Recruitment firm hit by bad debt goes bust, owing £482k to taxman
PUBLISHED: 10:14 19 November 2019 | UPDATED: 15:14 09 December 2019
A £6m turnover Ipswich recruitment firm hit by bad debt, tax bills and a court bill, coupled with declining turnover and profit, has gone into liquidation.
Hunterskill Recruitment, which specialised in providing temporary labour, particularly for the recycling sector, had been going since 2006.
But director Reginald Jacob said it hit problems after a major customer collapsed leaving it with £118k worth of debt, and it lost a court case against a client, putting it a further £40k out of pocket. It also faced a £76k VAT surcharge. Prior to this the business had always been profitable - reaching a peak turnover, in excess of £6m, for the accounting year ending March 31, 2018, he said.
The bank withdrew its facility, making it impossible to continue, he explained, and as a consequence its headquarters in Norwich Road, Ipswich - along with a satellite office in Peterborough - closed earlier this year.
In a statement to creditors, Mr Jacob said profits began to decline "as people using this type of service gradually began to reduce price margins, meaning profits decreased and the market place for this type of labour diminished". He pursued new business, but after finding a lack of new clients, took the decision to case trading in April, he added.
Philip Ballard, a partner at insolvency practice Greenfield Recovery Ltd, was appointed joint liquidator along with Sajid Sattar, on November 7, 2019.
Mr Ballard said liabilities were believed to be in the region of £488k, with £482k owed to HM Revenue and Customs. The director's statement of affairs suggested the only asset was an overdrawn director's loan account of around £95k, but a full reconciliation to the date of liquidation would need to be undertaken, he said.
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"There were no employees at the time of our instruction and it is understood that their employment had already been transferred to another entity," he added.
"As liquidators we have a duty to maximise the realisation of assets, and conduct an investigation into the financial affairs of the company and the conduct of its directors. Unfortunately a liquidation is not a quick process, and we are not currently able to confirm the prospect of a return to creditors. Should any creditors have any concerns they should contact the liquidators directly."
Mr Jacob said he was now focusing on a separate sister company, Hunterskill Associates, based in Great Coleman Street, Ipswich, which was set up three years ago to cater for high end contract recruitment work, including mechanical engineers, farm operatives and some factory workers - but geared to permanent roles.
"We are moving away from temporary labour," he said. This area was becoming increasingly difficult, he explained, with margins very low, and Brexit causing a severe downturn in new migrant workers into the country.
Mr Jacob said: "The challenges of recruiting within the local market place has placed industrial agencies at risk when placing individuals who may also be under the control of unlicensed gangmasters.
"This is crucially important, as Hunterskill Associates Ltd will only manage industrial contracts that carry 100% assurance that can be, and only serviced by candidates that pass a stringent vetting process that meet the standards of the Gangmasters and Labour Abuse Authority (GLAA) and Association of Labour Providers (ALP).
He added: "As Hunterskill Associates Ltd was incorporated three years ago we are allowed to continue trading under the original name of Hunterskill Recruitment as essentially now Hunterskill Recruitment is the trading name of Hunterskill Associates Ltd. We chose to continue trading under this name as we are a well established local business that has serviced the local area since 2006."
Mr Jacob said half of the HMRC tax bill was in dispute