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<p>The recent change to HMRC’s creditor status for certain debts ensures that when
a business enters insolvency, more of the taxes paid in good faith by its employees
and customers, but held temporarily by the business, go to fund public services as
intended, rather than be distributed to other creditors. This measure is forecast
to raise up to £255 million a year, and the average recovery will be determined on
a case by case basis.</p><p> </p><p>While there is no specific analysis of the impact
for individual sectors the Government has engaged extensively with stakeholders in
the finance industry and held a formal consultation on the policy design. Having considered
all views carefully, the Government believes these reforms take a fair and proportionate
approach, balancing the interests of taxpayers, the Exchequer and other creditors.</p><p>
</p><p>Bank lending to small and medium-sized businesses alone in 2019 was £57 billion,
and the majority of business lending is by fixed charges and is unaffected by this
measure. In part for this reason, this change is not expected to have a significant
impact on financial institutions, the lending market or wider economy. The OBR did
not make any adjustments to their economic forecast in response to this measure.</p>
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