From April 2020, 4 taxes became 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. So, if you are a trading with a business that suddenly goes bust you will be very low on the list.
HMRC is a preferred creditor when businesses go bankrupt!
22 May 2020 | Business