks ahead of floating charge holders and unsecured creditors with respect to recovering certain pre-insolvency taxes from an insolvent business ( Crown preference ). Directors can also now incur personal liability for the unpaid taxes of an insolvent company where they are involved in tax avoidance, evasion, or phoenixism.
As a consequence of these changes, funds available to floating charge and unsecured creditors could be significantly reduced. The tax evasion measures could make unpaid taxes a personal liability for directors in certain circumstances.