UK business insolvencies are on the rise
By Mr Bankruptcy
22nd June 2023
There was a lot of speculation during lockdown that many businesses would struggle to survive once the economy opened up again and that insolvencies would increase. Since the end of lockdown, financial insecurity seems to have got worse and the general feeling is that an even greater number of businesses are no longer able to continue.
But do the statistics back this sentiment up, how is the future looking, and what can you do to help your business to deal with debt and keep operating?
13-year high for insolvencies
According to a report by the Institute of Chartered Accountants in England and Wales (ICAEW), company insolvencies have risen to a 13 year high. This trend started in the fourth quarter of 2022 but it’s feared that the worst is yet to come.
This will make uncomfortable reading for many business owners because the number of insolvencies in the last quarter of 2022 rose by 30%, compared to the same period in the previous year, and March 2023 saw a 16% increase in corporate insolvencies compared to the previous month.
Rising interest rates and the ongoing cost of living crisis will continue to impact consumers and businesses alike and as UK business confidence dropped to a 13 year low, also in the fourth quarter in 2022, there’s obviously much concern for the future.
The high cost of borrowing means many businesses will find it hard to secure loans to pay off existing debts and although energy costs may be coming down, energy bill support for business also ended in March. This is combined with a decrease in consumer spending as people continue to look for ways to ride out the ongoing challenges caused by the cost of living squeeze, adding further financial pressure to already struggling firms.
What can businesses do to deal with unmanageable debt?
Many businesses will already feel that they have cut back as much as they can, and without the income there’s not much more they can do. As they see costs regularly outstripping income, they are making the choice to close before things get even worse.
We’ve talked previously about ways business owners can reduce costs to help prevent debt and the 6 essential reports your business needs to help them make informed financial decisions. Courses of action really involve getting back to basic business practices which readers will be familiar with, such as reviewing budgets, cutting costs and exploring what tax relief schemes may be available to your business. But if you still feel that you are running out of options for managing your financial problems or that your debt is becoming unmanageable, then it becomes vital to seek specialist advice, and to do it quickly.
Even when it seems that there’s no clear way forward, there is support available to help you understand the options available to you and your business, so that your next step will be in a direction you can be confident about.
James Rosa Associates
James Rosa associates is a firm of debt advisors and debt adjustors. With a supportive, non-judgemental and friendly approach, we offer a full range of advice and professional services to individuals and business owners/directors who face unmanageable debt and are looking for a solution, or anyone who is involved in a civil or commercial dispute. Our range of services include:
We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.
Find out if you qualify for a free consultation
If you want to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, then contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk and find out whether you qualify for our free consultation service.
What do you do if you can’t afford to pay your business taxes?
By Mr Bankruptcy
5th June 2023
If you’ve fallen behind with paying your corporation tax, it’s important you understand the options available to you to so you can work to resolve the matter.
What happens if I miss a payment?
Corporation tax is payable on the profits of your business and on capital gains with the figure calculated from the year-end accounts that you submit. Any tax owed will be payable 9 months and a day after the date your tax accounting period ends.
HMRC will send a reminder and warning letter that your payment is overdue, but you will receive charges from the moment your payment is late and you will also be charged interest on the money owed.
If you haven’t contacted HMRC already to inform them that you are unable to pay your tax bill, it is important to do so quickly. They will want to see that you’re proactively trying to work with them to address the problem and that you aren’t just trying to avoid paying tax.
If your tax bill remains unpaid, HMRC has options for recovering the money. To understand the impact of these options, it’s important to get professional advice.
Options for tax bill payment
To repay or resolve tax debt, there are several options:
- Time to Pay arrangements: An agreement may be reached with HMRC to allow tax owed to be paid over an agreed period of time, but only if they believe you can repay what’s owed while also keeping up with your ongoing tax obligations.
- Formal insolvency proceedings: If you are unable to pay your tax bill you may need to consider formal insolvency proceedings. This could be a Company Voluntary Arrangement, which is a repayment plan for a percentage of your debts, but it has to be agreed to by the majority of your creditors. There’s also Creditors Voluntary Liquidation where company assets are liquidated to repay debts.
Is it time to take action to deal with my tax bill problem?
If you know that you will be unable to pay your corporate tax bill or you’re already behind with your payments it’s important not to ignore the situation, no matter how stressful it seems.
If you take no action HMRC may commence a winding up procedure – to avoid that path you should seek advice quickly. With professional insolvency support you can understand the best options available to you and the implications of each.
Only then can you choose the right solution for your circumstances and start addressing the burden of debt, which affects not just your finances, but also your health and wellbeing and those around you.
James Rosa Associates
James Rosa associates is a firm of debt advisors and debt adjustors. With a supportive and friendly approach, we offer a full range of advice and professional services to support individuals and business owners/directors who face unmanageable debt from any cause, including that tax demand, or who are involved in civil or commercial disputes.
Our services include:
We are fully authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.
Do you qualify for a free debt consultation
If you want to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk to find out whether you qualify for a free consultation.