New data from Mazars, the international tax firm, shows that HMRC tried to shut down 440 limited companies in the last quarter of 2022 over unpaid tax debts, a 46% increase from the 301 that it tried to close the previous quarter.

Michael Pallott, Partner at Mazars, says that the number of winding-up petitions can be expected to rise as HMRC increasingly abandons pandemic-era forbearance and returns to more normal levels of debt enforcement activity.  HMRC had been prevented from issuing winding-up petitions by the Government’s moratorium on winding-up petitions enacted during the pandemic.  This moratorium was lifted in March 2022, allowing HMRC and other creditors to pursue businesses that owe them money.  HMRC is feeling the pressure after it was recently criticised by the Commons public accounts committee for failing to collect an estimated £42 billion in unpaid tax.

Pallott said: “HMRC understandably needs to recoup money that the taxpayer is owed, however, given the negative economic outlook, the increase in winding up petitions from HMRC is likely to see more businesses forced to close their doors.”

Pallott adds that HMRC is willing to negotiate with businesses who have a genuine reason for being behind with their payments and wish to negotiate in good faith but early communication is vital.  Under certain circumstances, businesses can apply to the tax authority for Time to Pay arrangements, giving them an extended period in which to pay back their debts.  HMRC currently has 823,000 Time to Pay arrangements in place.

Emma Reilly, MD of specialist credit management company, Top Service Ltd, commented on the impact on UK construction businesses “We are seeing an increase in winding-up petitions being presented to construction companies, not just by HMRC, but by trade creditors too.  We would advise businesses with cash-flow difficulties to keep the lines of communication open with creditors to try and prevent a situation escalating to the winding-up petition stage”.

National Insolvency figures published (14 February 2023) by the Government’s Insolvency Service have indicated that the number of registered company insolvencies in January 2023 was 1,671:

• 7% higher than in the same month in the previous year (1,567 in January 2022), and
• 11% higher than the number registered three years previously (pre-pandemic; 1,502 in January 2020).

There were 189 compulsory liquidations in January 2023, which is 52% more than in January 2022, but 36% lower than in January 2020. Numbers of compulsory liquidations have increased from historical lows seen during the coronavirus (COVID-19) pandemic, partly as a result of an increase in winding-up petitions presented by HMRC.

In January 2023 there were 1,382 Creditors’ Voluntary Liquidations (CVLs), 2% higher than in January 2022 and 37% higher than January 2020. Numbers of administrations and Company Voluntary Arrangements (CVAs) remained lower than before the pandemic but were higher than in January 2022.

What makes Top Service Different?

When mainstream agencies look at credit information they number crunch. They use the last set of accounts and any public record information to produce credit limits and scores. It’s a pretty good way to look at credit information but it can overlook information that a person notices, for instance: What has happened from the time the business filed its last set of accounts to the time the credit check is performed?

Top Service Insider Intelligence is construction-specific information that provides up to date, relevant, reliable information to enable more informed business decisions to be made when accepting an application for trade credit. 

As the only credit reference and debt recovery agency specific to the construction industry, we make it our mission to ensure our members receive the most up to date, credit information and company trading experiences. Our insider intelligence can make a real difference between company profit and painful write-offs. 

What you need to know about Top Service:

• Our bespoke collection strategies mean that no case is treated the same. Our access to credit information and exclusive trading experiences enables us to change strategy quickly when our incoming intelligence is received, providing excellent results.

• Fast, effective collections. We know that speed is of the essence, so all collections are given top priority.  We don’t just go through the motions, our experienced and highly skilled team members are adept at tricky negotiations, dispute resolution, tracing absconded debtors and thinking outside of the box to achieve tangible results.

• Fully compliant.  We have been trading for 30 years and we have always taken compliance very seriously.  We are authorised by the FCA and Top Service Ltd is a corporate member of the Credit Services Association (CSA).  All senior Top Service staff are members of the Chartered Institute of Credit Management and collections professionals are hand-picked and trained to the highest standards. 

