Large businesses will be enjoying a reduction in corporation tax to 24% next month (April 2012) and a further reduction to 22% in 2013 but businesses with profits below £300k will be unaffected by corporation tax rate changes. The banks also dip out on this tax cut as they are being hit with a levy to make sure they don’t benefit from this tax cut.
Sunday retail trading hours are being extended for 8 weeks in the summer to coincide with the Olympics but will these 8 days of extra trading hours really have significant impact?
Those businesses connected with broadband infrastructure, those businesses in rural or poor broadband speed areas may benefit from the pledged investment in this area. Those holding contracts with the Ministry of Defence for accommodation improvements and also those involved in making cycling around London safer could also benefit in investment in these areas but this is very targeted investment which will not benefit the vast majority of businesses.
The other major announced additional funding is the £20billion being made available for discounted loans subject to the new National Loan Guarantee Scheme. The devil may well be in the detail however as to how easy in practice these will be to secure.
The higher rate of income tax came down to 45% and low to middle income earners will have a bit more cash to spend, although not until next year when the personal allowance rise kicks in.
We will also await to see if the simplification of the tax return process for small businesses has any material effect.
Losers
Those businesses operating in haulage and distribution have not been helped as the fuel duty has not been changed so businesses operating in the transport arena will continue to face financial pressures.
Pensioners will lose the “old age” personal allowance next year and state pension age will be regularly reviewed so expect to work longer before drawing state pension.
The wealthy whilst gaining on the income tax rate change will lose out with stamp duty on house sales over £2m increasing to 7%, earners over £60k will lose child benefit and those earning over £50k will lose some of this child benefit. In addition, the higher rate (40%) income tax threshold is being reduced by £1k next year.
The usual favourites continue to go up with tobacco rising 5% above inflation and whilst the rise in alcohol duty remained unchanged, it still continues to increase by 2% above inflation.
What does this mean overall?
You may not be able to afford to drown your sorrows or smoke yourself into an early grave but this will enable you to work longer before you draw your state pension.
Whilst there are some positive messages in the budget, there are few measures that will have a significant impact to help those small and medium sized businesses that are already struggling financially and/or are loss-making unless your business can benefit from the investment offered from funding that can be secured via the national Loan Guarantee Scheme.
If you or your clients are in this position, early consultation is always recommended to help find a solution to the way forward.
]]>Our experience of these bonds is, unsurprisingly, the latter situation. Often it is where directors of a company that has been in financial difficulty start a new business, or where a business has failed to maintain agreed payment plans for its VAT.
As mentioned, the law enables HMR&C to require an amount of security if they consider there is a risk of tax being unpaid by your business. Examples of this are:-
It is worthwhile bearing in mind that if they think that there is a risk of a business defaulting on the VAT, HMRC do not need to give any warning of the requirement although they will issue a ‘Notice of Requirement’. The amount they require will vary particularly depending on how often the business makes returns and payments. If the business pays quarterly, HMRC will require a bond based on 6 months VAT, whilst if the business pays monthly the bond will be based on 4 months worth of VAT.
To continue to trade without providing the bond can be very expensive. It is a criminal offence and each taxable supply made is liable to a fine of up to £5,000.
HMRC will hold the bond as long as they feel that there is a risk but advise that they will review it within 12 months for monthly payers and 2 years for quarterly payers.
You can appeal against the bond, but the penalties for trading without a bond still hold during the course of the appeal often meaning that it is impossible to trade during this period.
HMRC are very magnanimous in what they will accept as the bond:-
This security for VAT liabilities has been around for a long time, and I am sure that in the days to come we will see it being used more often.
Should your clients be asked for a bond and be unable to comply, they may well need advice on their financial position. We at Portland Business & Financial Solutions specialise in giving advice to those in financial difficulty. If any of your clients are in financial difficulty and would like specialist advice, please contact me (01202 712815) or Mike Fortune (01202 712811).
Robert May
Senior Manager (Poole Office)
Profile - click here
In 2009 Quantitative Easing and other procedures to stabilise the economy were introduced, and by September 2009 the LIBOR rate was heading towards the base rate.
Now, however, the banks are running scared about the chance of a Greek or Italian default and the collapse of the euro. In November 2011 the LIBOR rate reached 1.00703%, twice the base rate of 0.50%. In January 2012 it has reached 1.08706% the highest since July 2009. This increasing gap reflects the fears of the dangerously wobbly European economy. Banks have already had to write down exposure to the Greek debt which puts pressure on less capitalised institutions. British banks have a £64 billion exposure to Italy and any default by them could signal another banking crash, more tax-payer bailouts and a second recession.
