With effect from 1 April 2004 the Insolvency Service introduced a new rate of Secretary of State fees for all cases where the Bankruptcy Orders and Winding up Orders were made after that date. Where the Orders had been made prior to that date the case continued to be subject to the rate of Secretary of State fees, or Ad Valorem if it was an “old Act” case, that was applicable before 1 April 2004, but this has now all been changed with the introduction of the Insolvency Practitioners and Insolvency Services Account (Fees) (Amendment) Order 2007. With effect from 1 April 2007 the Order abolished Ad Valorem once and for all on “old Act” cases and Secretary of State fees on all cases where the Bankruptcy Orders and Winding up Orders were made prior to 1 April 2004 (qualifying cases). As a result, no Secretary of State fees/Ad Valorem will be charged on the funds remitted to the ISA after 1 April 2007 in qualifying cases. You will, however, still have to remit all estate funds to the ISA in all cases in accordance with the Insolvency Regulations 1994, and Secretary of State fees will continue to be charged on cases where the Bankruptcy Orders and Winding up Orders were made after 1 April 2004.
What the abolition of ad valorem for qualifying cases will mean though is that closing calculations are simplified as, for example, you will not have to calculate ad valorem on VAT input tax reclaimed. More importantly though, it means that where an annulment is being sought in a qualifying case on the grounds of payment in full, there is no need for it to be done using third party funds (actual or notional). For such qualifying cases an annulment can be done using estate funds without prejudicing the debtor by incurring ad valorem charges and with the advantage that the trustee can retain control of the process as they are able to pay the creditors without having to rely on the debtor’s solicitor, who may not have much knowledge or experience of insolvency procedures.
