Businesses owed 16b by insolvent companies

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 Businesses owed £16bn by insolvent companies

More than 100,000 British businesses are owed an estimated £16bn by insolvent companies, with individuals and SMEs taking the biggest hit. A report from R3 found that in 2015, 6% of all UK firms were creditors of an insolvent company, affecting a total of 113,000 firms across the UK. However, only 4% of large corporations have given credit in the past year, compared to 14% of mid-sized businesses. Some 7% of companies with 50 or fewer staff have also been left out of pocket by debtors. R3 president Phillip Sykes said: "Growing businesses encounter two classic problems: going for growth by taking on new customers without properly checking their creditworthiness and a lack of controls to monitor their exposure." The £16bn figure was reached by extrapolating data from HMRC, which is owed about 24% of unsecured debt in cases of insolvency. In its latest tax gap report, HMRC estimated it writes off £4bn a year as a result of unpaid taxes following insolvencies, which generated a final figure of £16bn in unsecured debt in insolvencies last year.

Source: The Sunday Telegraph (03/01/2016)

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