HMRC has a duty to consider the proposal and the normal process is for the insolvency practitioner to contact HMRC and tell them a CVA is being prepared. The collector or debt recovery unit will then pass the file to the central Voluntary Arrangement Service in Cardiff.

They will normally insist on their own conditions being included in the Arrangement and will add these modifications to the Proposal before accepting it.

These modifications will include an insistence that all future returns and payments are made on time. A CVA can be failed by HMRC contacting the Supervisor if these terms are not adhered to.

HMRC has now had its preferential status reinstated. This means that they will usually insist on 100% repayment of their debt before any payment to other creditors. This could make the burden of a CVA even more difficult.