Strong relationships driver’ssays Terence Byrne. seat In the · GROWTH 6 Driving Progress Be...

The next stepUnleash growth potential p8

Be alternative?A legal view on funding p12

Tax benefitsClaim for R&D Relief p13

The next generationIdentify future leaders p16

Issue 43 | www.hwca.com

Backing Your Business

Strong relationships and the ability to grasp the next opportunity are key to successful growth, says Terence Byrne.

driver’sIn the

seat

One | Issue 43 | www.hwca.com

needed to reassess the returns from trying to develop their businesses.

Cashflow is the very lifeblood of companies, and businesses need more money than we ever expected just to survive. Maybe that’s why our business-friendly government has unilaterally decided to allow itself to issue Advanced Payment Notices (APNs), effectively demanding payment of tax that HMRC’s not yet proved is due. While we acknowledge that there is the need to prevent future abuse of more extreme tax planning arrangements, surely our business-friendly government should have to prove that abuse has happened rather than just demanding money with menaces!

Of course, being business friendly also means paying out monies on time, which is why I cannot understand why some VAT refunds have been held up for months, if not years, despite having been approved by tribunals and courts. It must be an oversight?

As 5 April gets closer, discussions with our clients on planning for the next tax year will become more important and more complex. So it’s just as well we have a business-friendly government!

PERSONAL

4 Second hand news Buying a ‘pre-loved’ annuity may prove

to be a complicated affair.

16 Expert investment insight

Allowing an investment manager to handle your portfolio can pay dividends.

17 Anti-business tax An upcoming change to the tax

on dividend incomes may mean you lose out.

GROWTH

6 Driving Progress Be ready for opportunities says Progress

Group’s Terence Byrne.

8 Learn to lead Your leadership style needs to evolve

with the business.

10 If it ain’t broke Traditional business planning techniques

are as important as ever.

RISK

12 Funding facts You need your eyes open for legal

tripwires when assessing funding options.

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Haines Watts is a top 15 firm of chartered accountants which specialises in supporting business owners. We work with over 35,000 owners across a wide range of industries. This experience enables us to provide clients with access to a huge range of expertise and knowledge.

Our fresh thinking and practical approach underpin our values.

Commercial – Translating our technical knowledge into sound commercial advice.

Approachable – Access to your Haines Watts Partner whatever your issue, big or small.

Supportive – As a business owner you can rely on our experience to support your ideas and help you achieve your goals.

Challenging – We act as a sounding board and challenge your plans. It’s our way of ensuring that you consider all the options and make the best decisions.

Practical – We live in the real world. We’ll give you sensible, professional and appropriate advice.

WHO WE ARE

I was starting to think about pre-year end tax planning for our clients when I realised how lucky we were to have a business-

friendly government.Many of our clients choose to operate their

business through a limited company, receiving a salary for their labour and dividends in return for their investment. As 5 April approaches, we will help clients to plan for the upcoming change in dividend tax rates, as HMRC will be looking to extract a further 7.5% tax for dividends afterwards. This also means that we are planning to maximise returns for our clients prior to that date, as this higher rate is a ‘tax on success’ implemented by our business-friendly government.

Several of our more successful clients have also been buying businesses with a view to either

strengthen their current business or to create a second income stream. Our business-friendly government would be proud of their efforts to

restart the economy. The capital cost of goodwill used to be tax deductible, but overnight became non-deductible. The timescale on this fundamental change meant that several

ongoing purchases were shelved and our clients

THE BOTTOM LINE

A business-friendly government. Really?

Andrew Minifie, National Managing Partner

EFFICIENCIES

13 Research your tax options

R&D Relief is not just for high tech companies.

TALENT

14 Nurture talent Help your key people to reach their

potential.

18 Haines Watts Update The latest news from Haines Watts.

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Backing your business 3One is published by Haines Watts and produced by

ROUND-UP

Despite noting the serious impact of employee absences on long-term business growth, health and wellbeing is not a priority for SME leaders.

Three quarters of SME leaders have noted a significant impact on business growth due to a long employee sickness absence, according to recent research from BUPA. Respondents noted that during a business’s infancy, even a short-term absence has an impact on growth.

