Could this be the start of things to come? While the interminable negotiations over Brexit are doing little to reassure businesses about the future, the Association of British Insurers (ABI) reports that 57 businesses a day are seeking help with debt. Politicians may be in charge of our Brexit future, but the business environment is increasingly showing signs of poor confidence for investment and growth. Banks and Insolvency Practitioners are keen to help by offering positive advice and options.
At our recent Fife and Tayside Insolvency Discussion Group, David Grant, Executive, Strategic Business Services, Clydesdale Bank spoke about how the Bank encourages businesses to raise matters with their relationship managers at a very early stage to enable them to assist in a forward plan. The Strategic Business Services team’s key aim is for repatriation – to help their customers resolve matters and to retain their customer business. As a result, the Bank enjoys a high success rate in retaining those businesses who have faced financial business difficulty where they are repatriated and returned entirely to relationship manager support. Very few formal insolvencies are initiated.
Dunedin Advisory directors were encouraged by the Bank’s positive solution-driven approach which mirrors entirely Dunedin’s philosophy for business owners to address any challenges or trading difficulties at the earliest possible stage. This enables a number of options to be explored and to avoid formal insolvency, wherever possible. Formal insolvency can, of course, also have a place where it is used in a positive way in a restructuring or hive-off situation and is not always the doom and gloom situation perceived by those who have limited restructuring or insolvency expertise.
On another front, HMRC is attempting to change the tax status back to a preferential status which is causing concern. There is concern that this will curb business lending further and goes against the spirit of the 2013 legislation, where it was recognised by the Government that enterprise value and maintaining business is essential for a healthy economy.
Professionals are also expressing concern about how difficult it is to provide definitive advice to customers facing difficulties, particularly in meeting tax commitments since there is a wide inconsistency in how HMRC deal with defaults. In some instances, there is quite a bit of latitude allowed for a business to restructure with repayment schedules and in other cases no scope whatsoever.
The clear message again is that the earlier a business faces a problem in meeting any of its financial commitments, whether tax or otherwise they should be addressing these and seeking support from their advisors and bank at the earliest possible time.