Haslemere - The revolution started here (honest)

Back on the road again!

The genteel Surrey town of Haslemere may not on the face of it seem the most obvious place for a revolution, but that may be about to change. The 21 businesses that were represented at the lunchtime Peal Networking Club event showed increasing belligerence as they castigated the media for focussing on the negative aspects of the current situation and not acknowledging the many businesses who are still doing very well. Perhaps that is the answer - a bottom up revolt - maybe it will have more effect on boosting the economy that any top down Government action. Power to the people, as John Lennon used to say.

Earlier at the IOD West Surrey branch breakfast we were all encouraged to think of skills that we had developed in 2008 and what we would be aiming to improve in 2009. My offering was working on my running skills to enable me to complete my first half marathon, a choice I justified when questioned by saying that it was an ideal way of pushing me beyond my comfort zone, improving my strategic planning (getting through 13.1 miles required a systematic approach in terms of running speed and time goals) and gaining the focus and determination to achieve a seemingly impossible target, all skills that could greatly assist my clients.

Suitably inspired my colleagues then decided that in 2009 they were going to focus on improving their juggling skills, unleashing their inner cartoonist and becoming the best know left handed bass guitarist since Paul McCartney. All in the best interests of our clients you understand………

What the VAT reduction means for small businesses

This is a newsclip from the BBC website which shows very clearly what the VAT reduction currently means for small businesses.

http://news.bbc.co.uk/1/hi/business/7757966.stm

It should be required viewing for all Ministers, MPs and civil servants as to what happens in the real world!

Alastair has spoken

Tuesday

So Alastair has spoken. I am not going to go into the economic or political significance of his “mini budget” beyond noting that he appears to have taken a sizeable gamble, which if it fails could lead to considerable difficulties for the UK economy in the future. However there are a number of measures which will directly impact on our clients, both present and future, some of which are discussed below.

Firstly credit where credit is due. There are many things that will benefit small and medium sized business, as long as they actually do what they say on the tin. These include the small business finance scheme, the loan guarantee facility for small businesses who export, the possibility of negotiating flexible payment of tax liabilities in cases of hardship, empty property relief and the ability to carry back some business losses for up to three years. The delay in the increase in the rate of small business corporation tax and the deferring of proposals to tackle so called income shifting are also very welcome. We at Orchard will certainly be looking at how our clients can benefit from these measures.

Regarding the centrepiece of the Pre-Budget Report (PBR), the temporary reduction in the rate of VAT is particularly good news for those that cannot recover input tax such as charities, public sector bodies, health and education, and er banks and insurance companies. For other businesses there will be the administrative hassles of changing systems, prices and catalogues, especially in retail which is in the middle of its busiest period and where there is already selective discounting taking place. Indeed if I were a SMART retailer, rather than cutting prices across the board, I would the use the VAT cut both on targeted price reductions i.e. as part of the price element of my marketing mix and to squirrel some cash away.

However all businesses, particularly those working in the business to business sector will need to be mindful of the cash flow impact of the VAT reduction - firms that had budgeted VAT at 17.5% should now adjust their cash receipts downwards to reflect the new rate of 15%. This could be a useful argument to deploy if you are looking to agree a payment plan for taxes with HMRC.

The main sting in the tail going forward is the increase in NI rates for both employers and employees, which represent an extra cost and cash burden. However the impact of this could be mitigated by looking at flexible remuneration ideas such as share schemes and salary sacrifice options.

My view remains that it is confidence and job insecurity rather than cash that is the main break on people spending and it is not clear whether the measures outlined in the PBR will have an impact in this area. Clearly I hope for the sake of UK plc there is some positive benefit from all of this but I remain to be convinced. Meanwhile I would continue to urge businesses to follow the basic principles of financial management and look for the opportunities that are always going to be there for SMART businesses.

Antony on the road (6)

Sunday

It seems that a reduction in VAT has emerged as the favourite for the main weapon to be used by the Government to stimulate the economy. (http://news.bbc.co.uk/1/hi/uk_politics/7744273.stm) I am a little sceptical as to how effective this is going to be as retailers are already falling over themselves to cut prices and tempt people to spend. I still think that lack of confidence driven by fear of unemployment will be the main reason for people not spending and unless firms boost cash flow by keeping the benefit of this VAT cut to themselves (for which they will be castigated by all and sundry) I can't see the cut doing much to address this. Let's see what tomorrow will bring.

