As Chartered Accountants who work with start-ups, it’s encouraging to note that our local region, the Home Counties, is ahead of the curve when it comes to new business creation. Analysis released in November 2015 by UHY Hacker Young reveals that two thirds of the top 20 net growth areas in the UK are located in the Home Counties. So if you’re thinking of starting a business here you’ll be in good company.
Setting up a business anywhere, at any time, requires a rare combination of a great idea, resilience, finance and entrepreneurship. Businesses that set up in areas with lower growth rates and go against the trends are to be applauded. Clearly the Home Counties has a more conducive climate for the new entrepreneur.
Not only is the Home Counties a hub for growth, but within this region, our Hertfordshire base is counted amongst the top start-up zones too. Watford, East Hertfordshire, Borehamwood and Potters Bar, Broxbourne and Waltham Cross are all amongst the UK’s highest for net new businesses. Unsurprisingly, London, another area where we support many clients, takes a top spot too.
UK net new business
Areas with the greatest increase last year
||Net new business
per 10,000 population
|Windsor and Maidenhead
|Horsham, West Sussex
|Borehamwood & Potters Bar
|Broxbourne & Waltham Cross
|Amersham & Chesham
|UHY Hacker Young statistics:
Number of net new businesses per 10,000
to year end 31 December 2013, latest figures available.
Tarrant Green & Company is well placed to support start-ups, with twenty years spent doing just that. Over the years we’ve provided advice to many new businesses on their structure, taxation and raising finance. We provide advice and training on accounts and admin systems, giving a practical perspective that saves time and money.
For advice, please email firstname.lastname@example.org or call +44(0)1438 869 644.
Innovation is essential if for any business that wishes to attract customers, compete against rivals and succeed into the long term. But for many small businesses the prospect of embarking on a Research and Development (R&D) project may seem daunting, bold and risky. The UK government’s Tax Credit Scheme provides welcome support. For small and medium enterprises, the tax credit of 230% is worth taking into account.
It means that for every £100 of qualifying costs, a small business could have the income on which Corporation Tax is paid reduced by an extra £130 on top of the £100 that was spent.
In the case of a loss, this tax relief can be converted into tax credits.
It’s apparent that many small businesses are not claiming the R&D tax relief that they’re entitled to, or are reluctant to invest, because now HMRC is to launch a new initiative, called ‘Making R&D Easier’, specifically targeting small businesses.
Claim the R&D relief you’re entitled to
This initiative aims to increase the uptake of R&D tax relief by raising awareness and making it easier to apply for tax relief. A publicity campaign is due to be launched as well as direct communication with taxpayers, including email and social media. HMRC plan to check records to identify businesses which qualify for R&D tax relief but aren’t yet claiming it.
Do you have future R&D plans that fall within the scheme?
New guidance is on its way
To make it easier to claim the relief, improved guidance will be provided by HMRC including a clearer definition of ‘appreciable improvement’. Guidance will cover the interaction between R&D and the State aid rules, R&D reporting, and software R&D. Tarrant Green & Company can support you with advice on tax matters.
Small companies Advance Assurance from November 2015
Until now, companies faced uncertainty because they would have to back an R&D programme and incur expenses but couldn’t be sure whether their claim for relief would be accepted. This would only be known once they filed their tax return after they had incurred R&D costs. To mitigate against this risk, from November 2015, small businesses (with a turnover of less than £2m and fewer than 50 employees) who haven’t applied for R&D tax relief before can apply for Advance Assurance. Once assessed, eligible projects will be granted Advance Assurance for 3 years, provided that there are no material changes to the project.
For advice on corporation tax and R&D tax relief, you can Tarrant Green & Company on +44(0)1438 869 644 or email email@example.com
New research by AAT this year has revealed that it costs businesses £10bn to comply with the UK tax regime. But small and medium businesses shoulder the greater part of the burden. The AAT survey of 500 businesses, uncovered that SMEs spend around £9.9bn each year on tax compliance compared to £100m paid by larger firms.
