Despite the belief that insolvency is a highly paid profession, insiders claim the government frequently refuses to pay practitioners the fees they bill. When an IP begins the process to disqualify a director, he is required by law to assist the disqualification unit in its work, which could include going to court.
But sources claim that in complicated cases, the DTI is reluctant to pay the demanded rate. ‘The firm charges a rate, but the government doesn’t pay that rate if it doesn’t think it is appropriate,’ a source said.
Many IPs believe the answer is a standard rate for government work, but the DTI has so far refused to set one.
Keith Goodman, president of the Insolvency Practitioners’ Association, said: ‘In some aspects of our work we run at a loss, but it’s inevitable.
It’s an occupational hazard’.
He added the insolvency service is aware of this issue and do most of the work. High profile insolvencies like Prost Grand Prix attract media attention and help promote a myth of ‘fat cat’ insolvency experts.
A spokeswoman said the government pays ‘the normal charge rate of that practice, depending on that IP’s grade’.
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