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Her Majesty's Preference

Adam Smith Institute - Chapter 11

The UK bankruptcy problem, though, is HM Revenue & Customs. When a firm fails, they are fist in the queue for payment. Suppliers and customers get left with a few pence for each pound they’re owed. ...It would be better.. if they (HMRC) were in the same queue as all the other creditors.

Even Homer nods - HM Revenue & Customs

HMRC does not have preferential status in the distribution of the assets of an insolvent estate. The former Departments of Customs & Excise and Inland Revenue both lost preferential status on 15 September 2003 under the provisions of the Enterprise Act 2002.

Something that even their debt collectors "don't know" as when I was being chased for an erroneous debt they tried the "preferential creditor" line on me and I was able to correct them and never heard from them again.

UPDATE - The ASI blog post has been silently edited and the error corrected.


Actually, as a former debt collector, I would say the problem lies with the Insolvency Practitioners who charge fucking horrendous fees for administering the estate of a bankrupt. You can expect a senior practitioner to charge will in excess of £100 per hour just to fill in an expenses form - I kid you not.

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