The rate of business insolvencies has fallen in January 2013 to its lowest rate since June 2007 according to figures from Experian’s Insolvency Index. It is also reported that personal insolvencies have dropped by over 13% over the past 12 years.
Are these the green shoots that were expected many years ago? This has to be taken as a positive and hopefully consumer confidence will grow as a result. However, there remain problem areas that need to be addressed.
So called “zombie companies” remain an issue in the economy. Neither the banks nor HMRC appear to want to pursue those in default with any vigour. Should the banks be doing more to help the situation? Would a reduction in the Official Receiver’s deposit help to clear the problem? What is clear is that the problem needs to be addressed.
There is also the introduction of Real Time Information (“RTI”) from HMRC in April 2013 which it has been suggested will push many businesses that are already teetering on the edge financially over that edge. It is hoped that RTI could help to eradicate the zombie companies but this may not be the case. Will it simply be that HMRC will know exactly what is owed by a business rather than a rough idea but the fact remains that the business is not paying HMRC and HMRC will not pursue enforcement? Only time will tell.
Businesses need to be prepared and manage their finances well. Is your business ready for RTI? It is happening so if your business is not ready, get advice now.
Further, it is likely that there will be a postponement to the revaluation of business rates. This was due to take place in October 2015 but may well be pushed back by the Government to 2017. The Government is reported as claiming that the postponement will promote help and certainty for businesses. But ratepayers are now faced with a possible two further years of paying rates based on what are reported to be now inflated April 2008 rates.
Business rates are however a complicated area. If you are concerned about business rates, then there are professionals that can help and advice should be sought. Any business experiencing financial difficulties should also seek professional advice as soon as the problem arises.
By associate solicitor, Nikki Whittle