• We have more than 30 years of experience in collecting commercial and contract debts.

Contact our helpdesk team today on 01527 518800 to discuss how Top Service can support and help you protect your business.

Bank-to-business lending is forecast to contract 3.8% (net) this year, from net growth of 3.7% in 2022, before returning to growth (of 0.9% net) in 2024 according to research by leading economic forecasting group EY Item Club.

The outlook for business lending is set to improve next year as the economy begins to recover. However, growth remains subdued, and only 0.9% net growth is forecast in 2024 as businesses, especially SMEs, continue to deal with the economic shocks of recent years.

While bank lending to businesses soared during the pandemic as companies utilised state-subsidised lending schemes this year it is forecast to fall into negative territory by almost 4% (-£18.8bn).   Borrowing demand is expected to weaken as firms – both large corporates and SMEs – face multiple pressures from higher costs of servicing debt, lower earnings and continued global supply chain disruption.

2024 should see growth in net lending resume as high inflation eases and the economy starts to recover.  However, it is likely to be sluggish with EY Item Club forecasting low growth of 0.9%, equating to net lending of £4bn, reflecting the damage to sentiment from the series of economic shocks in recent years.  Growth is forecast to then pick up to 3.1% (£15bn) in 2025.

EY also forecasts that write-off rates on company loans will reach 0.8% in 2023, before dipping to 0.6% in 2024 and 0.5% in 2025. This compares with 0.2% in 2021 and 0.3% in 2022.  However, the forecast rise for 2023 is still a long way short of rates of 1%-1.5% in the early 2010s, following the financial crisis.

Emma Reilly, director of construction credit specialists Top Service Ltd, said:

“As bank lending tightens we expect to see debtor payment days lengthen.  Those businesses extending trade credit should ensure that they are running a tight ship in relation to credit control”.

At Top Service we promote the use of great customer relationships to support our members’ business growth and help to improve cash flow.

For us, credit management starts right at the beginning of your customer relationship. There are a few simple steps you can take that will make big improvements:

1) Use a credit application form

This will help you to deliver a great service to your customer and will also help you to collect information that will help you if you need to carry out due diligence checks prior to deciding whether to extend credit facilities or collect money from a customer. You can also help to prevent delays in payment by understanding what your customers needs to be able to make payment.

2) Perform customer service checks

Once you have provided your goods or service to a new customer and raised the invoice – check in on them. How did they find the service you provided? Did they receive the invoice OK? Do they need to place any further orders? By carrying out these customer service checks you’re not only standing out from your competitor, you’re building great customer relationships, helping your business to grow and also going someway to get your invoice paid on time. Checking there are no queries, that the invoice has been received and that your customer has everything they need to make payment can only have a positive impact on your payment terms.

3) React to information received

Reacting to information will be key. You should be monitoring your customers so you’re aware of any changes. If you’re notified of a new CCJ, check how much is outstanding from your customer and in cases where you perhaps aren’t due to chase an invoice until the end of the month, put a phone call in now or at least start chasing a little earlier than usual.

4) Keep an eye on anomalies

is your customer later than usual making payment. Find out why, it could be as simple as an invoice has been mislaid. Or it could be something more serious that you need to act on.

Information and communication is the key to great credit control.

Our team can provide you with individual advice and support if you need it and we also have a credit control healthcheck available on our website that is free for members to use. We will review the check and provide bespoke advice to you and your business.

Contact us for more details.

A survey by the Association of Chartered Certified Accountants (ACCA) and the Corporate Finance Network reveals confidence among SMEs has fallen from 38% in the summer last year to 17% now.

The number of SMEs who have plans for growth has plummeted from 38% in the summer of last year to just 17%. The research brings to the forefront the underlying pessimism among SMEs as a third (33%) of businesses felt less confident in their ability to grow following the Chancellor’s statement back in November.

