The Chancellor’s announcement in the Pre-Budget Report that HM Revenue & Customs’ Business Payment Support Service – the “Time to Pay” scheme – would continue for “as long as needed” was welcome news. The last thing that businesses need at the moment is to have this crucial lifeline swept away from them.
When a business fails, deposits or prepayments made by the public rank only as unsecured claims. Consumers have no greater protection or priority than suppliers or other trade creditors. The most high profile recent example of this was the collapse of Farepak, the Christmas hamper company, in 2006, when some £38 million of consumers’ money was largely lost.
The consensus view of the economic pundits seems to be that the UK is at last emerging from the longest and deepest recession for decades. By common consent, both business and consumer confidence is certainly improving, but the recovery is fragile, and whether the recovery will be L-shaped, V-shaped, W-shaped or some other shape remains the subject of debate.
The official statistics for corporate and individual insolvencies, published by the Insolvency Service, for the second quarter of 2009 show that the overall number of insolvencies has continued to rise, albeit at a much slower rate than in the recent past.
The Office of Fair Trading (“OFT”) has warned consumers not to be taken in by companies offering to free them from their debts by buying their liabilities from them.
The warning follows an increase in internet and press advertising by debt and claims management companies stating that they can take over or write off debts by purchasing consumers’ credit agreements.
We wanted to mention Australia just as an excuse to gloat over the Ashes victory this summer, but finding a link between insolvency and our antipodean cousins was less than easy. Happily, their Supreme Court recently came up with an interesting decision on the Aussie equivalent of wrongful trading.