When it comes to your own business we offer taxation advice and practical, cost-effective help. Just call 01438 869 644 or email firstname.lastname@example.org
Small and medium enterprise tax compliance
Whilst SMEs may (by definition) have up to 250,000 staff, the average number of employees is actually just up to four people. Despite this micro scale SMEs pay a disproportionately high amount to comply with the tax regime and this work also takes proportionately longer compared to big businesses.
- average 4 staff
- £4,376 on average in tax compliance costs
- 2 hours per week spent on tax compliance
Large businesses tax compliance
Although they employ over 250,000 people and often a great many more, the compliance costs for large businesses are proportionately lower.
- 250,000+ staff
- £8,900 on average in tax compliance costs
- 6 hours per week spent on tax compliance
Tax is too complex and time-consuming
SMEs believe that the tax system is overly complex.
- 70% say far too much time is needed to handle tax issues.
- 70% think that the UK tax system is too complicated.
The areas of tax which AAT members believe are most in need of simplification to help UK businesses are:
- Tax relief
- Capital gains
- Corporation tax
- Income tax.
Ease the compliance burden
Chartered Accountants Tarrant Green & Company can advise on a host of tax issues and help clients to comply with their tax obligations, shouldering some of the tax compliance burden. This includes:
- Advice on tax planning for individuals, partnerships and limited companies
- Preparation & filing of Personal Tax Returns
- Preparation and filing of Company Tax Returns
If you’d like any help then do get in touch on 01438 869 644 or email email@example.com
When you buy tangible assets for your business like premises and products you know exactly what you’re getting. But when it comes to something intangible, such as really good financial guidance for your business, it’s not quite so easy. Did you know that anyone can set up as an accountant without necessarily getting qualified first?
Effective advice on your finance and tax affairs can give your business an advantage in the market place. So what should you look for, and what does Tarrant Green provide?
A licence to practice
Find out whether your accountant is a member of a professional body such as The Institute of Chartered Accountants in England and Wales (ICAEW). This way you’ll know that they’ve completed several years of in-depth training, and probably much more, plus they have practical experience. Members are committed to continued professional development to ensure their knowledge remains up-to-date. ICAEW Chartered Accountants are bound by a code of ethics and if they offer professional services to the public, they’ll hold a practising certificate and professional indemnity insurance
Senior partner, Tarrant Green, is a Chartered Accountant and Member of the ICAEW, as well as other professional bodies.
Start-up advice and raising finance
If you’re starting up a new venture, or expanding an existing one, there are many sources of finance available and each have their pros and cons. Make sure your potential accountant can give you an objective assessment of your options – from sale and lease back and peer to peer lending, to grants, factoring and even employee shareholding (such as the John Lewis model).
At Tarrant Green & Company we support emerging new businesses through the ICAEW Business Advice Service – your first meeting is free.
Tax returns under control
Legally, personal and company tax returns must be filed. A good accountant will make this information-gathering and form-filling exercise as pain-free as possible. So find out how your accountant will approach this. Do they handle everything at an accountant’s rate at the year end, or do they help you to put book-keeping support in place to keep your costs low. And when you provide all the required information, will they prepare the return in good time so you know what tax you owe, or will you have to keep chasing until you finally find out your tax liability and submit your return close to the deadline. It’s worth asking, as it happens all too often.
Completing tax returns becomes cost-effective and trouble-free with Tarrant Green & Company.
Accounting and taxation can be very complex indeed. But with the help of someone suitably qualified, this knowledge will be used to provide you with straightforward guidance. Check that your prospective accountant has expertise to provide the type of tax advice you need.
Tarrant Green represents clients in HMRC tribunals due to extensive tax know-how.
Find out what experience your prospective accountant has of different accounting systems. Whilst there are many different systems, Sage is a big player. An accountant with expertise not just of Sage but of other systems besides is likely to be able to dovetail their service more effectively.
Tarrant Green has experience of these accounting and admin systems: Sage™; VT Accounts; KashFlow; Intuit Quickbooks; Opsis; Thomson Reuters Elite™ (Legal); Quill Pinpoint (Legal); Eclipse® Proclaim Case Management; Taxcalc®.
