How will the collapse of Carillion impact contractors?Published on: 2nd February 2018
The 16th January 2018 saw construction giant Carillion enter into liquidation, causing many projects throughout the UK to be placed on hold, as well as forcing thousands upon thousands of contractors to reassess their current situation as they wait to discover if they will be impacted.
The firm collapsed whilst still owing 30,000 businesses around £1 billion, as well as having 20,000 employees and in the midst of major construction projects such as HS2 and the new Royal Liverpool Hospital. As investigations continue into how Carillion came to be in such a dire position, we look toward the contractors that will ultimately be affected by its collapse.
Loss of money
Contractors may find themselves out of pocket if they had been working directly with Carillion as a sub-contractor on a project, as to how sub-contractors will be reimbursed for money owed is yet to be resolved. Unfortunately, this issue may spread further than just those working with Carillion, as contractors struggling with cash flow due to the collapse creates a domino effect further down the supply chain.
Postponement of projects
Many projects that Carillion had been handling have already been taken over by fellow construction businesses, however many projects may find themselves in limbo as it is decided how the project will move forward without its main contractor. For contractors working on these projects work will halt indefinitely until the situation is resolved.
More stringent processes and procedures
Carillion is likely to highlight the mistakes that many others are making, which will subsequently force businesses to seriously consider the current processes and procedures in which they run their business to ensure another situation like this is avoided.
As investigations into the collapse continue and further details are announced, our CIS and limited company services will continue to support contractors working in construction and other industries in ensuring they are fully compliant with HMRC and CIS regulations.