Carillion’s collapse and it’s knock-on effect

Carillion’s collapse and it’s knock-on effect

by admin

Tens of thousands of jobs and a multitude of government contracts were under threat on Monday 15th January 2018 after construction giant Carillion was forced to enter liquidation.

They are expected to appoint accountants PricewaterhouseCoopers as special managers to handle the collapse of the firm.

The company has suffered from a massive crisis, caused by project delays and missed budgets, leading to warnings, mounting debts of around £2 billion and a large pensions deficit of approximately £600million.

The Wolverhampton-based firm is involved in a large number of government projects.

These include providing school dinners to around 30,000 pupils a day in 218 schools, cleaning and catering for NHS hospitals, construction work on rail projects and maintaining circa 50,000 army base homes for the Ministry of Defence.

In the UK it’s projects have included the likes of; The Royal Opera House, the Channel Tunnel, Tate Modern, the Library of Birmingham and the famous doughnut building of the UK’s Government Communications Headquarters (GCHQ).

Among many ongoing projects, Carillion was also building the £335 million new Royal Liverpool Hospital, which is reported to be at least a year behind schedule.

Internationally it has been responsible for the likes of Oman’s parliament – the Majlis, Alvito Dam in Portugal and the Yas Marina Hotel in Abu Dhabi.

It is looking like contracts for building part of the HS2 rail link will remain in the private sector.

Kier and Eiffage, the other two construction partners, have assured ministers they can build the London to Birmingham section of the line with Carillion.

Other companies have already drawn up contingency plans for Carillion’s demise, including the UK’s largest construction firm, Balfour Beatty, which expects to take a £45m hit.

Carillion employs around 43,000 globally – around 20,000 in Britain – But many thousands more are employed by firms linked to Carillion as sub-contractors or suppliers – Hundreds of smaller businesses could collapse, the domino effect, as it travels down the chain could be unprecedented.

There will also be a lot of individuals and firms who were a supplier or subcontractor to Carillion who will be wondering what they should do now.

The knock-on effect for the company’s suppliers and subcontractors is going to be considerable and confusing for all involved.

On a day to day basis, subcontractors and suppliers to large construction companies often have to endure a lengthy wait for their invoices to be paid – More so now, if they are owed by Carillion!

Some companies will have immediate issues which will cause potential impact on their own cash flow and ability to maintain payments. This could result in serious problems when it comes to paying wages, suppliers and business debts, HMRC included.

Consider your actions, if this affects you personally or if you are struggling in general with HMRC debts/business debt:

• Speak to your accountant with regards to any up-coming bills which you don’t think you will now be able to pay on time – Assess with them, the impact on your cash flow/forecasts.

• If you need assistance, with the likes of accruing HMRC debts – speak to specialist advisors out there who can assist with the likes of a Time to Pay Arrangement –

• Look at your own ways of increasing revenue – If a void is left; can new business contracts/sales be bought on quickly that could help?

• Contact a specialist Insolvency Practitioner if you are concerned things may escalate out of control.

Seek advice as early as possible, be that from your accountant or a specialist advisor. At the moment everyone is assessing just how much impact these events may have on other businesses and it is likely to take time before the dust settles on this.

Lloyds Bank has said it will provide £50 million to support it’s small business customers who are struggling after the failure of Carillion – Let’s hope others follow!

HMRC will also provide practical advice and guidance on those affected through it’s Business Payment Support Service (BPSS). The BPSS connects businesses with HMRC staff who can offer practical help and advice on a wide range of tax problems, providing a fast and sympathetic route to agreeing the best way forward and addressing immediate concerns with practical solutions.

Or feel free to contact us direct to discuss any issues with HMRC arrears. You can call us on 0800 448 0293, start a live chat on our website or email


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