Chancellor’s latest Autumn Statement

By Ken Maggs, Moore Thompson

The lack of big changes to tax or regulations in the Autumn Statement will help businesses plan for the year ahead, according to East of England-based accountants Moore Thompson.

There was much anticipation ahead of the Chancellor’s latest Autumn Statement, especially following the big announcements made during his three previous announcements to Parliament.

However, it soon became clear that George Osborne’s focus was on the economy and public finances. He said “economic and national security” was at the heart of his Autumn Statement and that he wanted to create “an economic recovery for all, in all parts of the country.”

During his speech the Chancellor announced that the Government would double the housing budget to £2 billion a year, which will fund the creation of an additional 400,000 homes in England.

This measure will provide a significant boost to the construction industry and the suppliers that support it.

Mr Osborne also announced that 98 per cent of businesses would not have to contribute to the apprenticeship levy, following the introduction of a £15,000 allowance. The levy will see some businesses pay 0.5 per cent of their payroll budget to support future apprentices in the UK.

The Chancellor also announced that the 3 per cent company car benefit-in-kind diesel supplement would be retained until 2021, instead of being removed in 2016.

In his speech to the Commons he reaffirmed the creation of 26 new or extended enterprise zones and said that plans to devolve business rates powers to local councils would go ahead.

The Chancellor’s latest Statement has been pretty quiet compared to the last few that he has delivered and may have surprised many small businesses.

While there may not be any big moves to support SMEs, the fact that the Chancellor has decided not to make big changes to tax or regulations should be welcomed.

Knowing that the next six to seven months will hold fewer surprises will allow businesses to plan, invest and grow more easily, without the fear of a sudden change to their operations.

The Statement did contain some significant changes, especially for those looking to invest in the property market.

The introduction of an additional 3 per cent surcharge on stamp duty land tax for individuals looking to purchase buy-to-let properties or second homes will be a big disappointment for those seeking to make a strong return on their hard earned money and may shelve many people’s long-term plans.

Individuals should consult a professional if this measure affects their future retirement or investment plans.

 

More details on www.moorethompson.co.uk

 

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Economic growth forecast increased by Confederation of British Industry

By Ken Maggs, Moore Thompson

The Confederation of British Industry (CBI) has upgraded its forecast for UK economic growth following evidence of increased productivity, the strengthening of consumer spending and improved business prospects.

According to the CBI, the economy will grow by 2.6 per cent this year, up from a forecast of 2.4 per cent in June, after what the business organisation called “strong domestic demand and upbeat official data” since their last prediction. It has also upgraded its forecast for next year, foreseeing growth of 2.8 per cent compared with its former forecast of 2.5 per cent.

However, the CBI’s forecast is still below the 2.8 per cent expected by the Bank of England, although it is in line with other private sector forecasts and is higher than the 2.4 per cent predicted last month by the Office for Budget Responsibility (OBR).

The business lobby group now also expects interest rates to rise sooner than it originally thought. It had expected rates to begin rising from their historic low of 0.5 per cent from the beginning of next April but now believes they could rise to 0.75 per cent in the first quarter of 2016 and then continue to rise at a very gradual pace.

Looking further into next year, the CBI said it expects growth to continue at a similar pace to the three months to the end of June all year long, averaging 0.7 per cent a quarter as long as household spending and business investment continue strongly.

Total business spending could rise by 6.2 per cent this year, the group predicts, with manufacturing fixed investment jumping to a 12.6 per cent expansion. However, it added that all the growth this year will come from domestic demand, as the strong pound is hampering competitiveness abroad and growth in the Eurozone, the UK’s biggest trading partner, will remain subdued.

 

 

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Think tank suggests way to boost UK productivity

By Ken Maggs, Moore Thompson

According to a leading think tank, the UK’s productivity could be boosted if the government focused on low-wage sectors, such as hospitality and parts of retailing, which currently receive little support.

The Institute for Public Policy Research (IPPR) argues that help tends to be targeted towards highly skilled workers in advanced manufacturing and yet the low-paid employees in bars and at checkouts could be the key to sustaining the UK’s recovery.

As a spokesman for the Institute said, while manufacturers often have a strong incentive to improve their performance in a bid to compete with more efficient foreign firms, the same pressure does not exist across large parts of the domestic service sector economy. The IPPR is therefore calling on the Government to think more carefully about how its spending can help to boost productivity in these sectors.

The UK’s productivity expanded at an average annual rate of 2.3 per cent in terms of worker output-per-hour in the years between 1979 and 2007, which helped to drive rising living standards.  However, since 2007 this has fallen by an average of 0.1 per cent.

This unexpected failure of output-per-hour to rebound after the financial crisis has been called the “productivity puzzle”. This is partly blamed on collapsing productivity in the North Sea oil sector and in the financial sector. Meanwhile, several other sectors including retail and transport also saw productivity fall sharply when the crash happened.

However, since the recovery got underway in 2011, another important explanation for the productivity puzzle has been the rapid rise in employment in relatively low-productivity sectors.  Therefore, raising the minimum wage to £9 by 2020 could help by giving firms an incentive to invest in technology and training to get more out of their lower-paid staff.

 

 

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Cash Flow Forecasts and Payments

By Lynn Munday ACA, Forecast Flow

I mentioned previously that your weekly cash flow forecast should include all your sales/receivables from your customers and therefore to complete the picture you must include all your payments.

