Insolvency fees rise but the number of insolvencies drop

Hart Shaw Business Recovery is reminding SMEs that revised fees for bankruptcies and company insolvencies will come into force on 16 November 2015.

Fees and charges are reviewed annually and the revised fee structure ensures that the cost of insolvency processes is paid for by those who use them.

The company winding up deposit – which needs to be paid to the Department of Enterprise, Trade and Investment – is set to rise by eight per cent to £1,350, whilst the company winding up administration fee will climb by five per cent to £2,520.

Christopher Brown, Business Recovery & Insolvency Partner, at Hart Shaw, a founder member firm of the UK200 Group said: “These changes will be subject to Parliamentary scrutiny, but the rise in fees is disappointing for SMEs. However, it is promising to learn that according to the latest figures from the Insolvency Service, there has been a fall in the number of company insolvencies in England and Wales over the last quarter.

“Some 3,539 companies entered insolvency in Q3 2015; a drop of more than ten per cent compared to Q3 2014. The decrease in compulsory liquidations mark a drop to the lowest level since 1989. In fact, the estimated liquidation rate in the 12 months ending Q3 2015 was less than half of one per cent of active companies, which is the lowest level since comparable records began in 1984.

“However, if you’re an SME owner that is worried about bankruptcy, insolvency and the associated fees, talk to an expert.”

Hart Shaw Business Recovery has a team of professionals that can assist in this area. To find out more, please contact Christopher Brown on 0114 251 8850 or chris.brown@hartshaw.co.uk.

 

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Do not bury your head in the sand

Sheffield based accountants Hart Shaw is urging business not to be complacent if they receive accelerated payment notices (APNs), after new figures reveal that the government has collected more than £1 billion through their use.

HM Revenue & Customs (HMRC) recently announced that it has collected more than a billion pound using APNs, since it was granted the new powers in 2014/15.

Under the accelerated payment rules, HMRC is able to make taxpayers pay disputed tax in advance, rather than waiting for the outcome of a tax tribunal ruling.

Once an APN is received taxpayers have 90 days to pay the outstanding tax, whether they feel it is due or not or face additional penalties. If the taxpayer wins the case the money is reimbursed to them with interest.

During the first year HMRC issued more than 10,000 notices to businesses or individuals who had used a disclosable scheme under the Disclosure of Tax Avoidance Schemes (DOTAS) rules.

Christopher Brown, Business Recovery & Insolvency Partner at Hart Shaw said: ““Receiving an APN should not be taken lightly, as it can have a serious effect on the liquidity and reputation of you and your business.

“The fact that HMRC have collected more than £1 billion, shows that they are serious when it comes to potential tax avoidance.”

Earlier this year, it was revealed in HMRC’s annual report on tax avoidance, that of the £596m received from APNs during 2014/15, some £28m was refunded after legal challenges.

“While many of those targeted by these new powers may have legitimately avoided paying tax, there will be some individuals and business who have been unfairly targeted and this is evident in the number of refunds already issued by HMRC,” added Christopher.  “Seeking professional advice sooner rather than later is critical.”

For more information please contact Christopher Brown on 0114 251 8850 or chris.brown@hartshaw.co.uk.

 

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New EU court ruling could have significant impact on businesses

Sheffield based Chartered Accountants Hart Shaw is warning businesses to be aware of a new European court ruling which has clarified that travelling time to and from work could itself be classed as work.

In a landmark ruling, the European Court of Justice has said that time spent to and from first and last appointments by workers without a fixed office should be regarded as working time and that wages should be paid in relation to this.

Within most businesses this time has not previously been considered as work and it means that firms operating without a fixed office may be in breach of EU working time regulations.

Failing to meet these regulations could see an employer brought before the Health and Safety Executive in the UK, which could lead to improvement notices being issued. Subsequent failure to comply can lead to unlimited fines and imprisonment.

Christopher Brown, Business Recovery Partner at Hart Shaw said: “This new ruling represents a significant change to the current Working Time Regulations and could have a number of implications on a business, ranging from additional wage costs for travelling time to fines or even imprisonment for those who fail to meet its requirements.

“While some business owners may not be happy with this new measure it is important that they comply with it, or face the prospect of an investigation that could have a significant effect on them and their business.”

Christopher added that this new ruling is most likely to affect care businesses, sales representatives and tradesmen who begin and end their working day at home.

“Speaking to a professional regarding your responsibilities as an employer in regards to the Working Time Regulations could save you a lot of problems further down the line,” added Christopher.

To help keep track of business and travel expenses please download our mobile app where such expenses can be logged and calculated accurately. 

For further information please contact Christopher Brown on T: 0114 251 8850 or email: chris.brown@hartshaw.co.uk.

 

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Business confidence remains high

Sheffield based Chartered Accountants, Hart Shaw has commented on news that, according to the latest Business in Britain report from Lloyds Bank, overall business confidence remains strong and stable.

This positive attitude is largely underpinned by companies’ expectations of an improvement in exports, as well as an anticipated increase in investment levels.

