Insolvencies could increase this year, body warns

Posted 22/05/2011

The number of businesses going into insolvency could rise later this year as struggling firms fail to comply with their legal requirements.

Frances Coulson, president of trade body R3, stated that many companies may have failed to meet a deadline of May 19th for submitting P35 information, which is typically a time when HM Revenue and Customs (HMRC) uncover firms that have fallen short in their PAYE payments.

She added that R3’s latest Business Distress Index has revealed 24 per cent of enterprises are currently concerned about their debt and the P35 deadline could be a test for many of them.

“I suspect this will lead to an increase in actions by HMRC in a couple of months’ time, as well as pushing up corporate insolvency numbers towards the end of the year,” Ms Coulson stated.

Last month, a study by Begbies Taylor found that 26 per cent more firms have reported financial difficulties in the first quarter of 2011 then in the previous three months.