INS10175 - Introduction to Voluntary Arrangements

The basic process for VAs

There are a number of actions which might be required depending on the circumstances relating to particular cases, but the basic process is outlined below.

Preliminary contact

Before the statutory procedures start there may be discussion with VAS about proposals. VAS only supports if all acceptance criteria are satisfied.

Draft Proposals

These generally only outline the commercial proposal. Read all draft material carefully.

• Repudiate special treatment for any creditor inside or outside of the proposed arrangement and any other unacceptable terms.
• See that CVAs proposed by administrators commence at the administration date and that administration period liability is fully paid by the administrator.
• Say where rejection might be made for compliance reasons. Only disclose these to the debtor. Do not disclose them to an IP (without the debtor’s signed authority) until the IP holds office as nominee or supervisor.
• Consider against the same criteria as formal proposals.
• If you are likely to support, say only that ‘you have no objection in principle to a VA but that you will not commit until you have seen the full text and full supporting financial information’.
• To avoid claims of implied ‘tacit support’ respond as soon as possible and preferably before the substantive proposal is issued to creditors but within a maximum of 15 working days.

Suspending HMRC Local Action

Once a debtor or IP representing a debtor communicates with VAS about the terms of a VA, that is on receipt of draft or formal proposals

• Suspend all HMRC recovery action – distress, county court proceedings or civil recovery action.

Former Revenue debts

• Telephone the Recovery Office responsible for the distraint or county court proceedings and advise it to suspend action.
• Transfer any EIS papers temporarily to VAS and suspend action until the file can be returned to EIS.
• If a petition has been issued against a debtor email HMRC Solicitors to suspend action. HMRC Solicitors will agree to adjournment requests.
• After four weeks if no formal proposal is received or VAS has been advised that a VA is not being pursued advise the Recovery Office by telephone to resume its action or instruct EIS/HMRC Solicitors to continue unless an Interim order is in place.

Former Customs debts

• Update the Departmental Trader Register (DTR) on receipt of a draft proposal with a note

“Draft VA pending hold all action”

• When the formal proposal is received amend the DTR to read

“VA pending hold all action”

• If no formal proposal is received after 4 weeks or VAS is advised that a VA is not being pursued advise the DMU through DTR

“VA abandoned resume recovery”.

Proposals received

Once the proposal is received from the nominee

• Establish the extent of the HMRC debt
• Consider against VAS acceptance criteria and liaise with the IP
• Vote at the creditors' meeting (normally by proxy)
• Follow up the Report of the meeting to identify modifications to the proposal and ensure there has been no material irregularity or unfair prejudice.

VA in place

Once the VA is in place the monitoring teams

• Finalise the claim
• Monitor the arrangement and the post-voluntary arrangement tax and return position
• Vet (review) the supervisor’s annual report
• Remind for dividends and account for payment
• Refer any breach of the arrangement to the Post-Monitoring Support Team.