The twice-yearly Lloyds Bank report gathers the views of 1,500 UK companies – predominantly small to medium sized businesses, or SMEs – and tracks the overall balance of opinion on a range of important performance and confidence measures.

The report’s overall key confidence index, which looks at businesses sentiment over the coming six months, has remained stable at 43 per cent compared with January 2015. Although the latest reading is down from the survey’s high of 53 per cent recorded 12 months ago, it remains above the long-term average reading of 23 per cent. Expectations of employment growth and a resurgent export market suggest strong economic prospects for the second half of the year.

Christopher Brown, Business Recovery & Insolvency Partner at Hart Shaw said: “Some 29 per cent of the firms surveyed said that weaker UK demand poses the greatest threat to their business in the next six months. This could explain why firms expect to increase their sales in global markets.”

The net balance of exporters expecting an increase in total exports across the globe has risen to 46 per cent. This has been boosted by firms’ intentions to export to growing regions such as the Middle East and Africa. In particular, the increase in total exports has been driven by the number of exporters expecting an increase in trade with Europe in the next six months.

“Business confidence has remained relatively strong with encouraging expectations for sales, orders and profits for the rest of the year,” noted Christopher. “This has been underlined by a bounce back in exports to Europe as well as companies’ intentions to grow their presence further on the international stage. However, we’ll be keeping an eye on how the situation in Greece affects British SMEs,” they concluded.

For further details contact Christopher on 0114 251 8850 or chris.brown@hartshaw.co.uk.

 

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Is your business experiencing financial difficulty?

Do you need to know what options are available to your business in troubling times?

Watch our service insight to gain more understanding of the options that can be available and how you can start taking the right steps to safeguard the long term future of your business.

The team at Hart Shaw Business Recovery & Insolvency have helped to turn around and keep trading over 60% of the troubled businesses that have sought help and advice from us.

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SMEs face barriers to growth

46 per cent of SME owners believe that a lack of access to skilled workers is the main obstacle to growing their business. The figure comes from research conducted by the British Insurance Brokers’ Association (BIBA) and Populus in which 500 directors, senior leaders and SME owners were polled.

A similar number (43 per cent) believe that cutting so-called ‘red tape’ would be the quickest way to stimulate growth among mid-market businesses.

For smaller companies – those with 10-49 employees – access to credit is a wide concern, with 26 per cent citing this as the biggest barrier to expansion.

According to the BIBA and Populus survey, the biggest barriers to growth are:

• Lack of talent/skills: 46 per cent
• Red tape: 43 per cent
• Rising supplier costs: 36 per cent
• Lack of tax breaks for small business: 24 per cent
• Lack of business opportunities/sufficient network: 23 per cent
• Availability of credit: 23 per cent
• Knowledge of overseas markets: 13 per cent
• Protective overseas markets: 11 per cent
• Lack of cost-effective transport: 10 per cent

One of the biggest obstacles to growth is a lack of effectively skilled staff, so more needs to be done to encourage SMEs to take on apprentices.

Interestingly, availability of credit is seen as a barrier for nearly a quarter of those polled. Clearly, banks need to review their lending policies.

Hart Shaw is experienced at assisting SMEs and can offer a range of services to help owners facing any of the problems highlighted in the survey. For more details, please Christopher Brown, Business Recovery & Insolvency Partner on T: 0114 251 8850 or email: chris.brown@hartshaw.co.uk.  

 

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No business is immune from failure

The recent insolvency of the Rotherham based MTL Group is a timely reminder that no company, however large and high profile, is immune from failure. Administrators were appointed to MTL Group on 2 February 2015 with the immediate loss of 157 jobs and leaving creditors owed circa £10m.

The immediate effect of any insolvency is that creditors suddenly have a bad debt to deal with, and the larger the debt, the more likely that there will be a domino effect, causing otherwise solvent companies to have cash flow problems which could ultimately lead to failure. When the initial insolvency involves such a high profile company as MTL Group the risk of the domino effect only increases.

We are currently helping one of the creditors of MTL who has a large bad debt. Fortunately this company is financially sound but even so, the disruption to its immediate cash flow caused by MTL is such that we are currently negotiating with HM Revenue & Customs a time to pay arrangement for the current VAT Quarter. This will enable the Company to avoid penalties and make nominal payments until, over the next six months, it can claim VAT Bad Debt relief on the MTL debt and so satisfy the current VAT quarter.

Other Companies in less financial health may need to negotiate with their creditors generally and this is where an Insolvency Practitioner can provide valuable help. Of course this is dealing with the effects of a bad debt after it has happened. But what practical things can a Company do to lessen the effects of a bad debt before it happens?

The first thing is to know your customer, assess their credit worthiness and set a credit limit which reflects the commercial risk you are prepared to take, because were your customer to fail that is how much you stand to lose.  Once set, stick to it. We often see cases where although a credit limit was in place, the company has ignored it and gone on supplying the customer which has ultimately failed. If possible incorporate a personal guarantee into your credit application form, it may not always be possible, especially with larger customers, but it is worth trying. Finally consider credit insurance to protect against non-payment should a customer fail. The benefits of credit insurance are not only that the debt being insured would be paid, but that you will have access to improved credit intelligence on your customers.

