A pipework manufacturer based in West Yorkshire has been forced into administration after the ‘profitable’ company was found to be loss making. The error was found after the firm’s own accountant, solely responsible for the books in the specialist company, left the firm, perhaps demonstrating the value of leaving such matters in the professional hands of outsourced accountants.
BCI Process, which was backed by an investment firm, was thought to be a recent small business success, after securing contracts worth more than £1m.
Major utilities
The firm is headquartered in Keighley, a passing town for the Tour de France visit to Yorkshire this year, and is a key employer in the local area. In total, the company workforce is about 70, of which 20 are full-time staff.
With its contracts ranging in length and value from short-term deals worth 25k to multi-million ongoing agreements, an unspecified number of jobs have been saved as administrator Leonard Curtis managed to secure a rescue package at the firm formerly known as Brewchem International.
Many of its contracts are with major utility companies throughout the globe, with its steelwork structures a major component of many of the largest projects currently in process.
Also a manufacturer of pipework, other contracts include deals with multinational firms in the food and drink sector.
History of debt
According to InsiderMedia.com, the firm has had a few run-ins with HMRC in recent years.
In 2012, the firm agreed an investment package with Hughes Armstrong Corporate Investment. That money was used to service a debt with HMRC.
In 2014, however, HMRC sent the firm a demand for £300,000. BCI’s internal accountant refuted this, claiming an overstatement when tallying company books with HMRC figures.
This issue and others were found when the accountant left BCI in March this year. Serving as a timely reminder for the importance of having a professional team in place, it shows why many small businesses use outsourced accounting and financial services for their bookkeeping.
Rescue package
For the nine months preceding July 2013, the accountant had reported a pre-tax BCI profit of £155,000. In that period, the firm had actually made a loss of £233,000. The same loss was discovered to have been made by the firm in the nine months to April this year too.
Another discovery indicated that HMRC could also be owed up to £1.1m. A plan was drawn up to service this debt, but the firm was unable to meet its obligations.
Following a winding up order being issued and a restriction of credit access, a new firm was created by Hughes Armstrong, BCI Brewchem (Anglia), to rescue the ongoing operations.