Insolvencies of private limited and public companies have fallen recently as shown by latest information on business insolvencies has been released. HMRC became a lender of last resort and this has had a positive impact on business failures.
However the jury is ‘still out’ so to speak in the UK accounting industry presumably because the view by the professionals is that it is merely postponing the inevitable (failure) at a cost and risk to the taxpayer, with similar messages echoed by the latest news from the Department of Business Innovation and Skills.
Private limited and public company insolvencies for Q1 2010 were 4,082 a massive 17.8% drop on the same period last. Professional accountants and business advisers believe that HMRC could create further problems, delaying or even losing tax debts.
The idea that corporate insolvencies numbers may have been affected by the the uncertainty produced by a hung parliament in the UK has little founding, but there may be some substance in the facts that because several big players in UK business and retail banking remain in public ownership, political imperatives may influence HM Revenue and Customs to delay in collecting any tax debts. Under Gordon brown and the Labour administration the proportion of HMRC's business debt increased £27.7bn in 2008/2009 (an net increase of approximately £3bn. The Accounting industry is only too well aware of HMRC’s bad debt provision, now running at over £11bn.
Most professional accounting firms and business adviser predict a steady rise in insolvencies throughout 2010 in the wake of HMRC tighten its belt, and better administration brought in by the change of Government.
