Customs declaration deadline

A reminder that businesses must submit all export declarations through the Customs Declaration Service (CDS) by 4 June.

Businesses exporting goods have less than one month left to move across to the CDS, HM Revenue and Customs (HMRC) announced today.

Export declarations must be submitted through CDS from 4 June this year, when it replaces the Customs Handling Import and Export Freight (CHIEF) system for all trade declarations.

CDS provides businesses with a more user-friendly, streamlined system with greater functionality. It has been running since 2018 for import declarations and more than 117 million customs declarations have already been submitted through CDS.

HMRC is working closely with the border industry and directly contacting all declarants and traders to urge them to access the available support now and transfer over to CDS.

Businesses with customs agents should ensure their agent is ready to use CDS. Those without a customs agent must prepare to make their own declarations using software that works with the system.

Further information is available on GOV.UK, including the CDS toolkit and checklists, which break down the individual steps traders need to take. Traders can also subscribe to CDS alerts and access the free Trader Dress Rehearsal to practice submitting declarations.

Source:Other | 12-05-2024

New Companies House powers

The recently introduced Economic Crime and Transparency Act has gifted Companies House a range of new powers aimed at reducing exploitation by corporate entities to pursue illegal enterprise.

The aim of the new reforms are:

  • Introducing identity verification for all new and existing registered company directors, People with Significant Control, and those delivering documents to the Registrar. This will improve the accuracy of Companies House data, to support business decisions and law enforcement investigations.
  • Broadening the Registrar of Companies House’s powers so that the Registrar can become a more active gatekeeper over company creation and custodian of more reliable data, including new powers to check, remove or decline information submitted to, or already on, the companies register.
  • Improving the financial information on the register so that the register is more reliable, complete and accurate, reflects the latest advancements in digital technology, and enables better business decisions.
  • Providing Companies House with more effective investigation and enforcement powers and introducing better cross-checking of data with other public and private sector bodies. Companies House will be able to proactively share information with law enforcement bodies where they have evidence of anomalous filings or suspicious behaviour.
  • Enhancing the protection of personal information provided to Companies House to protect individuals from fraud and other harms.
  • Broader reforms to clamp down on misuse of corporate entities.

In addition to the above, the bill will:

  • enable businesses in certain situations to share information more easily for the purposes of preventing, investigating or detecting economic crime by disapplying civil liability for breaches of confidentiality for firms who share information to combat economic crime;
  • enable proactive intelligence gathering by law enforcement and strengthening the National Crime Agency’s Financial Intelligence Unit’s (FIU) ability to obtain information from businesses relating to money laundering and terrorist financing by removing the requirement for a pre-existing Suspicious Activity Report (SAR) to have been submitted before an Information Order (IO) can be made; and
  • focus private sector and law enforcement resources on high value activity, reducing the reporting burden on businesses and enabling greater prioritisation of law enforcement resource by expanding the types of case in which businesses can deal with clients’ property without having to first submit a Defence Against Money Laundering (DAML) SAR.

As more information on the detail of how these changes will impact SMEs, we will post further updates on this newsfeed.

Source:Other | 06-05-2024

Business rates relief in England

Business rates are a tax on non-domestic premises, including most commercial properties such as shops, offices, pubs, warehouses and factories. The money raised through business rates is used to help fund local services like the police, fire and rescue services.

Business rates are generally calculated by multiplying the rateable value of commercial premises by the business rates multiplier before any eligible reliefs are deducted. Business rates are treated differently in England, Wales, Scotland and Northern Ireland and the rates relief schemes vary across the UK.

In England, you may be eligible for business rates relief if your business is:

  • a small business
  • a retail, hospitality and leisure property – for example, a shop, restaurant, entertainment venue or hotel
  • the only business in a rural area
  • a charity or a community amateur sports club
  • a local newspaper

You may also be eligible for business rates relief if:

  • you own a property and it’s empty, partly empty or being refurbished
  • you make certain improvements to your property
  • your rates change by more than a certain amount at revaluation
  • you will get less small business or rural rate relief after 1 April 2023
  • you are in financial difficulty
  • your property is in an ‘enterprise zone’
  • your property is in a ‘freeport’
  • your property is a heat network

Local councils can also choose to offer business rates relief to businesses that benefit the local community or economy. Contact your local council to find out if this is available in your area and check if you are eligible.

Source:HM Revenue & Customs | 29-04-2024

Free management course for SMEs

The government has launched the new Help to Grow: Management Essentials course; a short online course with practical tips and resources for small business leaders.

It is based on the 12-week Help to Grow: Management Course and is suited for leaders of newer or smaller SMEs, or those who are looking to explore the principles of business growth and management before taking the next step and enrolling in the full course.

The government sees small businesses as a vital part of local economies across the UK and supporting them is crucial to delivering on the need to grow the economy.

2024 is nominated as the year of the SME and the government has pledged it will continue to support and engage small businesses, reaffirming their role as the engines of our economy. The recent launch builds on a raft of measures designed to help them meet their full potential.

