Many of us have been on tenterhooks, waiting to see the detail of the new D-reporting process\u2026 which comes into effect in two days!<\/p>\n
I lost patience and got in direct contact with the Insolvency Service, who graciously allowed me an audience to convey many of my concerns and to learn more about how it is all intended to work.<\/p>\n
We have been promised a Dear IP imminently, but here are the Service\u2019s answers to my questions.<\/p>\n
The Basics <\/strong><\/p>\n I\u2019m sure we\u2019ve all learned the basics by now:<\/p>\n The Question Bank<\/strong><\/p>\n The questions are all multiple choice, the majority \u201csimple\u201d Yes\/No, although some involve selecting from a range, e.g. regarding the number of creditors.<\/p>\n In his webinar for the ICAEW last month, Mark Danks of the Insolvency Service did reveal some valuable information about the Question Bank, but I was left with the impression that the Service\u2019s target was to have the process settled in June 2016, so that it is ready for receipt of the first online D-reports.<\/p>\n I expressed my concern to the Service that this is just not good enough. IPs would get criticised if they did not put their minds to the D-reporting task until the deadline was almost upon them and in any event it is not efficient to do so, not least because crunch-time falls in the middle of the summer holidays, so it would be ideal if IPs could get ahead of D-reporting deadlines.\u00a0 How are IPs and staff supposed to prepare for the changes, if the Question Bank is not fixed and made available now?\u00a0 There are checklists to amend and there is training to organise.<\/p>\n I was assured that the Service\u2019s work with their IP panel indicates that the Question Bank is on the lines of current CDDA checklists and so they did not envisage (many) changes would be necessary. Now that I have seen the Question Bank, I regret to say that this is patently not <\/em>the case.<\/p>\n If you want to revisit checklists to mirror the questions \u2013 which is how The Compliance Alliance\u2019s revised checklist is being structured and which would be my recommendation so that you make sure that staff do the leg-work to get ready all answers before logging in \u2013 beware the following.<\/p>\n How can I access the Question Bank?<\/strong><\/p>\n Unless the Service makes the Question Bank widely available, you will only be able to see it when you get a post-6 April appointment added to your dashboard. You should then be able to start the D-reporting process and click through the pages of questions.\u00a0 Of course, this is not<\/em> user-friendly for anyone trying to manage the work within the practice.<\/p>\n I do fear, however, that the Service\u2019s current<\/u> Question Bank is not as valuable as we would hope in any event.\u00a0 The Service expects<\/u> these questions to change, not only before July but also thereafter, particularly when they start to see how IPs answer and react to the questions on live cases.<\/p>\n In other words, if you create a checklist to mirror the questions today<\/em>, it seems to me that the chances are very high that the questions will have changed by the time your staff log in to complete<\/em> the form!\u00a0 I tried to stress to the Service person that I spoke to how <\/em>unhelpful this would be.\u00a0 I don\u2019t want to be negative about the Service\u2019s drive for continual improvement, but please <\/em>do warn us all <\/em>when\/what changes are planned so that we can make appropriate changes internally in good time.\u00a0 My personal preference would be that all of us on the Dear IP list (i.e. not just IPs) are given at least 3 months warning of any changes.<\/p>\n Is the D-report just a string of multiple choice questions?<\/strong><\/p>\n The prototype that has been made available is just this. The Service is keen to ensure that the Question Bank remains this way as far as possible so that their evaluation can be an automatic process.\u00a0 If your answers hit their rules engine\u2019s target, it will trigger a human review of the information and likely will involve an Insolvency Service staff member contacting you to ask further questions in order to decide whether it is a case worthy of taking forward.<\/p>\n At present, the prototype does not allow IPs to inform the Service online of any recovery actions that they intend to take\/are taking, although the Service is very keen to receive this information. I understand that the ability for IPs to provide such information will form part of the online form (eventually).<\/p>\n What do we do if misconduct is discovered after the D-report has been submitted?<\/strong><\/p>\n Personally, I think this is a serious disadvantage of the new process over the old. Firstly, I think that the need to submit D-reports in 3 months instead of 6 greatly increases the chances that you will discover or learn new information that would have affected your report.<\/p>\n However more importantly I think, the removal of the IP\u2019s decision about unfitness removes the IP\u2019s ability to act as any <\/em>kind of filter: if you learn \u201cnew information\u201d, you have to report it, whether or not you think it is material.\u00a0 Therefore, it doesn\u2019t mean you need only consider newly-identified \u201cmisconduct\u201d \u2013 it goes much further than this.<\/p>\n What is \u201cnew information\u201d?