This is the new initiative by HMRC for which the consultation document has come out. Consultation will close 7th November with draft legislation in December and the start of implementation in 2017 with full implementation as from 5 April 2018 with all taxpayers on stream by 1st January 2019. It will apply to all taxpayers both business and SA taxpayers. For businesses it will be a major change to the way they relate and report to HMRC. In this article we will only address Make Tax Digital (MTD) as it is applicable to businesses. The MTD for businesses will apply to all businesses with a turnover greater than £10,000 p.a. Submissions to HMRC must be made quarterly with a 5th adjusting submission 9 months after the financial year-end. Submissions must use commercial software. The free HMRC software has been withdrawn. Micro businesses used to keeping their records on spreadsheets which are submitted to their accountants once a year will now be … [Read more...]
The importance of integrating your systems for business success
It’s very easy to buy software today – gone are the times when you needed to go out and buy a disk and install something. Now you go online looking for a CRM system and, within minutes, you are using one on a free trial, and it works on your desktop, laptop, tablet, phone – anywhere you need it. This ease of access has a couple of effects: first, it’s easy to sign up for something without fully understanding the functionality on offer and, second, there are a lot of people after your monthly subscription, so there is a variable quality of product on offer. In short, it’s a bit of a minefield. Smaller businesses who are not willing or able to implement a modular enterprise system like SAP, Microsoft Dynamics, or one of the larger Sage products, for example, are potentially left with numerous different solutions. These may cover accounting, CRM, e-commerce, order-processing, inventory management, and other specialised business … [Read more...]
Selling a Business – Avoiding an own goal in due diligence – Part 2
How secure is your intellectual property? In the last blog I dealt with the tricky question of contracts and “change of control clauses”. Another hard lot of questions you will have to answer will be to do with your Intellectual Property. You have searched for all your IP stuff and mostly drawn a blank. The questions you could be asked are for you to provide a list and supporting documentation covering all: “Details of any software, web site or electronic database owned or used by the company indicating in each case whether the software, web site or electronic database is owned by the company or licensed. Supply copies of all licence agreements together with a list of fees payable and Copies of all other agreements relating to the development or operation of software, web sites, databases or hardware for or on behalf of the company. Details of any infringements or alleged infringements of any intellectual property owned … [Read more...]
What is Financial Modelling and how can it help my business? Part 1
What is Financial Modelling? -- Business owners have posed this question to me often. While there can be several complicated definitions, simply put, it is the practice of projecting a business’s operating and financial results. Financial modelling allows you to see into the financial future of your business, to plan, and to understand if sufficient cash is available to meet your future operating needs. Is Financial Modelling relevant to me? Every business, large or small, growing or struggling, needs to create robust business plans backed by sound financial forecasts. Successful businesses usually do this better than the ones that are struggling. Or reversing the argument, businesses that create sound financial forecasts are far more likely to succeed over time than the ones that do not. What kind of questions can financial modelling answer? The short answer is – almost all types. Here are some examples: For start-up businesses How much … [Read more...]
What does Brexit mean for the future of R&D Tax Credits?
The initial shock waves from Britain voting to leave the EU are subsiding, however the longer term impacts are yet to be felt. The big question for those UK companies claiming R&D tax relief and tax credits is - What does Brexit mean for our R&D claims? General opinion is that there will be no immediate impact. Over the longer term there could even be some positive outcomes, as the UK will no longer be bound by EU regulations that put restrictions on how R&D tax relief and tax credits are framed. The UK government, like many other countries around the world, uses tax incentives, such as the tax reductions and cash credits available under the R&D schemes, to make the UK more attractive for companies. They see the R&D tax credit schemes as critical to underpinning UK economic growth and competitiveness by supporting investment in innovation across all industries and sectors. Their belief in the schemes is evidenced by the many recent … [Read more...]
Brexit – What now for SMEs?
The electorate has decided that the UK should leave the EU. How best can SMEs respond to the coming changes? Whether you are pleased with the outcome or dismayed is irrelevant. The decision has been made. What you need to focus on is how best to manage and grow your business in the short to medium term. Long term planning is more difficult as the Brexit option only leads to many uncertainties. The first thing is - Don't Panic. Nothing is ever as good or as bad as it seems. Every triumph always has at least some form of downside, and every disaster (except perhaps illness and death) is never as black as it first appears. There is almost always some benefit to be found, and things are very rarely as bad as they seem initially. As small business owners we are naturally optimistic people. We would not have started and continued to run our businesses if we were not naturally hopeful. Now is the time to start thinking … [Read more...]
The Autumn spending review relating to property
Landlords and Second Home Levy New 3% surcharge on stamp duty for buy-to-let properties and second homes from April 2016, raising about £1bn in England and Wales will have to pay a 3% surcharge on each stamp duty band. George Osborne said the new surcharge would raise extra money. This change, would "choke off" investment in rented properties for the small investors and those who are thinking about investing as a pension plan for the future. This is likely to turn many new and existing landlords away from the sector and reduce the number of homes to rent and almost certainly driving up rents for the millions. Higher rents make it even less likely that those on low or modest incomes will ever be able to raise the deposit required to realise their dream of home ownership, despite new Help to Buy ISAs or capital loans for Londoners that were unveiled in the Autumn spending Review– first-time buyers will still need to find around 5% of the total purchase price as their share of the … [Read more...]
Getting maternity leave right with your key employees
Over the last 12 months l have worked with client MDs on 6 cases of maternity leave and on two of these cases, because they have become contentious, I have reflected on the causes of these disputes. Looking at this dispassionately one might say that this reflects a normal distribution – most situations of maternity leave will be managed perfectly well by both employer and employee. However, occasionally, there will be situations where the maternity will cause a rethink in the nature of the employment relationship leading to a dispute. In some cases the maternity accelerates the amicable ending of the employment relationship. I offer these thoughts to better manage the maternity leave process to do the best you can to avoid disputes. As the MD who knows the employee’s situation, you are probably best placed to predict any risks that may emerge. Whether you want to admit to the risks is another matter. If there is any likelihood of a breakdown in the employment relationship, ensure … [Read more...]
