Matthew Kaye

A report from Price Bailey analysing the credit risk scores and balance sheets of pubs has found that c. 20% of pubs have negative net assets and are therefore insolvent on a balance sheet basis. One in ten have a maximum Delphi Risk score suggesting they are very likely to fail in the next 12 months. The Autumn Statement will only contribute to this outlook. Businesses will be facing increased staff cost both in the form of National Minimum Wage increases as well as NIC tax rises. Consumers will also be facing reduced income in real terms even as the cost of living crisis eases. Similarly, with recent reports revising down growth expectations, consumer confidence may be further rattled. Balance sheet analysis in this manner is somewhat limited. Balance sheet insolvency in and of itself is not necessarily a sign that a business should cease trading, but it is useful for considering and appraising a business and can be an indicator of underlying structural issues. But it is somewhat fact and case specific. As I have said before many, especially smaller, pubs are somewhat thinly capitalised in that the primary assets are a leasehold or mortgaged freehold property and stock that is often subject to retention of title. Bank or other finance tend to be key liabilities and it is not difficult to see why so many may well be balance sheet insolvent notwithstanding financial performance and projections. The retail space, which is exposed to similar of the similar challenges of restaurants, has seen a number of high profile insolvencies and restructurings of late. Restaurants may be slightly more resilient but it does suggest to me that we could see an increase in restructurings in the sector possibly through the use to Restructuring Plans to cram down lease liabilities as we have seen of late in the retail sector. #insolvency #businessrecovery #restructuring #turnaround #business #finance #pub #accountant #london

7

Well worth a read if your are a business owner with value locked up in your business. Nicola and team are experts at guiding you through this process and delivering the result you need.

9

The moment you decide to make a move in your career can be transformative, yet it's not uncommon to face a counteroffer from your current employer. So how should you handle this critical juncture? Having spent 25 years in the accountancy recruitment sector in the North East of England, this scenario is all too familiar. Here's what I've learned: Firstly, understand why you decided to look for a new role in the first place. Was it the quest for a better salary, more responsibilities, a need for change, or perhaps work-life balance? Reflect on these motives, as they will guide your decision when considering a counteroffer. Recall the feeling when you accepted that new position. There was undoubtedly excitement for what lay ahead - new challenges, learning opportunities, and perhaps a step up in your professional world. Can a counteroffer genuinely provide that same sense of advancement? Moreover, upon tendering your resignation, your employer's immediate response was not to let you go, but why? Consider whether the counteroffer is a knee-jerk reaction to avoid the inconvenience of replacing you or a sincere recognition of your worth. Ask yourself critical questions: ✔️ Will the counteroffer resolve long-term issues? ✔️ Does it align with your career aspirations? ✔️ What are the implications for your reputation within your current organisation? Remember, despite a flattering counteroffer, the statistics aren't in favour of long-term satisfaction post-acceptance. According to various industry reports, a significant percentage of employees who accept counteroffers find themselves on the job market again within a year. When faced with a counteroffer, communicate transparently with both your current and prospective employers. Express gratitude for the counteroffer but reaffirm your decision to move forward if that's what feels right after careful consideration. Your career journey is exactly that - yours. The paths you choose should be stepping stones to greater fulfilment and opportunities. Feel free to reach out for a conversation about this pivotal career moment. Whether you decide to stay or go, I'm here to offer impartial advice or even just to listen. It's what I've dedicated my career to, and it's an experience I'm glad to share. #CareerChange #CounterOffer #JobDecision

5

2 Comments

If cakes 🍰 , pastries 🥐, red meat 🥩, poultry 🐓 and fish 🎣 were subject to #VAT in the UK the Treasury could raise an extra £4bn in tax every year. This is my quick and dirty estimate based on last year’s combined sales of all those items (approximately £20bn) £4bn that could be spent to reform Child Benefit by introducing a much fairer and higher household income threshold (which would cost £1.4bn) and remove the 2 child benefit cap (which has an estimated cost of £2.5bn) Considering that the UK has probably the biggest and most controversial ‘pool’ of zero rated items in the world, particularly with regards to food, and that charging VAT on cakes and meat would leave more essential items such as bread 🍞 and milk 🥛 unaffected I believe it is something worth exploring Oh, and it would make the never ending Jaffa Cake debate totally irrelevant 😃 Thoughts?

