On 1 December 2020, the Crown will regain preferential status for most of its debts, more than 17 years after it was abolished. The change runs contrary to the government’s renewed attempts to promote a culture of corporate rescue, leaving insolvency practitioners with a tricky path to navigate.

The partial reintroduction of Crown preference was first proposed in the Autumn Budget 2018 for introduction in April 2020. The rationale was that too often, distressed companies use tax they have collected to prop up their ailing business, leaving HMRC high and dry in the event of insolvency.