Acquiring a Business – Issues to consider – Part 4
Before you make the offer to acquire a business – Consider what happens next Post-Acquisition Strategies Prior to making an offer, the acquirer should consider the purpose of the acquisition and re-visit the reasons for making the acquisition and how well the target fits within those reasons. The steps required are: Confirm the acquisition meets the deal objectives Is the business to be run standalone or integrated? Is the culture very different and will this inhibit the deal success? Does the acquisition meet the objectives set out in the overview? Ensure the commercial due diligence checklist is linked to running the business Understand the competitive landscape the acquisition target operates in. Understand the management intentions and how to use the management team being acquired to best advantage. Plan to take advantage of the “halo” effect Identify the areas where the quickest and most profitable extra profit can be obtained and assign people to exploit it Assess the … [Read more...]
Acquiring a Business – Issues to consider – Part 2
WHAT SPECIFIC ATTRIBUTES MAKE AN ACQUISITION AN ATTRACTIVE STRATEGY? Acquirers are interested in growing their own businesses and an acquisition is one of the options available to them, and usually provides a faster track to growth than organic growth. In addition, they can be interested in other benefits, for example: geographic expansion customer base customer spread, i.e. for a retail business a large number of customers, for a manufacturer a number of blue-chip customers, such that there is no undue reliance on a small number of customers contract durations repeat business patterns skill-sets technology Intellectual Property Rights depth and quality of management uniqueness and competitiveness of products and services scalability of products and/or services market position and brand systems and processes, particularly relating to winning new business distribution quality of service the “halo” effect, the extra revenues and profits that can be gained from e.g. … [Read more...]
Acquiring a Business – Issues to consider – Part 1
WHAT IS THE MAIN STRATEGIC REASONING FOR ACQUIRERS OF A BUSINESS? Acquirers do not buy the past performance of business. They buy the future performance of the business, but use the past performance as a guide (along with other things) to establish the likelihood of the future profits. Acquirers can have diverse motivations: ego or status a carefully thought out strategy opportunistic reasons, e.g. see a competitor of failing business up for sale and think a good deal may be had by acquiring it a Seller (or the Seller’s Advisor) has managed to paint a vision for the Acquirer of what the end result will look like of the two businesses once they have been merged. The case will appear convincing, such that the Acquirer will believe that, by acquiring, he or she will be able to generate a value significantly greater and faster than the alternative of continuing organic growth. Whatever the starting point, once an Acquirer is “in play” and considering an acquisition, then it is the … [Read more...]
Small Business, Enterprise and Employment Act 2015 (SBEE Act)
New legislation will require company owners to provide additional information to Companies House. The Small Business, Enterprise and Employment Act 2015 introduces the Register of Beneficial Owners, which requires companies to submit details of all individuals who have at least 25% control. The register comes into effect on the 1 April 2016. As with the Annual Return, there will be a yearly requirement to update the document; however, changes should be updated when they arise. The legislation requires submission of details of owners with 25% control, but the process for determining control is complex. It addresses direct and indirect control, as well as dilution of control, which is particularly relevant if the UK Company is part of a global group. The public register will contain the following details: Name, country, nationality and date of birth Service address, residential address Date the individual became required to register Nature of his/her control and … [Read more...]
Dealing with an under-performing family member
This is one of those predictable problems which takes on additional angst because it involves a family member. As a predictable problem, its’ resolution can be proceduralised by specifically mentioning this situation in a family constitution so that there are no surprises if and when a situation like this occurs. But first things first. Why do people underperform? There are 4 reasons, 3 of which are the responsibility of family business management. The person cannot meet expectations The person does not know what is expected of them The person does not know that they are not meeting expectations The person will not meet expectations The first 3 reasons are management issues. Identifying the reason is the start point for the discussion. Are expectations too high? Are expectations too vague? Is the person’s role clear? Are the objectives set SMART? Are there regular reviews of the person’s performance? Is training or coaching provided to help the person … [Read more...]
Personal Guarantee Insurance
Are you or your clients worried about the Personal Guarantees that you have given? Then think about PG Insurance. Personal Guarantees are the bane of most business owners’ lives and something that they continually ‘moan’ about. Invariably any form of borrowing above say £5-10,000 from a bank or other financial entity will require further security in the form of a personal guarantee from the business owners and directors. This is on top of any security that they may also take over the assets of your company. As has been seen over the recent past, it doesn’t take a lot for an excellent business to be hit by unforeseen factors that may result in adverse trading and the lender may demand repayment of its money. You may well be faced with a call on the guarantee that you have given. At that point your personal assets are at risk. Personal Guarantee Insurance is there to meet that claim up to the amount for which you are insured. Personal Guarantee Insurance … [Read more...]
What do the new accounting standards mean for you?
In the next year your accountant will start talking to you about the changes in accounting standards in FRS 102. This new standard is about moving the UK Accounting standards closer to the International Accounting Standards. The main difference will be an increase in costs and these will come in two parts. In the year that you convert to the new standards there will be extra costs because your previous year’s accounts will have to be converted to the new standards. There will then be higher costs because there are extra reporting requirements. Here are some of the new requirements: There will be new accruals for items such as Holiday pay. You will have to declare any foreign currency transactions you have set up but not actioned. You will need to make declarations about Fixed Assets, Intangible Assets such as intellectual property and Goodwill. What can you do to minimise these costs. Be prepared. Find out from your accountant which of these changes affect you … [Read more...]
