INSOLVENCY (SCOTLAND) RULES 2018

The new Insolvency (Scotland) Rules 2018 are finally here!
Due to commence on 6 April 2019, now is the time for familiarisation, planning and preparation. Here’s how we can assist you.

ICAS Insolvency and Restructuring Conference 2018

Insolvency Support Services director Eileen Maclean is delighted to have been invited to join a superb line-up of speakers at the ICAS Insolvency and Restructuring Conference 2018 at Gleneagles on 13 and14 November. The theme of this year’s conference is A Profession in the Spotlight, which ICAS has chosen to reflect the increasing levels of scrutiny faced by our profession.

For more info and to book: https://www.icas.com/events/the-icas-insolvency-and-restructuring-conference-2018

If you’re going too, Eileen hopes to catch up with you there.

Common Financial Tool (Scotland) Regulations 2018 – Giving evidence to Parliament

Eileen Maclean, R3 Scottish Technical Committee member, gave evidence to the Scottish Parliament Economy, Jobs and Fair Work Committee, on the new Common Financial Tool (Scotland) Regulations 2018 on 30 October.

Eileen said: “It was a privilege to be asked to give evidence on behalf of the profession. Now we await the Committee’s recommendation, with interest.”

You can watch the session here: https://www.scottishparliament.tv/meeting/economy-energy-and-fair-work-committee-part-i-october-30-2018

 

Lifting the corporate veil

It seems that the protection afforded by Limited Liability has received a body blow in the Budget with an announcement that directors may face personal liability for their company’s tax liabilities:

“Tax abuse and insolvency – Following Royal Assent of Finance Bill 2019-20, directors and other persons involved in tax avoidance, evasion or phoenixism will be jointly and severally liable for company tax liabilities, where there is a risk that the company may deliberately enter insolvency. (69)”

The language is perhaps a little confused. Insolvency is, after all, a measurable financial position, defined in statute with reference to two established tests, so not something that is “deliberately” entered, per se. It’s also not entirely clear which company is being referred to – the one with the liabilities or the successor. At a guess, the provisions are aiming at behaviours that cause or contribute to the insolvency of a company, but viewed with hindsight of an insolvency proceeding.

But leaving aside the semantics, there could be some significant and tangible impacts for business owners looking to avail themselves of the entrepreneurial encouragement to “have another go” that Limited Liability is intended to afford. Whilst there is no great surprise that tax evaders should be targeted, interestingly, both avoidance and phoenixism (like them or not – both currently legal practices), appear to be encompassed also.

We will have to await further details before the impact of this on the advice provided to directors of insolvent companies can be fully assessed. However, if the trigger for personal liability is the act of starting again (i.e. phoenixing), these provisions may have the unintended consequence of discouraging business restarts at a time when the economy is likely to be sorely in need of them. They may also impact the saleability of distressed assets, where often a connected party is the only interested purchaser. If such a purchase risks the imposition of personal liability for the debts of the predecessor company, the well-advised might reasonably look to buy their stock and fixtures and fittings elsewhere, or at the very least, be willing to pay rather less for them!

Alison Curry
Director, Insolvency Support Services 

Anti-Money Laundering – Have you assessed the risks?

A step-by-step explanation of a firm’s responsibilities under anti-money laundering regulations.

For many insolvency practitioners, anti-money laundering (AML) compliance starts and finishes with client identification procedures. But that simply isn’t sufficient to comply with current legislative requirements, nor to adequately protect you from becoming a professional enabler – a title none of us relish acquiring!

The area is under increasing regulatory scrutiny as the Recognised Professional Bodies (your AML supervisors) now have their own oversight regulator, the Office for Professional Body Anti-Money Laundering Supervisions (OPBAS), breathing down their necks. We IPs are likely to come under closer scrutiny from our AML supervisors, with a renewed focus on meaningful AML compliance.

So, aside from Customer Due Diligence (CDD) procedures, what do you need to do?