Essentials is the latest addition to the extensive package of SME support announced by Government as part of the ‘Help to Grow’ campaign: a one-stop shop for SMEs. The Help to Grow site makes it quicker and easier for business owners to find the resources they need for every step of their growth journey from across government.

Source:Other | 29-04-2024

Settling energy disputes

Business owners that are in dispute with their energy suppliers will be interested in the free support on offer from the Energy Ombudsman.

In a recent press release the Department for Energy Security and Net Zero confirmed the following:

“Businesses will get free support to resolve issues with their energy contracts, as part of government and Ofgem changes to tackle cowboy practices like hidden fees, inaccurate energy bills and pressurising sales tactics for energy contracts.

“Small organisations with fewer than 50 employees will be entitled to free support from the Energy Ombudsman on disputes with their energy supplier. It will extend the service to cover 99% of all businesses in Great Britain, giving them the confidence to grow – as part of the government’s long-term plan to boost the economy and improve economic security for all.

“The Ombudsman has the power to order suppliers to provide compensation of up to £10,000 or take action to resolve issues – such as raising standards for their customers, or to credit or amend customer accounts.

“The move will also enable businesses and other organisations to settle disputes with their energy broker via the Ombudsman, without the need for costly legal proceedings – as part of changes set out by the government and Ofgem today. It is a first step in a crackdown on rogue energy brokers targeting small organisations with thousands of pounds in hidden fees.

“Energy Affordability Minister Amanda Solloway has warned energy brokers to end these unacceptable practices, with the government planning to consult later this year on regulating brokers and other third-party intermediaries.”

Source:Other | 15-04-2024

COVID Bounce Back abuse

The Insolvency Service has recently published information confirming that a total of 831 company directors were banned in 2023-24 for Covid support scheme abuse, up more than 80% on the previous year, and that the average length of director disqualification for Covid misconduct in 2023-24 was almost 10 years.

The Covid Bounce Back Loan Scheme was introduced at the start of the pandemic in 2020. It helped small and medium-sized businesses borrow between £2,000 and £50,000 at a low interest rate, guaranteed by the government. 

Businesses were entitled to a single loan of up to 25% of their turnover under the scheme. 

Individuals could only use the loans for the economic benefit of the business and not for personal purposes. 

Enforcement action taken against those that have abused the support schemes has ranged from companies being wound-up in court to criminal convictions, compensation orders and director disqualifications. 

The Insolvency Service has successfully applied to have 1,430 directors banned for abusing Covid support schemes since it started investigating potential financial wrongdoing in this area in 2021. 

Source:Other | 15-04-2024

What do we mean by profit?

When most business owners refer to business profits, they are likely to mean the difference between sales and costs, and more concisely, that sales exceed costs.

However, the word “profits” can prove to be a moveable feast as HMRC, banks and traders will likely have a different interpretation.

For example, do costs include:

  • intangible overheads like depreciation;
  • the write-off of goodwill; or
  • taxation.

The distinctions can prove to be important especially if comparisons are being made for benchmarking purposes – comparing the results of a business with the results for the relevant industry sector.

Company accounts display sales, costs, intangible write-offs and corporation tax charges, but any dividends taken by directors as part of their remuneration package – most directors of small companies take low salaries and high dividends to save NIC costs – are not deducted as a cost in the Profit & Loss account. And so reported profits after tax are not the complete story; any dividends taken by working directors need to be considered as these will reduce retained profits.

The question, what is profit, is therefore dependent for its usefulness as an indicator of a businesses’ health, only if its definition is fully appreciated.

Source:Other | 08-04-2024

To register or not to register

In the recent Spring Budget, the VAT registration threshold was raised to £90,000 (previously £85,000) which means that smaller businesses that did not want to register for VAT, now have an additional £5,000 of turnover they can make each year without needing to register for VAT.

Obviously, if you sell goods or services to other businesses, and they are likely to be registered for VAT, if you are eventually required to register you can do so without changing your price structure; clients can simply claim back the VAT you have added to their bills.

But problems arise if you sell to non-business customers who cannot claim back VAT.

Once your business breaches the £90,000 turnover threshold you will be faced with two choices:

  1. Reduce your prices so your customer pays no more for your services. For example, if the pre-VAT price was £120, following registration, you would need to reduce your price to £100, which plus VAT at 20% would equal £120. Unless you could increase your sales volume, this would have a serious impact on your profitability.
  2. The second choice would be to pass on the VAT to customers. In this case your price would stay at £120, but you would need to charge customers £144 (£120 plus 20% VAT). Unless the goods or services you were selling had limited alternative suppliers, this price hike will likely reduce your sales and profitability.

So, although welcome, the rise in the VAT registration threshold to £90,000 will not overly excite traders who are grappling with the need to increase prices already, to counter inflation, and cope with rising costs.

Traders caught in this do I register or not conundrum do have choices, but they require serious consideration. If you need help to consider your options, please call.

Source:Other | 04-04-2024

Time to rethink the credit you offer your customers

Most business owners are driven by sales targets and to meet these targets they may be tempted to offer extended payment terms.