71

93 Comments

Question for the R&D tax relief community. Last week at Accountex, I was explaining how our tax calculator can help with the various R&D tax relief rates and the merger scheme when someone said, "I think the government's long-term goal is to get rid of the R&D scheme." I paused... Naturally, I asked what made them feel that way, pointing out that it couldn't just disappear overnight? They replied, "they will gradually reduce it until it goes to zero." What do you think? Surely the UK government won't remove the incentive that so many other countries offer, especially in the EU? #researchanddevelopmenttaxrelief #randd #innovation #randdtaxrelief

6

9 Comments

Could another one be steered away from biting the dust? Your FP&A “should” simulate what will happen to your company by placing all the variables (the drivers) into a place (the model) to generate the outcome (5-year plan). A fashion parade is where you are made to visualise yourself in clothes that look completely different on others (models) whilst you may not possess the same physical attributes like the ones on the walkway. I recently came across a post from yet another founder, now an ex-founder, announcing the closure of their business. Sadly, these stories are becoming more common on LinkedIn. As someone in FP&A, I see a recurring theme: many companies rely models (financial ones) that adopt predictive outcomes that encourage you to visualise your company’s outcome using variables that are not representative of your companies’ attributes; being on flawed financial models that fail to prepare them for real-world challenges. Before this particular incident, I had gone through something with another company. Being the following: 1.      I reached out to pitch my services to a company that I was aware was struggling, despite having FP&A inhouse. 2.      Initially, the CEO was too busy firefighting to meet with me. 3.      On my second mail, I sent a version of my driver-based FP&A model, with instructions to load their companies’ drivers into the input section of the model. 4.      To input the data, there is a command button that requires just a click, and the model does the rest. 5.      After about a week, I got an urgent call. Their existing model—a predictive "click-and-drag" type—painted an overly rosy picture: ·        Revenue overestimated. ·        Opex underestimated. ·        Free cash flow inflated. 6.      This flawed approach had left them blindsided when actual results fell short. After implementing this driver-based model, the CEO saw a clearer financial reality, truer cash flow projections, and actionable insights. Driver-based FP&A models focus on what truly drives revenue, costs, and cash flow, providing precision and resilience—especially critical for companies operating on thin margins. Your financial runway might not be as long as you think, get a different look at the dataset of your company, for free! DM me to get a copy of the driver-based model and see how far your business can really go. In FP&A, the best tool isn’t the one that looks good—it’s the one that gets it right.

7

Self-Assessment HMRC expects Self-Assessment Tax Return as well as any tax payment due to be completed for the Tax Year 2024/2025 - Paper form: 31 October 2024 - Online Submission: 31 January 2025 Nearly half of the 🕰️ has lapsed and if you or your Accountant have not completed your Tax Return as of yet We would suggest to prioritise this Some of the reasons as 👇 - Better planning and understanding of the taxes - Prepared to understand and pay any payment on Account for the following year (If applicable) - More accurately prepared rather than left until the last minute - Be able to raise any queries with HMRC Office if tax has been overpaid as a result of incorrect Tax Code - Less likely to submit the Tax Return late - Less likely to pay the Tax Late - Be prepared better for Making Tax Digital (Expected to begin in April 2026) and this will apply to many individuals If you require any assistance Please feel free to reach out to us Tel: 01212852534 Web: https://lnkd.in/ewYzdMs #accountants #taxes #bookkeeping #vat #paye #selfassessment #corporationtax #accounts #companies #pension #investments #business #businessowner #SME #accountant #accountancy #director #soletrader #partnership #incorporation #taxadvice #Crypto

6

The recent Autumn Budget Breakdown hosted by Menzies LLP offered valuable insights into the budget updates, specifically focusing on practical aspects for accountants like me. Here are some key points I found intriguing: - The budget aims to raise £70bn, with £30bn from borrowing and £40bn from taxes. - Notably, £25bn of the tax revenue is expected to come from increases in employers' national insurance contributions. In my view, these figures underscore the importance of achieving growth in the coming years for these measures to be effective. Additionally, while we may not have direct control over national insurance hikes, there are strategies we can implement to navigate these changes. By optimising hiring processes, using employment allowances, and fostering a conducive work environment to enhance employee retention, we can mitigate unnecessary employment related expenses. The session shed light on critical financial aspects, emphasising the need for initiative-taking measures and prudent financial management in the evolving economic landscape. John Dunaway Dwayne Whitehouse Holly Richardson GradCG Stuart Richardson Laura Jones