Antony on the road (5)

Friday

No events to attend today so a good chance to catch up with paperwork and the latest thinking of the media pundits on Monday’s pre budget statement. (No mention of client work I hear you say - well the reality is that client work is a priority whatever else I do and therefore continues to be dealt with expeditiously regardless of the other things that I do). Most seem to agree that it was the right thing although more and more were realising that it would require significant tax increases further down the line. (http://news.bbc.co.uk/1/hi/uk_politics/7741397.stm) Most of the suggestions (leaks?) coming out so far indicate that the Government is looking to put money in the hands of consumers to encourage them to spend. Maybe this is the answer although my own view is that it is lack of confidence and job security rather than lack of money that is stopping people spending. I would have though that a package of measures to help business cash flow and encourage job conservation would be cheaper and much more effective but I guess I am only an accountant so what do I know?

Antony on the road (4)

Thursday

My turn to be star attraction this morning, turning up bright and early at Ashford Manor Golf Club in Surrey to give a seminar to the Surrey Chambers of Commerce (http://www.surrey-chambers.co.uk/) on how to survive and thrive in the current economic climate. The seminar is based on our Orchard SMART programme which has been specifically devised for the current situation and which aims to focus clients on looking for opportunities whilst ensuring that they tighten up on the basics financial control and management. In addition to finance, the programme also addresses sales, marketing and people issues and it intended to help business for whom financial management was not so important in the good time but is now essential in the current climate.

More details can be found on our website but what was encouraging was the positive attitude of many of the businesses there to the current situation and the belief that they could be SMART enough to survive and thrive.

Antony on the road (3)

Attended a Tax briefing on investigations with Baker Tilly (http://www.bakertilly.co.uk/)
in Guildford which among other things concentrated on the new penalty regime and appeals process.

My head was buzzing as they rattled through a number of changes seemingly designed to simplify and improve matters, but given the number of issues that are yet to be clarified by HMRC would appear to mean that a considerable about of bedding in is going to be required.

I freely admit that I am glad that I don’t do tax. Obviously I am aware of the major issues affecting businesses and am able to manage tax advisors on behalf of clients but I don’t provide advice or deal directly with HMRC on a day to day basis. Our tax system is in dire need of simplification, not least in that it would provide some certainty to taxpayers, advisors and HMRC frontline staff themselves. However given the need that the Government has for cash I can’t see it happening for some time to come.

However it was great opportunity to catch up with a number of small practitioners, all of whom were sceptical that Alastair Darling would be able to do much to get his billions through quickly enough to make a difference in the short term.

Antony on the road (2)

Tuesday

Breakfast courtesy of the Thames Valley Economic Partnership (http://www.businessinberkshire.co.uk/tvep/index.html) where the keynote speakers were John Whitely, the Bank of England’s agent for central and southern England, and Willie Walsh, chief executive of British Airways.

John Whitely gave a very downbeat assessment of the current situation, backed up a formidable array of alarming looking graphs, and concluded that there was a “very high degree of uncertainty in unprecedented times”.

Willie Walsh was Willie Walsh and said exactly what you would expect him to say (http://www.thamesvalley.co.uk/public_panel/economic_outlook.php)
regarding BA’s response to the economic downturn and the requirement for a third runway at Heathrow.

Fair play then to the guy from Imago (http://www.imagogroupplc.com/3D%20Telepresence/3DTelePresence.htm), a business that provide 3D telepresence facilities who stood up and proudly pointed out that they were over 100% ahead of their budget in the first few months of their business year. Clearly a SMART business and a good riposte to all the gloom and doom that had otherwise prevailed during the morning.

Antony on the road - "so you don't have to"

In the week before the all important pre-budget announcement that promises to pump billions into the economy, Orchard Principal Antony Doggwiler has been out and about at various business events gauging the mood and uncovering what is really happening in the business world. Remember he does all this so that you don’t have to.

Monday

Up in Coventry today manning our stand at TechnologyWorld 08, an exhibition organised by UKTI (https://www.uktradeinvest.gov.uk/) targeted at growth technology firms, both from the UK and overseas. Exhibitions are a good example of Forrest Gump’s assertion that life is like a box of chocolates in that you never what you are going to get in terms of visitors to the stand and any business opportunities that might arise. However we had many visitors to our stand and met some very interesting businesses. We also took the opportunity to talk to a number of UKTI advisors about our cost effective offering for companies setting up businesses in the UK.

Talking of chocolates, Ash’s bright idea of putting chocolates on the stand meant an increasing stream of visitors during the afternoon as energy levels flagged, such that we were soon badging ourselves “The Official Chocolate Suppliers to TechnologyWorld08”. All good fun and an event I think we would do again.