More collapses imminent, warns KPMG

KPMG’s leading restructuring expert has said bold moves to ease companies’
tax burdens had prevented collapses – but warned 5,000 businesses will still
fail in 2009.

Richard Fleming said deferrals of VAT and PAYE payments through HMRC’s
business payments support service had headed off large numbers of business

The time-to-pay arrangements saw businesses put off a combined bill of £2.4bn
by the end of May.

Fleming said the 1,571 insolvencies so far this year was way behind the 5,000
predicted for the whole of 2009, but an inevitable slump in commerce after the
holiday season would see the forecast borne out.

After an average of 350 collapses a month since the beginning of the year,
the number of administrations halved to 178 in June, KPMG said.

But the drop was only temporary, said Fleming, the architect of sports chain
JJBÕs company voluntary arrangement. ‘We are not convinced that this indicates
an upturn in sentiment; more a temporary reprieve in advance of a second wave of

‘From the business perspective, HMRC’s decision to allow companies to delay
payments on PAYE and VAT has bought them time by freeing up working capital,’ he

Fleming predicted the 5,000 mark will be reached after the holiday season. He
said: ‘September is likely to be the crunch month for many businesses in tourism
and leisure.’

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