A notice to say that our office closes on Monday 23rd December at 2pm and re-opens on Thursday 2nd January 2020 at 9am.
Our clients are experiencing that Making Tax Digital is coming apart at the seams.
Why? Well, a number of clients who have submitted their VAT returns, had them accepted by HMRC and paid their VAT bill have subsequently had a letter, like the one shown at the bottom of this article informing them that they have not submitted or paid their VAT.
On further investigation when you ring up HMRC to find out what has happened you are met with an answering machine message which informs you to ignore the letter as they have been sent out in error.
So, (a) if this is your experience, please don’t worry; (b) if you have a Government Gateway access then you may just want to double check that all is ok; and (c) if you are concerned please give us a call to discuss the situation. We would be happy to help and advise.
With the level of work we have on at the moment we are looking to add to our experienced team an Accounts Senior.
This individual we are looking for:
- Must be an experienced individual in the production of accounts for sole trader and limited company accounts as well as a broad range of clients covering various trading activities.
- Must have worked in a general practice for more than one year and can hit the ground running as far as the production of accounts is concerned.
- If they were experienced in the preparation of tax computations and returns this would be a bonus but not a must.
- Will be competent and comfortable in the use of accounting software such as IRIS, Sage and Xero as well as Excel. We are not looking to train someone up in the use of accounting software.
- Will have a proven track record of working cooperatively with others and is a positive influence on a team.
- Will be self-motivated, diligent in time management, and does not require micro managing.
- Will be able to listen carefully and follow instructions.
- Would be available say 3 days per week and living in the local area to our office would be ideal. We would look at a full time individual if that is the only option available.
- Ideally would be a qualified person as well as experienced.
If you have the expertise and experience we are looking for we would be delighted to hear from you!
As a first step please send your CV to this email address: email@example.com
Look forward to hearing from you.
Tom Bathgate MBA
The UK Government is to delay the introduction of VAT Reverse Charging for construction companies by a year after a coalition of trade bodies and organisations highlighted its potentially damaging consequences.
Reverse charge VAT was due to come into force from 1st October 2019 but the government last week announced its decision to delay implementation until 1st October 2020.
The move follows a joint letter sent last month to Chancellor Sajid Javid, where the Building Engineering Services Association (BESA) and other key industry bodies, led by the Federation of Master Builders (FMB), pressed the government to delay the VAT changes due to the damaging impact policy would have on the sector.
Brian Berry, chief executive of the FMB, said the delay is a victory for common sense. He added: “I’m pleased that the government has made this sensible and pragmatic decision to delay reverse charge VAT until a time when it will have less of a negative impact on the tens of thousands of construction companies across the UK. To plough on with the October 2019 implementation could have been disastrous given that the changes were due to be made just before the UK is expected to leave the EU, quite possibly on ‘no-deal’ terms.
“The situation hasn’t been helped by the poor communication and guidance produced by HMRC. Despite the best efforts of construction trade associations to communicate the changes to their members, it’s concerning that so few employers have even heard of reverse charge VAT.”
Data published by the trade body in July revealed that more than two-thirds of construction firms had not heard of the VAT changes and of those who had, around the same number hadn’t prepared.
Mr Berry said: “It is reassuring that the government has listened to the construction industry, which has come together to make clear to the government that sticking to the October 2019 timetable could lead to a loss of productivity, reduced cash flow and in the worst cases, lead to a hit on jobs, tipping some companies over the edge.
“What’s required now is for the government and industry to work together to deliver a sector-wide communications campaign, which must include plain English guidance on the changes. We also want to work with the government to deliver workshops aimed at construction employers, held in locations across the country, to explain what’s happening and why.”
T Bathgate MBA
Broadthunder Accounting Limited
Preparing to concede ownership of a business can be tough for owner managers, but getting it right is crucial if the business is to remain successful. It will come as no real surprised that early planning is key yet in my experience most ignore it until, for some particular reason, it becomes a pressing issue.
Succession planning involves transferring ownership and control of a business to new management. The three main options are: (a) transferring ownership to a family member; (b) transferring ownership to a non-family member; or (c) disposing of the business through a sale, management buy-out, management buy-in or voluntary liquidation.
Why succession planning is important
The UK has 4.8 million family businesses which is 88% of all the businesses in the UK and I would guess that the majority of first-generation family businesses have no succession plan.
The most common reasons include resistance by the owner to let go control, fear or retirement or inability to find or choose a successor.
Handing over ownership is highly emotional and can be complicated which is another reason why it is left until it becomes a top priority.
Know what can be at stake
Leaving succession planning until it is too late is likely to mean that a successful transfer of ownership is not possible with the required time-table. When the decision is forced by events a panic decision or an ill informed one can mean that the business is transferred into reluctant and or inexperienced or even incapable hands.
Business disruption can easily take place in this context as arguments arise over who owns what or who runs which part and this kind of disruption and uncertainty can have a negative effect on sales and employee morale.
If this goes on for too long it can lead to business failure and a family fued.
So, as I said in my introduction, it will come as no surprise that setting aside time to think clearly and unhurriedly in advance and then crafting a succession plan is the key to successful succession.
