Let's keep the wealthy foreign investors on board

By Amanda Vigar, Managing Partner, V&A Bell Brown LLP

Britain is open for business… or is it? It certainly should be with unemployment rising and the economy in the doldrums.

At a time when this country needs more taxpayers and more wealth-producing, industry- investing people, we’ve managed to make rich foreigners feel less welcome and it looks like they’re taking their money elsewhere. The country needs that like a hole in the head!

According to HM Revenue and Customs’ own figures, the number of non-domiciled taxpayers has fallen by 2,000 in a year. It may have something to do with the £30,000 annual non-dom levy they’re being asked to pay for the privilege of putting their stake in the UK.

According to a Freedom of Information request, the damning stats show that the number of non-doms has plummeted from 140,000 in 2008 to 116,000 now. These are just the ones that are paying the levy – so likely to be on the wealthy end of the spectrum!

This group of highly informed, highly mobile, enormously wealthy wealth producers is, not surprisingly, also very well informed. And they have highly skilled people to do their sums for them, and they have decided that the UK is not the proposition it once was – we’re not longer seen as a “light touch” tax and regulation economy.

Foreign investment is always important to a successful economy and the need to stay attractive to international money is imperative to our country’s recovery and growth.

The £30,000 annual tax levy on non-doms who have been in the UK for between seven and 12 years is not helping us. The levy is only part of a raft of other tax measures, introduced or being discussed, which are gaining us a reputation for being less welcoming to people with real spending power than we once were.

We need to keep access to investment open and easy. To do otherwise seems contrary to the ideals of a free market and at odds with our role as an international centre for investment and ideas.

These non-domicile taxpayers will continue to take to their luxury launches and abandon the good ship Britannia if they feel the weather is no longer set fair. While they’re aboard, they will invest in the UK and create jobs. When they’re abroad, they will invest their money abroad. Time for a change of tack!

Statement from Business Battle-axe Amanda Vigar on the passing of former PM Margaret Thatcher

Amanda Vigar, Managing Partner, V&A Bell Brown LLP, the Business Battle-axe, said: “Lady Thatcher was a towering figure in UK politics and her legacy is with us to this very day. I firmly believe that without her strong and decisive leadership and the positive economic climate that she fostered many businesses would simply not have even got off the ground.

“Her resolute determination and strong leadership helped to release Britain from the stranglehold of trade union dominance and her free market policies helped to inspire many ordinary people to start their own businesses and to buy their own homes. On a personal level, she has been a huge inspiration to me, and I firmly believe that her legacy will live on for many, many years to come.”

Smaller businesses need more help to survive yet alone thrive!

By Amanda Vigar, Managing Partner, V&A Bell Brown LLP

I can’t help thinking the Budget was a wasted opportunity. There were some good things in there for smaller businesses, but there were also measures that should, and could, have been included. Add to that it was a Budget of “jam tomorrow”; all in all, it was rather a let-down.

The cut in mainstream Corporation Tax won’t directly help smaller businesses, but it will help to attract overseas businesses to set up in the UK. The Employment Allowance is good news as well as the first £2,000 will be taken off employers’ National Insurance bill. This will mean that many small businesses will no longer have to pay employers’ NI. For a small business owner who is thinking about taking on their first employee a huge barrier will be removed. That’s the good news.

Perhaps the biggest Budget disappointment for small firms was that George Osborne did not announce any curb on business rates and there was no reduction in the rate of corporation tax for smaller businesses. Rates will have risen 13% in three years at a cost to retailers of about £175m a year.

With lending to small businesses down 25% in real terms since its peak in 2009, and almost 10% lower than in 2006, I’m also disappointed that there was no announcement on the Business Bank that has been advocated by the business secretary, Vince Cable. Whilst we don’t want to go down the road of what was tantamount to irresponsible lending in the early years of this century, the tides have turned too far the other way in more recent times. The proposed Business Bank will not lend directly to small businesses, but will give advice on suitable facilities and schemes as well as providing cheap wholesale finance for alternative lenders and so called 'challenger banks’.