<\/strong><\/p>\n The new rules define \u201cnew information\u201d as \u201cinformation which an office-holder considers should have been included in a conduct report prepared in relation to the company, or would have been so included had it been available before the report was sent\u201d. If new information comes to the IP\u2019s attention, he must provide this to the Insolvency Service as soon as reasonably practicable.\u00a0 A failure to do so constitutes an offence.<\/p>\n I pointed out to the Service that, technically, \u201cnew information\u201d could involve a wide range of immaterial changes to an IP\u2019s original report. For example: \u201ccan all the company\u2019s transactions with directors and any associated parties be identified?\u201d\u00a0 Just because your original \u201cno\u201d can later be changed to \u201cyes\u201d, does that mean you need to report it to the Service?\u00a0 One would hope that IPs could exercise discretion in deciding whether technically \u201cnew information\u201d is of any interest to the Service, but I do wonder if the rules prohibit this.<\/p>\n I am not certain how this issue can be overcome \u2013 the rules are the rules. The Service person gave me the impression that the process for delivering \u201cnew information\u201d has not yet been formulated.\u00a0 However, I hope that the Service sees \u2013 and will somehow deal with \u2013 the need to avoid burdening IPs (and Service staff) with a requirement to inform them of all <\/em>\u201cnew information\u201d.<\/p>\n What practically can we do to prepare for the new process?<\/strong><\/p>\n Your to-do list might include these:<\/p>\n I believe that the \u201cnew information\u201d provisions present a particular challenge. You will need to ensure that \u201cnew information\u201d is identified and reported as soon as reasonably practicable (even if, somehow, it is accepted by the Service and the RPBs that we need not report immaterial <\/em>\u201cnew information\u201d).\u00a0 Being alert to report new information would seem to be particularly important where you have submitted a D-report before getting access to company records and where your later efforts identified misconduct.\u00a0 It would also be relevant where you suspected<\/em> misconduct \u2013 and answered \u201cuncertain\u201d or \u201cno\u201d where questions asked about the existence of evidence<\/em> \u2013 and only later did you discover evidence.<\/p>\n Some other consequences of the new statutory provisions<\/strong><\/p>\n The main statutory provisions are located in:<\/p>\n The Service has widely reported that old-style D-reports will continue to be received until October 2016, but in my view this overlooks the fact that there will <\/em>be old-style D-reports due later <\/em>than this.\u00a0 For one thing, CVLs following from pre<\/u> 6 April 2016 Administrations are subject to the old regime.\u00a0 This will also affect old cases where you have submitted an interim D-return with the expectation of submitting a full D1 or final D2 after 6 October 2016.\u00a0 Therefore, don\u2019t delete all your old templates until you\u2019re sure that you have reported every last old-style D-report.<\/p>\n From my reading of the rules, it seems to me that they provide a transitional period only up to 6 October 2016, but after this date the old D-forms will not <\/em>be acceptable under the rules.\u00a0 Presumably, the Service will devise a solution by October!<\/p>\n Liquidators following from post<\/u> 6 April 2016 Administrations will not be required to submit a D-report.\u00a0 Whilst this will be good news to any Administrators who keep hold of their Para 83 CVLs, I don\u2019t think it is great for Liquidators who are new to the case.\u00a0 From my reading of the legislation, it seems to me that these liquidators will be subject to the \u201cnew information\u201d requirements and therefore will need to review what the Administrators had reported earlier.<\/p>\n The old rules are revoked in full (apart from the transitional provisions covering old appointments). As far as I can see, this means that there is no longer a 14-day timescale for IPs to submit a report on vacating office.\u00a0 Presumably, this is because it was felt unlikely that an IP would vacate office before the 3-month deadline.<\/p>\n \u201cQuicker and easier\u201d for whom?<\/strong><\/p>\n In theory, the move to a simple online form should be quicker and easier for everyone: IPs, their staff and the Insolvency Service alike. However, completing a D-report is more like filling in a self-assessment tax return than completing a passport application: you won\u2019t have all the information at your finger-tips unless you do the prep work.<\/p>\n Most practices have their own tried-and-tested ways of gathering information, following trails, and reaching conclusions on CDDA and SIP2 matters. Structuring a D-report on a string of questions forces our hands.\u00a0 To reach 4 April and not <\/em>to have given all IPs access to the detail is, in my view, irresponsible.\u00a0 Either it shows how little understanding the Service has of IPs\u2019 work or it indicates that the Service has been chasing its tail with a near-impossible deadline.\u00a0 Personally, I think that it\u2019s a bit of both.<\/p>\n If we can help ease the pain of moving to the new regime, please do get in touch with any one of us or drop a line to info@thecompliancealliance.co.uk<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" Many of us have been on tenterhooks, waiting to see the detail of the new D-reporting process\u2026 which comes into effect in two days! I lost patience and got in direct contact with the Insolvency Service, who graciously allowed me … Continue reading \n
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