Methodology and Quality Document – Monthly Insolvency Statistics April 2022

1. Data Sources

1.1 Data sources for insolvencies

Company Insolvency data for England & Wales, Scotland and Northern
Ireland are sourced from Companies House, except for compulsory
liquidation data for England & Wales and Northern Ireland.

Compulsory liquidation data for England & Wales are sourced from the
Insolvency Service case information system (ISCIS). Compulsory
liquidation data for Northern Ireland are sourced from the Department
for the Economy, Northern Ireland.

Individual insolvency data for England & Wales were sourced from ISCIS;
individual insolvency data for Northern Ireland were sourced from the
Department for the Economy.

1.2 Data sources for non-insolvency measures

Company moratorium and restructuring plan data for England and Wales are
sourced from Companies House.

Individual breathing space data are sourced from the Breathing Space
register, owned by HM Treasury (HMT), for which the Insolvency Service
is a custodian.

2. Methodology

2.1 Data extraction and validation

Companies House routinely supply data covering company insolvencies and
non-insolvency measures (moratoriums and restricting plans) on a
quarterly basis. These data are used to compile the Insolvency Service’s
Quarterly National
Statistics
.
Companies House conduct a series of basic checks on the data including
the removal of duplicate records prior to data supply.

In the interim months between the quarterly data supply, Companies House
provides daily datasets which are combined by the Insolvency Service
statistics team to create the interim monthly datasets. These data are
not validated and are subsequently overwritten by the next validated
quarterly dataset when available.

Individual insolvency data for England & Wales, and compulsory
liquidation data for England & Wales are extracted from the Insolvency
Service’s administration system approximately five working days after
month end. Due to the tight turnaround for publication these data are
not validated except to remove duplicate compulsory liquidations. As
with the company insolvency data, there is a more robust validation
process for the compilation of the quarterly statistics, as outlined in
the Administrative Data Quality Assurance and Audit
Arrangements
.

Note that the process carried out to remove duplicate liquidation data
was reviewed and changed ahead of the release of the January 2021
monthly statistics (published on 19th February). The process was
improved to ensure that the correct duplicate record was retained. This
resulted in a small number of revisions to the month in which the
liquidation was recorded. The impact of these revisions is considered
minimal since there were no changes made to the overall totals of
liquidations.

Individual insolvency and compulsory liquidation data for Northern
Ireland are provided in aggregate form by Northern Ireland’s Department
for the Economy. The Insolvency Service does not conduct any further
validation on these aggregate data.

Some automated validation checks are made on the individual breathing
space data, such as ensuring that dates are formatted correctly.
However, data are extracted from the breathing space register in
aggregate form to protect the identity of individuals and therefore the
Insolvency Service does not conduct any further validation on these
aggregate data.

2.2 Seasonal adjustment of data

Insolvency data with seasonal or other calendar influences that
influence patterns in the data series are typically seasonally adjusted.
The process of seasonal adjustment results in a clearer picture of the
underlying behaviour of the data.

However, the underlying data used to compile the Monthly Insolvency
Statistics have not been seasonally adjusted since the monthly
historical time series is too short to enable any seasonal trends to be
determined. Additionally, the resource required to seasonally adjust the
data each month would result in less timely publication of these
statistics.

Since the data are not seasonally adjusted, month-on-month changes are
not valid. Instead, comparisons are made in the commentary between the
latest month and the same month in the previous two years.

2.3 Tabulating numbers of company and individual insolvencies

Company insolvency data, as provided by Companies House are tabulated by
insolvency type (creditors’ voluntary liquidations (CVLs),
administrations, company voluntary arrangements (CVAs) and receivership
appointments) and calendar month in which each insolvency was registered
with Companies House. Therefore, numbers reflect company insolvency
registrations rather than insolvency procedure start dates.

Compulsory liquidation data are sourced by the Insolvency Service and
are reported by court order date, thus providing a more accurate measure
of the number of new cases in each month. However, data for the latest
month are extracted from a live system approximately five working days
after month end and are subject to change and therefore figures are
marked provisional.

Bankruptcy and Debt Relief Order (DRO) data for England & Wales are
tabulated by insolvency type and calendar month of order or agreement.
Similarly to compulsory liquidations, data for the latest month are
extracted from a live system approximately five working days after month
end and are subject to change and therefore figures are marked
provisional.

Individual voluntary arrangements (IVAs) in England & Wales are counted
within these statistics once they are registered with the Insolvency
Service, and they are reported by month of registration date. There is
often a time lag between the date on which the IVA is accepted (known as
the date of creditor agreement) and date of registration by licensed
insolvency practitioners working for firms that specialise in this area
and changes are often partly a result of how promptly and frequently
providers register IVAs with the Insolvency Service. Therefore, the
underlying data for IVAs are volatile from one month to the next (see
Quality section below for information on the volatility of these data).

