The start of 2018 saw the somewhat unexpected collapse of one of the UK’s largest construction and contracting businesses, Carillion.
Despite winning a number of new public sector bids, including a £1.4 billion contract for HS2, it was revealed in early January that the company would be going into compulsory liquidation.
In the months prior to its collapse, the business appeared publicly to be in good health and posted positive profit reports, but it has since been revealed that the business was struggling, with many subcontractors seeing their payments delayed by more than 120 days.
With various banking institutions taking priority as the firm’s creditors, it has been reported that more than 30,000 businesses, including thousands of small subcontractors, may not be paid for the work they have already completed.
As so many businesses are expected to be directly affected by this collapse, HM Revenue & Customs (HMRC) is offering a new lifeline to struggling companies.
It has said that “as part of its ongoing commitment to delivering support for businesses, HMRC will provide practical advice and guidance to those affected through its Business Payment Support Service (BPSS).”
The BPSS is designed to allow businesses to find a quick and sympathetic method for agreeing on future tax payments to reduce the stress on a business and its cash flow.
Through the BPSS companies can:
- Agree on instalment arrangements if they are unable to pay tax on time following the Carillion collapse.
- Suspend any debt collection proceedings.
- Review penalties for missing statutory deadlines.
- Reduce any payments on account.
- Agree to defer payments due to short-term cash flow difficulties.
HMRC has also offered to support affected workers and their families with cash support through the tax credits system.
It is encouraging businesses to get in contact with them sooner rather than later to arrange alternative solutions if they are struggling to pay tax in light of the collapse of Carillion.
Businesses affected by the liquidation of Carillion are also advised to speak to trusted professional advisers if they are concerned about the future of their own company in light of payments due from the now-defunct company.
If your company has been affected by Carillion’s collapse, our dedicated insolvency team at Milsted Langdon can provide expert advice to help you assess your current position and find solutions to prevent your company’s failure. Contact us today to find out more.