More and more businesses feel there is no point in even trying to raise finance to grow, and that’s a real concern in our fragile economy. Baby steps are not what we need right now. We need real action that can give smaller businesses the kick-start and confidence they need to grow and survive. It’s tough out there and there is little real sign that it’s going to get any better fast. So, even though I’m not an advocate of government meddling, I do think that the Coalition should act on lending. There are private finance initiatives springing up, but these need to be co-ordinated, and the Business Bank could certainly help. A client who’s been in business for about twenty years said to me the other day that he wouldn’t have been able to get his small business off the ground had he been starting out today. The barrier is, of course, the lack of finance out there. So, come on Coalition, put some real timescales in place for this new bank, as it’s a good idea, but now’s the time to put your money where your mouth is!

Sleepwalking into business failure

By Amanda Vigar, Managing Partner, V&A Bell Brown LLP

We may tentatively be emerging from one of the longest double dip recessions in recent history, and may even be sliding into a triple dip downturn. Many businesses have gone to the wall and many others have, sadly, turned into ‘zombie businesses.’

Zombie companies are the living dead in our economy.  They are only capable only of servicing interest payments on company debt rather than making inroads into it. They are alive – but barely – thanks to government help, monetary policy and, often, the reluctance of lenders to write off bad loans since the crisis. Many have even been going down the deeply worrying route of servicing business debt using director’s personal cash reserves, or even taking out personal loans to keep their businesses afloat.

These ‘living dead’ companies are now being strangled by their capital structure and mistakes of the past. Many of these were already faltering businesses that took on debt based on a pre 2007 plan, but there is no way, on current performance, that this debt can be paid back. As the country emerges from recession, firms starved of investment will suddenly need more cash, but will not be able to attract the required funding because they haven’t been servicing old debt adequately. These companies are unable to invest in new equipment or future growth areas so can partly be blamed for the weak recovery.

So what can zombie businesses do to help themselves?

• Each week, predict where your bank statement will be the following week.
• Stop paying with cheques! Controlling when cash leaves the account is vital for healthy cash-flow and electronic payments are normally much cheaper than cheques!
• Minimise the number of standing orders and direct debits unless you get a healthy discount for paying this way. This will help keep the timings of payments within your control.
• If a client is behind with payments, stop selling to them until they are able to meet the terms agreed and ask for payments up front!
• Negotiate better payment terms with suppliers. For example, if you can’t get longer payment terms try to secure discounts for early or block payments.
• If employees wish to purchase anything, ask them why, if they had to spend their own money would they still need to buy it? Helping your staff to take responsibility for cash-flow will reduce waste and save you cash.
  
  

Amanda Vigar is Managing Partner at V&A Bell Brown LLP, a Holmfirth-based firm of accountants specialising in all aspects of accountancy and tax affairs on behalf of small and medium sized businesses. The company is part of the V&A Group which also includes V&A Vigar & Co LLP and V&A Corporate Finance. The V&A Group also gets involved in turning around struggling firms and advising on sales.

Why Big Business Is Right To Avoid The Tax Man

WHY BIG BUSINESS IS RIGHT TO AVOID THE TAX MAN

By Amanda Vigar, Managing Partner, V&A Bell Brown LLP.

The big brands, eBay, Google and Apple, are notorious tax avoiders who should be hauled over the coals by HMRC – right? Starbucks, for example, has been forced to pay £20m to the tax man over the next two years due to alleged tax avoidance. Should other big multi-national companies now be hounded until they pay up?

Well, that’s a big resounding “no” from me! With an international economy, people are able to move their money across tax boundaries quite freely and legally. And they are allowed to take advantage of the system they operate in. Any curb on this free movement may well deter major international companies from trading in the UK.  That said, there need to be checks and balances in place to prevent abuse.  Hence, the civilised world has introduced rules on transfer pricing to ensure that profits aren’t moved around just to save tax.  There has to be a commercial reason for it. While I’m certainly not arguing for an end to taxation, we have to face the fact that high levels of taxation will prevent some kinds of economic activity from happening. 

We also have to look wider than just what corporation tax they pay.  There’s VAT, National Insurance, landfill tax and customs duties, to name but a few.  We also have to remember that the average Starbucks on the street corner is a franchise – i.e. not owned by the Starbucks ogres, but by small businesses that  are paying corporation tax – assuming they make profits.  

