As is typical of the media, they regularly report UK insolvency figures and how they appear to be rising. However, there are two things that are not mentioned in their reporting. The first is putting insolvency figures into perspective, by comparing corporate insolvencies with the number of active businesses in the UK. The second statistic that never gets reported is the number of solvent liquidations.
A solvent (or a members’ voluntary liquidation) is a tax-led winding up of a company where there will be a return paid to shareholders. It could be the company was a single-purpose vehicle or, simply a successful business that is being brought to an end due to the retirement of its owners.
The first thought must be that it is a real positive as business owners can retire, having paid all of the company creditors and they are the beneficiary of funds to assist (or facilitate) retirement. However, on the other side of the coin, you could argue these are the people who have a proven record of having a good business acumen; a skill we are losing.
In some recent research, it was suggested 23% of business owners have hastened their plans to wind down or sell. The report suggests the expediting of activity has come from an uncertainty on where the UK economy is heading. That uncertainty covers many areas, but is primarily the legacy of Brexit, COVID-19 pandemic and the threat of a government change, where changes in policy and taxation are a real threat.
Confidence is often dismissed as a business quality and there can be no doubt business confidence has taken a beating over these past three years. However, before you launch into a solvent winding up you should plan ahead, both in terms of how best to wind down the affairs of your company (whether that is a sale, succession planning or closure) and your own personal tax position.
At PBC we are seeing an increasing number of solvent liquidations where we will assist the directors and their advisors to ensure the winding down is completed in the most cost-efficient manner.
If you require any advice or assistance on mediation or any other insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss and advise on your situation on 01604 212150 or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.