For example, if your business grants a customer time to pay – say 60 days – after the services or goods supplied have been delivered, effectively, your money stays in their bank account for 60 days.

Further, if you have incurred costs regarding a sale, which have to be paid for before your customer settles their bill, you are out of pocket until your account is settled.

There is a well-worn cliché in business that cash is king. Business owners should keep a weather eye on the effectiveness of their efforts to turn a sale into cash in the bank. Amounts owed by customers may look like a useful buffer – cash to come in in future months – but you cannot spend or invest trade debtors.

Once you have made a sale, if you allow customers extended credit terms you are basically saying it is OK to leave your money in their bank accounts.

A further, major risk from offering over generous credit terms is over-trading. As mentioned above, if you have to pay for your goods and services on terms less generous than those you offer your customers, you will run out of spending power unless you have substantial cash reserves.

The next time you are tempted to extend credit in order to win a sale, take advice. We can help you consider the wider consequences of your sales strategy and its impact on cash flow.

Source:Other | 25-03-2024

We are unpaid tax collectors

Clients often refer to the VAT added to supplier invoices as if it were a cost to their business regardless of their VAT position.

This is true if you are not registered for VAT, you do not have to add VAT to your sales and you cannot recover any VAT you pay on purchases. Under these circumstances, VAT is a cost.

If you are registered for VAT, cash you collect from your customers will include VAT – if the sales are subject to VAT – and you will pay the VAT collected (less any VAT you pay on purchases) to HMRC. As you are collecting VAT from your customers, paying VAT on purchases to your suppliers and paying the difference to HMRC, there is no overall cost to your business.

Whilst there is no effect on our profitability if we are registered for VAT, if we have to pay over VAT added to our sales before our customers pay our bills then there can be a cashflow issue. Fortunately, HMRC allow traders affected in this way to use a special process called cash accounting for VAT. If you qualify for this method, you will only pay VAT added to your sales when your customers pay you, and conversely, you can only reclaim VAT on purchases when you have paid for them.

Consequently, those of us who are registered for VAT and are required to calculate and make returns to HMRC, are indeed unpaid tax collectors.

Source:Other | 25-03-2024

Public sector productivity

In a recent announcement by the Treasury, it was announced that plans are afoot to deliver up to £1.8bn of productivity benefits by 2029.

The aim is to improve public sector productivity, including releasing police time for more frontline work. 

The Chancellor is promoting increases in public sector productivity as an alternative to accepting an ever-increasing bill for public services as the government sticks to its plan to move on from the high spending and high tax approach that was necessary to get the UK through the shocks of Covid and Russia’s invasion of Ukraine.

According to the Treasury spokesperson, a new focus is needed on the long-term decisions required to strengthen the economy and give people the opportunity to build a wealthier, more secure life for themselves and their families. 

Covering frontline services, the plan is designed to help public servants get back to doing what is most important: teaching our children, keeping us safe and treating us when we’re sick.

According to the Office for Budget Responsibility, returning to levels of pre-pandemic productivity could save £20 billion a year. This would help manage the size of the state in the long term, whilst maintaining public service quality and delivering savings for taxpayers.

Source:Other | 11-03-2024

Companies House rolls-out new powers

The first measures under the Economic Crime and Corporate Transparency Act 2023 (ECCT Act) came into force on Monday 4 March 2024.

Changes introduced include:

  • greater powers to query information and request supporting evidence;
  • stronger checks on company names; 
  • new rules for registered office addresses (all companies must have an appropriate address at all times – they will not be able to use a PO Box as their registered office address); 
  • a requirement for all companies to supply a registered email address;
  • a requirement for subscribers to confirm they’re forming a company for a lawful purpose when they incorporate, and for a company to confirm its intended future activities will be lawful on its confirmation statement;
  • greater powers to tackle and remove factually inaccurate information; and
  • the ability to share data with other government departments and law enforcement agencies.

New criminal offences and civil penalties will complement the measures introduced.

The phased roll out of new powers and requirements is designed to minimise hassle for legitimate businesses. Many of the changes will be integrated into existing reporting cycles, such as the requirement to update a company’s confirmation statement.

As further measures are introduced, Companies House will let people who file information with Companies House know what they need to do via their communications channels and campaigns.

Source:Other | 03-03-2024

A new champion for small businesses appointed

An experienced entrepreneur has taken up a key role to promote the needs of small businesses to government and ensure suppliers seize the benefits of the Procurement Act.

Shirley Cooper OBE, former chair and president of the Chartered Institute of Procurement and Supply, met Parliamentary Secretary Alex Burghart for the first time as Crown Representative for small businesses earlier this month. 

They discussed priorities for the next 12 months, with a focus on the implementation of the Procurement Act in October, which will see further benefits for start-ups and small businesses wishing to work with the government. These include simpler processes, greater transparency and access to opportunities, as well as strengthened payment terms which will maximise value for money and innovation in the government market.

