We hope you enjoy our latest monthly collection of interesting and pertinent news and announcements as much as the long-awaited summer weather!
There is a lot of information that will impact and be of interest to accountants and their clients which is why we created our accountants hub so you’ll have access to the most important and accurate insolvency information whenever you need it.
But you can’t be everywhere and read everything all at once, so we collect the most interesting and important business and insolvency news stories every week along with regular new blogs on a range of relevant topics for you each and every week.
We’re always keen to hear what you think so email us at ask@businessrescueexpert.co.uk because we really want to write what you really want to read!
Insolvency Service revised IVA protocol
The Insolvency Service has published a revised Individual Voluntary Arrangement (IVA) protocol to better improve the service currently offered to people in debt and safeguard them from poor practice.
The new protocol includes easy-to-read “key facts” documents which will be given to people in debt before they sign up to a legally binding IVA. The protocol also gives greater clarity to Insolvency Practitioners about their responsibilities when giving advice about IVAs.
Claire Hardgrave, head of Insolvency Practitioner Regulation for the Insolvency Service, said: “It’s vital that people with debt problems are always given quality advice. At the same time, Insolvency Practitioners need access to clear guidance in order to provide the best service possible.
“Since the publication of our report, we’ve been working with regulators and met Insolvency Practitioners to discuss our plans. This protocol provides much-needed safeguards and transparency for all concerned, ensuring there are fewer grey areas for the practice and that people in debt are supported from the very start.
Sustainability monitoring increasingly falling to accountants
With corporate sustainability disclosures becoming mandatory, the responsibility for reporting them is increasingly shifting to become a finance function.
This is no longer a redistribution of tasks but a reflection of a deeper change. That sustainability disclosures are moving from soft statements of good intentions to hard, auditable data held to the same standards are financial statements.
Previously sustainability reporting has been outside of core financial responsibilities, handled by ESG teams and consultants and measured on different timelines and systems.
New mandatory frameworks like the European Union’s Corporate Sustainability Reporting Directive (CSRD), the International Sustainability Standards Board’s (ISSBs) International Financial Reporting Standards S1 and S2 and the UK Sustainability Reporting Standards disclosures are becoming financially integrated and is expected to be reported with the same rigour, structure and credibility as any other corporate financial statement.
Because of this fundamental shift, it now increasingly falls to accountants who are increasingly being trained to manage controls, deliver assurance and uphold reporting integrity.
So what will this look like in practice?
Skilled and qualified accountants will be required to bring their methodologies to identify both the financial impact of sustainability risks and the broader impacts of an organisation on people and the environment using material judgements, internal controls and enterprise risk.
For example, climate risk disclosures must be grounded in real financial modelling, linked to enterprise risk registers and incorporated into scenario analysis, tasks that naturally fall within the remit of accountants.
Carbon and emissions data must be increasingly monetised, linked to capital allocation decisions and reflected in budgets and forecasts, increasing integration between sustainability and management accounting.
Similarly, audit-ready sustainability disclosures must now follow clear documentation trails, consistent methodologies and established assurance standards – which will be familiar to anyone who’s ever worked on reporting or auditing.
The reason for the change is, like so much, finance driven.
Investors are embedding sustainability risks into valuations. Banks are pricing climate risk into lending, suppliers are screening ESG credentials and regulators are increasingly demanding audit-assured data.
Where this is fragmented, inconsistent or disconnected from financials it damages credibility but when properly integrated and aligned with existing financial reporting structures can easily become a source of strategic insight and competitive advantage.
In order for accounting teams to meet these new demands, they will require new skills, tools and approaches including new responsibilities, systems and mindsets.
HMRC receives more funding in Spending Review
The chancellor announced that an additional £500 million will be allocated to HMRC to make 90% of interactions be online by 2030 with inheritance tax paper processes becoming a priority.
With the aim of making HMRC a “truly digital first organisation”, the current level of digital interactions at 70% is expected to increase over the next five years.
The details were set out in the Spending Review Green Book with the Treasury adamant that this will improve the services HMRC offers as it will divert taxpayers and accountants from having to call or write to HMRC which we all know can be a lengthy process.
