Fat Controller:
in cases of bankruptcy, the first in line, (preferred creditor) is always the Her Majesty’s Revenue & Customs. They’ll claim their VAT & Tax dues before anybody else.
HMRC are not a “preferred creditor” under the insolvency legislation. That status was abolished for them 14 years ago and they are in exactly the same position as any ordinary trade creditor, supplier etc. Employees are still classed as “preferred creditors” so they come above HMRC, suppliers etc (but are still below “secured creditors” - i.e. those who have a legal charge on company assets).
The list goes as follows:
- Insolvency fees and expenses (so the accountants get first dibs)
- Secured creditors
- Preferred creditors (including employees wages, redundancy etc)
- Unsecured creditors (including HMRC)
- “Associate” unsecured creditors (this might include expense payments owed to employees)
- Shareholders