London, Jan 18: After the disappointing third quarter numbers and the 6 per cent rise in the number of British companies facing financial distress, there are fears that the economy is far from recovery and is yet to face the worst of the global slump.
Even though the economic trends in the last few months of 2009 were better than the numbers recorded during the peak of the global economic crisis, the numbers would worsen again, warned Begbies Traynor, an insolvency specialist.
In a more distressing news, the government's 'time-to-pay' scheme, which provided a lot of support to recession-hit companies in 2009, is about to end.
"HMRC remains one of the principal creditors in many insolvencies and we fear that when the current "time-to-pay" scheme, which provided a lifeline to many businesses, is finished there will be a significant rise in company failures - most probably from the third quarter of 2010 onwards," Begbies is quoted as saying in a Times Online report.
Introduced in 2009 autumn, the scheme allows companies to defer paying their bill for three to six months and triggered a rush of 242,000 businesses asking for deferral of a total 4.2 billion pounds in tax.
Once the Government's scheme to delay making tax demands for troubled companies runs out there will a bloodbath, the experts predicted.
Most of the companies that got into the scheme probably won't survive, Nick Hood, a partner at Begbies Traynor, is quoted as saying in the report published on Monday, Jan 18.
With the tax offices already starting to refuse extensions to payment deferrals, more and more companies are expected to see troubled waters ahead in the year as they would be expected to repay debt in the coming months.