There will be more categories of payments and the format you choose depends on how much detail you want to show in your cash flow forecast.

Payments include amounts due to be paid to suppliers, expenses to be paid to employees, rent, rates, payroll, PAYE/NIC, VAT, intellectual property fees, professional fees, loan repayments, loan interest, bank interest, bank charges and whatever other payments you need to make. For each of these payments you need to work out when they are due to be paid and allocate them to the appropriate week.

If the payments are not made according to the cash flow forecast then they need to be moved to the following weeks.

 

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Small business commissioner addresses late payments

By Ken Maggs, Moore Thompson

The department of Business Innovation & Skills (BIS) has announced that it is creating a new role for a small business csar tasked with tackling “unfair” business practices, such as late payment of bills to small firms.

Following the announcement, Small Business Minister Anna Soubry dubbed late payment disputes as “simply unacceptable, saying that small businesses in the UK are owed a whopping £26bn in late payments every year, while chasing the debts costs them millions more.

According to recent research, the average delay in receiving payments faced by small businesses has risen to 72 days, which is a day longer than a year ago and 11 days longer than at the peak of the recession.

As a spokesman for the organisation that commissioned the research said, despite the economic recovery gathering pace, payment delays are getting worse, not better, for small businesses. This is critical, as delays to payments put enormous pressure on small firms’ cash flow and smaller businesses are particularly vulnerable.

Business groups welcomed the news of a csar, with the Federation of Small Businesses (FSB) saying that the appointment is a step in the right direction but adding that the role must be properly funded and be high profile.

A spokesman for the FSB said it is important to ensure that the new commissioner has the confidence of the entire business community, a clear focus on tackling supply chain bullying, and sufficient powers to intervene and resolve late-payment disputes in a timely and effective way.

Meanwhile, the Institute of Directors (IoD) called the announcement “very welcome”, with a spokesman agreeing that late payment is a “particular problem for smaller companies”. He added that it affected around two-thirds of IoD members last year alone.

 

 

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MOORE THOMPSON JOINS 1STOP4BUSINESS

Ken Maggs of Moore Thompson.

Ken Maggs of Moore Thompson.

Peterborough business organisation 1stop4business (www.1stop4business.org) has expanded the range of services it offers by welcoming accountancy firm Moore Thompson as its latest member.

1stop4business is a co-operative marketing campaign launched by some of Peterborough’s leading professional service providers. Through its website and call centre it offers a ‘one stop shop’ for companies which are seeking suppliers of these business services.

Moore Thompson provides a wide range of accountancy, taxation, audit and related services to businesses throughout the Peterborough area from offices in Wisbech, Spalding and Market Deeping.

Ken Maggs of Moore Thompson said: “Working with other service providers through 1stop4business allows us to collectively promote our services to companies currently based in Peterborough or which are planning to move into the city. The one-stop shop concept for professional services is a cost-effective way of developing new business opportunities for 1stop4business members while also providing a unique and convenient single source of information for businesses.”

David Dixon of Personnel Matters, chairman of 1stop4business, said: “Accountancy is clearly a key offering for firms seeking professional services and we are delighted to have recruited Moore Thompson as a member to provide that service.

“We are continuing to expand our activities and would welcome enquiries about membership from firms providing services that are not offered by our existing members.”

Full details of 1stop4business and its existing members are on its website at www.1stop4business.org.

 

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FIVE ACCOUNTING PITFALLS FOR SMALL COMPANIES

Many small companies do not take their financial systems, controls and reporting seriously enough until something goes wrong. Set out below is a list of pitfalls which companies can easily fall into if proper financial systems, controls and reporting have not been implemented and the ways to avoid the pitfalls.

  1. Keep your accounting records up to date
    Often companies will leave entering transactions onto the accounts system until the last minute i.e. at the end of each quarter or year end and panic. Clearing the backlog of transactions can prove to be costly if help is required.Keep your accounts system keep it up to date. It pays to spend a small amount of time each week entering transactions onto the accounts system rather than letting a backlog of transactions build up.
  2. Prepare statutory accounts and tax returns on time
    Statutory accounts must be prepared and filed on time and not left to the last minute, as you will be fined for late filing by Companies House. Likewise ensure VAT, corporation tax and PAYE/NIC returns are filed on time, as late filings and mistakes incur penalties.Having an up to date accounts system makes the preparation of the statutory accounts and these returns easier as all the information is readily available.
  3. Install an accounts system
    Small companies often start by using excel spreadsheets for their accounting records but this is dangerous as mistakes can be made which could prove to be costly and reporting can be onerous.To avoid this install an accounting system. Packages which are easy to use are available on the internet for a small monthly fee.
  4. Chase debts
    Invoice your customers on time and collect the cash when it is due. If you do not do this you may find you run out of cash and you cannot meet your liabilities.Spend time each week chasing debts and maybe consider offering a small cash discount to receive the cash a little earlier.
  5. Prepare a weekly cash flow forecast
    Do not rely on the cash balance on your bank statement. Prepare a weekly cash flow forecast which includes all known and anticipated receipts and payments over the next 3 months. The forecast will show if there is a cash shortfall in the period.It is always better to be proactive and plan for cash shortfalls rather than reacting when it’s too late as finding finance could prove to be more expensive.

 

Source: Lynn Munday ACA, Forecast Flow

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