November 2023 - The IFT

Institute for Turnaround welcomes publication of HMRC’s approach to Restructuring Plans

On 1 November 2023, HMRC published some new guidance outlining the approach they will take to restructuring proposals provided by companies, such as restructuring plans under Part 26A of the Companies Act 2006. 

The guidance is short and without frills but does offer some key points for companies to ensure they consider when looking to restructure debts given HMRC’s status as a key creditor. The guidance also reflects some of the key lessons that have developed from Part 26A case law to date where HMRC engagement has been crucial to the success or failure of plans.

Firstly, HMRC is clear that they will only support restructuring proposals where they believe there is a “realistic chance of succeeding” (emphasis added).  They outline that companies must be prepared to explain why they consider the plan to be realistic and in particular that HMRC will critically examine projections of future income and expenditure, comparing it to previous history and assurance. All tax returns must be filed and HMRC need to be satisfied that the company will be able to pay future debts to them as they are due.

The guidance therefore makes clear that companies and their advisers need to be mindful of previous dealings and filings with HMRC and be prepared to explain any previous issues with taxes, as well as to defend future assumptions and calculations. Robust figures and independent evidence are crucial.

Another consideration of HMRC highlighted is the approach taken to payments of other creditors ahead of HMRC and whether this is justified, as well as looking at whether the company has “dealt fairly with payments to creditors during the period” and if part of a group, has “reasonably apportioned debt or risk within the group”.

Ultimately, the key point to take from this guidance, as indeed from the case law it reflects, is that HMRC support for restructuring is possible, but early and open engagement with HMRC is essential.

What does the Autumn Statement offer struggling businesses?

What does the Autumn Statement offer struggling businesses?

As a major policy moment before the next UK general election, this Autumn Statement has been hotly anticipated. There was much speculation about possible tax cuts to provide relief to businesses who have been struggling with the impacts of inflation, supply chain and labour issues.

Hunt predicted that the 110 growth measures he included in the statement would increase business investment by £20 billion per year in a decade and he emphasised that the statement was an “Autumn Statement for Growth”. This was against  figures from the Office for Budget Responsibility where projected growth is now expected to be slower than expected, and inflation is estimated not to fall to its 2% target level until the first half of 2025. Whilst the economy defied predictions with an estimated growth of 0.6% in 2023, the OBR’s estimate of the medium-term potential growth rate of the economy has been revised down to 1.6% from their previous estimate of 1.8%.

The Chancellor’s measures for businesses included the following:

Business Tax Measures 

  • “Full expensing” for businesses to be made permanent.
  • 75% business rates discount for hospitality, retail and leisure extended for another year to 2024/2025.
  • A freeze on all alcohol duty until 1 August 2024.
  • Creating a new simplified Research & Development (R&D) tax relief combining the existing R&D expenditure credit and SME schemes; reducing the rate that loss-making companies are taxed within the merge scheme from 25% to 19% and lowering the threshold for additional support for R&D-intensive lossmaking SMEs to 30%.
  • The small business rates multiplier will be frozen for a further year, though the standard business rates multiplier will rise by inflation.
  • Abolition of Class 2 National Insurance contributions for the self-employed altogether, and Class 4 National Insurance contributions reduced by 1% from 9% from April 2024.


Apprenticeships and Skills

  • An additional £50 million to boost numbers of apprenticeships in key growth sectors.


Business investment and other measures

  • Reforms to business planning applications for faster processing.
  • Foreign Direct Investment reforms, including a concierge service for the largest investors.
  • Mansion House pension reforms to unlock an extra £75 billion of investment for high growth forms by 2030.
  • Extension of the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) schemes until 2035 to support start-up companies.
  • A new Growth Fund within the British Business Bank for investing in high growth companies.
  • An upcoming review of the Value for Money Framework by the Financial Conduct Authority
  • A consultation on the Pension Protection Fund acting as a consolidator for smaller private defined benefit pensions schemes.
  • Further capital market reforms to attract investment.


Sector specific measures

  • Improving electricity grid access for clean energy companies.
  • £500 million over the next two years to help develop Artificial Intelligence industries.
  • For the advanced manufacturing and green energy sectors he announced that the government will be publishing long-term plans and £4.5 billion of support over the five years to 2030 to attract investment into strategic manufacturing centres.


Late payments  

  • In terms of payments dates, the Procurement Act has 30-day payment terms throughout the subcontract supply chain for public sector contracts. From April 2024, any company bidding for large government contracts should demonstrate they pay their own invoices within an average of 55 days which will reduce progressively to 30 days.


Levelling up

  • Investment zones and freeports – extending financial incentives for investment zones, and tax reliefs for Freeports from 5 years to 10 years.
  • A £150 million investment opportunity fund, new investment zone in West Yorkshire, 3 further investment zones in the West Midlands, East Midlands and Greater Manchester, and a second investment zone in Wales.



The Chancellor stated that the 110 growth measures he included in the statement would increase business investment by up to £20 billion per year and described the extension to full expensing as “the largest business tax cut in modern British history” and the “biggest ever boost for business investment in modern times”.

A number of the measures will be welcome for struggling businesses, especially smaller businesses, such as the plans for tackling late payments where businesses are struggling with cashflow issues, as well as the freezing of the small business multiplier for an additional year. There were also sector specific measures such as the extension of the 75% business rates discount for hospitality, retail and leisure for another year, and the freezing of all alcohol duty until 1 August 2024. This will be good news for these sectors, where businesses are particularly struggling with increasing costs and the impact of the cost-of-living crisis on demand.

The full expensing change was broadly welcomed by businesses – though it will benefit more research-intensive industries rather than service sectors – and it was also noted that by the Federation of Small Businesses that some of the major concerns of SME businesses were addressed, such as late payments and small business rates. Other measures supporting investment have been welcomed by organisations such as the British Venture Capital Association.

However, larger retailers and other hospitality businesses will still have to face an increase in the standard business rates multiplier by the September 2023 CPI rate of 6.7%. The OBR analysis confirmed that though the tax cuts in the Autumn Statement reduce the UK tax burden by 0.7% of GDP, the tax burden continues to rise and will reach a post-war high of nearly 38% of GDP by 2028/29. Increases to the National Living Wage also represent additional costs for businesses. In addition, organisations like the Institute of Directors noted that there was a lack of comprehensive measures for tackling skills shortages that also impact business prospects.

Ultimately, whilst welcoming some of the measures, businesses will be looking at the reduced growth figures – with a rate of 0.7% now predicted for 2024 – as well as the lagging inflation and interest rates with trepidation and steeling themselves for continued challenging times.

Webinar: Pensions and the Impact of Interest Rates

2nd November – 08:00am – 09:00am


Defined benefit pension obligations are estimated by discounting long term volatile cash flows by interest rates governed by a number of uncertain assumptions. Whatever you think about those assumptions, the fact that rates have risen by up to 5% over the last 12 to 18 months means the pension obligations that you are calculating have fundamentally changed.

This webinar explores how to assess the pension scheme discount at your appointment, how to manage the acquired liabilities, and how to minimise or eliminate that discount at the end of your appointment or on exit.