Practical commercial experience
Ask questions to establish how well your potential accountant can apply knowledge to provide practical answers. Give them a scenario where you took tax advice in the past and see if they come up with the same solution – or an even better one.
Our senior partner, Tarrant Green, knows finance, and he’s also provided Interim Management on request, with experience spanning over 20 years.
Availability of your accountant
Often businesses complain that they choose an accountant and then can’t get hold of them when they need support. Calls may be passed down the line to a junior, who is not able to handle the query successfully. So find out in advance how your accountant will support you and your business.
Once appointed, Tarrant Green is your Chartered Accountant; he’s pro-active and responds quickly – in person.
How do you say goodbye to the business you’ve built up over many years? This is the question that faces many business owners when they seek to retire or move on from their current business. There are a number of options available, such as selling the assets, selling the business or a management buyout. But these have their limitations, especially for a business owner that want to protect the jobs of their employees and provide certainty for suppliers that have served them so well. Employee ownership, along the lines of the John Lewis model, provides an effective solution. This is especially true today, as the Government is committed to encouraging employee ownership through preferential tax treatment.
So what are the limitations of a sale?
Selling assets owned by the business such as buildings, plant, equipment or stock is unlikely to realise the full value of the business. Selling the business as an ongoing concern requires you to provide information with a high degree of transparency. You may not want everyone, including competitors, to know all this information. Management Buy-Outs often put huge financial pressures on the company as it struggles to pay back its loans. For a business owner that wants to ensure continuity for their business, job security for staff and an effective way to release money from the business, employee ownership can be their best option.
What are the options for co-ownership?
Some companies are owned by their employees who become direct individual shareholders through tax-advantaged share plans, such as a Share Incentive Plan. However, this could be difficult to achieve at the point that you wish to sell the business. Many companies use the indirect ‘John Lewis model’ of employee ownership where the business is held in Trust, and employees are the beneficiaries. There are also combined schemes with some of the shares in Trust and some owned by employee shareholders, and co-operatives which are run for the benefit of members, which can include staff and customers.
The John Lewis model
The John Lewis Partnership is the largest employee-owned company in the UK, with a turnover of £10bn. All 93,800 permanent staff are Partners that own the John Lewis and Waitrose business. Shares are held in Trust and employees share in benefits and profits. The structure allows the organisation to be commercial and democratic. In spring this year John Lewis announced a staff bonus of 11% of salary, in some years employees have received as much as 17% of salary, equivalent to nine weeks wages. The model has helped create a strong business run by a highly motivated workforce. But don’t be fooled into thinking employee ownership is only for big players like John Lewis, many other companies, large and small, have adopted this model and seen the benefits.
According to a study by Cass business school, employee-owned businesses enjoyed higher growth and job creation during the recession than companies in conventional ownership. Employee owned businesses typically outperform companies where employees do not have an ownership stake or the right to participate in decision-making. Cass concludes this advantage is derived from “taking a stakeholder rather than a shareholder view of management”. The Employee Ownership Association reports that employee-owned companies consistently outperform FTSE All-Share with a 9.9% boost to share values.
The implications of moving to indirect employee ownership
In the past, business owners would have had to pay Capital Gain Tax, when selling their business, but now, where a business owner sells a controlling interest to an employee ownership trust there is a complete relief from Capital Gains Tax. As you might expect there are a number of conditions to be met.
There are different vehicles to use, where shares are held collectively on behalf of employees through an indirect scheme, most frequently through an Employee Ownership Trust. This enables the buying and warehousing (or holding) of shares from the owner. Employees can then receive or purchase shares in a tax efficient manner through the Share Incentive Plan. The Share Incentive Plan also uses a form of trust.
Tarrant Green & Co. can advise on the pros and cons of releasing capital from your business through employee ownership. We can help set up the required structures and ensure that you optimise the tax advantages of this scheme. In addition, we can provide advice on business valuation, buyout funding, management structures and phased release of capital. This can be a really effective way to realise the true market value of your business whilst at the same time providing stability for employees and future growth for your company, even when you step back from it to pursue other interests.