Official Statistics

Methodology and Quality Document – Company Insolvency Statistics June 2024

Published 19 July 2024

Review of designation as accredited official statistics

This official statistics publication is a successor to the quarterly Company Insolvency Statistics, which were accredited official statistics. At the time of publication, the Office for Statistics Regulation was assessing this new publication for compliance with the standards of trustworthiness, quality and value in the Code of Practice for Statistics. Because the review is ongoing, this edition of the publication is labelled as ‘official statistics’ instead of ‘accredited official statistics’.

You are welcome to contact us directly with any comments about how we meet these standards. Alternatively, you can contact OSR by emailing [email protected] or via the OSR website.

1. Data sources and data validation

Individual-level company insolvency data for England and Wales, Scotland and Northern Ireland were sourced from Companies House (except for compulsory liquidation data for England and Wales and Northern Ireland, see below). Companies House conducts a series of basic checks on the data, including the removal of duplicate records, prior to supplying the Insolvency Service with monthly snapshots of data to compile company insolvency statistics. Note that Companies House does not verify the accuracy of all information filed, as outlined in their disclaimer published on the gov.uk website. Company moratorium and restructuring plan data are also sourced from Companies House.

Aggregate data for compulsory liquidations in Northern Ireland were sourced from the Department for the Economy. The Insolvency Service does not conduct any further validation on these aggregate data.

Compulsory liquidation data for England and Wales were sourced from the Insolvency Service case information system (ISCIS).

Companies House separately provides snapshot numbers of companies on the effective register as at the end of each month in England and Wales, Scotland, and Northern Ireland. These data were used to calculate company insolvency rates and are separately published by Companies House on the gov.uk website

More information on the administrative systems used to compile these insolvency statistics can be found in the Statement of Administrative Sources.

2. Methodology

2.1 Seasonal adjustment of data

Underlying data for these monthly statistics for England and Wales were adjusted using an ARIMA model where there was evidence of seasonality. This removal of systematic calendar-related variation enables comparisons to be made between months and the underlying trend in insolvency numbers to be determined.

The seasonal adjustment models are reviewed on an annual basis, in accordance with the Insolvency Service Official Statistics Revisions Policy. Based on the outcome of the April 2024 Seasonal Adjustment Review, compulsory liquidations, creditors’ voluntary liquidations (CVLs) and administrations in England & Wales were all seasonally adjusted. Data for Scotland and Northern Ireland were not adjusted.

Seasonal adjustment in this publication typically results in numbers being adjusted by up to 10%.

Seasonal adjustment was carried out using X13-ARIMA-SEATS (developed by the US Census Bureau), as implemented in the ‘seasonal’ package in R.

Full details of the 2024 seasonal adjustment review and the models used to adjust these data can be can be found in the April 2024 Seasonal Adjustment Review.

2.2 Calculation of rates

The numbers of companies that entered insolvency in each of England & Wales, Scotland and Northern Ireland was divided by the mean average number of all companies on the effective Companies House register during the same period. The effective register excludes companies in the course of removal or liquidation.

The rates presented for each month reflect a 12-month rolling rate per 10,000 companies on the effective register. Therefore, the March 2024 rates, for example, were calculated using data covering the period 1 April 2023 to 31 March 2024.

The insolvency rate gives an indication of the probability of a company entering insolvency in the previous 12 months. As the rates are calculated as a proportion of the total number of companies, they are more comparable over longer time periods than the absolute numbers.

2.3 Tabulating numbers of company insolvencies

The main series of company insolvency tables present the overall numbers of company insolvencies in each month since January 2021, as well as annual totals. Tables 1a and 1b present seasonally adjusted and non-seasonally adjusted tables for England and Wales. The commentary for these statistics refers to the seasonally adjusted figures so that reliable month-to-month comparisons can be made. Table 4 presents the non-seasonally adjusted numbers for Scotland. Table 6 presents the non-seasonally adjusted numbers for Northern Ireland.

