There is no doubt that current conditions are driving more #hospitalityindustry businesses to breaking point . We have had an increasing number of enquiries in this area in recent months.
In our article https://www.antonybatty.com/6000-licensed-premises-closed-uk-2023-insolvency-practitioners-can-help -we look at three key changes that Kate Nicholls OBE, UKHospitality, the trade body for hospitality in the UK is asking for the Government to make to support the industry. However, we also know that many hospitality businesses are already struggling financially, so we also look at how Insolvency Practitioners can help distressed businesses.
The three key support measures proposed by UK Hospitality
- A 3% cap on business rates increases
“The proposed 6.7% increase to business rates for up to 20,000 hospitality businesses will push yet more businesses to failure. For those that survive, it will simply divert spending earmarked for investment into the higher rates payments.” - Temporary changes to employer National Insurance Contributions
“A cut in the lower rate of employer NICs to 10% and increasing the threshold at which contributions are made by the employer will help businesses manage the increase in the National Living Wage.” - A lower rate of VAT for hospitality, leisure and tourism
“A 12.5% VAT rate is proven to boost demand, generate revenue and keep prices low. It is the single greatest catalyst for growth in hospitality, with 70% of businesses passing through reduced prices to customers.”
How can Insolvency Practitioners help?
Whether the Government will offer support of this kind to the hospitality industry, either in the forthcoming March 6th 2024 budget, or perhaps before the next election is due (by January 2025) remains to be seen.
As with all businesses, we always look first at the #turnaround options.
Our advice is for #directors to act as soon as possible if financial difficulties are mounting. Some of the main options for struggling businesses are:
- Negotiating a Time to Pay (TTP) Arrangement with HMRC. A TTP arrangement is a structured payment plan with HMRC that gives businesses time to pay back what they owe. We are experienced in dealing with HMRC in such matters.
- Additional Finance. We have professional contacts with multiple lenders who could help find the right deal for extra funding.
- A Company Voluntary Arrangement. If creditors are demanding the money they are owed, the CVA process allows for directors (with the support of an insolvency practitioner) to propose a structured repayment plan over a period of time, and/or for a percentage of the debts owed. If successful this would mean a potential write off of part of the debt or further time to plan payment, and avoid insolvent liquidation.
If you need any help our #bournemouth office are here to help. www.antonybatty.com/about-our-insolvency-practitioners/bournemouth-office/