The Insolvency Service
In 2014, The Insolvency Service agreed with Ministers at the Department for Business, Innovation and Skills and with HM Treasury (HMT) that it would carry out a full review of its funding, including that of the Official Receiver Services.
This review has identified that the funding for Official Receivers Services should be more transparent and be compliant with HMTs Managing Public Money (MPM) guidance. MPM guidance requires fees to be set at a level which aims to achieve full cost recovery and that those fees and charges should be reviewed regularly.
Date of implementation
The petition deposits (the amount that needs to be paid up front to obtain an order will be increasing in all cases where the petition is lodged with the Adjudicator, or filed at Court on or after the 21 July 2016.
The fee structure will be changing, and existing fees will be increasing for all cases where the bankruptcy order or compulsory winding up order is made on or after the 21 July 2016.
The new fees will only be charged in cases where the order was made on or after the commencement date. Where the bankruptcy order or compulsory winding up order was made prior to this date, the fees will be charged in accordance with the fees order in place at that time.
Detail of the changes to the Official Receivers fee structure
A new suite of fees is being introduced which aim to match costs to the activities being carried out. Administration fees and petition deposits will continue to be charged and are reviewed regularly to ensure that they are set at the appropriate level.
New fees include:
- the Official Receivers general fee
- a trustee / liquidator fee
- an Income Payments Order / Agreement set up fee
- a dismissed / withdrawn petition fee
The Secretary of State fee will no longer be applied to orders made on or after the 21 July 2016.
Rationale for the change
New fees are being introduced, not only to make the Official Receivers new fee regime fairer and more transparent, but to provide a stable funding platform for the Insolvency Service; which is able to flex in line with an increase or decrease in case numbers.
Detail of the new fees
The Official Receivers general fee
This new fee will be a fixed single fee and is being introduced to replace the existing Secretary of State fee in all cases where the order is made on or after 21 July 2016. This means that creditors will know at the start of a case the maximum amount that will be charged for it to be administered. As with the Secretary of State fee it replaces, this fee will go towards meeting all the costs of the Official Receivers operations. The existing Secretary of State fee was charged as a percentage of assets realised in a case. The maximum amount charged under the Secretary of State fee per case is 80,000. The new fee will be set at 6,000 and therefore there should be more funds available to return to creditors in cases that have assets.
This fee will be charged to the case upon the making of the bankruptcy or winding up order.
The Trustee / Liquidator fee
This fee will be charged in cases where the Official Receiver acts as Trustee or Liquidator and realises assets in a case. The fee is set at a level to cover the costs of undertaking that work, currently 15% of assets realised. There is no maximum amount that can be charged under this fee.
The Income payments agreement (IPA) / Income payments order (IPO) set up fee
This fee will be charged in all bankruptcy cases where an IPA or IPO is set up. The fee is set at 150 which will cover the specific costs incurred by the Official Receiver of arranging and setting up the IPA / IPO and will be collected from the first payments made by the debtor into the arrangement.
This fee will only be charged once on a case. If a debtor defaults on their payments under an IPA, and the Official Receiver makes application to Court to enforce payments via an IPO, in these circumstances no further fee will be payable.
The Dismissed / Withdrawn petition fee
This 50 fee will be introduced to cover the costs of the Official Receivers administration work when issuing a refund to the petitioner whenever the petition is dismissed or withdrawn.
In summary the new fees are as follows:
| Name of fee | Current fee |
| OR general fee | 6,000 |
| Trustee / Liquidator fee | 15% of asset value realised by the Official Receiver |
| IPA / IPO set up fee | 150 |
| Dismissed / withdrawn petition refund fee | 50 |
Implementation timetable for the new fee structure
Designing and introducing a new fee structure is not an easy task. Before any changes can be made to the fee structure, approval is needed from Ministers and HM Treasury. These agreements have only recently been secured.
Additionally, as the fee structure is changing, a new fees order is required to amend the legislation. This process is more involved than simply amending an existing fees order. Announcements regarding the detail of the changes can only be made once the fees order is laid in Parliament
The intention as with previous changes is to ensure that those who benefit from the insolvency regime should be the ones to pay for it. But at the same time we are required to set our fees to cover our costs. Despite significant reductions in our cost base, we need to increase fees in order to ensure that costs continue to be met. The debtors petition deposit has not increased since 2011
Changes being made to existing fees and deposits
The table below shows the changes to the existing deposits and fees.
| Fee | Current | Proposed |
| Debtors (own) bankruptcy deposit | 525 | 550 |
| Debtor bankruptcy administration fee | 1,990 | No change |
| Creditors bankruptcy deposit petition | 825 | 990 |
| Creditor bankruptcy administration fee | 1,990 | 2,775 |
| Company winding up deposit | 1,350 | 1,600 |
| Company winding up administration fee | 2,520 | 5,000 |
| Public interest Company winding up deposit | 5,000 | No change |
| Public interest Company winding up administration fee | 5,000 | 7,500 |
| Distribution fee (charged when the Official Receiver acts as trustee or liquidator and pays a dividend to creditors | Banded time & rate charge | No change |
The debtors (own) bankruptcy deposit
This is an amount payable on presentation of the petition to help pay for the costs of the administration of the case. Only a small proportion of the costs are recovered at the outset of a case from the deposit, which is not sufficient to cover all the costs.
The deposit payable on a debtors bankruptcy petition last increased in 2011. As the deposit has not been increased for 5 years, this change amounts to a below-inflation increase.
Assistance where a debtor is unable to pay the deposit
There are a number of remedies for those who find themselves in debt of which bankruptcy is one. Free debt advice is available through government funded agencies such as the Citizens Advice Bureau and there is a wealth of information accessible online to assist those in debt to decide on the most suitable remedy for their situation.
The Government introduced Debt Relief Orders in April 2009 to meet the needs of those overwhelmed by relatively low levels of debt and this is a low cost option (90). This option was made more accessible to those seeking relief from their debts when the maximum admissible debt threshold was raised from 15,000 to 20,000 in October 2015.
Individual voluntary arrangements (IVAs) are also available to those who can make payments towards their debt.
Where bankruptcy is the most appropriate option it will provide relief from more significant levels of debt. The deposit is the only contribution a debtor needs to make to the cost of administering the bankruptcy process.
There are no provisions to waive the deposit or insolvency fees. However, when debtors petition for their own bankruptcy, they are able to pay the deposit by installments.
From April 2016, the process for an individual to apply for their own bankruptcy has changed. An application is now made to the new Adjudicators office, instead of to the Court. The cost of an application to the Adjudi