What are the risks faced by IPs?

Money laundering and terrorist financing are significant threats to any economy, particularly those operating globally. The UK is the world’s sixth largest economy, of which our financial services sector is a key component.

HM Treasury’s 2015 National Risk Assessment judged accountancy services to be at high risk of money laundering exploitation. The Treasury re-affirmed that view in 2017, concluding that ‘the inherent risks and vulnerabilities of accountancy services remain, due to the value of these services to those engaging in high-end money laundering… Company liquidation and associated services (including insolvency practice, which may be conducted by certain accountancy professionals) also pose a risk of criminals masking the audit trail of money laundered through a company and transferring the proceeds of crime…’.

Firm-wide risk assessment

First and foremost you must have a documented firm-wide risk assessment in place. This is a mandatory requirement under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR17), placed upon all ‘relevant persons’ (which includes IPs) and your supervisor may ask for sight of it at any time. Your risk assessment should:

  • identify the risk factors that apply specifically to your business and the way in which it operates
  • consider the frequency of occurrence of these risks, as well as their potential severity
  • explain how these risks are adequately managed and mitigated by the processes and procedures employed by your firm
  • be reviewed periodically and updated with new service lines and operational models
    used to educate and inform your staff

If you don’t know where to start or are pressed for time, ISS can assist you.

Oversight

Secondly, you need to consider who within your practice is going to take responsibility for production, operational oversight and periodic review of your policies, controls and procedures and whether this is going to be a formal compliance officer role, or an informal or shared function. Depending on the size and nature of your practice, either route may be appropriate. The key requirement is that someone (individual or group) needs to oversee this area. This is not the same function as the traditional money laundering reporting officer role, although these may be combined, if that works best for your firm.

Policies, controls and procedures

Regulation 19 of the MLR17 requires you to establish and maintain policies, controls and procedures to effectively mitigate and manage the risks of money laundering and terrorist financing identified in any risk assessment undertaken by the relevant person. These must be maintained in writing and must include:

  • risk management practices
  • internal controls
  • customer due diligence
  • reliance and record keeping
  • the monitoring and management of compliance with, and the internal communication of, such policies, controls and procedures

Do you have these policies in place? If not, we can help.

CPD and staff training

Those responsible for AML oversight must receive appropriate CPD on the conduct of their functions. Additionally, your whole team should be provided with periodic training, not just about the law in this area, but also about the specific risks presented to your business and the policies, controls and procedures that your firm has in place.

ISS can supply in-house and/or online learning modules for your officers and your team members, specifically tailored for your business and the risks it faces.

Beneficial owner and manager approval

It is a criminal offence for a person to act in the capacity of a beneficial owner, officer or manager of a relevant firm without the approval of an AML supervisor. Have all relevant owners and managers of your practice registered with your AML supervisor yet?

This requirement extends to any party with a controlling interest in the business (eg a shareholding in excess of 25%) and any principal, senior manager, or member of a management committee who is responsible for setting, approving or ensuring the firm’s compliance with the firm’s anti-money laundering policies and procedures.

 

We will be examining the legal requirements and the risks presented to practices in our forthcoming Intensive CPD / CPE Catch-Up Courses and discussing how practices may manage these.

For further information about how ISS may assist you in meeting your AML obligations, contact enquiries@insolvencysupportservices.com

R3 in Scotland Breakfast Seminar: An Insolvency Practitioner’s Duties and Obligations

Insolvency Support Services (ISS) is delighted to sponsor the upcoming R3 in Scotland Breakfast Seminar on An Insolvency Practitioner’s Duties and Obligations: a look at Doonin Plant vs SEPA.

The excellent panel of speakers comprises Kirsten Fleming and Tim Cooper from Addleshaw Goddard and Alison York, Head of Legal at the Scottish Environment Protection Agency (SEPA).

R3 President, Stuart Frith, will also give an update on behalf of R3.