Company insolvency data, as provided by Companies House, were tabulated by insolvency type (creditors’ voluntary liquidations (CVLs), administrations, company voluntary arrangements (CVAs) and receivership appointments) and month in which each insolvency was registered with Companies House. Therefore, numbers reflect company insolvency registrations rather than insolvency procedure start dates. Start dates vary across procedures e.g. administrations are started once an administrator has been appointed; CVAs start upon date of creditor agreement.

Compulsory liquidation data for England and Wales, sourced by the Insolvency Service, are reported by court order date, thus providing a more accurate measure of the number of new cases in each month. However, these figures are considered provisional since any future cases later considered as a duplicate, and any cases later rescinded, will be removed from the underlying data. Furthermore, there may be a lag in cases being recorded on the administrative system, meaning that numbers from previous months may subsequently be revised upwards. These figures are therefore marked as ‘provisional’ in the accompanying tables.

Numbers of insolvencies by industry in accordance with the 2007 Standard Industrial Classification (SIC) are presented in Table 1c for England & Wales and are also broken down by company insolvency type in supplementary industry tables published once each quarter in January, April, July and October. Insolvency numbers by industry for Scotland are also included in these supplementary tables.

Company insolvency data as supplied by Companies House contains a mixture of the 2003 and 2007 Standard Industrial Classification (SIC). Where a 2003 SIC code had been supplied, it is converted to a 2007 code using a ‘best match’ approach using the correlation tables provided by the Office for National Statistics. Where more than one SIC code is recorded, only the first listed code is used. For information on SIC 2007, including its structure and more detailed information on which industries are included in a particular SIC code, please see the Office for National Statistics website.

Between April 2016 and early 2019 there were a high number of CVLs registered for companies that should have only registered one CVL. Table 1d presents the (seasonally adjusted and non-seasonally adjusted) numbers of ‘bulk’ CVLs and the overall totals including ‘bulk’ CVLs.

Company moratorium and restructuring plan data are also sourced from Companies House and are presented by month in Table 1e.

Companies that entered CVL following administration are excluded from Tables 1a to 1d since they have already been captured as administrations and therefore would be counted twice. However, Table 2 separately presents these (non-seasonally adjusted) numbers since 2014.

Company liquidation rates are presented in Table 3 for England and Wales. Table 5 presents the rates of company liquidation in Scotland. Table 7 presents the rates of company liquidation in Northern Ireland.

A monthly time series back to 2000 can be found in the long-run CSV file on the main publication page.

3. Revisions

These statistics are subject to revisions, as set out in the published Revisions Policy. Revisions tend to be made as a result of data being entered onto administrative systems after the cut-off date for data being extracted to produce the statistics. In addition, seasonally adjusted numbers are revised in subsequent publications, as the ARIMA model used is updated with additional data.

Data for the most recent month were extracted approximately five working days after month end so there is an increased likelihood that published statistics may be revised in the future. Therefore, these monthly statistics are marked provisional.

Any revisions from the previous edition of the publication are noted in the Notes column of the accompanying data tables except those resulting from changes to the seasonal adjustment model.

4. Quality

This section provides information on the quality of these monthly company insolvency statistics, to enable users to judge whether the data are of sufficient quality for their intended use.

The section is structured to align with the Quality Assurance Framework of the European Statistical System for statistical outputs.

Relevance: The degree to which the statistical product meets user needs in both coverage and content.

These statistics present company insolvencies for England & Wales, Scotland and Northern Ireland and are the most comprehensive record of the number of company insolvencies in the United Kingdom.

The content and format of this publication were updated in April 2024 in response to feedback provided in a user consultation in 2023.

