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Accounting periods in Scottish Administration

There’s some debate surrounding R3.95 ISCVAAR2018 just now, regarding the application and meaning of R3.95(2) in terms of administration accounting periods.  Must an administrator submit a request for remuneration in relation to every accounting period, or is there flexibility in terms of submission (as there is in the Liquidation Rules)?

The relevant statute is reproduced here:

R3.95(2) appears to allow the Administrator to apply for remuneration, not only for the accounting period that has just expired, but also the previous accounting period. The use of the definite article appears to mean that an administrator can in practice claim for two accounting periods at a time, but no more. This is very different to liquidation, where so long as the Liquidator applies in conjunction with an accounting period, they can apply for as many past periods as necessary.

The terms of R3.95(1) appear to be distinct – where an Administrator intends to apply, they must do so within two weeks of the accounting period. Depending on how you read Rule 3.95(2) it indicates that they can apply for the prior period as well, if they have not already done so, unless you read “prior” as meaning the accounting period that has just ended! Either reading precludes an application for three or more extant accounting periods, without requesting the permission of the court to waive the failure of the IP to make a timely claim.

We are aware that the “two accounting period approach” has been successfully utilised by a number of Administrators, but there is no definitive decision or commentary from the Scottish Courts on this matter and this approach.

As always, therefore, the answer is to manage your accounting periods and the deadlines imposed by statute, rather than relying on the court to remedy a missed submission. Take legal advice if you are unsure.