Ms Cooper will lead on the overall relationship between the government and small businesses, making sure the government gets best value from small and medium-sized enterprises (SMEs), and that they in turn have the best possible opportunity to work with the government.

Shirley Cooper OBE said:

"I am delighted to take up this role and build on the work of my predecessor, Martin Traynor.

I look forward to working with colleagues across Government to make sure small businesses can seize the fantastic opportunities available to them in the public procurement process.” 

She will build on the work of Martin Traynor OBE, who is retiring after a five-year tenure in the post which culminated in the reforms of the Procurement Act 2023. 

Ms Cooper will also support the commitment to, and delivery of, increasing central government spend on SMEs. This spend has risen every year since 2016/17 and stood at a record £21.0 billion worth of work in 2021/2022. The Government spends around £300 billion every year on procurement.

She will be an advocate for small businesses, promoting their agenda both in government and externally. 

Source:Other | 27-02-2024

Crack down on ‘fire and rehire’ practices

The Government has announced action to tackle the use of controversial 'fire and rehire' practices. In a press release issued 19 February 2024 they said:

“Action against unscrupulous employers to tackle the use of controversial ‘fire and rehire’ practices will be rolled out by the Government today [19 February].

Dismissal and re-engagement, also known as ‘fire and rehire’, refers to when an employer fires an employee and offers them a new contract on new, often less favourable terms.

The Government has been clear that it firmly opposes this practice being used as a negotiating tactic. Today, a new statutory Code of Practice has been published making clear how employers must behave in this area. 

This new Code of Practice shows the Government is going a step further to protect workers across the country. This will help to preserve security and opportunity for those in work, as part of our plan to grow the economy.

In future the courts, and employment tribunals, will take the Code into account when considering relevant cases. This will include on unfair dismissal claims where the employer should have followed the Code.

Employment tribunals will have the power to apply an uplift of up to 25 percent of an employee’s compensation if an employer unreasonably fails to comply with the Code.

The new Code clarifies how employers should behave when seeking to change employees’ terms and conditions, aiming to ensure employees are properly consulted and treated fairly.

Employers will now also need to explore alternatives to dismissal and re-engagement and have meaningful discussions with employees or trade unions to reach an agreed outcome.

The Code makes it clear to employers that they must not use threats of dismissal to pressurise employees into accepting new terms. They should also not raise the prospect of dismissal unreasonably early or threaten dismissal where it is not envisaged.”

Source:Other | 27-02-2024

Importing or exporting for the first time?

If you are considering selling or buying to or from companies based outside the UK, you may well be overawed by the plethora of regulation you are required to be familiar.

As a first step, you could make use of the GOV.UK website and access HMRC’s “digital assistant”. You could use this to find out about:

  • getting an EORI number 
  • importing your personal belongings
  • looking up commodity codes, duty and VAT rates
  • trading with Northern Ireland

Take a look at this support page: https://www.gov.uk/business-support-helpline

If the digital assistant cannot help you, you can ask to transfer to a webchat with an HMRC adviser, if they are available.

You can call HMRC for help with questions about:

  • importing
  • exporting
  • customs reliefs

If you think you have been charged too much, find out how to claim a repayment of customs charges in the ‘If you’re charged too much or return your goods’ section of the Tax and customs for goods sent from abroad guide.

Telephone: 0300 322 9434

Opening times: 24 hours a day, 7 days a week

And if you prefer to have something in writing, you can send a letter for help with questions about importing, exporting and customs relief at:

HM Revenue and Customs — CITEX Written Enquiry Team
Local Compliance S0000
Newcastle
NE98 1ZZ
United Kingdom

Include your VAT registration number and the name and postal address of your business.

Source:Other | 19-02-2024

Top-line, bottom-line?

Most small business owners are happy, from a financial point of view, if sales are in line with expectations. And there are obvious grounds for this conclusion, after all, if sales dry up there are no funds feeding into cashflow.

Unfortunately, top-line sales are just one aspect of a business that measure bottom-line profitability.

To keep an eye on profitability traders must also monitor costs, and to monitor costs effectively businesses need to create a forecast or budget of future costs and compare actual costs with these numbers.

We encourage business clients to create forecasts on a rolling basis so they can see, in detail, how sales and costs are trending over the next year.

To round off these trading forecasts businesses also need to plot the effects of profit growth on their balance sheets.

Balance sheets gather the profits for the current trading period, add this to any retained profits brought forward and capital you have introduced, and display how this represented by the business assets and liabilities. For example, the value of fixed assets (plant, equipment and vehicles) and current assets (money owed to you, stocks etc), plus bank balances; less liabilities (loans, taxes due, bank overdrafts and so on).

Your balance sheet rounds off your management accounts reporting and together with a statement of profits (compared to forecasts) and cash flow provides you with the financial reporting to manage your business effectively. Making sure your sales are on track is one key indicator of financial well-being, but it is not a complete picture.

If you would like to consider setting up and managing your finances on a regular basis, please call.