However, the Treasury stressed that “alternative channels including phonelines” will remain open for those that need them, adding that all digital services would be available for taxpayers 24/7.
HMRC will also receive a previously announced £1.7 billion over the next four years that will go towards hiring 5,500 more compliance officers and 2,400 debt management staff members. This is predicted to raise £7.5 billion per year by 2029/30 but with newly appointed compliance officers taking at least two years before producing a reasonable yield may take longer.
Their overall budget will increase 1.8% a year up to £6.4 billion by 2028/29. Moving customer services primarily online by this period will save £126 million while HMRC have also agreed to £773 million of savings across five areas by the same year.
To help streamline administration, the Valuation Office Agency (VOA) will also be folded into HMRC which should result in a 5% to 10% saving by 2028/29 through shared services.
Over 10,000 companies removed from register
Companies House confirmed that they have removed thousands of companies from the register after finding that just 30 entities had incorporated over 50,000 companies.
Working collaboratively with The Insolvency Service, Companies House have worked to shut down thousands of companies involved in illicit activities such as using fraudulent information to incorporate businesses in the UK. They have also managed to identify over £50 million in UK property related to organised criminals in which asset recovery investigations are taking place.
The Insolvency Service have also identified over 100,000 shell companies formed over the past 20 years that they have analysed and have referred to Companies House to be dissolved.
By the autumn, Companies House will make ID verification compulsory for new directors and persons with significant control. By Spring 2026 they hope to force directors to verify their identities when filing any document and make third party agents registered as authorised corporate service providers (ACSPs) as well as being able to reject filings and documents that disqualified directors have submitted. ID verification will also be extended to LLPs, overseas companies, companies authorised to register and unregistered companies.
Rising employers NICs sees job losses increase last month while half of businesses plan to freeze pay
Last month saw 109,000 job losses, a reduction of 0.4%, but the highest monthly figure recorded for over four years, increasing the overall unemployment rate to 4.6%.
This was also the highest figures since April 2021, just after the full impact of the pandemic was felt.
The worst affected sector was hospitality with job losses of 5.6% across hotels, bars and restaurants which was followed by IT & telecoms which saw a reduction of 3.4%.
Retail was down 2.4% with overall employment down by 0.9%.
Additionally, new research shows that the planned employers’ National Insurance rise will have consequences with just over half (51%) planning to freeze salary increases while one in five companies say they have already had to cut jobs.
A survey of 500 business owners with a turnover of £5 million and above found that 53% had pencilled in headcount reductions in their future plans with another 35% planning to cut employee hours in a bid to make savings.
41% said that rising cost of employing people was their biggest issue at the moment with the double hit of higher NICs and above inflation rises to the national minimum wage.
Additionally, 76% of companies who responded said they were planning to increase their prices as a direct result of the rise and 61% said they had postponed plans for growth or would.
38% said they would be looking to increase automation in the year ahead while 21% said they would use technology including AI to replace staff if they were found to be able to make savings.
Changes coming for businesses with operating leases this year
Companies with operating leases for offices, warehouses, retail spaces, vehicles and other high-value equipment should prepare for some significant changes in how they are accounted for in their financial statement due to a major change under FRS 102 – the Financial Reporting Standard applicable in the UK and the Republic of Ireland.
For accounting periods commencing on or after January 1st 2026, businesses will need to change the way they account for operating leases. They will need to bring high-value operating leased assets onto the balance sheet as a “right of use” asset with a corresponding lease liability including property, plant, equipment and motor vehicles.
There are some exemptions for low-value assets such as small office furniture, mobile phones and short-life leases of less than 12 months.
Any adjustments will impact a company’s gross asset position which has the potential to breach company size and audit limits. Changes could also impact agreed bank covenants and EBITDA-linked bonuses.
Businesses with several operating leases will have to identify and bring them onto balance sheets as well as updating systems and processes to comply with the new requirements.
AI Assurance movement growing in accountancy firms
All the major accountancy firms are pushing ahead to try and establish a new generation of audits designed to verify the effectiveness and safety of AI systems in their work.
Led by Deloitte, EY and PwC, AI assurance services are aimed at leveraging their reputations in financial auditing to meet growing clients demands for trustworthy AI.
