Companies Act 1985

Section 614.

SCHEDULE 19Preference Among Creditors in Company Winding Up

" The relevant date "

1For the purposes of this Schedule, " the relevant date " is—

(a)in the case of a company ordered to be wound up compulsorily, the date of the appointment (or first appointment) of a provisional liquidator or, if no such appointment has been made, the date of the winding-up order, unless in either case the company had commenced to be wound up voluntarily before that date, and

(b)otherwise, the date of the passing of the resolution for winding up the company.

Debts to Inland Revenue

2All income tax, corporation tax, capital gains tax and other assessed taxes, assessed on the company up to 5th April next before the relevant date, and not exceeding in the whole one year's assessment.

3Any sums due at the relevant date from the company on account of tax deductions for the 12 months next before that date.

The sums here referred to—

(a)are those due by way of deduction of income tax from emoluments during the relevant period, which the company was liable to make under section 204 of the [1970 c. 10.] Income and Corporation Taxes Act 1970, less the amount of the repayments of income tax which the company was liable to make during the same period, and

(b)include amounts due from the company in respect of deductions required to be made by it under section 69 of the [1975 c. 45.] Finance (No. 2) Act 1975 (construction industry contract workers).

Debts due to Customs & Excise

4Any value added tax due at the relevant date from the company and having become due within the 12 months next before that date.

For purposes of this paragraph, the tax having become due within those 12 months in respect of any prescribed accounting period falling partly within and partly outside those 12 months is taken to be such part of the tax due for the whole of that accounting reference period as is proportionate to the part of the period falling within the 12 months.

5The amount of any car tax due at the relevant date from the company and having become due within the 12 months next before that date.

6Any amount due—

(a)by way of general betting duty or bingo duty, or

(b)under section 12(1) of the [1981 c. 63.] Betting and Gaming Duties Act 1981 (general betting duty and pool betting duty recoverable from agent collecting stakes), or

(c)under section 14 of, or Schedule 2 to, that Act (gaming licence duty),

from the company at the relevant date and which became due within the 12 months next before that date.

Local rates

7All local rates due from the company at the relevant date and having become due and payable within 12 months next before that date.

Social security debts

8All the debts specified in section 153(2) of the [1975 c. 14.] Social Security Act 1975, Schedule 3 to the [1975 c. 60.] Social Security Pensions Act 1975, and any corresponding provisions in force in Northern Ireland.

(This does not apply if the company is being wound up voluntarily merely for the purposes of reconstruction or amalgamation with another company.)

Debts to and in respect of company's employees

9All wages or salary (whether or not earned wholly or in part by way of commission) of any clerk or servant in respect of services rendered to the company during 4 months next before the relevant date, and ail wages (whether payable for time or for piece work) of any workman or labourer in respect of services so rendered.

10All accrued holiday remuneration becoming payable to any clerk, servant, workman or labourer (or in the case of his death to any other person in his right) on the termination of his employment before or by the effect of the winding-up order or resolution.

This includes, in relation to any person, all sums which, by virtue either of his contract of employment or of any enactment (including any order made or direction given under an Act), are payable on account of the remuneration which would, in the ordinary course, have become payable to him in respect of a period of holiday had his employment with the company continued until he became entitled to be allowed the holiday.

11The following amounts owed by the company to an employee are treated as wages payable by it to him in respect of the period for which they are payable—

(a)a guarantee payment under section 12(1) of the [1978 c. 44.] Employment Protection (Consolidation) Act 1978 (employee without work to do for a day or part of a day),

(b)remuneration on suspension on medical grounds under section 19 of that Act,

(c)any payment for time off under section 27(3) (trade union duties), 31(3) (looking for work, etc.) or 31A(4) (ante-natal care) of that Act,

(d)statutory sick pay under Part I of the [1982 c. 24.] Social Security and Housing Benefits Act 1982, and

(e)remuneration under a protective award made by an industrial tribunal under section 101 of the [1975 c. 71.] Employment Protection Act 1975 (redundancy dismissal with compensation).

12(1)The remuneration to which priority is to be given under paragraph 9 shall not, in the case of any claimant, exceed £800 ;

Provided that where a claimant under paragraph 9 is a labourer in husbandry who has entered into a contract for the payment of a portion of his wages in a lump sum at the end of the year of hiring, he has priority in respect of the whole of that sum, or a part of it, as the court may decide to be due under the contract, proportionate to the time of service up to the relevant date.

(2)No increase or reduction of the money sum specified above in this paragraph affects any case where the relevant date (or, where provisions of this Schedule apply by virtue of section 196, the date referred to in subsection (4) of that section) occurred before the coming into force of the increase or reduction.

Priority for third party advancing funds for wage-payments, etc.

13Where any payment has been made—

(a)to any clerk, servant, workman or labourer in the employment of the company on account of wages or salary, or

(b)to any such clerk, servant, workman or labourer or, in case of his death, to any other person in his right, on account of accrued holiday remuneration,

out of money advanced by some person for that purpose, the person by whom the money was advanced has in the winding up a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the clerk, servant, workman or labourer, or other person in his right, would have been entitled to priority in the winding up has been diminished by reason of the payment having been made.

Interpretation for the above paragraphs

14For purposes of this Schedule—

(a)any remuneration in respect of a period of holiday or of absence from work through sickness or other good cause is deemed to be wages in respect of services rendered to the company in that period ; and

(b)references to remuneration in respect of a period of holiday include any sums which, if they had been paid, would have been treated for purposes of the enactments relating to social security as earnings in respect of that period.