Number of businesses being dissolved rises
A rising number of company dissolutions took place in the first quarter of 2018 when compared to 12 months ago, new data shows.
Official government figures reveal that nearly 130,000 dissolutions took place in the UK in the first three months of this year, while there were nearly 168,000 company incorporations in the same period.
The number of companies on the Companies House register also surpassed four million for the first time at the end of March. Of those, just over 3,770,000 were deemed to be effective/ active.
Both the number of incorporations and dissolutions have increased steadily since 2012, but the number of dissolutions have risen at a faster rate.
The figure for the end of March 2018 also included more than 263,000 firms that were in the process of liquidation or dissolution.
It means the total number of companies climbed by 1% from the final quarter of 2017, while the register size jumped by 3.5% year‐on‐year.
Legislation, introduced in 2016, had a key role to play in increasing the number of dissolutions by reducing the processing time of both voluntary and compulsory methods.
While it results in a spike in the first quarter of 2016 that has not been seen since, the number of dissolutions has continued to rise.
For example, some 19.1% more companies were dissolved in the first quarter of this year when compared to the first three months of 2017.
When looking at a longer timescale, there were nearly 58,500 more dissolutions in the first quarter this year than in the same period in 2012 – a jump of 82%.
The rises in liquidations and insolvency are reflective of economic uncertainty and difficult trading conditions, but solutions do exist for businesses that act quickly.
By seeking advice at the first signs of difficulty it might be possible to restructure a business or to use various insolvency methods to get a suitable outcome for all involved parties.
By Phil Smith