Source:Other | 19-02-2024
business asset disposal relief guide by cigma accounting; london accountant; farringdon accountant

Navigating Business Asset Disposal Relief for UK Entrepreneurs

Navigating Business Asset Disposal Relief for UK Entrepreneurs

For UK entrepreneurs and business owners considering the sale of their business, shares in a trading company, or an interest in a trading partnership, understanding Business Asset Disposal Relief (BADR) is crucial. At CIGMA Accounting, we’re dedicated to guiding you through the intricacies of BADR to ensure you maximize your financial benefits.

What is Business Asset Disposal Relief?

Previously known as Entrepreneurs’ Relief prior to 6 April 2020, BADR offers a significantly reduced Capital Gains Tax (CGT) rate of 10% on qualifying assets, as opposed to the standard rate. This relief is available when exiting a business under specific conditions, providing substantial tax savings.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Eligibility Criteria for BADR

To qualify for BADR, certain conditions must be met, including:

  1. For Business Owners:

    • You must be a sole trader or a business partner.
    • The business must have been owned by you for at least 2 years up to the sale date.
  2. For Shareholders:

    • You need to be an employee or office holder in the company.
    • The company must primarily be involved in trading activities.
    • For non-EMI shares, you must hold at least 5% of the shares and voting rights.
  3. Special Considerations for EMI Shares:

    • Shares must be acquired post-5 April 2013.
    • The option to buy them should have been granted at least 2 years before their sale.

The Financial Aspect: Calculating Your Tax

When claiming BADR, the calculation of your tax liability involves:

  • Summing up gains on qualifying assets and deducting any losses.
  • Applying the 10% tax rate to the remaining amount after your tax-free allowance.
  • For higher rate Income Tax payers, different rates apply for gains not covered by BADR (28% for residential property and 20% for other assets).
  • Basic rate taxpayers have varied rates based on their total taxable income and the nature of the gains.

Lifetime Limit and Claiming Process

An essential aspect of BADR is its £1 million lifetime limit, which can be higher for assets sold before 11 March 2020. Claims for BADR are made either through self-assessment tax return or by completing Section A of the Business Asset Disposal Relief helpsheet.

Professional Assistance from CIGMA Accounting

Navigating the complexities of BADR can be challenging.
At CIGMA Accounting, we offer expert guidance and support to ensure you meet all the qualifying criteria and maximize your relief. Our team is equipped to handle all aspects of your claim, from initial assessment to filing the necessary paperwork.

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 


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Why breakeven analysis can be illuminating

If you focus your energy on sales, there is a chance that your efforts will produce losses. Which is why we always encourage our business clients to keep their accounting records using software that automatically produces monthly management accounts that reveal profitability as well as turnover and costs.

But there is another useful indicator that you can compute once you have these monthly trading results. It is the level of turnover you need to achieve – based on current costs – in order to breakeven, make no profit, but importantly, no loss.

If you provide services, rather than process goods for resale, the amount of turnover you need to create each month to breakeven will be your total monthly costs plus any remuneration you take from the business.

For example, if your costs are £35,000 and your monthly remuneration not included in those costs (dividends perhaps or drawings if self-employed) a further £5,000, then your current breakeven turnover is £40,000 a month.

The calculation is slightly different if you process or buy and sell goods for resale as each £1 of sales will need to cover the direct costs – of buying and processing goods – as well as other fixed overheads that do not change with the level of turnover achieved. To calculate a breakeven figure, you will need to divide your fixed costs by the gross profit percentage and multiply by 100. So, if fixed costs are £40,000 a month and your gross profit percentage (sales less direct costs as a percentage of sales) is 25%, your breakeven turnover would need to be (£40,000/25 x 100) £160,000. At this level of trading, you would produce £160,000 times 25% – £40,000 of gross profit which would exactly cover your fixed costs.

Obviously, to make progress financially, you would need to achieve sales in excess of your breakeven turnover. Never-the-less, this is a useful indictor to have as when you achieve this target you will know that any additional sales will be creating profits for your business.

If you have the data, we can help you produce a realistic breakeven figure for your business. Please call to organise.

Source:Other | 13-11-2023

Cash flow v supplier credit limits

In a recent article we explained how granting lengthy credit limits to customers was as good as letting them keep your money in their bank account.

In this post we describe the opposite situation, where you are granted longer terms to pay bills from your suppliers.

If you take delivery of goods and services and are granted – say 60 days before you are required to pay for those purchases – then you have the use of the purchases for almost two months before your bank account balances are reduced.

If you can process and resell goods purchased, within the 60 days, and be paid by your customers at point of sale, then your purchase will be fully-funded – from a cash flow point of view – before you are required to pay your supplier.

Obviously, many businesses are unable to sell on a COD basis (like retailers) but taking advantage of generous payment terms from your suppliers can have a positive impact for all concerns from a cash flow perspective.

Effectively, you suppliers are providing you with valuable working capital.

To make the most of this cash flow boost, reduce (when you can) the payment terms you offer your customers and take advantage of any extended payment terms on offer from suppliers.

But beware, if customers want discounts for shortening credit terms or if you lose supplier discounts for longer payment terms, then you will have to crunch the numbers to see how changing credit terms will affect your profitability as well as easing cash flow.