When: Friday 30 November 2018, 08:00 until 10:00
Where: Addleshaw Goddard LLP, 19 Canning Street , Edinburgh EH3 8EH

We look forward to catching up with you for an excellent breakfast seminar!

To book, please click here.

A Privacy Policy is not just for your website

An Insolvency Support Services (ISS) survey of 70 insolvency practitioners’ websites has revealed that only 25% contain any information about the rights of the various parties an insolvency practitioner will routinely process data about during the course of an insolvency engagement: debtors, directors, creditors, employees and other stakeholders.

While 80% of websites contained a privacy policy of sorts, 68% of these privacy policies related only to visitors’ use of the website and information collected about their website usage through cookies.

Most policies were found to be lengthy, generic templates which failed to adopt the “layering” approach recommended by the Information Commissioner’s Office. In one case, the privacy policy was labelled “US” and failed to mention the GDPR regulations at all!

Only 13% of the websites surveyed sought express permission for cookies and explained both the privacy policy in relation to the website and in relation to data held by the practice in connection with insolvency appointments.

Alison Curry, a director of ISS, commented: “These findings might not mean that practitioners are falling down in their GDPR obligations. They may be supplying the necessary information within privacy notices that are distributed by email or in hard copy during the course of insolvency proceedings. However, even if that is the case, these firms are missing an opportunity to make this information readily available at nominal additional cost and inconvenience, by placing it on their website. Of more concern would be if practitioners are failing to provide the relevant data subjects with an appropriate privacy notice, explaining their rights, the insolvency practitioner’s lawful basis for processing and the retention and destruction policies adopted by the practice.”

Do you have all the GDPR documentation that your firm needs in order to comply fully with the new legislation, both online and offline? ISS can assist you with insolvency-specific, layered, GDPR documents; including a full suite of policies, procedures and notices, which can be easily customised for use in your firm.

Was your firm surveyed? If you would like to know if yours was one of the firms surveyed, please get in touch for a no-obligation chat about our findings.

For further details, call 0845 6017570 or email enquiries@insolvencysupportservices.com

Research note:

Insolvency Support Services’ review surveyed the websites of 70 insolvency practitioners in London and South East England at the end of September 2018. Our main objective was to assess the extent to which insolvency practitioners’ have published a privacy policy on their website that satisfies GDPR requirements some four months after the new legislation came into force.

Intensive Insolvency CPD / CPE Catch Up Course

Looking to catch up on your CPD? It’s that time of year when we submit our licence applications and sign off that we have fulfilled our CPD obligations.

Join fellow professionals and the ISS Training team for an intensive two days and 12 hours of CPD / CPE in advance of your annual licence renewal.  It is only £495 plus VAT for the two days.

This course will cover key compliance areas for all insolvency professionals and provide optional streams to cater for the types of work your practice undertakes.  Choose the stream that suits your business and development need.  Delivered in a group, interactive format, you will have an opportunity to discuss with peers the issues you’ve encountered in practice and pick the brains of our compliance experts, Eileen Maclean and Alison Curry.

CPD Learning Outcomes

  • Clear and concise guidance to legislative and regulatory requirements governing each area
  • An opportunity to discuss current issues and best practice with fellow professionals
  • 12 hours of bespoke and relevant CPD/CPE to support your annual license renewal

Who should attend

This course is aimed at licenced Insolvency Practitioners and their staff, who are looking for a comprehensive introduction to the subject matter or an update to their technical knowledge and skills.

Speakers

Eileen Maclean MA Hons MIPA MABRP MBA, director of Insolvency Support Services Limited

Alison Curry LLB Hons MIPA, director of Insolvency Support Services Limited

Location and Date

Manchester, 21/22 November, 9.30am to 5.00pm

London, 5/6 December, 9.30am to 5.00pm

Cost

Half day course: £155 + VAT
Full day course: £295 + VAT
All four half day courses: just £495 + VAT

Fees include all course documentation, lunch and light refreshments

CPD

3-12 hours depending on modules attended

Course Outline

Day 1

Session 1: Know Your Customer:  Systems & Procedures Workshop
How you can improve your firm’s KYC in a cost effective and proportionate way to manage the risks presented by conflicts of interest and the AML regime.

