Published: 09:54, 15 May 2020
| Updated: 09:55, 15 May 2020
Delays at Companies House, the government's agency which regulates and registers businesses, is causing many firms forced to dissolve during the pandemic with mounting debts, a business expert has warned.
Andrew Tate, partner and head of restructuring at accountants and business advisors Kreston Reeves, which has offices in Canterbury, Chatham and Sandwich, says staff shortages at Companies House is costing many cash-strapped firms dear.
He explained: "Many companies have seen business disappear as a result of the coronavirus with little prospect of it returning and are taking the difficult decision to close, or dissolve, a company rather than go through formal insolvency procedures.
“It is a relatively straightforward process, costing just £10 and the completion of form DS01 that is then sent to Companies House. Two months later the company will no longer legally exist.
“But severe staff shortages at Companies House caused by the coronavirus and the government’s lockdown measures together with the decision by Companies House in April to introduce a three-month pause to the strike off process has left companies unable to dissolve, leaving them exposed to accumulating unnecessary expense and debt.
"It is particularly problematic for small businesses who cannot afford or do not need to go through formal insolvency proceedings.
“The decision by Companies House was with good intention recognising that business owners may not be able to file accounts on time – which, in normal times, leads to the striking off of a company. However, many decisions taken to cope with the virus have unintended consequences.
“Businesses are facing delays of up to five months, leaving them exposed to additional rent, business rates and administration costs they can ill-afford. Creditors may not object to the dissolution of a business if its debts are small, but as they accumulate they may force companies into more formal insolvency procedures.”
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More by this authorChris Britcher