Wednesday, 1 March 2017

This Lady’s not for turning?

The words of a certain prime minister echoed in the BattleAxe’s ears as she was urging No 10’s current occupant to ignore that quote and see sense on draconian media fuelled tax decisions.

Mrs May was clearly listening. She promptly ordered a U turn on the rise in National Insurance for the Self Employed announced by her next door Hamster in the Budget.  An increase he “justified” on the basis it wasn’t fair that the self-employed paid less than employees. However, he forgot that the self-employed don’t get statutory sick pay; have no right to paid holidays; don’t get pension contributions (because there is no such thing as Auto-Enrolment for the self-employed) nor lots of other benefits of employee status.  Their lower rate of NICs has always been a means of putting a little bit more away each month towards exactly those insurances and pensions.  Thankfully Mrs May helped Spreadsheet Phil “review” the idea and the concept disappeared – the BattleAxe having already offered a rolling pin to knock some sense into the Chancellor.

A slightly less vigorous deviation is on the Making Tax Digital strategy where businesses will need to file accounting data with HMRC more than once a year.  Given the state of HMRC’s existing systems and their proven inability to maintain accurate records, news of a further year’s delay gave rise to a huge collective sigh of relief within BattleAxe HQ.

Then there’s the new rules on how freelancers working for public authorities through limited companies are taxed. Another knee-jerk reaction to the media whipping up misunderstanding.  A few cases of abuse mean all freelancers working for the NHS, government departments and local authorities will potentially be penalised.  Historically the tax payers made the decision on whether they were really employees and it was their risk if they got it wrong!  Now it’s the public bodies’ decision and risk. So, what odds they won’t err on the side of caution and misclassify even genuine client/supplier relationships?

No sign of an Exchequer U Turn on this – yet! But there are many freelancers – including locum doctors and nurses who keep the NHS going – who are taking to the exit ramps and accelerating away from the public sector and, in some cases, the UK. Those staying are demanding higher daily rates to compensate for the new tax. So any potential extra tax being collected (the BattleAxe isn’t convinced it will be any) may well be outweighed by the additional costs of keeping the public sector running.  Hold on: that could explain the delay on Making Tax Digital – maybe HMRC can’t afford the staff to implement it! The BattleAxe will make doubly sure she doesn’t fall off her bike at the next triathlon in case there’s no-one in A&E to patch her up.

So, Mrs M, ignore Mrs T: U Turns aren’t always a bad thing!  Better still make sure the Cabinet engage brain before making announcements – the BattleAxe can help with the thinking process… on a freelance basis, of course.

Monday, 6 February 2017

Cash Flow is King

Whether you are in business or not, you’ll have heard the phrase ‘cash flow is king’, many times before. The saying has never been more true in this time of uncertainty when businesses of all shapes and sizes are just paused waiting to see what happens next This is making the mammoth task of  trying to balance the books even more difficult than usual.

One of the most difficult tasks any small business owner can face is how to chase up an overdue invoice. I say difficult because the SME has to navigate a tricky path between having their bill paid and not falling out with the customer. Here are some tips that will help any small business owner chase up overdue invoices:

Check payment runs - find out when customers make payment runs and what the cut off is. There’s no point in submitting the invoice on the 20th if the cut off for that month's payment run is the 19th!

Make it easy to pay – You should have a clear collection policy in place outlining credit terms, how you will collect money and any overdue payments.
Make invoices clear – having a good system in place to record invoices is key. There are many software packages available like Free Agent that our clients use that make it very easy for you to track payments. Remember also that, the last time a company can object to an invoice they receive is on the day they receive it. After that time, they cannot quibble and dispute it.       
Follow customer instructions – large companies in particular often have strict systems for paying. Maybe they want a special invoice number – so make one for them. Also, ensure that it’s consistent throughout your communications to avoid confusion.

Follow up promptly – Make sure you have a consistent collection procedure and always follow up as promptly as possible. Keep a close eye on patterns in which clients generally pay; and ask yourself whether this fits in with your billing cycle? If the client does not pay ten days after the invoice is due, send them a ten-day letter re-iterating the fact that the invoice is due and (politely!) asking for payment.

Be polite – Shouting threats is not going to do you, or your business, any favours. If all else fails, and the client is ignoring you, or refusing to pay the bill, then consider whether you really want their business in the future, and make a decision about whether or not it’s worthwhile to apply to a county court (used to be known as small claims court) to claim money you’re owed by a person or business. You can process a claim for money owed up to a value of £100,000 online. This covers most debts owed to SMEs; but if the debt exceeds this level, consult a solicitor. More information can be found at

Consider as well that the business could also be going through tough times, or they could be unhappy with the service you have provided. Either way, your main aim is make them pay their bill. Remember cash flow is king. 

