April 2010
‘Time to pay’ – cause for concern
With the majority of companies drawing a line under their 2009/10 performance as the tax year ends, professional financial advisors will be faced with the need to give specific advice to those companies where adverse trading and potential insolvency situations are revealed. We suspect that there is likely to be significant numbers of businesses with problems, particularly amongst those businesses that have tax deferrals arranged with HMRC, and maybe among larger numbers who have not.
Something like 200,000 companies have taken the advantage of HMRC’s ‘Time to Pay’ scheme involving £5.2bn of tax deferrals; but in recent months HMRC have stiffened their stance before granting any leeway. Where companies have not kept arrangements, a detailed investigation by an Insolvency Practitioner appointed by HMRC can be anticipated. During the past 12 months or so, HMRC have been responsible for 30% of all winding up petitions.
Additionally, as you may know, the Chancellor introduced new powers in the recent Budget to allow HMRC to demand money upfront from companies that are persistently late payers.
All in all, it’s not a good time for those businesses that struggled through 2009.
As we have discussed before, we believe that 2010 will be another difficult year. The forthcoming election has already created levels of anticipated insecurity in financial markets; the housing market, a big driver of retail sales, remains pretty static; unemployment figures, although lower than expected, mask the numbers of employees working on short time; worries of rises in inflation are making the headlines. A double dip recession is quite a possibility.
Over the years we have always recommended that professional advisors seek assistance on behalf of their clients sooner than later, because options to restructure, seek fresh capital, make new funding arrangements close down rather rapidly as the financial position deteriorates.
We remind you that we provide the following services:
• The Solvency Review
Completed by our dedicated team of insolvency practitioners and chartered accountants and where there are serious concerns about viability. The review establishes the financial situation and viability, explores the short-term funding requirement and presents options on the way forward
• The Managing Recovery Report
For those companies that are at the crossroads and when fundamental decisions are needed to support the company as it moves forward. Our report is well recognised by all major banks and asset lenders.
As well as establishing the financial position, trading projections, management capability and business viability, it develops strategies for profit and cash flow improvement and the level and structure of supporting finance that the business needs.
• Cash Flow Improvement
At times like these the flow of cash into a business can be critical; managing DSO’s downwards can be a daunting task. P&A Receivables Services manages sales ledgers and cash collection for all sizes of business, disclosed or undisclosed. We can train client’s staff in cash collection procedures and can assist recruitment plans in this discipline.
We have a suite of on-line support and reporting; and an on-line payment system – card based with a 24/7 service.
• Alternative Sources of Finance
P&A Lender Services can still find alternative sources of finance for clients that have a viable business plan and a clear way forward – even in these difficult times. Our personnel are seasoned bankers who can read balance sheets and know their way around the market.
Businesses work in difficult and challenging times – keeping the ‘patient’ alive and enabling them to work through the times ahead is always our primary aim.
If you are in need of some assistance, please don’t hesitate to telephone me or any of my partners on 0114 275 5033.
Jeremy Priestley
Managing Partner
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