HMRC is a preferred creditor when businesses go bankrupt!#AskAMS

From April 2020 HMRC is changing the rules on where they rank in the list of creditors for a bankrupt business.

From April 2020, 4 taxes will become preferred and high ranking trade creditors in any business going into liquidation. They are; Income Tax, VAT, CIS schemes and Employees’ National Insurance. It used to be that when a business went into liquidation, creditors were paid out in a specific order with secured bank loans and employee wages at the top, leaving trade creditors at the bottom along with HMRC. All this is changing in 2020. So, if you are a trading with a business that suddenly goes bust you will be very low on the list.