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Company Voluntary Agreements

 / What happens after a CVA is accepted?

What happens after a CVA is

Your CVA has been accepted! Other than the immediate relief you will
undoubtedly feel, what are the other effects you need to be aware of?
What do you need to know about VAT going forward and how do you
make sure the process stays on track? We discuss what an accepted 
CVA means for your business here.


Immediate effects of a CVA

  • You remain in control of your business
  • Your business cashflow will improve
  • Employees’ rights remain as they were
  • Your customers will not be informed of the CVA (although, depending on your industry, you may find that some rumours persist)

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

What happens to VAT within a CVA?

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.

What does my CVA supervisor do?

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.

Bringing the arrangement to an end

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.
Business Rescue Expert is part of Robson Scott Associates Limited, a limited company registered in England and Wales No. 05331812, a leading independent insolvency practice, specialising in business rescue advice. The company holds professional indemnity insurance and complies with the EU Services Directive. Christopher Horner (IP no 16150) is licenced by the Insolvency Practitioners Association


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