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HMRC internal manual

Debt Management and Banking Manual

Enforcement action: ordinary cause: effect of insolvency on ordinary cause actions: insolvency on diligence

Enterprise Act 2002

The Enterprise Act 2002 made important changes to insolvency law.

These changes fall into four categories:

  • corporate insolvency, notably the company administration procedure (see DMBM676640)
  • abolition of crown preference
  • individual insolvency
  • the reform of the financial regime of the Insolvency Service.

Crown Preference

With effect from 15 September 2003, Crown preference was abolished for all former Inland Revenue and HM Customs and Excise debts.

Crown preference, however, remains for any such debt where the relevant date is prior to 15 September 2003.

Immediate action on receipt of insolvency notification

On receipt of a notification of an insolvency you must not under anycircumstances start or continue proceedings for that case.

Where decree has not been granted but the case has been registered with the court, as well as withdrawing the case from ordinary cause action you should:

  • notify the court in writing
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • arrange for a claim to be lodged, as appropriate.

Note: In this instance “Insolvency” means any sequestration, company liquidation (both compulsory and voluntary winding up), administrative receiverships/receiverships, trust deeds, company schemes of arrangement, and company administrations.