Dear IP Letter 57

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Dear IP Letter 57 was published in October 2024

Dear IP 57
Dear Insolvency Practitioner,

In this, the Fifty Seventh of the “Dear IP (NI)” series, I should like to deal with the following issues:
1. Information the Official Receiver can provide to Insolvency Practitioners on bankruptcy and liquidation cases.
2. Insolvency Service Policy on Directors’ Claims in Insolvency Proceedings.
3. Update on new Legislation Affecting Payments due to Employees.
4. Guidance and Information Requests to Central Accounting Unit.
5. ISAAC - Password Resets, Adding a new Party to the System or Amending an Existing Party.
6. Lodgements to and Payments from the Insolvency Account.
7. Paying or Refunding HMRC and LPS.
8. Accepting cases on Portal – Majority Creditor and Speculative Rota.
9. Relocation of the Insolvency Service.

1. Information the Official Receiver can provide to Insolvency Practitioners on bankruptcy and liquidation cases

The Official Receiver and Insolvency Practitioners must ensure that any data exchanged between them is dealt with in accordance with legislative requirements. In particular, they should ensure that personal data is only provided to parties that are eligible to receive it. Improper provision and gathering of data is a serious matter and we will take firm action where a breach is identified.

Insolvency Practitioners should only seek to obtain information which they are lawfully entitled to receive and handle in accordance with data protection laws. These laws include the UK General Data Protection Regulation (UK GDPR) and the UK Data Protection Act 2018. In relation to bankruptcy or liquidation cases under the control of the Official Receiver, Insolvency Practitioners will be entitled to receive information where they are authorised to do so by a creditor, or in their capacity as office holder.

Where an agent or Insolvency Practitioner is authorised to act on behalf of a creditor, they may receive information in place of the creditor, but they would not be entitled to any more information than the creditor. Creditors are generally entitled to information that could be included within a report to creditors (RTC) and any notice of dividend. They can be provided with a list of creditors in a case in which they are listed as a creditor.

However, until the Official Receiver is satisfied that an Insolvency Practitioner or a third-party agent is properly authorised to act on behalf of the creditor, they will not be provided with any information relating to a case. The Insolvency Practitioner will only be properly authorised if there is a written authority from the creditor giving a blanket or case specific authority for the Insolvency Practitioner to represent it.

An authority from the creditor is required before any information, including a copy of the RTC and a list of creditors, can be shared with the Insolvency Practitioner. A nomination from a creditor in a decision making process for appointment as liquidator or trustee, is not considered to be sufficient authority that the Insolvency Practitioner is acting on behalf of that creditor in its dealings with the Official Receiver.

When seeking a rota appointment of an Insolvency Practitioner, the Official Receiver should provide all the relevant information to the Insolvency Practitioner to enable an informed decision to be made on whether to accept the appointment. This information will be limited to assets and liabilities of the insolvency party.

Any enquiries regarding this article should be directed towards Aislinn Quinn, Deputy Official Receiver, telephone 02890 548503, email Aislinn.Quinn@economy-ni.gov.uk

2. Insolvency Service Policy on Directors’ Claims in Insolvency Proceedings.

Director Claims for Redundancy Payments as Employees
Only employees who are made redundant are entitled to payments from the National Insurance Fund (NIF).

In Northern Ireland claims by employees for monies owed to them by employers who have entered insolvency proceedings are made in the first instance to the office-holder. The office-holder is responsible for referring the claim to the Department’s Redundancy Payments Service. The Redundancy Payments Service will adjudicate on the claim and make any payment to which the employee is entitled out of the National Insurance fund.

A director, who is an office holder, can also be an employee and be eligible for payment; however, directors applying to the Redundancy Payments Service for monies owed will need to provide evidence to support their claim that they were an employee.
This article is intended to assist Insolvency Practitioners in understanding the Redundancy Payment Service’s approach to assessing director claims for employee status.

An IP’s approach to establishing a director’s status before completing the RP14a will depend upon the specific circumstances of the case; however, if there are any areas of concern with regard to employee status, please contact the Redundancy Payments Service at the email address below.

Directors applying to the Redundancy Payments Service for monies owed will need to provide evidence to support their claim that they were an employee, and this will include the completion of a directors’ questionnaire, RP3. The Redundancy Payments Service will contact directors after they have submitted their claim to let them know what documents they need to provide.

The additional information required will be based on the claimant’s circumstances and may include (this is not an exhaustive list):
• Details as to the structure of the company in terms of directorships and shareholders.
• The last 5 years’ P60s.
• The last 3 months’ wage slips.
• Employer’s bank statements for the last 12 months to review regularity of payments.
• A comparison of the contracted hours being claimed in relation to the work being undertaken.
• Compliance with national minimum wage.
• A copy of the contract of employment and whether the terms of the contract were enacted.
• Dividends received in the last 5 years.
• Holiday pay arrangements.
• Workplace pension arrangements.
• Sick leave procedures.
• Grievance and disciplinary procedures.

The Redundancy Payments Service will have to consider whether there was a contract of employment in place at the time (which can be express or implied).
From the information provided, Redundancy Payments Service will determine, on the balance of probabilities, if they find the director to be an employee.

Redundancy Payments Service will reject the claim and not make any payments if they cannot confirm that the director was also an employee of the company. If the claimant disagrees with the decision, they can make a claim to an employment tribunal.