But despite nearly two in three SME leaders (63%) agreeing that their early hires were critical to business growth, few plan to act to look after their

employees’ ongoing health and more than two in five will never consider providing health and wellbeing benefits.

Richard Norris, SME Director at BUPA said: “SMEs must recognise that health and wellbeing is not a concern for later, but a key lever that should be an integral part of their growth strategy from the start. If small business owners continue to sideline employee wellbeing, they risk losing market share and good talent to more supportive competitors. By supporting the health and wellbeing of their people, leaders are helping to protect the long-term health of their business.”

Despite nearly a third of SME business owners feeling that employees lack the skills the business needs, only 5% plan to take on an apprentice next year.

The study, by financial services group Close Brothers, also found that three quarters of SMEs do not have an apprentice programme in place and over half do not plan to start one.

Of those who do want to hire one, the biggest barrier (for nearly 50%) was cost, with red tape a challenge for nearly 20% and lack of time needed for training cited as a challenge for about 14%.

More than 5.47m workers have now been automatically enrolled into a workplace pension by over 60,000 employers, according to a report from the Department for Work and Pensions. By February 2018, small and micro employers must also be fully compliant.

Just 10% of automatically enrolled workers had opted out by the end of August 2015 and data from April 2014 showed an increase in participation of 3.2 million since automatic enrolment began in 2012.

The total amount saved annually in workplace pensions was £80.3bn, an increase of £2.7bn from 2013. According to the Employers’ Pension Provision Survey, the median employer cost for implementing automatic enrolment was £500.

Just 10% opt out

Health, onthe sidelines

Companies lack talent pipeline

The Treasury and the Bank of England are to extend the Funding for Lending Scheme (FLS), which helps boost lending in the economy, to 2018 in order to help SMEs.

The scheme provides funds to banks and building societies at low rates, incentivising them to lend by tying fund value to performance.

Banks used the scheme to lend £600m to SMEs between January and March.

Chancellor George Osborne said: “Given the improvement we’ve seen in credit conditions for households and large businesses, as our long-term

economic plan moves from rescue to rebuild it is right that we continue to focus the

scheme’s firepower on the small businesses that are the lifeblood of

the economy. The FLS will be gradually wound down as the recovery strengthens, delivering a managed exit from the scheme.”

FLS support for SMEs


GROWTH EFFICIENCIES RISK DESTINATION PERSONAL TALENT

Following the recent consultation on how a secondary annuity market would function, the Government confirmed that tax restrictions for

anyone wishing to sell on their annuity will be removed in 2017.

Consumers who used their pension funds to purchase an income for life through an annuity will now be given the chance to sell their income through a broker or intermediary for a lump sum. The product will continue to be paid to the third party in line with the longevity of the original annuitant.

“There is no doubt that for those who are presently locked into small annuities or who favour lump sum death benefits over a taxable income, this will be a welcome reform,” says David.

“However, there are many practicalities to overcome that will ultimately determine whether this is a worthwhile initiative.”

Who will actually buy annuities?A fear that consumers are not shopping around led the Government to side-step a more straightforward option, where the annuity provider buys out the annuity.

“Instead, it has proposed that all interested parties, including the original provider, can bid for the income payments through an intermediary or broker, such as a financial adviser,” David continues.

“However, it is likely that such ‘interested parties’ will need to be FCA registered, restricting the size of the market and, in turn, the potential competition between buyers.”

It is also highly unlikely that a single annuity will ever be bought in isolation. “Surely these

A recipe disaster?The annuities marketplace is set to be transformed by the Government’s recent decision to remove taxation when this financial product is sold second hand, according to David Smith, Director, Financial Planning at Tilney Bestinvest.

for

institutions would only be interested in buying in bulk, mitigating the risks associated with adjudging an individual’s health status and a single annuity’s value for money,” David queries. “And whoever creates these packaged products will want their slice of the pie, reducing the potential offers to the consumer.”

Knowledge is keyIdentifying a good annuity deal is going to be an ongoing challenge for consumers as many of these products are not simply an income for life for an individual; they may contain added features such as spousal benefits or guarantee periods that are not easily quantifiable. “Talks of ‘benchmark annuity values’ have apparently hit brick walls, principally due to providers’ fears of falling short,” David explains.

Since the pension freedoms were introduced, the Government has put significant emphasis on the importance for consumers of obtaining financial advice when giving up a defined benefit pension for a lump sum.