7

Whilst the Budget was mostly quiet on the VAT front, HMRC chose the same day to release its updated guidance on the VAT changes being introduced for private schools. Concurrently, HM Treasury published its response to the recent technical consultation on the same issue. The cynics amongst us might question the timing of these releases. A summary of the key points below: There are no changes to the intention to implement VAT on private school fees or the implementation date, with the change still going ahead with effect from 1 January 2025; The definition of a nursery class has been amended, meaning that having one child of compulsory school age in a class does not “taint” the whole class from a VAT perspective;   Higher education provided by private schools will remain exempt from VAT; Further education colleges will remain exempt from VAT, with the second limb of the definition of a private school being amended so that only institutions that are wholly or mainly concerned with providing education suitable for (majority) fee paying 16-19 year olds are within scope of this policy; Independent training/learning providers are carved out from the changes; Fees earned by non-maintained special schools will now be subject to VAT; Teaching of English as a foreign language (TEFL) by a private school remains exempt from VAT. The government predicts that as a result of this measure there will be 37,000 fewer pupils in the private sector. The Government foresees a corresponding increase of 35,000 pupils into the state sector, with the other 2,000 consisting of international pupils who do not move into the UK state system and pupils moving into homeschooling. The one-off implementation cost to private schools entering the VAT system is estimated to be around £1 million. This includes familiarisation with the new requirements and registration for VAT. This does not include the cost of administration burdens not directly related to tax obligations. The total annual ongoing administrative burden for the small business population of accounting for VAT is expected to increase by £9 million. The average annual ongoing cost per business is predicted to be £3,400, but this will vary according to the size/complexity of the business. In addition to the cost for private schools the Government estimates that increased HMRC costs will be c£7 million over a 5 year period but may be higher. Whilst further guidance is welcome given the continuing uncertainty, its clear that the main thrust of the proposals remains unchanged and the much hoped for (and many, including me, would say sensible) delay of the implementation date is not going to happen. I would also contend that the implementation costs both to private schools and HMRC are likely to be some way north of the estimates. If you do require help navigating these changes, please dont hesitate to reach out to me or your usual Azets adviser. Alan Glen CTA Scott Craig Matt Blake

11

There's a bubbling crisis in the accountancy industry. A study from AccountingWeb shows that nearly half of all accountants are scared that asking for help might make people think they can't do their job right. This makes an already tough situation even worse. The fact that not many people are talking about this mental health crisis isn't helping either. It harms the wellbeing of employees, and in turn, it ends up hitting the financial sector where it hurts. There are a few companies shining the light and leading the way, but there needs to be wider acknowledgement and action from within the industry. If you're looking to hire top talent to catapult your business forward, you want to nurture and protect it. Also, younger candidates are more mental health aware - it may soon be an expectation that there is structured support in place. Source: https://vist.ly/yfvg #accountancy #accountants #mentalhealth #acca

1

Is there an instance where biscuits 🍪 wholly covered with chocolate can be sold without charging any VAT? 🤔 Of course there is 😀 this is #VAT, there’s always an exception! If, in a supply of a packet or tin of assorted biscuits, the weight of standard-rated chocolate biscuits does not exceed 15% of the total net weight, the whole packet or tin can be sold VAT free! This effectively overrides the general rule prescribing that assortments containing both standard-rated and zero-rated items are treated as mixed supplies for VAT purposes and the #tax value of each part of the mixture must be worked out in order to calculate the VAT due

31

9 Comments

The first major change to #tax affecting individuals has now been confirmed with the announcement that #VAT will be applied to private school fees from 1st January 2025. There are anti-avoidance measures in place for those who want to pay in advance, so careful planning is needed. But will this be an automatic 20% increase to current fees, or will schools have the ability (and appetite) to reduce their base fees if they can reclaim VAT on expenditure when they become VAT registered? This will definitely be an area of personal #financialplanning which will need careful consideration, especially with many parents committing to a payment period of 13 years per child in many cases. Understanding how this increase in costs will impact you both now, and over the longer term is vital to ensure you remain on track with your wider plans. Now would be a good time to review your cashflow forecasts with your financial planner. #personalfinance #wealthmanagement Juliet Bailey Stephanie Jackson Adam Green APFS, CFP™ https://lnkd.in/eR7ywG3d

