Inactive companies costing £57m, says Deloitte
More than 40 per cent of subsidiary companies registered in the East Midlands are dormant, costing the region £57m per year. That's according to research from Deloitte.
A report into the legal company structures of East Midlands businesses by the accountancy firm said 5,719 of the 13,222 subsidiary companies registered in the region were inactive.
Administrative and management costs of up to £10,000 per year are accrued by each one, which could be costing the East Midlands an annual £57m.
Chris Farrington, partner at Deloitte in Nottingham, 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 business 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."