Three-month rolling averages are presented to smooth the data and
indicate what the overall trend of IVA registrations might look like if
the underlying data were less volatile. Three-month rolling averages are
the mean average numbers of registered IVAs in the three months ending
in the reference period. For example, the three-month rolling average
estimate for January 2019 is the calculated mean average of the total
IVA registrations during November 2018, December 2018, and January 2019.
The mean average was calculated by summing together the actual numbers
of IVAs registered in each month and dividing by three.

For transparency, both counts and three-month rolling averages are
presented. Whilst three-month rolling averages are used to consider
potential changes in IVA trends over time, trends are still unreliable.
It is particularly important to consider longer term trends when making
assessments of individual voluntary arrangements, as presented within
the Quarterly Individual
Insolvencies

statistical series.

Aggregate counts of breathing space registrations are provided,
tabulated by month of registration on the breathing space register.

2.4 Tabulating insolvency by industry tables

Company insolvency data for England & Wales and Scotland, as supplied by
Companies House, contains a mixture of the 2003 and 2007 Standard
Industrial Classification (SIC). Where a 2003 SIC code has been
supplied, it has been converted to a 2007 code using a ‘best match’
approach using weighted tables provided by the Office for National
Statistics
.
Where more than one SIC code is recorded for a company, only the first
listed, or the primary, code is used.

For compulsory liquidations in England & Wales, companies are matched
against the Companies House register where possible, and SIC data are
drawn from this source. Where matching is not possible, data from the
Insolvency Service’s administrative systems are used instead. The
Insolvency Service’s administrative systems capture 2003 SIC codes and
are therefore converted using the same method as for 2003 SIC codes
captured in Companies House data.

Errors were identified in the process for matching compulsory
liquidation data to the Companies House register during the production
of the January 2021 company industry statistics (published on 19
February 2021). These errors were corrected and the time series back to
January 2019 updated in Tables 2 and 2.1 in the accompanying xlsx and
ods tables for all subsequent releases.

The impact of these errors is considered minimal. Whilst some of the
numbers changed, the percentage of all insolvencies within each industry
remained unchanged in most cases. Any percentage changes identified were
by no more than 1%. Details can be found in the January 2021
Methodology and Quality
Document
.

Insolvency Service data on bankruptcy orders relating to the
self-employed in England & Wales capture the SIC related to the industry
of the individual’s self-employed business. Again, SIC 2003 codes are
converted to 2007 codes using the ‘best match’ approach described above.

During the production of the January 2021 release it was identified that
the ‘Mining support service activities’ industry had been missing from
Table 6 since June 2020. This industry was added in for all subsequent
publications. The impact of this omission is considered low since there
was only one company insolvency in this industry between January 2019
and January 2021.

For information on SIC 2007, including its structure and more detailed
information on which industries are included, please see the Office for
National Statistics
website
.

3. Revisions

These monthly insolvency statistics are subject to scheduled revisions,
as set out in the published Revisions
Policy
.
Other revisions tend to be made as a result of data being entered onto
live administrative systems after the cut-off date for data being
extracted to produce the statistics. 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
future revisions will be marked with an ‘[r]’ in the relevant tables.

The number of IVAs presented for December 2020 were incorrect (Table 4
and subsequently Table 4.1) in the December 2020 statistics (published
15 January 2021). Compulsory liquidations, and therefore total new
company insolvencies, were also presented incorrectly for Northern
Ireland (Table 9). These above errors were a result of manual error
during the table compilation process. From the January 2021 release
(published 19 February 2021), the Insolvency Service statistics team has
introduced a new improved process to prevent these errors in the future.

Compulsory liquidations can be annulled or rescinded following a court
order. Prior to the March 2021 statistics (published 15 April 2021),
numbers included compulsory liquidations which had been subsequently
annulled or rescinded. In all subsequent releases, compulsory
liquidations which have been annulled or rescinded in England & Wales
have been removed. As a result of this change, 84 compulsory
liquidations registered between 1 January 2019 and 31 March 2021 were
removed which had previously been included.

During the production of the May 2021 statistics (published 15 June
2021), an error was identified in the process for assigning SIC codes
for compulsory liquidations presented in Tables 2 and 2.1. This has been
corrected for all future releases.

Until the June 2021 release, these statistics did not include Debt
Relief Orders that were approved but later revoked. Subsequent releases
do include these cases for all months back to the start of the series.

Until the September 2021 release, numbers of Debt Relief Orders
presented did not include those that were under enquiry. Subsequent
releases do include these cases for all months back to the start of the
series.