Source:Other | 31-10-2023

Back of an envelope

If you run a business and manage your planning by scribbling notes on the back of an envelope, you might be advised to read the contents of this article.

When the economy is vibrant, effectively when there are an abundance of buyers in your marketplace, cash flow and profitability tend to look after themselves; as long as you are selling your goods or services at a price that covers your overheads and drawings/dividends.

Unfortunately, since Brexit and COVID disruption and the current upward pressure on energy and raw material costs, buyers are more circumspect about purchasing and business profits and cash flow are under pressure.

In which case your business planning cannot, and should not, be restricted to a few notes scribbled on the back of an envelope.

Your current management accounts should show you what your current situation looks like:

  • are you making profits;
  • are you keeping within your overdraft limits; and
  • are you still solvent.

To answer these questions the use of low-cost, cloud based accounts software is the minimum you should be utilising.

A belts and braces approach should include forward planning, what will be your likely profitability, cash flow position and solvency look like in a year’s time?

If you need help maximising the use of software to achieve these basic planning objectives, or if you would like advice on business planning issues, please call. We can help you be prepared to deal with and survive the UK’s present economic challenges.

Source:Other | 31-10-2023

Cash flow v customer credit limits

If your business grants a customer time to pay – say 30 days – after the services or goods supplied have been delivered, effectively, your money stays in their bank account for 30 days.

Further, if you have incurred costs regarding a sale, that have to be paid for before your customer settles their bill, you are out of pocket until your account is settled.

Many business owners are driven by sales targets and to meet these targets many are tempted to offer extended payment terms.

There is a well-worn cliché in business that cash is king. Your business only has choices – regarding the sales it makes – once your customers’ money is in your bank account.

Actually, once you have made a sale, if you allow customers extended credit terms you are basically saying it is OK to leave your money in their bank accounts.

The major risk from offering over generous credit terms is over-trading. If you have to pay for your goods and services on terms less generous than those you offer your customers, you will run out of spending power unless you have substantial cash reserves.

Recent economic challenges have bleached away many rainy-day funds, and so, our ability to leave cash in customers’ bank accounts may place us in a position where we basically become cash insolvent, even if we are profitable and have surplus net assets.

The next time you are tempted to extend credit in order to win a sale, take advice. We can help you consider the wider consequences of your sales strategy and its impact on cash flow.

Source:Other| 22-10-2023

New company reporting regulation withdrawn

The Government has withdrawn draft regulations after consultation with companies raised concerns about imposing additional reporting requirements.

Instead, the Government will pursue options to reduce the burden of red tape to ensure the UK is one of the best places in the world to do business.

Draft regulations published in July would have added certain additional corporate and company reporting requirements to large UK listed and private companies, including an annual resilience statement, distributable profits figure, material fraud statement and triennial audit and assurance policy statement.

This would have incurred additional costs for companies by requiring them to include additional layers of corporate information in their annual reports.

Since July, the Government has completed a call for evidence on existing non-financial reporting requirements, which has identified a strong appetite from businesses and investors for reform, including to simplify and streamline existing reporting.

The Business Secretary has now decided to withdraw these regulations and will be setting out options to reform the wider framework shortly to reduce the burden of red tape on businesses.

The Government remains committed to wider audit and corporate governance reform, including establishing a new Audit, Reporting and Governance Authority to replace the existing Financial Reporting Council. The Government will bring forward legislation to deliver these reforms when Parliamentary time allows.

Source:Other| 22-10-2023

Recurring sales

Most business owners will appreciate the difference between one-off sales, and services that are generally described as recurring.

For example, you may sell a laptop (a one-off sale) and then bolt on a support contract (a recurring sale).

The advantage of recurring income streams is that they not only impact your current sales numbers, but they also help you build a platform of future sales for your business.

Also, the cost of “selling” or acquiring recurring sales is generally lower than securing a one-off sale as you are creating sales revenue into future years rather than just improving your sales figures in the current month. 

It is worth researching how you could develop recurring income streams for your business. Subscriptions or support are two areas ripe for development. Or you could encourage one-off buyers to join your Customer Club where for a minimum monthly fee, they would be entitled to a progressive discount on purchases.

As we strive to emerge from recent difficult economic challenges, seeking out ways to introduce recurring services into your product mix may help you build a sustainable future for your business.

Well worth getting together with your work colleagues to brainstorm ideas.

Source:Other| 16-10-2023

Repeat business

Once you have secured the attention of a customer that has purchased their initial goods or services from you, you have completed the hard part – converted a prospect into a buying customer – so don’t be afraid to follow up with cross-sales offers.

For example, when you deliver goods to a customer, do you promote other products that you supply or offer a discount for a repeat order?

Many firms adopt this strategy by:

  • Inserting a current publicity leaflet or brochure with the goods physically delivered, or by
  • Following up orders by email, a “Hope you found our recent delivery useful…”, with a link to your website and other offers.

In this way you build your relationship and increase footfall.

