Coronaviruses are named for the crown-like spikes on their surface. The combination of the “Two Crowns” – COVID-19 alongside the return of Crown Preference – will result in a significantly more material impact than was originally intended, given the COVID-19 VAT deferral scheme which has resulted in over £28bn of cumulative VAT deferrals.
In this briefing memo, Lisa Rickelton (Restructuring) and Alistair Winning (Tax) discuss the practical consequences of Crown Preference, alongside crown setoff rules in the context of insolvency, and provide worked examples, giving a deeper dive into the issues raised by VAT groups in which members have joint and several liability.