The Scheme: miscellaneous: voluntary arrangements
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A voluntary arrangement enables a debtor to come to a formal agreement with creditors regarding payment of their debts. Proposals are prepared by an insolvency practitioner called the nominee or, if the individual is already bankrupt, by the trustee in bankruptcy.
The proposals are placed before a meeting of creditors and, if approved, with or without modifications, are binding on all creditors who are notified of the proposals. Once approved the voluntary arrangement is then overseen by an insolvency practitioner called the supervisor.
Continuation of business
In contrast to bankruptcy cases, which commonly lead to the cessation of business, voluntary arrangements are often entered into to preserve the business as a going concern. Where a participating taxpayer continues to trade and holds gross payment status, its formal cancellation is not appropriate, but the applicant’s compliance will be reviewed at the next Scheduled Review (CISR49010).
An area in which voluntary arrangements differ from insolvency situations is the procedure where the participating taxpayer is a contractor or employer. In practice, the supervisor normally allows the taxpayer to continue operating the business, including the everyday operation of any PAYE/ITSC scheme in being. Unless, therefore, the terms of the arrangement indicate that the supervisor has become personally responsible for this aspect of the business, no special action is required in respect of any PAYE/ITSC scheme.
For further information on gross payment status and voluntary arrangements see CISR46130.