And the second hand annuity market will be no different. David highlights that there will therefore be a requirement for consumers with annuities over a certain value to obtain financial advice before being able to sell. “The exact threshold is to be determined next year,” he says.

For those who are locked into small annuities, this will be a welcome reform.”

Backing your business 5

A tax on freedomAnother issue is that bulking together a number of taxable income payments and receiving them all in a single tax year could result in a significantly higher tax bill than was envisaged.

“Is this again a bona fide reform to pass freedom back to the consumer or is it another legislative Trojan horse created to boost the short term tax-take for the Exchequer?” David muses.

Anything left for the consumer?Taking into account the applications, medical underwriting, financial planning and cashflow advice, consumer protection and the buyer’s margin, the costs associated with selling an annuity on the second-hand market may end up being prohibitive.

And, David adds, it’s all but guaranteed that the reform will be an ‘all or nothing’ scenario, with part-redemptions being classed as unauthorised. “For those only requiring a small lump sum, will they be forced to sell their entire annuity, at a cost, or take their lump sum then use part of the proceeds to purchase another annuity at another cost?

“Ultimately, the price a consumer receives for their annuity may come as a shock. Bearing in mind the potential tax charges if taken as a lump sum, the final offer for their annuity could make the consumer’s arduous journey up to this point completely worthless,” he says

All in all, the prospect of being able to swap an unwanted annuity for a lump sum is an attractive one, but taking into account the mechanics of doing so, will it be in the best interests of the buyer, the adviser and most importantly, the consumer?

“As they say, the proof will be in the pudding,” David concludes.

If you would like to discuss how any change to the annuities market will affect you, contact a Tilney Bestinvest financial planner on 020 7189 2400.

The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. This article does not constitute personal advice. If you are in doubt as to the suitability of an investment please contact one of our advisers. Prevailing tax rates and reliefs are dependent on your individual circumstances and are subject to change. The decision to access your pension is an important one and will affect your income and possibly your standard of living for years to come. Therefore we recommend that before any decision is made you receive regulated financial advice or get free guidance at pensionwise.gov.ukOnce set up, an annuity can’t normally be changed or cancelled. Therefore it is important to consider all of your options, especially in light of the new pension reforms.

Is this a bona fide reform to pass freedom back to the consumer or is it another legislative Trojan horse created to boost the short term tax-take for the Exchequer?”



FACTFILE CHALLENGE: Growth | SECTOR: Automotive | LOCATION: Bedford

What have been the key developments in the business over the past few years?The business started in 2006 with one

Skoda dealership. At that point the name was not considered a mainstream brand and some even laughed at it.

While to some that may have seemed a bold move, Skoda was owned by the Volkswagen Group and backed by its technology and R&D. So I knew Skoda would follow the same well-trodden and successful path laid down by its parent group.

That same year, we grew to a second location and opened another in Northampton in 2011. In 2014, we added the Suzuki brand to the group.

You’ve seen exponential growth. Tell me how you have prepared through careful business planning?We have grown with the Skoda franchise. In

2006, the brand sold 37,000 cars in the UK. This year, it sold 80,000 cars. Haines Watts has been supporting us since the beginning by making sure we have the right resources, staff and business structure in place.

As owner and Managing Director of motor dealership the Progress Group, Terence Byrne understands that his ability to build relationships has been a key driver for its rapid growth.

progressMakingLooking forward, what are your business objectives?We continue to keep an eye open for opportunities to take over other

businesses, and Gavin, our Partner at Haines Watts, has proved to be a valuable sounding board during this process.

He helps us to assess opportunities as they arise so we can be sure they are good fit with the culture of the group. It’s about finding the right dance partners.

How important is it to find and keep the right people in your business?Getting the right talent in place is essential in a sales-based business like ours. We’ve

managed to bring people on organically through the ranks but, as we’ve grown, roles are becoming bigger and we have had to look to the marketplace to find the right talent. When we’ve recruited people into key financial roles, Haines Watts has been crucial in helping us – after all this is someone they are going to be working with.

How do you measure your business performance?In the motor trade, manufacturers require extensive reporting so we constantly

measure and monitor our performance. This means we always have timely management information to hand to guide our business planning, helping us to adapt quickly.

