You’ll also feel the benefit of the CVA’s legal bind on your creditors. From the point of acceptance:
- All unsecured creditors will be bound by the terms of the CVA
- Your creditors’ interest and charges will be frozen
- Any ongoing legal actions will cease
- You’ll only make payments for the unsecured debt from that date as per the terms of proposal
As with other creditors, HMRC will be bound into the arrangement. It is therefore unable to charge further interest and penalties on the money you owe from the meeting date.
However, as your various debts with HMRC are usually accruing on a daily basis, once it has received
notice of the acceptance of your CVA, it will issue a VAT return for the period to the date of the meeting.
It’ll also issue a further VAT return from the period after the meeting until your quarter end. The pre-CVA meeting claim will form part of your CVA debt, and you’ll be expected to pay post-CVA returns on time, according to the usual timescales.
If you’re working with our firm, we will allocate a supervisor who will write to you clearly laying out your agreed obligations.
The supervisor will:
- Collect in the contributions or assets as per your proposal
- Agree the creditor claims and pay dividends to the creditors
- Review the company’s finances at the agreed time interval
If you and / or your supervisor find that your arrangement needs to materially change, they’ll call a new meeting of creditors and propose the variation to the arrangement. If it’s accepted by your creditors, the arrangement will continue as per the agreed proposal and the new variation.
Your CVA is brought to a successful conclusion once you have made all expected payments into the arrangement, and your supervisor has paid all dividends to your creditors.
You are then issued with a certificate of completion, and a final report is filed at companies house.
Hopefully this will help you prepare for the months and years ahead, however, if you would like to talk to us about any of the above in more detail, contact one of our business rescue experts directly.
