Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill: RPC Opinion
Regulatory Policy Committee opinion on BEIS’ impact assessment of the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill.
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The impact assessment (IA) to which this opinion relates deals with proposals to address a problem of directors dissolving companies to avoid repaying creditors. The Department’s original IA received a red (not fit for purpose) rating following an initial review notice. The Department subsequently submitted a further revised IA, which is now fit for purpose, although the wider cost-benefit analysis still relies heavily on assumptions based on limited evidence.
The final version of the IA uses evidence of the number of dissolved companies to provide a reasonable estimate of the subset of directors that would consider taking action that may be caught by the proposed legislation. The IA now also justifies that there will be no other business impacts (such as disproportionate costs to compliant micro businesses being investigated, or benefits to businesses from avoided fraud) given that the Insolvency Service is likely to undertake the same number of investigations, within an unchanged funding envelope. The RPC recognises the Insolvency Service’ justification and its suggestion to monitor these impacts.
The RPC is pleased that its advice has contributed to the improvement of the analysis supporting regulatory policy in this area. We commend the Insolvency Service’s best practice improvement of its IA and for the commitment shown in responding positively to the RPC’s previous opinions.