Recruitment sector hit hard by tax bills says SFP
A worrying spike of business failures in the recruitment sector is directly linked to unpaid tax bills, says one of the UK’s leading insolvency firms.
And the fear is that the increasing number of business failures reflects a wider malaise in employment and employment prospects with too many recruitment consultants chasing too few contracts.
Every recruitment instruction received by SFP in July and August 2011 cited large debts to Her Majesty’s Revenue and Customs (HMRC) as the principal debtor at the point of collapse. The size of the tax bills ranged from £100,000 to £600,000.
SFP has already warned of the impending HMRC ‘time bomb’ with the Time to Pay initiative causing many business failures over the past 12 months, and now the recruitment sector is feeling the effects, says Simon Plant, Group Partner, SFP. “With many of these companies the tax bill is often the last bill that they look to pay,” he says.
“Unfortunately, avoiding the taxman is simply not an option, and those that were given more time to pay that have not made suitable provision have now been found wanting.”
With public sector cuts and late payment affecting the industry, cashflow has become a serious issue: “There is almost a perfect storm of financial difficulties for some in the sector right now,” he adds. “Without making provisions for HMRC then the debt grows, causing failure across the entire business.”
Since July 2011 SFP has been appointed Administrator to:
· Arnashade Recruitment – annual turnover £9 million
· RGA Recruitment – annual turnover £1 million
· Key Personnel Group – annual turnover £3 million
· Speedy Contractors – annual turnover £1.6 million
· Target Appointments – annual turnover £800,000
· Thejobscompany.co.uk – annual turnover £4 million
· Empire ML – annual turnover £1.5 million