Mar 10 2011: Doctor Debt says 'Don't panic!'
THEY tried to hang on through Christmas 2010, hoping that something better would come along in 2011.
With the New Year, though, there came the realisation that the recession is still far from over and many small businesses were faced with a renewed bout of belt tightening – and a tax bill at a time when they needed it least of all.
For some it might have seemed like the most appropriate moment to call it a day.
But leading South Yorkshire insolvency practitioner Paul Moorhead has a simple piece of advice… don’t panic!
“I have businesses saying they are used to being quiet in January but they have always had the expectation of work coming in but this is the first time they have had no new contracts on the horizon and no new work to look forward to,” says Paul, the head of insolvency practice Moorhead Savage.
“Last year, Government figures suggested there were fewer smaller businesses going into liquidation but what appears to be the case is that a lot were hanging on and hoping for good things that have just not happened and they are now beginning to realist that they may have to take drastic action in 2011.
“And perhaps the biggest trigger point is when a letter from HM Revenue and Customs arrives, chasing unpaid tax debts – that’s the one thing that really makes people sit up and take notice!
“Running out of money is a reality for increasing numbers of businesses but doing nothing is not an option,” Paul insists.
“It is vital for struggling companies to take advice as soon as possible to avoid the worst for everyone involved.”
In some cases, he explains, there are business owners who are so worried about the continuing downturn and the fact that they don’t have the money now to pay the tax due from last year that they simply don’t now which way to turn, even missing the all-important January deadline for filing self-assessment tax returns. But keeping up to date with the paperwork, even if the tax is unaffordable, is vital.
“Missing the deadline for tax payments shows that a business needs help and HMRC will agree to sensible repayment plans in the right circumstances. But HMRC take a very dim view of overdue tax returns as it shows a lack of proper management by the business owner.
“Once all the paperwork is submitted and you know what the debts are, there are things you can do to come to an arrangement with all creditors, including HMRC.
“It may seem a daunting prospect but you can approach HMRC with a view to negotiating some sort of repayment plan and although they may be tightening up, they still want to help as far as they can.
“Similarly, other creditors do not want to see fellow businesses go to the wall if some sort of rescue plan can be developed.
“We have helped many businesses put forward a Company Voluntary Arrangement, which means that creditors get some or even all of their debt re-paid over a longer period of time but giving the business involved some breathing space, to allow them to recover and get back on their feet - which is usually in everybody’s interests.
“What many people forget is that the people chasing them for money are often other small business owners who know only too well how hard times are and that is why they will be prepared to look at a reasonable payment plan.”
Moorhead Savage has seen an increase in the number of small businesses seeking advice in the first weeks of 2011 and for some that call might have come just too late.
“This really is not the time to sit back and hope for the best,” says Paul. “The sooner you begin to face up to the crisis, the sooner a successful resolution will be found.
“In some cases winding up a company might be the right thing to do but by reaching an agreement with your creditors you give your business the best opportunity to recover from debt in the best possible way.
“And remember that your creditors too could be facing just as hard a time as you are.
“For many, it really is a case of: ‘There but for the grace of God go all of us!’”
To speak to Paul Moorhead and the Moorhead Savage team call 01709 3313000
