Using debt management schemes to restructure a company’s finances
Guidance for insolvency practitioners to help their clients restructure their company’s finances using a debt restructuring scheme or plan.
If you are an insolvency practitioner working with a company in financial difficulty, HMRC offers support in certain circumstances to help your clients restructure their finances.
Under parts 26 or 26A of the Companies Act 2006, companies can seek court, shareholder and creditor approval for a debt restructuring scheme or plan — also known as a scheme of arrangement or a part 26A restructuring plan.
When will HMRC offer support
HMRC will only offer support to companies to restructure where we believe you have a realistic chance of succeeding. If we do not believe you have a realistic chance of succeeding, we will work with you to try and find other ways to repay your debt to HMRC. This could include going through a formal insolvency process.
What information to include
HMRC considers schemes or plans on a case-by-case basis. You should contact our specialist Debt Management team as soon as you decide to restructure your finances. This will make it quicker for us to understand whether we can support you.
You will need to give us:
- your true asset and liability position
- a summary of any relevant independent valuations
- an explanation of:
- why you need to restructure
- what will be different afterwards
- any new finance that is being provided to you
- why you believe your scheme or plan has a realistic chance of working
We may ask you to give us more information to help us make a decision.
HMRC will also:
- compare our knowledge of your financial position, including any previous payment plans or assurances, with what you tell us
- look critically at your projections of income and expenditure
- need to be satisfied you are able to pay future debts to us as they are due
You must file all your tax returns before HMRC will consider any restructuring scheme or plan.
How HMRC make a decision
HMRC is more likely to support your proposal if we believe your scheme or plan:
- is truthful and supported by evidence, including accurate calculations of taxes you currently owe
- recognises HMRC’s function as the collector of taxes to fund public services, and your statutory obligations to deduct and pay tax
- explains any past failures to deduct and pay tax
- explains how the restructuring will benefit all your creditors
- has a realistic chance of succeeding
HMRC is less likely to support your scheme or plan where:
- other creditors are being paid whilst HMRC is not — unless you can justify the different treatment
- we have concerns that your history means you may not comply with future obligations or assurances
- we consider you have not dealt fairly with payments to creditors during the period you are preparing your scheme or plan
- we do not believe you will make full payment on time of all future debts, or submit on time all your tax returns
- we have concerns you have not made full disclosure or you are not being sufficiently realistic in your forecasts
- any restriction is brought in to prevent us from taking action to recover unpaid liabilities arising in the future
- you are part of a group of companies and we are not satisfied you have reasonably apportioned debt or risk within the group
Contact HMRC to discuss or submit a proposal
By email
To contact HMRC’s Debt Management team, email [email protected].
The subject of the email will change depending on which section you’re applying under, either:
- proposed scheme of arrangement (part 26 CA2006)
- proposed restructuring plan (part 26A CA2006)
If you have a date for your hearing, you should also include this in the subject of your email.
By post
If you cannot email, you should post your documents to:
Debt Management — EIS C
HM Revenue and Customs
BX9 1SH
If you do send your documents by post, you should include a covering letter making it clear which section you’re applying under, either:
- proposed scheme of arrangement (part 26 CA2006)
- proposed restructuring plan (part 26A CA2006)
HMRC may not be able to access online portals due to technical security restrictions, so we may ask you to send documents to us in other ways. If you cannot do so this may delay our response or affect our ability to properly consider your scheme or plan.