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Autumn Budget 2021 Predictions

The Chancellor will reveal his autumn spending review on 27 October and some of the expected announcements are being leaked…

Thursday, October 21st, 2021 Read More

Summer Budget 2020 Update

There has been a lot of speculation over recent weeks regarding the contents of Rishi Sunak’s summer budget. We all…

Wednesday, July 8th, 2020 Read More

Furlough Scheme Fraud

The government’s furlough scheme, known as the CJRS (Coronavirus Job Retention Scheme), was launched very quickly and those using it…

Tuesday, June 23rd, 2020 Read More

How to minimise inheritance tax

Last year, HMRC collected £5.2bn in inheritance tax receipts, making this tax a significant source of revenues. The amount collected…

Monday, February 18th, 2019 Read More

How to make the most of EIS

The Enterprise Investment Scheme (EIS) was originally established in 1994 and since then has continued to expand so that today…

Thursday, June 19th, 2014 Read More

How can business owners maximise the value of Entrepreneurs’ Relief – Part 1

Entrepreneurs’ relief can offer significant tax savings when exiting a business either completely or partially. However to get the maximum benefit of this relief, it is important to think ahead and plan accordingly. There are a number of qualifying criteria to consider depending on your individual circumstances, and action should be taken as soon as possible to avoid disqualification. In most cases, entrepreneurs wishing to use this relief need to review their position at least a year before a sale to ensure they qualify.

Monday, June 6th, 2011 Read More

EIS is now an investment option for MBOs

Enhancements to the Enterprise Investment Scheme (EIS) is one of the most useful policies introduced in the 2011 Budget – for business owners and tax payers looking to shelter their income from the current 50% tax rate. In addition to the increase in income tax relief from 20 per cent to 30 per cent making it more valuable to higher rate tax payers, access to the EIS scheme has also been widened.

Tuesday, April 26th, 2011 Read More

Christmas Greetings for Busy People – Tax efficient too….!

Another Christmas is almost upon us, and this year has once again vanished too quickly. Perhaps that’s because we’ve all never been busier. ‘Busyness’ is becoming the new norm as the recession tentatively starts to improve. Good news for everyone, but it has resulted in people needing to take on additional responsibilities because budgets have been cut. As a result ‘Doing It Yourself’ has been a big trend this year for business owners.

Monday, December 20th, 2010 Read More

CVAs rise as creditors collaborate to reduce losses

CVAs are on the rise and the recession has shown creditors willing to collaborate and minimise their losses. Jamie Constable, a partner at RJP and turnaround expert explains this trend and why CVAs are a good option to consider.

Friday, August 20th, 2010 Read More

60 Day Deadline for CGT Returns and Tax Payments

If you sell a property and incur capital gains tax on the transaction, you will need to file a tax return and also pay any tax that is due within 60 days of completion, or penalties will arise. Need help with your property taxes? Talk to us.

Statistics released this month revealed that there were almost 75% more company voluntary agreements (CVAs) agreed by business owners than this time last year. When a company goes into administration, there are really three options available – the business is sold once administrators are appointed  (some times known as a pre-pack), the assets are sold by the insolvency practitioners if no buyer is found, or a legally binding CVA is reached between the company and its creditors.

The first two cases result in the cessation of the old business, are far more disruptive and will usually result in much lower levels of return for creditors than with a CVA, in which the business and any contracts it has remain intact.  For smaller creditors in particular, the opportunity to recoup as much of the outstanding payment as possible is greatest with a CVA and in some cases, it can be up to the full amount, but deferred over a fixed time period of say 3 years.
In order to secure a formal CVA, 75% of creditors must agree to the terms of the CVA and a successful CVA will normally be after detailed negotiations between stakeholders over monies due.   In practice, it is relatively common for a more informal restructuring to occur before this stage whereby a group of creditors would collectively agree to CVA type payment terms to protect their interests by avoiding their customer becoming officially insolvent.
KPMG’s figures showed that the numbers of CVAs in the wholesale and retail sector increased by 33% to 100 from 75, while the construction industry saw the agreements rise to 147 from a total of 124 during the same period.  Certain sectors have always been more predisposed to CVA agreements because their business trades from costly leased premises and long-term agreements are in place with landlords.   Retailers, restaurants or health clubs fall into this category for instance and the most recent high profile examples where CVAs were used successfully as turnaround vehicles, can be seen with Miss Sixty, JD Sports and Discover Leisure.
Greater use of CVAs across different sectors is an interesting development to observe since traditionally, in spite of their benefits to all stakeholders, they have been notoriously difficult to agree.  This is because such a high level of consensus between creditors and the business management is needed. However as the numbers of insolvencies has risen in recent years due to the economic climate, companies have begun to understand that this route represents the best option to limit losses and recoup at least some of the monies owed.
Obviously it is never a good situation to be in, but when a customer is facing financial difficulties, a compromise agreement such as this could be best all round.  In practice it is very similar to HMRC’s own Time to Pay scheme which so many businesses have taken advantage of.
If as a business owner you are facing a situation such as this, where either you are having severe difficulties with cashflow or you have creditors potentially facing insolvency you should take advice on the best options to take and don’t dismiss the CVA.  From our experience, if the customer does end up in administration, once insolvency practitioners are appointed, your overall returns will be lower than if you are able to reach a compromise deal with the business owner directly.  It may also be possible for you or the firm to receive rescue funding through a turnaround specialist, during which time the business could also remain intact and continue trading.
Jamie Constable is a partner at RJP and an expert in turning around financially distressed companies.  Over the past 10 years, his turnaround investment company RCapital has provided rescue funding and turnaround management to many businesses including Little Chef, Helena Leisure and Morses Club.
If you would like further information please contact Jamie at