One of the South West’s leading independent accountancy firms, Milsted Langdon is urging businesses and individuals in financial trouble to seek help.
While many businesses affected by the latest national lockdown are receiving assistance via the various Government financial support measures, such as the furlough scheme, grants and loans, Milsted Langdon said it was concerned about business insolvency in the year to come.
Although the Government has pledged to maintain levels of support through to March and April, the firm is concerned that many businesses in difficulty could fail altogether once funding is removed and existing cash surpluses are exhausted.
Tim Close, the firm’s Chairman and one of its Insolvency Partners, said: “Many previously viable businesses are effectively being kept on life support by the Government’s support mechanisms, but once these measures are wound down it is almost inevitable that some businesses will fail.
“Local economies that are reliant on tourism, leisure and hospitality are likely to feel the brunt of the economic crunch in the next 12 months as a result.
“This is on top of the difficulties that many companies face as a result of the UK’s new trading relationships with the EU and the other difficulties certain sectors have to contend with.”
Tim continued: “At the moment, the most recent insolvency figures suggest that fewer businesses and individuals are becoming insolvent, but this is effectively an artificial trend, created by the Government’s ongoing support.
“In reality, many businesses and individuals have taken on extra debt and many invoices continue to go unpaid.
“As we emerge from the latest restrictions at some point later this year, without additional Government support, insolvency levels are likely to rise rapidly, which could then have a trickle-down effect on customers, suppliers and potentially entire communities.”
Looking at previous crises as a comparison, Tim said most insolvencies tended to occur as the recovery process began, as businesses had to once again incur costs and begin to settle outstanding debts, including tax charges, they may have deferred.
“It is clear that the Government support has played an essential role in keeping the economy ticking over, but businesses may yet face their toughest times ahead and they must seek professional advice on insolvency and restructuring if they hope to continue trading beyond the pandemic,” he added.
Insolvency of business restructuring advice is available from Milsted Langdon’s experienced team.
Join Somerset Chamber of Commerce to give your business a stronger voice both locally, regionally and nationally. Combined with local town chambers, we represent over 2,000 businesses across Somerset with a direct line to policy-makers at all levels.