26

1 Comment

The preparation of the annual Budget Forecast is always a highlight for any academy trust CFO! There are a few tweaks this year, we have summarised these along with a link to some useful ESFA guidance on the responsibilities and requirements around pension schemes (another hot topic in the last year or so). If you have any questions or need guidance, please speak to your usual Azets contact. #academies #budgetforecastreturn #bfr #LGPS

16

1 Comment

We officially entered Q2 in April. April is a notoriously busy time for accountants and businesses - my team has worked hard to deliver end of year accounts for clients and help them enter into the new financial year. Looking ahead, there’s some interesting things going on in the UK and, indeed, the world this quarter 👇 ●Purchasing power is slowly improving leading the way to recovery of consumption. ●In March 2024 the OBR forecasted that real household disposable incomes per head will increase by 0.1% in 2024 and then by 1.7% in 2025. ●Energy bills across households and businesses are slowly decreasing. ●The minimum wage for 18-20 year-olds is set for a £1.11 increase to £8.60 per hour. Those on apprenticeships schemes will also receive a pay increase. ●The OBR forecasts inflation to decline to 2.0% in Q2 2024 and is then expected to remain below 2% until Q3 2027. ●The government is cutting the main rate of employee National Insurance by 2p from 10% to 8% from 6 April 2024. ●Around 1.6 million households whose fixed rate mortgages end in 2024 face higher mortgage costs. ●We might see some of the 2024 budget announcements start to unfold. I’m interested to see how it will unfold as we dive deeper into the year 👀 In other news, I'm excited for the London Marathon and to see the start of the Euros 2024 this quarter! #income #consumption #purchasing #businesses #Q2 #energybills #yearend #QuarterTwo

21

1 Comment

Reward card schemes are gaining attention, but all that glitters is not gold, especially regarding tax clearance. At RJF, clients often ask us about these, and our stance is clear: if there's no explicit HMRC approval, it's best to avoid it. Got questions about a scheme you've encountered? Leave a comment or send me a message. #Business #Startup #LeanStartups

7

Do Practice Accountants Need to be Qualified to Reach the Top? Yes…but, not always 🤔 Whilst holding the ACA/ACCA qualification undoubtedly sets a standard of expertise, exceptions exist where other qualities can override this. 💥 But, it is becoming rarer. Many clients will not consider a candidate for some of the top positions if they are not qualified. 👀 It's the first cut they make. But, while qualifications are often a prerequisite for success, it's crucial to recognize that they don't always guarantee excellence. 💥 Sometimes, a blend of commercial acumen, technical prowess, and exceptional client relationship skills can outweigh any formal qualification. 💥 While qualifications provide a solid foundation, they are just one piece of the puzzle. As professionals, we must embrace a holistic perspective that values both traditional credentials and the unique strengths individuals bring to the table.

3

1 Comment

The FTT has found that HMRC was correct to tax money paid out for mis-selling of interest rate hedging products as compensation. A pair of brothers purchased interest rate hedging products (IRHPs) from a bank, to protect themselves against potential interest rate fluctuations on loans that they had taken out. The payments were deducted as expenses from their property business profits. Ultimately, it turned out that they had been mis-sold these IRHPs. They were given redress payments consisting of a basic sum, the difference between the cost of the product and the cost of a more appropriate product, plus interest. HMRC raised closure notices on the basis that the compensation and interest was taxable. The brothers argued that as the payments were made for the “opportunity cost in losing the ability to invest in different hedging products” rather than as compensation, they were not taxable. The FTT found that the payments were compensation for business expenditure that the brothers would not have made but for paying the higher price for mis-sold products, putting them back in the correct position. The fact that they were calculated by reference to the cost of the correct product did not make them payments for loss of opportunity, this was simply the way the FCA set up the scheme. The FTT dismissed the appeals and found that income tax applied to the whole of the payments and interest. Hackett & Anor v HMRC [2024] UKFTT 749 (TC)

4

In the UK most basic food stuffs are zero rated. However, the definition of 'basic' is not straightforward and many of the foods are zero rated as a result of historical legislation dating back to the introduction of VAT in 1973. #VAT #VATCakeorBiscuit

1