Three factors influence turnover:

  • The number of customers.
  • The price of your goods or services, and
  • Footfall, the number of times a customer buys from you in a trading period.

In most cases, increasing footfall will have the most impact on turnover. Footfall is the number of times you can encourage customers back to buy more from your business.

So, be on the lookout for ways to encourage your customers back. Once you start thinking in this way, you will be surprised by the number of strategies you could apply.

Source:Other| 16-10-2023

Government to support action against late payers

Most smaller businesses will have spent time chasing customers for payment beyond their agreed payment terms.

These demands take entrepreneurs away from their core tasks of business building and place unnecessary pressures on cashflow.

To assist, government is stepping in with new regulatory powers. The new measures will include:

  • Extending the Reporting on Payment Practices and Performance Regulations 2017. Following consultation, Government will take forward legislation to extend payment performance reporting obligations. They will include new metrics for reporting, including a value metric, so businesses and commentators can see the value of invoices, including invoices paid late, and a disputed invoices metric. They will also introduce reporting on retention payments for businesses in the construction sector.
  • Providing greater advice to small businesses on negotiating payment terms that better suit them, and on how going digital can help them get paid quicker and manage their cash flow.
  • Broadening the powers of the Small Business Commissioner: Introducing broader responsibilities, enabling the Commissioner to undertake investigations and publish reports where necessary on the basis of anonymous information and intelligence. This will require primary legislation, so will be subject to the legislative timetable.

The stronger measures will benefit UK businesses by fostering a stronger payment culture and providing businesses with more predictable and reliable cash flow, allowing businesses to spend and invest with greater certainty.

It will reduce the time spent by businesses chasing payments, freeing up more time for other activities that will help them to grow. Tackling late and long payments provides an opportunity to increase investment and productivity across the economy.

This will improve payment culture in the UK to support smaller businesses, many of whom do not have the resources to accommodate long or late payments from their business customers.

Source:Other| 02-10-2023

Charity Trustees Quiz

The Charity Commission has launched the next phase of its trustee campaign which aims to increase charity trustees’ knowledge and drive a positive change in charities’ governance.

The campaign encourages trustees to check what they know about their duties and aims to increase their awareness of the Commission’s 5-minute guides.

As part of the latest phase of the campaign, the regulator has released a new Trustee Quiz to enable trustees to test their knowledge of their duties and responsibilities.

The quiz is designed to engage trustees with a variety of questions based on everyday scenarios that they may encounter at their charity. It has been designed to help identify knowledge gaps and is an ideal refresher for trustees at all levels of experience. Research shows that the majority of trustees feel confident in their ability to manage their charities, however there may be areas of knowledge they can improve. The quiz is intended to encourage trustees to think again about what they know, to inspire upskilling.

The quiz takes around three minutes to complete and gives busy trustees an interactive means to quickly check what they know and help them uncover potential knowledge gaps they may not have been aware of. It prompts participants to test their knowledge on a range of topics, such as conflicts of interest and safeguarding. Feedback is provided for each question, and users are pointed to further guidance from the regulator to strengthen their knowledge.

Each participant also receives a score out of 10, allowing them to benchmark their knowledge.

The quiz can be accessed at https://beingacharitytrustee.campaign.gov.uk/take-the-trustee-quiz/

Source:Other| 25-09-2023

Help for businesses launching new AI

Organisations across the country will be able to demonstrate that their new artificial intelligence and digital innovations meet regulatory requirements so they can quickly bring them to market.

In their press release published 19 September 2023, the Department for Science, Innovation and Technology said:

A new pilot scheme set to launch next year will see a number of regulators develop a multi-agency advice service providing tailored support to businesses so they can meet requirements across various sectors while safely innovating – including through innovative technologies such as AI.

Backed by over £2 million in UK government funding, the streamlined service is intended to make it easier for businesses to get the help they need, by bringing together the different regulators involved in the oversight of cross-cutting AI and digital technologies.

In turn, businesses will be able to take their new innovations to market responsibly and more quickly, helping to grow the UK’s economy.

With digital technologies such as artificial intelligence needing increasingly to demonstrate compliance with a range of regulatory regimes, there is a growing need for joined-up advice across the regulatory landscape. This pilot scheme will meet business demands for coordinated support and help innovators navigate regulations, so they can spend more time developing cutting edge new products.

The service will be run by members of the Digital Regulation Cooperation Forum (DRCF), made up of the Information Commissioner’s Office, Ofcom, the Competition and Markets Authority and the Financial Conduct Authority, and known as DRCF AI and Digital Hub.

The DRCF came together as a voluntary collaboration in 2019, launching formally in 2020, and works to explore emerging regulatory issues which cut across the remits of the four regulators with the goal of making it easier for industry to comply with multiple regulatory regimes.

The trial is expected to last around a year, and will assess industry take up, service feasibility and how innovators are interacting with it. Innovators and businesses requiring advice will be invited to apply in due course with the DRCF expected to run a competition for innovators to outline where they need support from regulators to ensure innovative new technologies comply with cross-cutting regulatory regimes. Successful applications will be selected against criteria agreed jointly by regulators and the department.

