Insolvency trade body R3 calling for new reforms

financial services small businessR3 Association of Business Recovery Professionals are pushing the UK government to make changes to current insolvency schemes to benefit small businesses.

R3 have found that 1 in 6 insolvencies are caused by the failure of another company, suggesting that small businesses could be failing due to their debtors not paying them what they are owed.

The trade body are asking the government to back down on some proposed insolvency reforms that could damage small businesses and to focus on supporting the countries SMEs.

In his article for the FSB‘s Business Network magazine Andrew Tate, deputy vice-president of R3, explained that insolvency should not be the end for a company.

There have already been some changes, in August the government gave advice on how to prevent utilities and IT suppliers from changing their terms for businesses undergoing a rescue scheme. R3 found that an extra 2,000 businesses would be saved each year if their suppliers were prevented from changing the terms of contract.

There is still legislation that the organisation is campaigning to change; the 2012 Legal Aid Act is one of their main focuses, its small print holds terms that could see creditors not being paid what they are owed.

An exemption is currently in place to prevent this, however it is due to expire in April 2015 which could lead to ‘rogue directors’ of insolvent companies keeping their hands on tens of millions of pounds that belong to their creditors. The trade body are working with the government to renew the exemption but if no changes are made tax payers and small businesses will be particularly effected.

It is important for SMEs that they are provided with the correct support and advice, they are becoming one of the UK’s largest sectors contributing 49.8% to the UK’s GDP.

MCC Accountants specialise in small business accounting, offering a range of services. If you are a small business owner looking for accountancy advice do not hesitate to contact us, call us on 0161 707 1500 and we will be happy to answer any of your questions.

Posted in

Leave a Comment





This site uses Akismet to reduce spam. Learn how your comment data is processed.