The survey also found that 78% believe the government should prioritise small and medium businesses when identifying business sectors to direct future support. With a further 12% noting that micro businesses mustn’t be overlooked.

The ongoing stress of significant economic strain is taking its toll on the mental health of SME owners with an alarming 63% reporting higher levels of stress and anxiety. This has almost doubled over a six month period (33% in June 2022).’

ACCA UK and The CFN warn that as economic uncertainty continues, more detailed and targeted support from the government is needed to help firms’ growth worries and their mental health.

Glenn Collins, Head of Technical and Strategic Engagement at ACCA UK said “If the government wants to achieve their ambitions for economic growth, then it needs to take action and put in place a robust plan to address business pessimism. With an uninspiring Autumn 2022 Statement and subsequent cutting back of measures such as the energy support bill, SMEs are struggling and mental health is plummeting as a result. Businesses are in dire need of clarity for 2023 as they remain at a loss, unable to efficiently plan and organise their finances. This must be addressed in the Spring Budget.”

Commenting on the construction sector, Emma Reilly, Credit Management Specialist & MD at Top Service Ltd said “Construction output is still relatively strong and the government is still providing some help to SME developers, however, confidence in terms of getting paid on time is waning amongst SME construction businesses with many worried about the potential cash-flow challenges that lie ahead”.

A round-up of last year’s official business insolvencies, across all sectors, by Emma Reilly, MD of specialist credit referencing and debt recovery agency, Top Service Ltd:

*  50 in every 10,000 active limited companies entered insolvent liquidation in 2022.  This was an increase from the 33 per 10,000 active companies that entered liquidation in 2021, and was higher than the 42 per 10,000 in 2019 (pre Covid).

*  The company liquidation rate in 2022 was the highest liquidation rate since 2015, but was lower than the recessionary peak of 95 per 10,000 in 2009.

*  The total number of company insolvencies registered in 2022 was 22,109, which was the highest number since 2009 and 57% higher than 2021.

*  The increase compared to 2021 was driven by the highest annual number of Creditors’ Voluntary Liquidations (CVLs) for many years.  CVLs occur when the directors of a company appoint a licenced insolvency practitioner to formally close down their insolvent company.  They usually do this as a result of pressure from creditors.

*  The annual number of Compulsory Liquidations was higher than the record low number in 2021 but remained below pre-pandemic levels.  Compulsory Liquidations occur when a creditor issues a Winding-up Petition to the courts and then the court makes an order to wind the company up.  Many of these petitions are issued by HMRC for unpaid taxes.

*  Administrations were higher than 2021 but lower than pre-pandemic levels.  A company can appoint a licenced insolvency practitioner to act as an Administrator if there is a chance that the company can be rescued as a ‘going concern’ or if there is likely to be a better return to creditors than in a liquidation.

*  Corporate Voluntary Arrangements were similar to 2021 but lower than pre-pandemic levels.  These arrangements are made with creditors to allow the company to continue to trade.  Creditors vote as to whether they are prepared to accept a lower settlement figure which is usually paid back over an agreed period of time.

Latest quarterly figures from the Insolvency Service have shown that the number of company insolvencies across all sectors in England & Wales increased by 30%, compared with the previous year.

After seasonal adjustment, the number of business insolvencies in Quarter 4 (Q4) 2022 was 7% higher than in Q3 2022 and 30% higher than in Q4 2021.

The increase appears to have been partly driven by the number of Creditors Voluntary Liquidations which accounted for 82% of all company insolvencies.  These occur when the directors of a company appoint a licenced insolvency practitioner to formally close down their insolvent company.  They usually do this as a result of pressure from creditors.  The number of court ordered Compulsory Liquidations also increased to the highest quarterly number since the start of Covid, partly as a result of an increase in winding-up petitions presented by HMRC and due to a high number of petitions from a single bank.

The figures between 1st October and 31st December 2022 show that there were 5,995 (seasonally adjusted) registered business insolvencies, comprising of 4,891 creditors’ voluntary liquidations, 720 compulsory liquidations, 359 administrations and 25 company voluntary arrangements.

