The Outside Clinic restructuring plan (RP) was sanctioned last week with HMRC voting in favour of it. In a similar vein to Enzen (see our earlier blog) HMRC initially indicated that it was not inclined to support the plan, but, after negotiating a higher return following the convening hearing, it voted in favour of it. A somewhat different outcome in circumstance where HMRC had (prior to the company proposing a plan) instructed its solicitors to present a winding up petition after attempts to agree a time to pay agreement had failed.

HMRC’s engagement and support is welcome (as it is on any restructuring), but the outcome in both this case, and Enzen, should not be taken as a green light that HMRC’s support is guaranteed – much will depend on the terms of the plan.

Under the terms of the Outside Clinic RP as originally proposed, HMRC would have received a dividend of 5p in the £ in respect of its secondary preferential claims of c£1.45m, compared to nil in the relevant alternative. HMRC would also have been treated the same as other unsecured creditors who also were to receive 5p in the £.

Following the convening hearing, HMRC flagged a number of concerns which the plan company had to address not least

• Whether the “no worse off” test could be satisfied – with concern about the recoverability of receivables/book debts which (if the assumptions were wrong) could see a different return in the alternative (an argument we saw in opposition to the plan proposed by the Great Annual Savings company); and
• HMRC’s treatment compared to other creditors (as noted above the plan originally proposed to treat HMRC in the same way as unsecured creditors)

HMRC’s improved position seems to have come about partly as a result of the plan company subsequently acknowledging that HMRC is an involuntary creditor and that it has a role to play as collector of taxes.

Perhaps more will come from the judgments on both this case and Enzen, but the key takeaways at the moment are that a plan company must (a) recognise that HMRC is an involuntary creditor and (b) its role in collecting taxes – something that reflects HMRC guidance too. 

If HMRC’s status is recognised in a plan perhaps HMRC will support from the outset, especially so given HMRC’s new stated policy is “to participate as fully as possible in plans – which will include, when necessary and desirable, negotiating with plan companies on HMRC’s return under a restructuring plan”.