Key users of insolvency statistics include the Insolvency Service itself, which has policy responsibility for insolvency in England & Wales and for the non-devolved areas within Scotland and Northern Ireland; other government departments; parliament; the insolvency profession; debt advice agencies; media organisations; academics; the financial sector; the business community and the general public. Insolvency statistics are typically widely reported in national, regional and specialist media on the day of release. Key users of the breathing space statistics include HM Treasury, which has policy responsibility for the scheme, as well as debt advice agencies, media organisations and the general public.

The statistical production team welcomes feedback from users of the Insolvency Statistics and can be emailed at [email protected].

Accuracy and Reliability: Accuracy is the proximity between an estimate and the unknown true value. Reliability is the closeness of early estimations to subsequent estimated values.

All formal insolvency procedures entered into by a company, a partnership or an individual are required by law to be reported to the appropriate body, so Insolvency Service statistics should be a complete record of insolvency in the United Kingdom.

Some checks are in place to identify and remove duplication of cases, to ensure that returns cover all reporting areas, and to check consistency within tables and between related tables.

Note that data are extracted from live administrative systems and therefore subject to routine revisions as systems are updated.

Timeliness and Punctuality: Timeliness refers to the elapsed time between publication and the period to which the data refer. Punctuality refers to the time lag between the actual and planned dates of publication.

Company insolvency data is provided to the Insolvency Service by Companies House approximately five working days after the end of the month. Typically, these statistics are scheduled to be released two to three weeks after the end of the month they refer to. This is to allow time to extract and compile the statistics. This publication, which is the first in the new format, was published later than usual, as an additional time was required to implement the new processes and carry out additional checks.

The publication schedule for these statistics, and all other Insolvency Service statistics, can be found on the UK National Statistics Publication Hub.

Comparability and Coherence: Comparability is the degree to which data can be compared over time and domain. Coherence is the degree to which data are derived from different sources or methods, but refer to the same topic, are similar.

Companies House produces official statistics on companies in liquidation and in dissolution. However, totals do not align with the insolvency statistics, since they include companies that wound up voluntarily. There are also small differences between numbers resulting from differences in methodology and data sources.

For seasonally adjusted numbers, there are larger differences compared to the discontinued quarterly numbers. This is because a new monthly seasonal adjustment model has been produced. However, the quarterly sums of monthly seasonally adjusted numbers show similar differences in the magnitude and direction of seasonal adjustment to the previously published quarterly numbers.

The Gazette (formally the combination of three publications: The London Gazette, The Belfast Gazette and The Edinburgh Gazette) is an official journal of record consisting of statutory notices, including company insolvency notices. The timings of the publication of Gazette notices and the registration of company insolvencies at Companies House may differ and therefore the numbers of insolvencies in a specified time period may not align. Notifications of company CVAs are not published.

The Office for National Statistics also produces annual statistics on business “deaths” in its Business Demography publication. Again, figures do not align with Insolvency Service statistics as they relate to all registered businesses, whereas the insolvency statistics relate only to companies on the Companies House register, and business deaths include all types of dissolution in addition to insolvencies.

The AiB is required to be notified of all company liquidations and receiverships in Scotland, and publishes official statistics based on its own administrative records. These differ from the Insolvency Service statistics, which use data from Companies House as the source. Differences are due to the AiB using its own administrative system’s date rather than the date of registration at Companies House. The AiB does not publish information on the number of company voluntary arrangements or administrations, which are a reserved matter for the UK government.

Accessibility and Clarity: Accessibility is the ease with which users are able to access the data, also reflecting the format in which the data are available and the availability of supporting information. Clarity refers to the quality and sufficiency of metadata, illustrations and accompanying advice.

Insolvency statistics are available free of charge to the end user on the Gov.uk website and they meet the standards required under the Code of Practice for Official Statistics.

The accompanying data tables are formatted in line with current guidance for producers of official statistics to help improve the usability, accessibility and machine readability of spreadsheets.

Historical insolvency data are also published for the key series, on the National Archives website.

Views on the clarity of the publication are welcomed via email: [email protected].