Source:Other| 25-09-2023

Changes afoot at Companies House

Due to new legislation working its way through Parliament, Companies House will be making a number of significant changes. In a recent blog post, they made the following announcement:

We’re approaching a pivotal moment in the history of Companies House. This legislation, The Economic Crime and Transparency Bill, will fundamentally change our role and our purpose and will give us the powers we need to play a more significant role in tackling economic crime. Over time, we’ll become an active gatekeeper of the data on our registers rather than a passive recipient, and we’ll have the tools to go further to prevent the misuse of corporate entities.

It's widely known that the UK has one of the largest and most open economies in the world. However, it’s become increasingly apparent that this openness exposes the UK to criminals who want to use our corporate structures for illicit purposes. This is one of the things the new Bill will address.

The measures in the Bill will make sure the UK continues to be a great place to do business, while enabling us to take a tougher stance against economic crime.

The measures include:

  • introducing identity verification for all new and existing registered company directors, people with significant control, and those who file on behalf of companies;
  • broadening the registrar’s powers so that Companies House can become a more active gatekeeper over company creation and a custodian of more reliable data;
  • improving the financial information on the register so that the register is more reliable and accurate, reflects the latest advancements in digital technology, and enables better business decisions;
  • providing Companies House with more effective investigation and enforcement powers, and introducing better cross-checking of data with other public and private sector bodies; and
  • enhancing the protection of personal information provided to Companies House to protect individuals from fraud and other harms.

As more details are published more information will be posted on our newsfeeds.

Source:Other| 18-09-2023

Companies House fees increase?

Companies House have published information that suggests their fees may be increasing in the near future. And it’s all to do with the ECCT Bill currently passing through parliament.

To give it its full name, The Economic Crime and Corporate Transparency (ECCT) Bill will change the role and purpose of Companies House and will provide the powers needed to improve the accuracy of the information on their registers and to play a significant role in tackling economic crime.

Companies House are quoted as saying:

“We want to be ready to take action, and we’re working hard on a number of different workstreams to make sure we’ll be ready to implement many of the measures as soon as possible after the Bill achieves royal assent.”

As a reminder, the measures in the ECCT Bill include:

  • introducing identity verification for all new and existing registered company directors, people with significant control, and those who file on behalf of companies;
  • broadening the registrar’s powers to become a more active gatekeeper over company creation and a custodian of more reliable data;
  • improving the accuracy of financial information on the register so that the register is more reliable and accurate, reflects the latest advancements in digital technology, and enables better business decisions;
  • providing Companies House with more effective investigation and enforcement powers, and introducing better cross-checking of data with other public and private sector bodies; and
  • enhancing the protection of personal information provided to Companies House to protect individuals from fraud and other harms.

If implemented in full, Companies House costs will increase to meet the additional functions dictated by the Bill.

Companies House fees are set on a cost recovery basis. This means their fees must cover the cost of the services delivered. They do not make a profit on fees charged.

In a recently published blog post Companies House said:

“We review our fees every year to make sure they’re set at the right level. This year, we’ve taken new future expenditure into account as well as making sure we recover costs from our existing expenditure.

Companies House fees are much lower than the global average and have not changed since 2016. Many believe our fees are too low. During the debates while the ECCT Bill has moved through Parliament, there’s been a focus on the low levels of our fees and on making sure we’re adequately funded in the future.”

Source:Other| 11-09-2023

Are you a company director?

There is more to being appointed a company director than accepting the title.

According to Companies House directors formal, statutory duties and responsibilities include:

  • filing an annual confirmation statement;
  • filing your company annual accounts – even if the company is dormant;
  • notifying Companies House of any change in your company’s officers or their personal details;
  • notifying any change to your company’s registered office address
  • filing details of any allotment of shares;
  • dealing with the registration of any charges (mortgage); and
  • notifying Companies House of any change in your company’s people with significant control (PSCs) or their personal details.

Additionally, directors need to record minutes of company meetings that impact returns to Companies House and HMRC. For example, when dividends are voted and paid.

Directors should be aware that if you use a sensitive address like your home address as your company’s registered office or single alternative inspection location (SAIL), it will be available to the public. You cannot remove a registered office or SAIL address from the public register, even if it’s your home address.

If you are a director of a registered company, some of your details will be made public. This includes your:

  • name
  • nationality
  • occupation
  • month and year of your date of birth

A director must provide two addresses:

  • a correspondence address for the public register – known as a ‘service address’; and
  • their home address – known as the ‘usual residential address’.

A correspondence address is one you can use to receive communications about the company. This can be the same as the registered office address of the company, or it can be somewhere different.

A residential address is a director’s usual home address. You must tell us your home address, but it will not be available on the public register for everyone to see. It’s kept on a private register.

We will only provide home address information to credit reference agencies and specified public authorities, such as the police. In certain circumstances, you may be able to restrict the disclosure of your home address to credit reference agencies.

Source:Other| 28-08-2023