Tax & Accounting News

Personal insolvencies hit new record

12/05/2010

The first quarter of 2010 saw another record high for the number of personal insolvencies, with 35,682 people being declared insolvent – a 17.9 per cent increase compared to the same period in 2009.

However, there was only a slight increase compared to the final quarter of last year, suggesting the increase in the number of individuals going bust may be levelling off.

There were also significant changes to how these insolvencies were dealt with, with 18,256 bankruptcies – a 10.7 per cent decrease compared to the same period last year – whereas the number of Individual Voluntary Agreements (IVAs) increased by 20.1 per cent, to 11,782. There were also 5,622 Debt Relief Orders, a new measure to deal with relatively small debts, which was introduced in the second quarter of last year.

However, there was better news on business insolvencies, with corporate collapses falling to 4,082 during the first quarter of 2010 – down 17.8 per cent compared to the same period a year ago.

This was made up of 1,314 compulsory liquidations (which are down 1.3% on the previous quarter and down 14.8% on the corresponding quarter of the previous year), and 2,768 creditors’ voluntary liquidations (which are down 11.4% on the previous quarter and down 19.1% on the corresponding quarter of the previous year). 

However, industry body R3 has warned that the reduction was partly due to low interest rates and ‘time to pay’ arrangements from HM Revenue and Customs (HMRC), meaning corporate insolvencies could increase again if rates rose or HMRC began to take a tougher line.

For more information or advice on insolvency issues, please contact us.