Any enquiries regarding this article should be directed towards Redundancy Payments Service, Department for the Economy, Adelaide House, 39-49 Adelaide Street, Belfast, BT2 8FD, Telephone: 028 9025 7562,
Email: rpsquery@economy-ni.gov.uk

3. Update on new Legislation Affecting Payments due to Employees.

Practitioners are asked to note the coming changes resulting from two Private Member’s Bills introduced at Westminster having recently received Royal Assent. This will affect the calculation of payments due from the Redundance Payments Service. The effective provisions have not yet been brought into force. A further update will be issued once this happens.
The Neonatal Care (Leave and Pay) Act 2023 provides a statutory entitlement to paid leave for neonatal care.

This Act is not yet fully in force.
The Carer's Leave Act 2023 creates an entitlement for employees to take unpaid leave to care for dependents with long term care needs. The effective provisions were brought into force on 4 December 2023 by the Carer’s Leave Act 2023 (Commencement) Regulations 2023 (S.I. 2023/1283).

The Carer’s Leave Act 2023 and the Neonatal Care (Leave and Pay) Act 2023, when fully in force, are likely to modify the calculation of ‘a week’s pay’ to take account of statutory neonatal care leave and carer’s leave.

4. Guidance and Information Requests to Central Accounting Unit

Central Accounting Unit is noticing an increase in the number of queries from Insolvency Practitioner assistants regarding standard processes in relation to the completion of actions on the portal, payments to HMRC and supplier forms adding new parties to the system.

Instructions on these have been provided in previous Dear IP letters and I would remind you that staff should refer to these guidance documents in the first instance or seek clarity from their Insolvency Practitioner.

Insolvency Practitioner assistants should only contact Central Accounting Unit staff if their query has not already been covered in previous Dear IP letters which are available online at Insolvency guidance papers

Letters to insolvency practitioners

There is also a HELP manual on the Portal that you can refer to which contains a lot of useful and helpful information.

Any enquiries regarding this article should be directed towards Tina Diamond, Central Accounting Unit, telephone number 02890 257467, email tina.diamond@economy-ni.gov.uk

5. ISAAC - Password Resets, Adding a new Party to the System or Amending an Existing Party

Central Accounting Unit has been receiving a number of requests from Insolvency Practitioner assistants to change or reset passwords. The Insolvency Service is only responsible for resetting the password for Insolvency Practitioners and any such request must come from the IP themselves. For assistants and other staff, the IP is responsible for resetting these passwords.

We would also remind you that you should undertake a review of the current assistant list that you are responsible for and remove any obsolete accounts.

Any requests to update existing parties or to add a new party to the system should be sent to insolvency mailbox.

Any enquiries regarding this article should be directed towards Tina Diamond, Central Accounting Unit, telephone 02890 257467, email tina.diamond@economy-ni.gov.uk

6. Lodgements to and Payments from the Insolvency Account

It is essential that any lodgements / receipt transactions submitted on ISAAC should be completed with full and clear meaningful descriptions to the case it relates to. Any repayments back into an estate should clearly state that it is a repayment of a previous paid expense and the date of the original payment should be included in the description on ISAAC (or state paid from IP office account).

For payment requests, as well as being full and meaningful, the cheque/BACS remittance advice notes, relevant to the payment, show the description that has been entered on the system and should therefore be appropriate to the payee. There is no need to refer to case notes.
In general anyone should be able to read a transaction description and know what it relates to, without having prior knowledge of the case.

Any enquiries regarding this article should be directed towards Tina Diamond, Central Accounting Unit telephone 02890257467, email tina.diamond@economy-ni.gov.uk

7. Paying or Refunding HMRC and LPS

When repaying the deposit and / or the petitioning creditor costs for cases where HMRC and LPS are the petitioning creditor, payments should be made directly to them and not the Crown Solicitors Office.

HMRC Instructions sent to IPs in June 2020 should always be followed when making a dividend or repayment of deposit and petitioning creditor costs to HMRC.

Insolvency Practitioners should ensure all relevant team members / staff are aware of this instruction.

On ISAAC the dedicated parties should always be used, and it is the Insolvency Practitioners responsibility to ensure the creditor tab has the correct party associated to the creditor record. To help identify each party BKT and LQD has been added to the party name, the easiest way to find the party you need is to search using the appropriate abbreviation.

Any enquiries regarding this article should be directed towards Tina Diamond, Central Accounting Unit, telephone 028 90257467, email tina.diamond@economy-ni.gov.uk

8. Accepting cases on Portal – Majority Creditor and Speculative Rota

Cases offered to IPs where acceptance is required prior to being offered on the IP Portal, such as cases involving majority creditor support and offers made via the speculative rota, must be formally accepted by the IP themselves and cannot be accepted on their behalf.

Any enquiries regarding this article should be directed towards Amanda Waring, Insolvency Practitioner Unit, telephone 02890 548629, email Amanda.Waring@economy-ni.gov.uk

9. Relocation of the Insolvency Service.

Please be advised that as from Monday 21st October 2024 the Insolvency Service will be relocating. Our new office address will be:

Insolvency Service
Department for the Economy
Adelaide House
39-49 Adelaide Street
BELFAST
BT2 8FD

Telephone and email contacts remain unchanged:
Tel 028 9054 8531
E-mail: insolvency@economy-ni.gov.uk