Monitoring cashflow is particularly important as we have massive swings in the amount of money going in and out of the business. It’s an expensive product and we have a complex system of payment and deposits which other businesses don’t have to manage. We therefore keep on top of cashflow on a daily basis.

Opportunities never come along at the right time – they come knocking when you least expect it and you need to be ready and adaptable.”


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But I think I have been able to bring an ability to build relationships and that represents about 80% of this role – with customers, with staff and with the manufacturers.

How has Haines Watts performed over and above your expectations over the years?Haines Watts has been with us every step

of the way, helping us to manage challenges as they appear. I know they have the experience to continue supporting our growth over the next 10 years.

Some accountancy firms have a rigid ‘by the clock’ approach. With Haines Watts, you can simply pick up the phone and have a sensible conversation which leaves you feeling supported. They look after me, the business owner, first because they understand that it is the business owner who drives the business forward.

What is the most valuable lesson you have learned along the way?You need to work hard, plan well but also act on your instincts sometimes.

Opportunities never come along at the right time – they come knocking when you least expect it and you need to be ready and adaptable. Take the hint too – you don’t get offered opportunities in the motor trade unless you’re doing something right.

If you would like to know more about growing your business, contact your local Haines Watts office.

What have been your main drivers for growth?It’s partly that we were in the right place at the right time. We’ve been able to build

our business model on the back of the growth of the Skoda brand, and this has seen our workforce go from six to 82 people in just under a decade.


In most businesses, an owner-manager is a valuable lynch-pin. But they can also be causing a bottleneck that is stopping it from growing

sustainably.David Welling, Haines Watts Advisory Services

Managing Director, regularly hears that delegation is a key barrier to growth. “Business owners often don’t have the confidence that their supporting teams will step up to the challenge,” he says. “Finding and retaining the right people in an organisation is crucial to its future growth.”

As a company grows, it needs to fill key roles with people who have the experience and skills to deliver, or its capacity could lag behind the demands placed on the business by its rapid growth.

“Just when these business owners need to be delegating to their key staff members and making them accountable, they are holding back – that’s why we often say that the busiest desk in any organisation is the business owner’s,” says David. “The paperwork piles up while they try and find the time to sign off on every decision. This means they are not focused on thinking strategically

A preoccupation with turnover can hold back sustainable, profitable growth. The secret to turning a small business into a medium-sized venture is letting your leadership style evolve, says Haines Watts’ David Welling.

Growthon track

Just when business owners need to be delegating to key staff members and making them accountable, they are holding back.”



If you don’t give your employees the authority they need to do their job well, they end up demotivated.”

For more information on managing your company’s growth, contact your local Haines Watts office.

about the business as a whole and looking to the future.”

People of the futureDavid advises his clients to always be thinking about the next two people they want to hire. “Taking on a new employee is often a stress purchase, but it should be viewed as an investment. Finding the right people requires networking over time. Unfortunately, most owners don’t get around to it,” he continues.

Another aspect of nurturing talent in a business is providing ongoing training. This is important for maintaining loyalty and motivation in talented individuals who are often critical to the future success of any business.

“Business owners need to take risks when it comes to bringing on their people. It’s important to let employees make mistakes, and learn from them, but leaders also need to identify the worst-case scenario for potential damage this could do to the business and work to prevent that situation arising.”

Putting processes in place removes the stabilisers, according to David. By ‘muddying their knees’, individuals learn to take responsibility for preventing errors in the future and grow in confidence.

“This is one of the hardest skills for a business leader to get right. But if you don’t give your employees the authority they need to do their job well, they end up demotivated,” David says.

longer term but targeted plans for the following three years, and a softer focus on the next five years.

Know your appetiteDavid’s final point is the importance of a realistic view of risk and its value to the business. “People often talk the talk, but don’t transfer this to their actual decision-making,” David explains.

“They talk about aggressively growing their company but in reality make very safe business decisions. This doesn’t allow for brave changes that could come with larger benefits.

“It helps to identify where their appetite for risk really lies and how risk can be managed in line with their personal preference.”

Management needs systemsThat said, all businesses need clear systems and processes as they grow to ensure activities are transparent, compliant and continue to deliver to customers.

“It’s no good if the business owner retains all important information in their head – it can’t leak out by osmosis,” David says.