Session 2: SIPs Update
Refresh your knowledge of these key regulatory requirements.

Session 3:
Choose from:

Option A: Current issues in IVAs
Join Alison for an examination of the current regulatory focus and developments in IVA practice.

Or 

Option B: Current issues in MVL
Eileen presents an overview of the particular risks incumbent in MVL work and how these can be effectively managed.

Day 2

Session 1: Understanding Vulnerability
Vulnerability, and particularly the impact of mental health problems, has never been higher profile. Consider what adjustments your business operations require, to assist your clients and avoid adverse PR.

Session 2:
Choose from:

Option A: Bankruptcy Update
Alison leads the discussion on how practice within the Official Receivers is developing and examines the real impacts of bankruptcy on those you assist with their debt situation.

Or

Option B: Sectoral Challenges
With retail failure seldom out of the news, the hospitality sector struggling to recover its footing and the construction industry facing faltering house prices, Eileen will look at some sector-specific challenges faced by UK businesses and the owners and creditors you advise.

Session 3: Data Privacy Workshop
Data privacy cuts across all areas of practice management. Understand what steps you need to take, both as an insolvency professional and as a business person.

 

CPI and CPPI exam success for ISS Training students

ISS Training is delighted to congratulate its CPI and CPPI students on their success in the June 2018 CPI and CPPI exam sitting.  Our students achieved great results, including one distinction and three merits, and we are thrilled that all of their hard work paid off.  Well done, class of 2018!

Enrolment for the 2019 session is now open. For full details of the classes and dates for CPI click here and for CPPI click here.

If you would like to discuss your options, please speak to us at any time on 0845 601 7570 or courses@insolvencysupportservices.com

Announcement regarding Insolvency Support Services (ISS)       

Please note that with effect from 1 July 2018, the business of Insolvency Support Services under the business lines ISS Training, ISS Compliance, ISS Outsourcing and ISS Practice Support has transferred to a new limited company SC601201.  The company previously registered as Insolvency Support Services Limited (SC357810) has changed its name to Dunedin Advisory Limited.

Dunedin Advisory retains responsibility for the Accountant in Bankruptcy contract and remains as a provider of outsourced bankruptcy services.  Formal appointments in the name of Christine Convy and Jenn Stewart, and court reporting duties remain with Dunedin Advisory Limited.  Enquiries regarding any case matters previously dealt with by Insolvency Support Services Limited should now be directed to Dunedin Advisory, contact details for which can be found at https://dunedinadvisory.com

Insolvency Support Services Limited’s new details are as follows:

Registered address: 12 Castle Terrace, Edinburgh, EH1 2DP

Registered number: SC601201

Director: Eileen Maclean

VAT number: 299 2513 64

Customers

All contracts for training services have been assigned to Insolvency Support Services and will be honoured as contracted.   Any sums paid in advance for course bookings made before 1 July 2018 have been transferred to the new company in full.  Cancellation terms and all other terms and conditions of booking are unchanged.

Customers will be contacted individually with details of our new bank account for payments in respect of bookings made on or after 1 July 2018.

Suppliers

All invoices in relation to supplies to Insolvency Support Services Limited from 1 July 2018 onwards should be addressed to:

Insolvency Support Services Limited

12 Castle Terrace

Edinburgh

EH1 2PD

and submitted electronically via enquiries@insolvencysupportservices.com.  Standard payment terms are 30 days, unless otherwise agreed.

Continuity of Service

The team at ISS will continue to provide the same breadth and high standards of training, compliance, outsourcing and practice management services that you have come to expect.  We look forward to working with our valued existing customers and new contacts.

If you would like any further information, please contact Eileen Maclean at emm@insolvencysupportservices.com or on 07957 600538.