Updated: 9th September 2021
Industries including manufacturing, pharmaceuticals, and transport, face significant increased costs due to Brexit tariffs, exacerbating an already challenging operating environment.
Brexit tariffs hamper business growth, and with reduced opportunities and capability for investment, industry stagnation is a threat. So if your company is struggling due to Brexit tariffs, is there anything you can do to mitigate the effects, improve cash flow, and deal with the financial distress you’re experiencing?
Professional assistance is crucial in this situation, and could help you rescue your company before it enters insolvency. Real Business Rescue are insolvency specialists, and can provide professional advice on your best options.
Additional finance could support your business during this time of transition, and also into the future, offering reassurance that you can pay your bills as they fall due and avoid a slide into insolvency.
Alternative finance is typically more flexible and quicker to access than a ‘traditional’ bank loan, and will provide either a lump sum payment or regular cash injections throughout each month that help to stabilise your business.
Businesses with valuable hard assets wholly owned by the company could leverage their value via asset-based forms of lending, for example. You may be eligible to sell and lease back one or more of these assets, whilst continuing to use them on a day-to-day basis.
Other potential options include invoice finance, which releases the value held within your sales ledger. Each time you invoice a customer, a pre-agreed proportion of the invoice is released by the lender, typically within 24 hours.
If you’re struggling to keep up with your tax payments alongside the Brexit tariffs, you may be eligible for more time to pay your tax under HMRC’s Time to Pay Arrangement (TTP). Access to the scheme has been broadened during the coronavirus pandemic, and eligible businesses can gain up to 12 months’ extra time to pay their arrears.
Although you’ll need to stay up-to-date with current tax liabilities, this additional ‘breathing space’ where you don’t face added pressure from HMRC is valuable, given their ability to quickly close down companies with arrears.
If your business is still viable, but needs support in repaying debts, you may be eligible for a Company Voluntary Arrangement. This enables you to pay one amount towards your debts each month instead of multiple creditors, and crucially, prevents legal action being taken against the company.
You would need to appoint a licensed insolvency practitioner (IP) to negotiate with your unsecured creditors, as this is a formal procedure. A huge benefit of a CVA is that you don’t lose control of your company once the agreement is in place, but have the opportunity to trade your way out of difficulty, whilst being more able to afford the Brexit tariffs.
Company administration offers time to consider the best future for your business. Sometimes it can result in a CVA, as mentioned above, or perhaps a pre pack sale of the company.
Restructuring may also be an option if your business is failing because of Brexit tariffs, and this could mean selling assets/reducing costs to return the business to solvency. If there’s no chance of rescue or recovery, however, liquidation may be the only option.
If the financial pressures on your business are too great and there’s no alternative to liquidation, it’s highly advisable to enter liquidation voluntarily rather than waiting for a creditor to file a winding up petition.
By entering CVL you can minimise creditor losses, whilst also protecting yourself and other directors from wrongful trading allegations. These can be made if you’ve continued to trade after the company entered insolvency, and sometimes result in personal liability for directors.
An additional benefit if you enter Creditors’ Voluntary Liquidation is the potential to claim statutory redundancy pay. It isn’t widely known, but as a director you may be entitled to statutory redundancy if you’ve worked for the company as an employee.
Real Business Rescue can provide more information on director redundancy and any other issues your business is experiencing, including the additional pressures of having to pay Brexit tariffs. We operate a network of offices around the UK, so please contact one of our licensed insolvency practitioners to arrange a free, same-day consultation in complete confidence.
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