“Smaller businesses are often run by people with a strong entrepreneurial spirit, but as the company expands the leadership style needs to evolve to the next phase, where the chaos calms and decision-making is pushed down the business.”

He emphasises that it is important to view a talent pool with a critical eye. “Try not to be sentimental about your staff,” he says. “Hanging onto people just because they have been with you a long time does not mean you should promote them – you need the right individuals in important roles.

“But it isn’t always necessary, if you identify someone who isn’t in the right job, to let them go. You can often reassign people to more appropriate positions where they will thrive, making them happier in the process.”

David says asking the right questions when interviewing is important, as this can highlight candidates’ suitability: “Ask them what the last thing was that they did well and are proud of,” he suggests.

Measure your performanceWhen planning for growth, David also makes a clear distinction between short-term performance and longer term, strategic planning. “While looking at profit and loss accounts and sales charts offers short-term insights, if this is all a business owner relies on to guide their decision-making, performance will tail off,” David warns.

Instead, owners need to make sure they leave time to create the future they want for their business, away from the day-to-day running of the organisation. And this planning usually covers three different areas: short-term objectives,


T he way we do business has been transformed by recent developments in technology, but it’s important not to

overlook long-standing business fundamentals which remain as effective as ever, according to Haines Watts Regional Director of Consultancy, Chris Lonergan.

“Twenty years ago, business owners sometimes managed to make a success of their venture without taking a formal strategic view of their business, but this was usually attributed to luck or their innate business acumen,” Chris says.

“The common perceived wisdom was that a strategic business plan was essential. And this is more relevant than ever today. It’s no longer just about going to the bank for a loan.

“Taking the time to step back and think about the big picture is important at every business life stage, yet today 37% of UK SMEs still have no formal, written or recorded business plan.”

Chris highlights that a document which details why your company exists, how it functions, the talent that it contains and its future objectives - all written in concise and easy-to-understand language - is a valuable asset.

“Whether the business owner is looking to expand, plan a succession, find a buyer or make an acquisition, a well-thought-out plan is an essential tool for any leadership team,” he says.

The past five years have seen new gadgets, such as smart phones, transform the way the people do business. Yet, some more traditional business strategies, such as business planning, continue to serve small and medium-sized enterprises (SMEs) well.

What’s yourstrategy?

A well-thought-out plan is an essential tool for any leadership team.”


particularly challenging, says Chris. “When you are a small, people-focused organisation, you often rely on finding talent and letting them lead.”

As the company matures and grows, it usually has to become more structured. The key is to never mix the two, he adds. There is always a danger period as a company moves beyond the early stages of its lifecycle.

“Those lucky individuals who have a nose for business may have been able to get away without a formal, strategic business plan in the past, but today it’s an expected part of any sale, due diligence or funding process. It also helps everyone in your business to live and breathe your objectives.”

So whether you plan to grow your company or remain a stable ‘lifestyle’ venture, a good quality business plan remains a valuable investment.

“If you’re looking to sell your business, a good quality business plan allows external parties to understand your organisation, for instance. This can help you to find suitable buyers who understand the full value of your enterprise.”

Chris cites one of his clients as a good example of a small venture looking to appeal to a much larger corporate entity.

“It was a small medical sector start-up company that was looking to sell and so was approaching larger businesses. Its detailed plan helped to show a larger brand how it could potentially fit into its more rigid corporate business model,” Chris explains.

Live and breathe your strategyA strategic business plan doesn’t need to

be a large document. Instead, it should be a dynamic, living document which is updated regularly and upon which everyone in your management team agrees.

“The journey starts in the boardroom, where the leadership team should brainstorm, argue and debate ideas: this is where the real creative energy comes from,” Chris says.

“The second phase is its execution and it’s important that everyone on the leadership team buys in to the plan, otherwise you end up with politics instead of cohesive teamwork.”

Chris highlights the main questions which a business plan should answer:

1What problem does your business solve? Can you articulate what your

product or service provides a solution to? If you don’t know the answer to this question, your business is likely to be in trouble when you go to market, try to find customers and communicate your purpose to them.

2What is your target market today, and tomorrow? It’s essential that

your business plan is forward-looking, so it is always assessing changes in the marketplace and how it can evolve to keep up.

