Tuesday, January 02, 2018

A lack of joined up thinking between Government Departments

Our first Blog of 2018, and while the technical issues involved are not the most important that we have ever raised, the two principles concerned are: namely, a lack of joined up thinking between the Insolvency Service and Companies House, and the view of Companies House that tick box compliance is more important than that the integrity of a statutory register! Hopefully it is not a sign of things to come this year. 

At the tail end of last year we had a couple of queries from clients about the resignation of an IP who was leaving a practice and their replacement by decision procedures in CVAs and Compulsory Liquidations.  The process of achieving that was straight forward, being covered by the terms of the arrangement and the rules respectively, but then the problems started as Companies House would not register the resignation of the outgoing IP.  Where the change in officeholder takes place by way of a Block Transfer Order then it is simply a matter of sending a separate copy of the Court Order to Companies House for each case (nothing like the Government being green and saving paper!) and they will amend the Register, but there are no provisions in the rules requiring the notice of resignation of the outgoing IP to be filed at Companies House.  Companies House have informed us that since there is no statutory requirement to file the notice of resignation, they are unable to accept a notice of resignation for filing, even if that then means that the Register is inaccurate.  While they are responsible for the statutory Forms for filing documents at Companies House, they cannot create a Form if there is no legislative requirement to file a document, and it is The Insolvency Service who are responsible for the insolvency rules.  In contrast, there are Forms for the resignation of the IP in Administrations, MVLs and CVLs as there are rules specifically requiring the outgoing officeholder to notify Companies House.

I know that developing the New Rules was a huge exercise, and that there are bound to be gaps.  I would have thought though that the integrity of the Register would have driven any discussions between Companies House and The Insolvency Service during that process, and that they would have considered all documents that needed to be filed during insolvency procedures to ensure that integrity, including the resignation of an IP as officeholder in all the different corporate case types, not just Administrations, MVLs and CVLs.  It appears though that this particular issue fell through the gap between the responsibilities of The Insolvency Service for the legislation and Companies House for the Forms.  So, over to you, The Insolvency Service, to amend the rules to require the outgoing officeholder to give notice of their resignation to Companies House.  In reality though, that is going to take some time as it is clearly not at the top of any particular political agenda.  Personally though, I think that the having an accurate register is the most important factor in all this, and hopefully The Insolvency Service and Companies House can come up with a non-statutory solution that applies some common-sense to the process and allows the filing of non-statutory Forms where necessary to achieve that integrity.