Fee earning opportunities for accountants from insolvency cases post the withdrawal of Covid – 19 pandemic business financial support
Most of the Government’s financial support for business during the Covid – 19 pandemic is likely to be withdrawn by the end of this summer. The number of UK businesses failing since March 2020 has reduced hugely because of that support. Most commentators believe that by the latter part of 2021, that situation will start to reverse with many failing businesses being forced to enter into some kind of insolvency proceeding because of creditor pressure.
With effect from 1 December 2020, the Crown regained its preferential status in insolvencies in respect of VAT and employees’ PAYE/NIC deductions. Employer’s NIC and corporation tax will continue to be a non preferential unsecured claim in an insolvency. In our view, the effect of this change is that the number of business failures where there will be a dividend to the non preferential unsecured creditors (including the trade creditors) will reduce significantly, since the Government’s preferential claims will soak up many of the surpluses available for distribution to creditors in insolvency cases.
Because of this, we think HMRC are likely to take a much greater commercial interest in business failures than they have done previously and we think HMRC will increasingly expect to see the insolvency profession take appropriate steps to ensure that the failed business’s accounting records are brought up to date so that HMRC can quantify their preferential claim in the insolvency and who better to assist in ensuring that that is done than the failed business’ accountants.
Most accountants will have from time to time one or more of their clients fall on hard times and thus have the need to call on a firm of licensed insolvency practitioners on occasion. We think that accountants who see such a situation as an opportunity to add value to their clients and work with the firm of licensed insolvency practitioners in providing accountancy services to them will be an increasingly important stream of revenue for the accountant in the coming months and some years to come.
The team at Redman Nichols Butler have for over 25 years been providing insolvency and turnaround services to clients of accountants and over the years have developed strong and lasting relationships with accountants all over the country. We recognise the value accountants can add to an insolvency process and we think that that value is going to be ever more important in 2021 and beyond.
For more information on bankruptcy, liquidation, administration and all the other insolvency procedures, or to take advantage of our free consultation and business health check, please telephone Stella Flemmings on 01377 257788 and she will make you an appointment with one of our insolvency professionals at our Driffield, Hull, Grimsby, Scunthorpe or York offices. Meetings can be held virtually or in any of our offices whilst observing the socially distancing guidelines.
Because we are an independent insolvency practice, we keep our overheads low and have put systems in place to deal with simple liquidations at an affordable price of from £1,995 + VAT + Disbursements. Our MVLs are from £995 + VAT + Disbursements.