T&S rules wipe out another 1,000-odd PSCs

The number of incorporated businesses going to the wall increased between May and June this year, due to a mass collapse of connected personal service companies.

The Insolvency Service said the collapse of the PSCs was significant enough to drive up the overall level of insolvencies during the second quarter by more than 12 per cent -- to 4,457.

“This was caused by a one-off event of 1,131 connected personal service companies (PSCs) entering…[liquidation] following changes to claimable expense rules.” 

Despite the claim that the mass collapse of the PSCs was a ‘one-off,’ the same expenses rules caused another mass implosion of PSCs -- 1,796 of them -- late last year.

 “There were 1,796 company insolvencies in 2016 Q4 and 1,131 in 2017 Q2 due to one-off events,” the Insolvency Service clarified, seeming to refer to the introduction of the T&S legislation.

But more positively, excluding these two large-scale instances of PSCs failing, the underlying number of company insolvencies has fallen to its lowest quarterly level since 2000.

Explaining the 17-year low, the service said it was driven by a fall in creditors’ voluntary liquidations, which were highest in the Admin and Support, Construction and Retail sectors.

"The underlying liquidation rate has dropped to one in 247 [companies]," it added. "Changes in company liquidation rates are related to economic conditions: in periods of economic growth, liquidation rates tend to decrease."