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Friday, 20 April 2012

Number of distressed companies fall year on year

According to Red Flag Alert, which looks at the health of the UKs companies, the number of businesses that faced "critical" financial problems fell year on year.  The first Quarter of 2012 saw a fall of 17% when compared with The first Quarter 2011.  The Manufacturing industry has been the main winner with a 49% fall in critical distress. 

However, the weak property market and low consumer confidence has hit other sectors. Property Services saw distress rise by 113 per cent in the first quarter and Construction saw a  94 per cent  but they fell 16 per cent and 13 per cent year on year. In total 154,370 companies were distressed, compared with 186,554 a year ago.

So what is the outlook for UK companies? 

Well, it is difficult to say but many businesses are able to take advantage of our flexible labour market.  As such, the recent reduction in the number of unemployed is mainly due to the increase in part time working. 

In our view much will depend on the actions of HMRC.  If last year is anything to go by, they will become more aggressive at collecting unpaid tax in late Spring and early Summer.  It is important that strong competitive companies are not undermined by companies that are carrying around an unsustainable debt to HMRC.

If however your business is viable if a proportion of your debt is written off then we can help you restructure using a CVA.  If you recieve a threat of a winding up petition then call us urgently as HMRC will move fast and we will need to persuade them that your business can survive.

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