This article appeared in Huddersfield Examiner, Kirklees Business News February Edition page 14 

Wednesday, 1 February 2017

Too quick off the blocks?

The interest rate cut by the Monetary Policy Committee of the Bank of England didn’t come as a total surprise, like Usain Bolt’s triple-triple - but some of the BattleAxe’s grumpier interlocutors have been wondering if it may just prove to be a false start.

The MPC’s reasons sound sensible after our Brexit vote.  There are genuine fears, from some, of a downturn and job losses resulting from that vote.  Cutting rates is a classic ploy to encourage businesses to keep investing and spending, by showing they can borrow cheaply.  

However: what message is this sending out so soon after the vote?  Yes, after a lengthy and bitter campaign, the economy might have been expected to take a bit of a wobble.  Some people seemed genuinely amazed on June 24th that the lights came on, buses ran and overseas companies were still buying from the UK! 

The grumblers’ nagging doubt is that cutting rates right now suggests the UK is panicking or a sign of an economy that is out of control.  Both would be somewhat at odds with the latest figures on employment and consumer spending – like suggesting GB’s women’s 470 sailors or Giles Scott would fail to medal with just the last race to go!

Only time will tell how Brexit will actually impact the economy.  So far, the noises on trade deals from non-EU countries have been very positive.  Lower sterling makes imports more expensive but also makes exports cheaper, fuelling British exporters. They may need to reset sights to trade more actively with the 85% of the global economy that’s outside the EU. However, if we produce goods the world wants at the right price, that gives us profits to pay for those imports.

The other question is, will the base rate cut actually make any difference?  Well, of course, it depends on who you are! The drop may be raising smiles from people with mortgages, but they are LIBOR linked nowadays, so the cut may not lead to a wholesale drop in lending rates.  After all, the banks are already muttering more loudly about low margins than some countries have been about our success in the velodrome. 

Sadly, savings rates are almost bound to drop – thank goodness Mark Carney has come out against negative rates where you end up paying just to leave your cash in the bank!  That’s as attractive a concept as Yorkshire coming outside the top 20 in an Olympic medal table….

Monday, 5 December 2016

"The rule is, jam to-morrow and jam yesterday – but never jam to-day.

Hammond and May - Image originally appeared in InAuto News

In a week that has seen Hammond and May for the first time on Amazon Prime video, the stage was set for an equally dramatic introduction – our new team’s first Autumn Statement!

When she stood outside Number 10 as our new Prime Minister, Mrs May promised Government policies that would help those who are “just about managing” and what emerged from Number 11 definitely showed some signs of that.

The popular headlines: Living Wage up, tax and NIC thresholds up, petrol duty frozen.  Then there is the change to the taper on Universal Tax credit changes so that families keep more of their credits as their income rises and the money that will be invested in building affordable homes and improving transport systems, which will additionally help to secure jobs in the long downtrodden construction industry.

It painted a picture of the UK as a good place to live and definitely open for business, confirming the cuts in the rates of corporation tax and promising more funding to Universities and for R&D.  Indeed, more cash will be available to finance everything from innovative businesses, via the British Business Bank, to improved mobile phone networks and internet infrastructure.

So, was it all good news from Hammond’s first rifle though the red dispatch boxes? 

To be fair, he was somewhat constrained by his predecessor’s previous decisions, by the Office for Budget Responsibility’s rather downbeat assessment of future economic performance and the ongoing lack of cash in the Government’s coffers.

But, no, not if you own a home or a car because you’ll be paying more for your insurance.  Not if you’re a landlord that will have to carry the costs of proving that your tenants are credit worthy and entitled to live in the UK.  Not if you’re an employer that will have to work out how to recover the rise in the Living Wage and the extra NIC costs of stopping employees giving up salary in return for benefits (except eco-friendly cars), as well as price rises on pretty much everything you buy as other employers to factor them in to their prices.  And if your business ends up struggling as a result of this, to add insult to injury you’ll now have to pay NICs on some redundancy payments.

To appease the nay-sayers in the British media who believe that big businesses (especially foreign ones) create losses just to avoid paying tax, the ability to offset tax losses against future profits will be restricted if those profits are more than £5m and the amount of interest over £2m that can be deducted will be limited.  Some might think it an interesting way to incentivise generating profits in the UK.
Chancellors have to work hard to find proverbial rabbits to pull from their hats in the Autumn.  The best Mr Hammond could do was make it an event that announced its own demise - his major surprise was the news that there will be no more Autumn Statements!

“And”, as Jeremy Clarkson might (now) say “on THAT terrible disappointment….”

This article was printed on December 5th in Huddersfield Examiner Kirklees Business News on page 14 - Titled Hammond and May