REGIONAL accountancy firm Begbies Traynor, which has an operation in Birmingham, has revised its full-year targets after third quarter revenues fell in its tax division.
The group said demand for tax planning services had fallen due to a tougher stance towards such activities by the Government and HM Revenue and Customs. The sluggish deals market has also been a factor.
“We do not expect a material contribution from the tax division in the current market conditions,” said the firm in a trading update for the three months to the end of January.
The core insolvency division, which accounts for around 80% of revenue, saw business increase in line with seasonal trends but the overall UK market was flat, said Begbies.
“This seasonal improvement will only partially mitigate lower than expected performance from the group’s tax division. Overall, this has resulted in a reduction in the board’s expectations for the year as a whole.”
The firm has continued with its restructuring plans to “align costs to current levels of activity”.
It expects this programme, which involves severance costs and onerous property leases, to cost £3m and give annual savings of £2m.
Chairman Ric Traynor said: “The core insolvency business has now stabilised in line with national appointment trends.
“We have taken strong action to realign costs to enhance profitability at current levels of activity, following the disappointing trading performance in the year to date.
“However, we have maintained our market leading position in insolvency and the group remains well-placed to take full advantage of any upturn in its markets from its current cost base.”
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