There are other reasons for pessimism as well, such as:-
Not all is doom and gloom, there are some reasons for optimism:-
In the end, as with all predictions, nothing is certain, except that we are in for a stormy time ahead.
Should any of your clients suffer financial strain in the future, particularly in view of the above, we at Portland Business and Financial Solutions are always available to discuss their particular problems and assist. Hopefully, if advice is sought early enough, they can ride the storm that may be on the horizon.
Robert May
Senior Manager (Poole Office)
Profile - click here
HMRC advises that “In 2010 approximately 325,000 companies were dissolved informally and struck off without going into liquidation. It is possible that some companies making large distributions on the cessation of the business may now opt for to be formally wound up, in order to protect the tax position of their shareholders.”
Whilst increasing the amount to be treated as a capital distribution to £25k will help some companies avoid the costs of a formal winding up, it should also be remembered that this informal approach can leave the door open to future claims against the company / directors and shareholders and is only possible if there is no objection to the dissolution from an interested party.
The usual dangers of dissolutions outside the protection of a formal liquidation still apply so if this is relevant to your business or you have a client that it relates to and wish to discuss any particular situation, please contact Portland on 01489 550 440 or email me at mike.field@portbfs.co.uk.
]]>It appears that these forces are coming to a head. Various sources predict that sales during the Christmas period in 2011 will be considerably lower than they were for the same period in 2010. For non food retailers, Christmas can account for a large proportion of their annual sales. However at the moment consumers are worried about rising everyday costs such as food and petrol, as well as job security.
If the banks decline to roll over loans for another year, or decide that some of their customers may not be viable and withdraw facilities these can add extra unwanted pressures on already struggling businesses. Just after Christmas, when many businesses will have had the highest takings of the year, is a prime time to pull the plug.
Even if businesses survive the Christmas period, many may well not have sufficient working capital to survive until next Christmas.
Whilst every Christmas, some retailers fail, the additional burdens and possible fall in Christmas sales means that 2012 may well start with an increased number of business failures. Planning ahead and possibly taking advantage of the increased turnover due to Christmas spending could make all the difference. If businesses do start to feel the pressure, seeking early advice can provide them with more options and a better chance of survival. Even businesses on the brink could find this an opportunity. Despite all the pressures, a difficult economy can provide an opportunity to right size a business for long term success.
Although Portland’s offices are closed over the Christmas period, from 23 December 2011 to 3 January 2012, we can always be contacted on our mobiles should you, or any of your clients or contacts need advice over the Christmas period or in the New Year. We know that this can be a stressful time, but if advice is sought early enough there may well be a number of options that will lead to the survival of the business.
Robert May
Senior Manager (Poole Office)
Profile - click here
Guests enjoyed a champagne reception, sumptuous 4 course meal and followed by a crowd pleasing speech by Portland Managing Director Carl Faulds. The evening then took a hypnotic turn as guests were entertained by the experienced hypnotist Adam Night whose jaw dropping performance left the most sceptical of people believe in the wonders of hypnosis. Prize winning jockey, human washing machine and milk maid were just some of the roles that ‘subjects’ were hypnotised into playing.
Carl Faulds commented: “We would just like to thank our business partners for making it a memorable night and for supporting us over the years. For this year’s entertainment, we found something that would not only be entertaining, but also a novel and unique experience“.
Mike Dyer from Verisona Solicitors & Advocates commented: “After such a successful dinner last year it was difficult to imagine that you could match the enjoyment levels this year but if anything, I think you exceeded them!”
Simon Williams from Natwest commented: “You should all be very proud for such a hugely successful evening. As far as I know, I was not hypnotised last night!”
Padraig Murphy from Allied Irish Bank (GB) stated: “Thank you all for a superb time last night. Good company, first rate food & hospitality, an excellent time all round. The entertainment was first class.”
]]>I find it pleasing that the next generation are being given the opportunity to learn some valuable financial skills and an insight into the financial world which wasn’t previously available at schools. It was also rewarding that I was able to give something back to the local community.
The FSA considered this course necessary as a survey showed that many UK consumers lack the confidence to effectively make decisions about their money. This is worrying in a society where there are few aspects of life that do not require some form of financial transaction."
Nicola Layland
For more information, please visit www.ifslearning.ac.uk
]]>The event was in aid of Southampton based charity Leukaemia Busters. Thanks to the auction of a signed t-shirt and raffle, £3,000 was raised on the night, which was the highest amount raised yet.
The night was topped off by an Inspirational talk by Roger Black, which was very well received and universally praised.
Nicola commented; “All in all, the night was a huge success, and I was taken aback by people’s generosity and kindness. Hopefully we will be able to top this year’s record by raising even more next year.”
