22.2.2022 | Tax

Company insolvencies more than double in a year

Nowhere in the world has escaped the coronavirus pandemic unscathed. 

The number of businesses to declare insolvency has more than doubled in the last year.

New data released by the Insolvency Service has proven to be a bleak reminder of the effects of the coronavirus pandemic on businesses here in the UK.

Not only did the number of registered company insolvencies increase in England and Wales in January – from 758 in 2021 to 1,560 in 2022 – it followed an already rising figure in 2020.

Here, Nick Marshall from Beatons Group delves deeper into the news and what it means for businesses here in the east.

What has caused the rise?
Nowhere in the world has escaped the coronavirus pandemic unscathed, be that through infection numbers, businesses folding or experiencing logistical nightmares.

The latter – which we saw particularly in the tail end of 2021 here in the UK – is certain to have influenced these rising numbers.

The end of restrictions on winding-up orders due to coronavirus, which was lifted in September 2021, may be a factor.

In addition, the end of the job retention scheme, deferred VAT payments and bounce-back loans becoming repayable, mean businesses who have not suitably recovered from the pandemic may have been forced to wind up.

These factors run alongside global inflationary trends which are sure to affect those in the construction, manufacturing and technology industries harder than others.

It is those problems, tied in with the rising costs SMEs are needing to pass on to their consumers, which are causing pressures to develop further.

Could these problems continue?
It is not just those industries mentioned which remain at risk of falling victim to volatile trends. As mentioned, the issue of passing rising costs on to the consumer could be faced by all businesses, particularly low-cost retail entities.

It remains to be seen if the perfect storm of issues could continue, especially with the global energy crisis and rising inflation showing no sign of slowing down. We are also yet to see the effect of interest rate increases on smaller businesses.

However, with the end of the pandemic measures in England recently announced, it is hoped that businesses will soon be able to look forward to better days, free from the significant disruptions encountered in the previous two years.

What should you do to protect your business?
All businesses should be alert to changes in the wider economic climate and any signs of financial distress.

Reliable up-to-date financial information can help management identify key trends in the business to assist with making informed decisions where appropriate.

Beatons has a team of highly-trained professionals with particular expertise in the shipping industry and can help with a wide range of services.

Should you require expert advice or support, contact our friendly team on 01473 659777 or via info@beatons.co.uk.

More information can also be found on the Beatons website.

Insolvencies more than double in a year