Tag Archive | "bankruptcy"

HMRC hands out 57pc more winding up orders to firms this year

According to recently released figures, Her Majesty’s Revenue and Customs handed out 57 per cent more winding up orders to firms this tax year than the last.

The figures, which were published just a few days ago, found that the taxman presented just over 5,300 petitions to businesses for winding up in the 2011-2012 tax year. This was a considerable increase over the 3,367 petitions handed out by HMRC in the 2010-2011 tax year, and coincides with new restrictions instituted on the number of companies that are granted access to the Time to Pay system, a tax deferral programme, suggesting that the taxman’s sympathy no longer runs quite as deep when it comes to contractors and businesses that ran ashore on the shoals of rough economic waters over the past tax year.

An HMRC representative spoke out on the new figures to the press, remarking that the taxman’s intentions behind the clampdown wasn’t to coerce firms to shutter their doors or force more individuals into being bankrupt. Instead, the spokesman said that the true impetus behind the decision was instead made to maximise the debts collected by the taxation authority.

The taxman’s representative also said that HRMC will only initiate bankruptcy or winding up action in the event that the authority is of the belief that this would be the best way to protect the Exchequer’s interests in respect of specific debts. Such actions are never taken lightly, the spokesman added.

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Company insolvencies increase but personal ones decrease

The number of companies going insolvent is on the increase, something that could potentially also harm the fortunes of accountants for contractors.

Latest government statistics show a 0.1% quarter-on-quarter increase to 4,242 company insolvencies in the third quarter of this year. Whilst this increase is marginal, it is 6.5% up on the corresponding period last year when only 3,974 firms were declared insolvent.

206 firms applied for Company Voluntary Arrangements in Q3, compared to 187 in the second quarter. In the third quarter of 2010, only 159 companies chose to go down this route. Voluntary liquidations also recorded a 3.1% quarter-on-quarter increase.

Although the number of companies going into administration decreased by 22 on a quarter to quarter basis, 673 represents a rise of 31 on 2010’s Q3 figure.

Whilst company insolvencies are increasing, the number of personal insolvencies continues to decline.

In the third quarter of 2010, there were 33,935 personal insolvencies. Last quarter the figure had dropped to 30,219. Over the same period, there has also been a 31% decrease in bankruptcies.

The number of people taking out individual Voluntary Arrangements was up to 13,048, a quarter-on-quarter increase of 905.

The number of Debt Relief Orders reached an all time high of 7,257 in Q3. This represented a 7.6% increase on Q2 for the method that was introduced in April 2010.

Debt Relief Orders are for people with debts of less than £15,000 and assets of no more than £300. The Insolvency Service changed the rules this year for DROs, IVAs and bankruptcies to exclude pension pots when calculating an individual’s assets.

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Image: Tip Jar 2 by gfpeck

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Certain sectors see a rise in financially distressed firms

It might come as no surprise to contractor accountants to hear that the latest Begbies Traynor Red Flag report shows a 61% increase the number of financially distressed firms in the professional services sector over the past 12 months.

15,526 firms were discovered to be experiencing significant financial difficulties in the first quarter of this year compared to 9,620 in the corresponding period of 2010.

One reason for this increase is the stale corporate deals and property market, according to Begbies Traynor executive chairman, Ric Traynor. He went on to point out that professional services firms operating with a high fixed cost base find it increasingly difficult to cope with the current market conditions as revenues have failed to recover and opportunities to further cut costs have become more limited.

It’s not only professional services firms that are struggling either. Bars and restaurants fared even worse, registering a 68% increase on the Red Flag report, whilst the amount of culture & leisure firms with significant financial problems rose by 60%.

Companies with critical financial problems that are considering insolvency will be distressed to learn that even that option is to cost more. The Insolvency Service has raised the cost of filing bankruptcy proceedings and starting compulsory liquidation.

As from the 1st of June, an individual who wants to file for bankruptcy will need to pay £525, an increase of £75, whilst the charge for a creditor petitioning for a bankruptcy order will need to pay £700 instead of the current £600. Companies entering into voluntary liquidation will need to pay £1,165, a rise of £165.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Closed by runran

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680 people apply for 440 voluntary redundancies!

440 jobs are to be lost at Official Receiver offices throughout the UK, according to the Public and Commercial Services Union.

What might surprise you is that 680 people have applied to take voluntary redundancy since the cuts were announced to staff. That would suggest that at a large portion of the workforce is dissatisfied! This theory seems to be backed up by the high percentage of absenteeism last year.

There are 36 Official Receiver offices in the UK that deal with bankruptcies and company liquidations. The department expects to see a decrease in bankruptcies this year but personal insolvency experts disagree saying they will remain at record levels as the government spending cuts take effect.

The latest headcount at the Insolvency Service, taken at the end of last March, was 3,132 including agency workers and contractors.

Meanwhile, R3, the insolvency trade body, has condemned the government for not taking action against company directors who are guilty of dishonest and fraudulent activities. The number of disqualified directors has dropped by 25% in the past eight years.

R3 claims that insolvency practitioners submitted in excess of 7,000 reports to the Insolvency Service in 2010 and yet fewer than 1,400 of these resulted in a director’s disqualification. It is therefore calling on the Insolvency Service to increase its efforts to weed out dishonest company officials.

The trade body blames a lack of government resources for the service’s failings and expressed concern that more complex cases could be overlooked. Steven Law, the president of R3, said the trade body would like to help the Insolvency Service implement an effective system that ensures all cases are pursued.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: EXIT by marfis75

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