The recent legislative change gives HMRC second preferential creditor status for certain taxes. This change ensures that when a business enters insolvency, more of the taxes paid in good faith by its employees and customers, but held temporarily by the business, go to fund public services as intended, rather than be distributed to other creditors.
This change is not expected to have a significant impact on financial institutions, the lending market or wider economy. This measure is forecast to raise up to £220 million a year. To put this into perspective, bank lending to small and medium-sized businesses alone in 2019 was £57 billion.