So, rather than whining that the big corporations are getting away with murder by not paying ‘enough tax’ into UK coffers, why don’t we instead breathe a sigh of relief that these big, hugely successful, companies are operating here at all? They invest in our country as they do business here, recruit from our workforce and sell goods and services to us that we actually want. 

So, what’s the point of casting them as the bad guys? Well, there’s no point at all. Where Starbucks leads, by making a token (to them!) £20m tax payment – really, a brilliantly timed PR exercise - I doubt that many other companies will follow. That’s good news for our economy, as those businesses are more likely to stick with us and invest in UK PLC.

Amanda Vigar is Managing Partner at V&A Bell Brown LLP, a Holmfirth-based firm of accountants specialising in all aspects of accountancy and tax affairs on behalf of small and medium sized businesses. The company is part of the V&A Group which also includes V&A Vigar & Co LLP and V&A Corporate Finance. The V&A Group also gets involved in turning around struggling firms and advising on sales.

For further information: www.bellbrown.com.

Taking the Taxman to Task

OKAY, I’ll admit it – I am one for getting on my soapbox, but I make no excuses for that!

As well as being an accountant who tries to break the dour mould that our profession happily wears like a straitjacket, I like to speak my mind.

I also do not suffer fools gladly and that can come in extremely handy when dealing with cases against HM Revenue & Customs.

This week, at V&A Bell Brown in Holmfirth, we are celebrating a well-earned victory against HMRC. The taxman has seen reason in light of our completely rational case on behalf of a client who had accidentally overpaid their tax by thousands of pounds.

Why did it take so long, I hear you ask? Well, at first because HMRC denied that there had been an over-payment, despite strong evidence to the contrary.

My guess is that they did not mount a correct and thorough enough investigation into the case until they were “handbagged” (by me, of course!) into doing so.

Even once they’d admitted the overpayment, they refused to repay it until the client proved why it had made the over payment.

Now HMRC plans to make taxpayers legally responsible for checking that the taxman is taking the correct amount of tax.

It’s proposing to change current rules which waive underpayment of income tax if the root causes are delays and mistakes by HMRC officials.

HMRC receives around 166,244 complaints each year in response to demands for underpaid tax (quite a few from V&A Vigar Group!).

HMRC shouldn’t be trying to pass the buck to taxpayers because it’s too complicated for them to manage. Instead politicians should address the root cause of the problem – the needlessly and ridiculously complicated tax system.

A simplified tax system will make it far easier for HMRC to do their job and ensure that all taxpayers pay no more or no less than their fair share.

It will also ensure that cases like the one this week are sorted out in a reasonable time.

Charity Begins at Work?

By The Business Battle-axe, Amanda Vigar, Managing Partner, V&A Bell Brown LLP.

As the old saying goes, charity begins at home. But why not let it continue at the workplace?

A recent study by employee engagement consultancy LeapCR caught my eye when it found that almost half of UK workers claimed they were more likely to stay with an employer that allowed them to carry out charity work during office hours. Even more surprisingly, one in 10 people said they would take a ‘significant’ pay cut to stay with an employer who encouraged charity amongst staff.

Earlier this month I was given the honour of becoming a director at the Nerve Centre, a charity based in Huddersfield. The charity does amazing work for people and families affected by neurological conditions. The charity carries out vital work in providing advice, activities, therapies and support for people suffering from a range of neurological conditions. The devastating fact is that eight million people in the UK are currently living with such a condition.

Personally, I cannot fathom as to why an employer would stop anyone from carrying out charity work under the company name. The personal development benefits to workers are clear; through charitable work they can learn new skills, bond with colleagues and help to boost overall morale in the office.

Allowing employees to volunteer for charity work also keeps them busy and motivated if times are a bit quiet for your business whilst also drawing an association between the company brand and a charity. Numerous companies have seen business bloom after having untapped market segments opened up by their charitable links reflecting positively upon them.

Despite this, the charities themselves should not be forgotten. The charitable, or the ‘third’ sector, is experiencing a financial squeeze at the moment and every assistance, no matter how small, is appreciated. Payroll giving can be an easy way to do this – and it’s tax efficient for both the employer and the charity! A hundred employees giving just £5 a month can make a significant difference to a small local charity like the Nerve Centre. After all, we need to look after charities because we never know when we might need them to look after us or our loved ones.