Emma Reilly, Credit Management Specialist and MD of Top Service Ltd says of the construction sector,

“Output is still relatively strong as 2023 gets underway although many experts are forecasting that output will fall later in the year, particularly in house-building.  The nature of the construction industry means that one insolvent main contractor can bring down dozens of smaller sub-contractors and suppliers so the sector is vulnerable in that respect”.

National Insolvency figures published (17 January 2023) by the Government’s Insolvency Service have indicated that the number of registered company insolvencies in December 2022 was 1,964:

• 32% higher than in the same month in the previous year (1,489 in December 2021), and
• 76% higher than the number registered three years previously (pre-pandemic; 1,119 in December 2019).

There were 183 compulsory liquidations in December 2022, more than three and a half times as many as in December 2021 and 8% higher than in December 2019. Numbers of compulsory liquidations have increased from historical lows seen during the coronavirus (COVID-19) pandemic, partly as a result of an increase in winding-up petitions presented by HMRC.

In December 2022 there were 1,659 Creditors’ Voluntary Liquidations (CVLs), 22% higher than in December 2021 and more than twice as many as December 2019. Numbers of administrations and Company Voluntary Arrangements (CVAs) remained lower than before the pandemic but were higher than in December 2021.

What makes Top Service Different?

When mainstream agencies look at credit information they number crunch. They use the last set of accounts and any public record information to produce credit limits and scores. It’s a pretty good way to look at credit information but it can overlook information that a person notices, for instance: What has happened from the time the business filed its last set of accounts to the time the credit check is performed?

Top Service Insider Intelligence is construction-specific information that provides up to date, relevant, reliable information to enable more informed business decisions to be made when accepting an application for trade credit. 

As the only credit reference and debt recovery agency specific to the construction industry, we make it our mission to ensure our members receive the most up to date, credit information and company trading experiences. Our insider intelligence can make a real difference between company profit and painful write-offs. 

What you need to know about Top Service:

• Our bespoke collection strategies mean that no case is treated the same. Our access to credit information and exclusive trading experiences enables us to change strategy quickly when our incoming intelligence is received, providing excellent results.

• Fast, effective collections. We know that speed is of the essence, so all collections are given top priority.  We don’t just go through the motions, our experienced and highly skilled team members are adept at tricky negotiations, dispute resolution, tracing absconded debtors and thinking outside of the box to achieve tangible results.

• Fully compliant.  We have been trading for 30 years and we have always taken compliance very seriously.  We are authorised by the FCA and Top Service Ltd is a corporate member of the Credit Services Association (CSA).  All senior Top Service staff are members of the Chartered Institute of Credit Management and collections professionals are hand-picked and trained to the highest standards. 

• We have more than 30 years of experience in collecting commercial and contract debts.

Contact our helpdesk team today on 01527 518800 to discuss how Top Service can support and help you protect your business.

Small and medium housebuilders struggling to access traditional development finance can take advantage of government funding to get homes built across England.

Through the government’s Levelling Up Home Building Fund, Homes England provides development loans to small and medium housebuilders.  The Fund supports smaller house builders that struggle to access finance through traditional bank lenders, with loans starting from £250,000.

Eligible developers:

*  Must be a UK-registered corporate entity or limited liability partnership.

*  Must plan to build or refurbish five or more homes on a site in England.

*  Must have a controlling interest in the land.

*  Must be able to demonstrate that the project would stall, or progress much less quickly, without this finance.

Emma Reilly, MD at Top Service Ltd says:

“It’s encouraging to see the government continue to support the construction sector through its Homes England initiative.  Reading the case studies it appears that many of the small developments that have benefited from the scheme wouldn’t have been possible without the government’s help”.

More information about the scheme can be found here:

https://www.gov.uk/guidance/levelling-up-home-building-fund-development-finance