Company insolvencies rising and HMRC debt at record high levels

The monthly insolvency statistics for October 2023 show that the number of registered company insolvencies in England and Wales has risen again. 

The increase in company insolvencies has largely been driven by a rise in the number of creditors voluntary liquidations (an insolvency process driven by the directors, rather than creditors), although the number of compulsory liquidations has also slowly started to increase. 

Alongside these figures, HMRC has also reported that overdue tax debt is at a record high with the majority of tax debt being owed by small to medium sized businesses. HMRC says that where customers are unable to pay on time, they will do everything they can to help those in short term financial difficulty; however, in practice, negotiating time to pay is often quite challenging due to limited resources and slow processing times at HMRC. 

Given the extraordinarily high levels of overdue tax debt, we expect to see an increase in compliance and enforcement action being taken by HMRC. This will place additional pressure on businesses in an already challenging environment. Seeking early advice will be crucial for struggling businesses. 

If your business is experiencing short term financial difficulties, or struggling to pay an overdue tax debt, please contact Rachel Brown (Senior Associate) in our Restructuring and Insolvency Department to find out how we can help.