Moving into AI verification brings new revenue and reputational opportunities for the bigger firms and mirrors their previous expansion into providing assurance and standardisation for ESG metrics. This development coincides with some insurers starting to offer policies covering potential losses from malfunctioning AI tools, such as customer service chatbots offering incorrect advice.
The Institute of Chartered Accountants in England and Wales (ICAEW) hosted their inaugural AI assurance conference last month showing the growing interest and enthusiasm for the adoption of standards.
Currently hundreds of UK firms offer some form of AI assurance though government research indicates that much of this is provided by the AI developers themselves raising questions about independence and transparency.
A lack of standardisation is a significant hurdle of the assurance market as the level and trust of verification can vary considerably. Some services may offer only light-touch advice or focus on compliance with a single piece of legislation.
The Department for Science, Innovation and Technology has identified higher demand for AI assurance in sectors such as financial services, life sciences and pharmaceuticals.
Accounting and finance can be at the forefront of a new movement.
The Insolvency Service appoints first Digital Asset specialist
Former police investigator Andrew Small has been appointed as The Insolvency Service’s first dedicated crypto intelligence specialist to help recover more money from bankruptcy cases.
He will help track the digital assets in criminal cases and provide the agency with detailed knowledge of the growing crypto market.
The number of insolvency cases involving crypto as a recoverable asset has risen by 420% in the past five years with 59 cases in 2024/25 compared to 14 in 2019/20. At the same time the estimated value of cryptoassets identified in insolvency cases has risen by a factor of 364 – from just over £1,400 in 2019/20 to more than £520,000 in 2024/25.
Mr Small said: “There has been a rapid rise in crypto ownership in the UK and alongside that we’ve seen a similar rise in cryptoasset ownership in bankruptcy cases. Crypto is very much a recoverable asset and my role will be to help the agency by providing specialist knowledge about the types of cryptoassets available and the associated technology used to buy, sell and store them.
“The Insolvency Service has a duty to trace and recover money and assets from individuals and companies in insolvency cases and we’ll work to return as much money owed to creditors as possible.”
The Financial Conduct Authority estimates that seven million UK adults (12% of the population) held some form of crypto up from 3.2 million (4.4%) in 2021.
Scottish GDP growth lags behind the rest of the UK
The latest figures for the Scottish economy show that while it grew in the first quarter of 2025, it was lagging behind the rest of the country.
Between January and March 2025, the Scottish GDP grew 0.4% according to figures from the Scottish government. This is compared to the UK-wide GDP of 0.7% growth.
It was a mixed picture depending on the individual sectors that make up the economy. Electricity and Gas supply firms along with information and communication businesses saw a 0.2% contraction in their contributions while accommodation and food services added 0.2%.
Deputy First Minister Kate Forbes said: “It’s encouraging to see quarterly growth continuing and getting stronger in Scotland, following a 0.1% rise at the end of 2024.
“In the face of ongoing global challenges, dynamic steps are being taken to grow and transform Scotland’s economy. We are pursuing new investment, building export potential and supporting innovation.”
Insolvencies in Scotland reach a 26-month high in May
New research from R3, the UK’s restructuring trade body, showed that there were 141 insolvency cases in Scotland last month – the highest total for 29 months since December 2022.
Compared to the rest of the UK, Scotland saw both the largest monthly and yearly percentage increase in insolvency-related activity numbers.
Chris Horner, Insolvency director with BusinessRescueExpert, said: “The figures are striking given that the levels today are higher than they were for much of 2023 and 2024 when businesses were grappling with the aftermath of Covid-19 and the impact of a cost-of-living crisis.
“A number of factors contribute including a rise in the number of MVLs because directors are choosing to close their solvent businesses.
“There are also more winding up petitions as creditors take their lead from HMRC who are becoming more aggressive in chasing outstanding debts. HMRC’s more assertive approach is influencing creditors to follow suit, especially where there are signs of persistent non-payment.
“The story from Scotland is mirrored across the wider UK with business activity and confidence remaining subdued as firms continue to face persistent cost pressures, higher tax obligations and weak demand. For many businesses, this combination of pressures can tip some into formal insolvency procedures.”