Resilience to recovery: The future of UK construction
Resilience to recovery: The future of UK construction
How to agree ‘Time to Pay’ with HMRC HMRC are typically a significant creditor for construction firms, across CIS, VAT and PAYE liabilities and are therefore a key stakeholder when a business is experiencing financial challenges. When it comes to outstanding tax liabilities, the good news is that, in our recent experience, HMRC remains supportive in agreeing to ‘Time to Pay’ agreements. These are carefully prepared, bespoke, plans that allow business owners to repay their arrears over an agreed timeframe. HMRC doesn’t agree to them lightly however. Businesses need to have a clear reason for not being able to meet their tax payments on time and, ultimately, a watertight commitment that will see the payments being made in full. It will also take a view based on recent compliance record and how good a company has been at paying its taxes in the past when weighing up whether further concessions can be made. If you think that your outstanding tax liabilities are unsustainable and that you would benefit from a Time to Pay agreement, early engagement is key. Demonstrating to HMRC that a Time to Pay agreement is part of an effective, wider turnaround strategy is critical, alongside ensuring that any agreements that firms enter are genuinely achievable – missing payments on a plan can, in circumstances, make matters worse.
A split field
Turning to revenue expectations for the year ahead, broadly similar proportions of construction firms expect revenues to increase (36%) and decrease (39%).
65% 39%
Firms surveyed in Greater London are more bullish about their potential, with 65% expecting to increase earnings, while just 12% of East Midlands construction firms are forecasting revenue growth in 2024. At the same time, data shows that London’s economy is forecast to bounce back higher than the rest of the regions as the UK returns to growth, supporting higher confidence in the capital. But the fact that there is no clear-cut view on the sector’s prospects for prosperity reflects a background of ongoing uncertainty and economic volatility, as well as greater pockets of activity in specific cities and regions. As a result, we’re seeing a similar pattern in industry appetite when it comes to future M&A and exit strategies.
Looking to profitability, again there is a diversity of expectation, with equal amounts forecasting an increase in profitability (39%) and a decrease (38%). London firms are, once more, the most optimistic, with 63% expecting to increase profits, while just 16% of East Midlands firms expect the same. It’s possible that the negative sentiment seen in the East Midlands reflects the decision to cancel the eastern leg of HS2, which was particularly poorly received in the region. Over a third of respondents told our survey they would consider merging with another business (36%), while a similar proportion said they might acquire a new business (36%), sell part of their business(es) (35%) or sell all of it (34%) over the next year. The fact that so many of our respondents indicated considering some sort of transaction in the next 12 months, shows the impact of current pressures on future corporate activity.
Get in touch
Simon Farr Director Restructuring Advisory Manchester +44 (0)7787 004 421 simon.farr@frpadvisory.com
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