Due to a temporary data reporting system issue, data from one working day of
April 2022 is missing and numbers are therefore likely to be revised
upwards in next month’s release. This includes data for all individual
insolvencies in England and Wales, as well as compulsory liquidations in
England and Wales.

4. Quality

This section provides information on the quality of these monthly
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.

The insolvency statistics are the most comprehensive record of the
number of corporate and individual insolvencies in the UK. They include
all formal types of insolvency procedure currently available.

These monthly statistics have been compiled in response to the
coronavirus (COVID-19) pandemic, with the aim of publishing more
frequent information to better meet user need during this time of
economic uncertainty. The methodology and content will continue to be
reviewed to ensure that they meet user need.

This monthly series supplements the Insolvency Service’s quarterly
company
and
individual
insolvency National Statistics to provide more up to date information,
as the coronavirus (COVID-19) pandemic continues, on the numbers of
companies and individuals who are unable to pay debts and enter a formal
insolvency procedure.

This statistical release presents company insolvencies for England &
Wales, Scotland and Northern Ireland. Individual insolvencies are
presented for England & Wales, and Northern Ireland.

Individual insolvencies in Scotland are compiled and published
separately by the Accountant in Bankruptcy
(AiB). The Insolvency Service incorporates individual insolvencies in
Scotland into the quarterly individual insolvency
statistics

for completeness. However, to avoid any unnecessary delay in releasing
these more timely statistics, monthly individual insolvencies for
Scotland were not pulled into this statistical release. Until May 2021,
monthly individual insolvency statistics for Scotland were published on
the Accountant in Bankruptcy (AiB)
website
.
However, this publication has now been discontinued as per this
bulletin
.

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.

The statistical production team welcomes feedback from users of the
Insolvency Statistics (current contact details are provided on the front
page of the latest release).

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.

Numbers of insolvency cases are typically based on the date they were
registered onto the relevant administrative recording system, and so it
should be noted when making comparisons of trends over time, that trends
can be influenced by late reporting.

The impact of delayed reporting is particularly an issue for IVAs. IVAs
are counted within the statistics once they are registered with the
Insolvency Service and are reported by month of registration date. There
can be a time lag between the date on which the IVA is accepted (known
as the date of creditor agreement) and date of registration by licensed
insolvency practitioners working for firms that specialise in this area.
This time lag can lead to volatility in the data from one month to the
next and create difficulty in constituting reliable short-term trends,
since changes over time may be partly a result of IVA provider activity.
Therefore, three-month rolling averages have been calculated to smooth
the data and indicate what the overall trend of IVA registrations might
look like if the underlying data were less volatile. For transparency,
both the counts of IVA registrations and three-month rolling averages
are presented in the statistics.

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. Data for
the most recent month were extracted approximately five working days
after month end. Whilst there is no expectation for revisions, there is
an increased likelihood that published statistics may be revised in the
future. Therefore, these monthly statistics are marked provisional.

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.

Individual and company insolvency data were extracted approximately five
working days after latest month end. However, there is a two month delay
in reporting for the bankruptcy statistics by employment status, and the
industry breakdowns for those who were self-employed. This is because it
can take several weeks for employment status to be recorded following
the date of the bankruptcy order. There is a one month delay in
reporting the industry breakdowns for company insolvencies, because it
can take several weeks for the SIC code to be recorded.

Typically, these statistics are scheduled to be released two weeks (10
working days) after month end, to provide faster indicators of the
impact of the coronavirus (COVID-19) pandemic on insolvency across Great
Britain. Where a scheduled release date falls on a Monday the scheduled
release has been pushed forwards by a day, to the Tuesday, to ensure
compliance with the Pre-release Access to Official Statistics
Order
.

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.

The Insolvency Service also publishes quarterly company and individual
statistics. As detailed in the methodology section above, the sum of
these monthly statistics may not equal previously published quarterly
statistics due to the use of different reporting dates for bankruptcies,
DROs and compulsory liquidations. In addition, the administrative
systems used to capture data are live systems and are subject to
amendments.

Companies House produces official statistics on companies in liquidation
and in dissolution. However, these figures do not align with the
insolvency statistics, since they include companies that wound up
voluntarily.

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 and
personal 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. Additionally, it is only a legal requirement for
certain insolvency procedures to be published in the Gazette.
Notifications of company CVAs are not published. In terms of personal
insolvency, only notifications of bankruptcies are 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. AiB also publishes quarterly statistics on the number of
individual insolvencies, which are reproduced in the Insolvency
Statistics.

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
.
They are released via the Publication
Hub

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. The Government
Statistical Service are continuing to review this guidance and so the
presentation of these statistics may change in the future.

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 the contact
details on the cover page of this release.

Any enquiries regarding this document/publication should be sent to us
at [email protected].

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