Here are some of the comments from guests that attended:
“I just wanted to thank you for organising the Dinner at the De Vere Grand Harbour yesterday, which was a great success. The whole event went like clockwork and everyone really enjoyed themselves. I also thought that Roger Black was an excellent speaker. “
“Just to say a big congratulations at your sterling efforts in arranging for a fantastic evening! Best one yet! Everyone had a super time and Roger Black's talk was inspirational. A super job by you guys and all of the hard work paid off.”
“A short note to say well done for the dinner … The food, set up and speaker were excellent”
]]>There seems to be no consistency as to what the Revenue will or will not accept. It seems to vary between different Revenue collection offices and indeed between different Revenue officers. It appears that where one officer will reject plans on the grounds that they are too long or the officer doesn’t believe they will be complied with, another will accept them.
With no real guidance or consistency, getting agreement to a payment plan can be tricky. We at Portland are mindful of the problems and are quite happy to assist in any capacity with your clients’ dealings with the Revenue or other creditors. In particular we can detail the options available to clients in the event that they need a plan B or C should the Revenue not accept a payment plan and start taking action.
Robert May
Senior Manager (Poole Office)
Profile - click here
Portland Director James Tickell commented; “It is now becoming an all too common trend that even businesses with linage that almost dates back to turn of the last century are finding it difficult to survive in the current climate. This can be through no fault of their own, as was the case with W Churches, but they have shown good business sense by calling in administrators before it was too late. In these unpredictable times, no one is immune from falling victim of credit lines, and identifying this issue early is critical.”
The new owners intend to keep the W Churches brand, and the management team will remain in place.
]]>So what can be done? First, take a step back and a deep breath.
The key to dealing with insolvency is to be proactive. Identify the underlying problems and list what you intend to do to solve them. To do this you need to know the current financial position of your business and it helps if you prepare monthly management accounts and use the information to review the actual results versus forecast every month. Look closely at where you earn your profit and cut out non contributing elements that take up disproportionate time or resources, particularly cash, remember it is profit that matters not the size of the sale. Make sure that you invoice promptly and have a clear credit control procedure in place to make sure you get paid promptly, it is possible to train your customers to make sure that they get used to paying on time and consider referring overdue debts to a reputable external debt collector, a customer that doesn’t pay is a cost not a sale. Beware of desperation setting into your mindset and don’t get carried away by the prospect of new customers, maintain discipline and credit-check them all, but not blindly, also use your own judgement and nose to smell a rat. You can also protect yourself to some extent by including retention of title ("ROT") clauses in your trading terms.
If your plan is going to take some time to implement and cashflow is running out, consider whether asset-based lending, particularly over book debts, can turn yours assets into cash, but also be aware of the terms of the lending agreement and particularly the penalty costs on exit. You could also propose an informal arrangement with some or all of your creditors, it helps if you approach them early enough and explain that the company has cash flow problems, but you have a plan to put things right.
Finally, if the feeling in the pit of your stomach is getting worse, or you just feel overwhelmed Nobody wants to see a business fail and there is plenty of help available from licensed Insolvency Practitioners or experienced accountants. They will be able to offer support and most importantly will take some of the pressure off by providing clear objectives and direction. This is particularly the case if you need help to pull out of the downward spiral of fire fighting daily problems and get the focus back on resolving the fundamental issues. An insolvency Practitioner will also be familiar with all the legal pitfalls and be able to advise to ensure that you don’t make matters worse by inadvertently breaching the law and making things worse for yourself.
]]>Despite a depressed housing market, a change in policy for social housing in Eastleigh which made sale difficult and a buyer pulling out, joint liquidators James and Carl of Portland with their agents Goadsby, took into account that there was value in the building, and after months of negotiating were able to secure the sale. This means that the members will receive a share of the surplus.
After months of hard work, contracts were exchanged with a new purchaser on 30th June. and sale completed on the 15th July. The new purchaser intends to keep the building and it will be converted into a child’s nursery. The feedback from the members has been positive that the club is being used for future generations of the town.
Senior Manager at Portland, Nicola Layland said “We have seen an increase in the number of similar clubs facing difficulties, particularly as members are no longer using these clubs as often as in the past. There is far higher competition with chains of pubs offering lower prices when disposable income is at the front of everyone’s minds. We are pleased that after a lot of time and effort we have been able to complete a sale and we will now be working hard to agree the creditors claims and then distribute the surplus funds to the members. With over 450 members this is going to take some time and we ask members to be patient whilst we do so“.
If you are a member of the club and have not confirmed your membership details you should do so as soon as possible to Elizabeth.mitchell@portbfs.co.uk or visit www.portbfs.co.uk or by post at 1640 Parkway, Solent Business Park, Whiteley, Fareham, Hampshire, PO15 7AH to ensure that you are included in the distribution.
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