3How are you different to other similar businesses? A few years ago,

you could talk about your USP – but being unique in the marketplace is much harder today. Instead, you need to show your point of difference, especially around customer experience.

4Does your customer have a budget for your product or service? Does

your target company have an operating budget allocated to what you are selling? If not, how are you going to persuade the customer to buy?

5What kind of business structure do you have? It’s important to

recognise whether you are people-focused or procedure-focused.

This final point on business structure is


The journey starts in the boardroom, where the leadership team should brainstorm, argue and debate ideas”

If you want to find out more about the benefits of strategic business planning, please contact your local Haines Watts office.



“All crowdfunding platforms will charge a fee, but it may be possible to negotiate a fixed price,” says Jason. “Paying a percentage of the amount raised is also fine provided that you factor this in from the outset.”

It is also important to check whether you will be subject to termination fees if the platform raises the minimum amount, but you no longer wish to proceed.

Sharing the loadThe way in which these platforms operate can vary greatly, so it’s worth finding one that suits your company.

“Companies such as SEEDRS, for example, have an investment entity which will hold the shares as nominee for all the members of the public,” says Jason. “This is probably the best way of doing it because you then only have one extra shareholder and the platform deals with the additional admin.

“Crowdcube is the opposite, however; you could suddenly have hundreds of individual shareholders. The admin behind that is substantial and I think it’s still something that the platforms themselves are still working out how to do.

“From a legal perspective, I don’t think there’s a right or wrong way of going about it,” he says. “It’s all about how much equity you are prepared to give up.”

If you are happy to go down the equity route, it is sometimes worth considering more sophisticated options such as professional funding and venture capitalism, adds Jason. “These routes can offer the expertise that crowdfunding cannot.”

Find the right finance:1. Are you willing to give up some equity in

your business? If so, consider crowdfunding, professional funders and high net worth individuals.

2. Are your processes and documentation ready for due diligence?

3. Weigh up your opportunities in terms of the costs and time incurred and how much you are willing to give away.

4. Speak to your accountant for advice and relevant contacts.

Before committing to an alternative funding route, it can pay to consider the legal implications.

T he first question business owners should consider when thinking about alternative finance is whether they are willing to give up an element of

control over their company, says Jason Hill of Shoosmiths LLP.

Get everyone on board“Giving up shareholding and being answerable to new investors can be a dramatic change of mindset that some business owners are not open to,” says Jason.

If this is the case, then debt finance is probably the way forward, he advises.

While banks may only undertake limited due diligence, anyone going down the equity route should factor in the time and costs involved in preparing for the thorough review that investors will want to perform.

As well as giving up some control, a business owner will also need to check that existing shareholders and members of the business are on board before making a decision.

“Funding platforms will want to see constitutional documents – your company’s

articles of association and shareholders’ agreement, if you have one – terminated, amended or replaced in the form that they prefer,” says Jason.

Follow the crowd?For public-facing companies, the crowdfunding model can lead to buy-in from a significant number of people, says Jason. “The flipside of this exposure, however, is that investors may not always understand the risk potential, which can sometimes result in bad PR.”

Companies handling sensitive information must be particularly careful as, depending on the agreement and structure that is put in place, you may be giving investors that you don’t personally know access to information about your business.

Focus

Choosing a particular funding route is all about how much equity you are prepared to give up.”

To find out more about alternative funding options, contact your local Haines Watts office.

funding

13

Don’t arrest your development

Research and development is often associated with high-tech sectors, but a wide range of businesses could use R&D to unlock tax benefits leading to significant cash injections.

R &D Relief is the biggest Corporation Tax relief available to SMEs, but awareness of the benefits is low in the UK.

“Contrary to what most people think, the relief is actually geared towards problem solvers, people who overcome technical uncertainties in their day-to-day work, not just scientists and innovators in white coats,” says Jonathan Scott, Technical Tax Associate Partner at Haines Watts.

“Sectors such as engineering often consider problem solving to be just another part of their job, but that doesn’t mean that they can’t claim. We’ve prepared substantial claims for engineers, architects and software developers alike who are producing innovative designs as part of their day-to-day work.”

