Inactive companies cost £88m, says Deloitte
More than 40 per cent of subsidiary companies registered in the West Midlands are dormant, costing the region £88m per year. That's according to research from Deloitte.
A report into the legal company structures of West Midlands businesses by the accountancy firm said 8,824 of the 20,339 subsidiary companies registered in the region were inactive.
Administrative and management costs of up to £10,000 per year are accrued by each one, said Deloitte, which could be costing the West Midlands an annual £88m.
Dominic Wong, partner at Deloitte in Birmingham, said: "The figures from the analysis indicate a missed opportunity. Whist there is inevitably some cost associated with groups eliminating their unwanted subsidiaries using appropriate procedures; the payback period associated with this 'one off cost' is very attractive.
"Most businesses leaders do not realise how much it costs to keep an oversized legal structure running, with only the statutory filing costs often being considered. A way round this can be to go for the low hanging fruits - get rid of the companies that are not trading but have a clear plan for the operational companies."