Identify and assess your options
As mentioned earlier you could decide to transfer ownership of the business to a family or non-family member. You might sell the business or dispose of it through a management buy-out or management buy-in. In fact, you might decide the best course of action is to wind up the business altogether by means of voluntary liquidation.
Factors that should guide your decision
Begin by considering whether there is an obvious choice of successor within the business. This could be a family or non-family member who has worked for you for some time, someone who knows the business well and who has the necessary skills to take control.
Identifying the right person to take over the running of your business can be a difficult decision. Much is at stake and you need to be absolutely certain your chosen candidate is capable of taking your business forward.
If an internal appointment is not possible, you might have to opt for an external appointment. However, if you need to generate funds for your retirement, a sale might be your only course of action.
Keeping it in the family
Choosing a family member as a successor is a popular option for many owner-managers – especially when the person already works within the business.
Family succession provides a feeling that the business has been left in the hands of someone who is committed and who will do all they can to bring continued success.
Making your choice
When considering who is best equipped to take the business forward it is crucial that you remain objective. Be guided by the needs of the business, not emotional considerations or which family member has the greatest influence on you.
When considering potential successors look for evidence of commitment. Assess skills and experience carefully, because the person you choose needs to have what it takes. Consider also whether they have the necessary leadership skills and personality to motivate and manage others.
Preparing for succession
Once you have chosen the person most suited to succeed you and they are open and willing to take the helm, start preparing them through education (informal and formal if necessary), a range of training and close mentoring.
Set a timetable for the transfer of power and ownership and use the time you have left to give them the benefit of your knowledge and experience. To test their readiness, you can begin to lessen your involvement and give your successor responsibility for making some important decisions.
Give them the necessary time to equip themselves with the skills and knowledge they need, otherwise you will be setting them up to fail.
Non family member
Transferring ownership and control of your business to a family member might not be possible or feasible.
After careful consideration you might conclude that a non-family member– a current employee, someone who knows the business and is committed – is best placed to take the business forward.
If such a person does not exist, you might be forced to bring someone in from the outside. Be careful. Such an appointment can cause resentment. To minimise the risk of problems arising, communicate the reasons for their appointment to your staff and make it clear that it’s in the best interests of the business.
Trust is the major issue if control of your business is given to an external person. You will need to be sure about their skills and experience because the person you choose should have what it takes. As well as knowledge of your firm and type of business, they will need the necessary leadership skills and personality to motivate and manage others within your business. You will also need to be sure of their commitment.
A Trade sale
Disposal (selling the business) is, in my opinion, the best option if there is a need to raise cash (perhaps to fund retirement), an absence of a natural successor or the family has no vision or desire to continue its involvement in the business.
I’m fully aware that deciding to sell can be tough for owner-managers who can feel reluctant to let go of a business they have nurtured for years and see it as their life’s work. Again appropriate preparation will help to lower fears and concerns, until you are certain have found the right buyer.
Preparing to sell your business
It actually can take several years to get to the stage where a business is ready for sale. If you decide disposal is the most appropriate option, then you need to establish a plan, time line and some objectives for preparing the business for sale.
To ensure your business is in the best shape to command a competitive offer, you should consider seeking guidance from an experienced corporate finance advisor or business broker.
Ideally before being in a position to sell, you need to make sure your business is as lean, efficient and as profitable as possible. Clear evidence of sales growth via honest projections will truly help to maximise its appeal. There should be no black holes or major issues which could jeopardise the sale, such as a legal action or a tax investigation.
The key options
Management buy-outs (MBO) are becoming increasingly popular with younger family businesses. Transferring control of the business to a management team from within that already has knowledge of the company provides numerous advantages. It also gives the owner-manager the chance to transfer ownership to people who are already committed possess knowledge and relevant experience and who already have a stake in the business’ continued success.
Management buy-ins (MBI) occur when an external management team joins the business and takes a stake in its equity.
Voluntary liquidation involves dissolving all of a company’s assets, paying off employees in accordance with the Act respecting labour standards and closing the business down.
It is usually only considered when all other options have failed (e.g. when no one is interested in buying the business or taking over its management).
There can be quite substantial expenses involved, and so voluntary liquidation is unlikely to provide the best returns for business owners who are looking to raise cash.
Above all else put in place a formal succession plan
Any succession plan is of no use if it exists only in your mind.
Having to formalise your succession plan enables you to know exactly what course of action you plan to take, when and how. Setting it out in black and white often means gaps and weaknesses are exposed, which means more effective strategies need to be employed to get it succession ready.
Once you have decided which course of action best enables you to relinquish control of your business in the manner you want, you should be able to work out a timetable of necessary actions. This needs incredible attention to detail both in planning and executing.
In my experience a succession plan can take several years to implement and it can take longer that you think if your approach is to build the plane as you fly it.
Your succession plan needs to be communicated effectively to other important people within your business. Letting staff, customers and suppliers know of your intention to cease involvement in the business is important – and timing is crucial. The last thing you need is people to lose faith in the business when they hear you will no longer be involved.
Throughout, it is important to seek expert advice on every aspect of relinquishing ownership of your business – not least of which is taxation. There will be implications for both your personal finances and those of the business.
One of the toughest challenges that business owners face is learning to slowly let go in advance of actually relinquishing control over their businesses. However difficult, it is a necessary part of the process.
Tom Bathgate MBA
162 Walkden Road