Previously profitable businesses that suffered financially during the Covid pandemic are being pushed to the brink by high inflation, a leading insolvency practitioner has warned.

Craig Allison of Wylie & Bisset said Scotland recorded the highest monthly increase in insolvency-related activity of anywhere in the UK during April, according to figures from restructuring trade body R3.

Its analysis found there were 122 company insolvencies in Scotland last month, the highest so far this year. Compared to the same period a year earlier, insolvency activity was up by 32.6 per cent.

“What we’re seeing is profitable businesses, which suffered financially during the coronavirus pandemic, now being squeezed by a cost-of-living crisis," he said.

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“In scenarios like this many directors are using insolvency processes as a means to restructure their businesses which, if done properly, can save jobs and bolster the economy.”

Mr Allison added that the "choppy" increase in restructuring activity has not been on the scale originally anticipated.

“That slow increase could be down to a number of factors – credit still seems to be readily available, so there’s potentially still a bit of robbing Peter to pay Paul as directors try to keep their companies afloat,” he said.

“HMRC pressure seems to be a precursor for a rise in insolvency and, up until the end of last year, HMRC has been fairly quiet when it comes to petitions for winding up.

“However, since then, there has been a flurry of HMRC activity, so it makes sense that insolvency numbers are up, whether that be HMRC being directly responsible, or by directors seeking to take control of the situation and out of creditor’s hands.”