If your require any assistance in dealing with your creditors or require further information about credit insurance please contact Christopher Brown, Business Recovery & Insolvency Partner at Hart Shaw on T: 0114 251 8850 or email: chris.brown@hartshaw.co.uk.

Christopher Brown, Business Recovery & Insolvency Partner at Hart Shaw

 

 

 

 

 

 

 

 

 

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Failure to plan hits small businesses’ profits

Small and medium-sized businesses are being advised that failure to have a business plan in place could hit their profits – a warning that is backed up by new research.

According to the study, which surveyed 453 SMEs, 70 per cent of those with a business plan in place made a profit, compared to 52 per cent without a plan.

Of those polled, a third had not put a plan in place for the year, with two thirds of these saying they did not see the need for a plan.

Christopher Brown, Business Recovery & Insolvency Partner at Hart Shaw Chartered Accountants, said: “There is a saying that failing to plan is the same as planning to fail – and that is certainly true of a lot of small and medium-sized businesses today.

“While many business owners may not see the need for a plan, the fact is that those who do have a plan will see greater benefits in the long term, including increased profits.

“If your business is not where you want it to be then it may be time to review your business plan and if you have not got one in place then now is the time to take that step. Your local accountant can help you identify your business goals and then draw up a plan which can be reviewed on a regular basis as your circumstances change.”

For further information, please contact Christopher on T: 0114 251 8850 or email: chris.brown@hartshaw.co.uk.

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Increase in Insolvencies as economy improves

As the economy finally appears to be moving to a state of recovery there are still concerns for a large number of SMEs who are teetering on the edge of survival. Increased business confidence should enable these businesses to take advantage of an upturn in their markets, offering them the opportunities for the growth they have been crying out for. But for some businesses who have been struggling for the last few years it may not be that simple.

The term ‘zombie’ businesses has been circulating for some time now, referring to businesses that are managing to survive by barely servicing their debts, taking advantage of low interest rates and the patience of their creditors. Whilst there may be growth opportunities there for these businesses, poor cash flow and a lack of working capital may restrain their ability to fulfil orders as the markets improve.

Historically, the number of insolvencies has tended to increase as the economy improves, interest rates rise and creditors start to apply pressure. These ‘zombies’ are most at risk of failure and will have a knock on effect to other businesses in the supply chain if they become insolvent.

So what can you do to protect your business should one of your customers turn out to be a ‘zombie’ and fails? You can never know your customer well enough. Credit checking your customers on a regular basis can mean the difference between getting paid or being left with a bad debt. If you have carried out a credit check and set a credit limit, stick to it. We often see creditors in the liquidations we deal with who are owed many times the credit limit they had set. Review your terms and conditions to ensure that you are trading on your terms and not your customers. Consider incorporating a Retention of Title clause in your terms and conditions to give you the opportunity to recover your goods should your customer not pay. Of course, on paper this sounds simple but in practice it takes some effort to get it right, keep doing it right.

If your business is ‘zombie’ it is never too late to take professional advice to start the process of turning the business round. Of course, the sooner you take advice, the better as there will be more options available to you.  Engaging an Insolvency Practitioner or Business Recovery professional is not a negative move, as first and foremost, if there is a viable business to be saved a good Practitioner will explore every avenue to ensure the business continues to trade, looking for the best possible outcome for all involved.

For further information please contact Christopher Brown, Business Recovery & Insolvency Partner at Hart Shaw on T: 0114 251 8850 or email: chris.brown@hartshaw.co.uk.

 

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Consultation to be launched into late payments

Small businesses who struggle to get paid on time should be aware that the Government is to launch a consultation into the issue.

According to YouGov research, 85 per cent of small firms had experienced late payments over the last two years, despite the Government-backed Prompt Payment Code, which was established in 2008 to help small suppliers get paid on time.

Although around 1,500 firms are signed up to this scheme, it has been claimed that some have still managed to stretch out settlement periods to 120 days, despite an EU directive which says business-to-business payments must be made within half that time.

Now, Prime Minister David Cameron has pledged to launch a consultation into late payments, asking for views on areas such as encouraging greater responsibility for prompt payment, highlighting firms who are good payers and those who are not, how existing legislation can be better enforced and whether firms should be fined for making late payments.

Late payments can have a crippling impact on the cash flow of many smaller businesses, so it will come as welcome news to many that the Government is now looking into the matter.

The consultation is due to be launched later this year and it remains to be seen what the outcome will be. However, in the meantime, businesses who are experiencing cash flow difficulties or struggling to budget effectively may benefit from seeking expert advice as soon as possible to ensure that any problems are identified and addressed before they get out of hand.

For further information, please contact Christopher Brown, Business Recovery & Insolvency Partner on T: 0114 251 8850 or email: chris.brown@hartshaw.co.uk.

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