Tax benefits for allAn SME doesn’t even need to be profitable to benefit, says Jonathan. “While profitable companies will save on paying Corporation Tax on their profits, loss-making ventures will be able to surrender their R&D Relief value for a tax refund of 14.5%.

“One software development company that we successfully made a claim for received a Corporation Tax refund of around £240,000, despite having no turnover,” says Jonathan. Other recent claims include a £293,000 Corporation Tax saving for an architecture company with £8.1m turnover and a refund of £48,000 for a specialist veterinary referral company with turnover of £2m.

Is your company eligible?

• Partnerships, sole traders and LLPs cannot claim a claimant must be subject to Corporation Tax.

• To claim under the SME relief, a claimant must have fewer than 500 staff, below €100m turnover and with gross assets of less than €86m. The limits include companies that are within a group therefore care needs to be taken when companies are within a group structure. If these limits are breached, the business may still be eligible to claim under the Large Company Tax Relief.

• The relief is ultimately geared towards problem solving, whether that is related to product development or service delivery.

• If a project already receives a grant or subsidy, it may not fall under the SME scheme.

• Even if the project has ended without reaching its problem-solving objectives, a claim can be made for up to this point.

To find out more about making a new R&D Relief claim or improving a claim already submitted, contact your local Haines Watts office.

A benefit of the relief is that, unlike grant claims, you don’t have to go out and spend money to receive it, highlights Jonathan. “The Government is helping these companies by giving a further enhanced deduction of 130% against profit, so for every £1 of R&D spent you get tax relief of up to £2.30.”

It’s not too lateThe good news is that businesses can submit a claim retrospectively, as long as it is within two years of the end of the relevant Corporation Tax accounting period.

“If you’ve already paid your tax, it can mean a cash refund,” says Jonathan. This could fund the next year’s tax bill, allow for investment or, for a loss-making company, allow them to continue to trade and assist with cashflow.

Claims can be made year-on-year, with companies expected to demonstrate research and development they have undergone in that year in order to qualify.

To make a successful claim, SMEs should prepare the company’s research, development and financial information, says Jonathan.

“When our advisers look over an SME’s claim, we often agree that the company and project qualify, but that the qualifying expenditure is only a fraction of what it should be,” he says.

“Amending these claims retrospectively is much more difficult than getting it right first time, but it’s an area that Haines Watts can assist with.”


Backing your business



A leadership team’s role is to support a business owner and share not only their vision, but the responsibility for

driving growth. And as today’s employment marketplace

heats up, finding people with the skills, experience and knowledge of the sector to take a business forward can be a challenge.

By looking longer term and bringing on their own people, business owners can find individuals who fit well within the culture of the company and bring the right skills and experience to their role.

Haines Watts knows all too well how important it is to nurture the talent it has already and continue to attract the right calibre of employee into the future.

Its response was to launch its own Leadership Development Programme 18 months ago in partnership with the Leadership Trust. While the first recruits are yet to graduate from the two-year

aims to help the individuals who take part to not only learn management skills, but to change their behaviour – the way they interact with the people around them.

It is this skill which has had immediate impact on those working above and below them in the structure of the business.

“You’re wasting your money if you fail to also train your key senior managers,” Gaynor continues. “Everyone needs to learn approaches and behaviours which can help them realise that they don’t have all the answers, and that they need to share decision-making.”

Take the

leadcourse, the business has already seen extraordinary results.

Choose the right candidatesIt’s not about offering training across the board, according to Leadership Trust founder Gaynor Lewis.

“You don’t want to take the sheep-dip approach as you can end up with too many people being trained for a small number of senior roles. Instead, it’s about finding people who have the potential to be crucial contributors to the future success of the business and providing them with the skills to fulfil that potential,” she says.

“That’s why we recommend that

candidates are nominated by their senior managers rather than putting themselves forward.”

The Haines Watts programme

Training the next generation of leaders is about more than management tips or preparing people for promotion. It’s about helping individuals to see the big picture and identify how their behaviours can be adapted to benefit the whole organisation.


If you want to hear more about developing your team, please contact your local Haines Watts office.

Decision-making barriersThe Trust also runs courses for current leaders where they can learn the skills their up-and-coming talent are developing. “We often see decision-makers contributing to a bottleneck in their organisation because they retain too much control and fail to allow their leadership team to support them,” says Gaynor. “This just clogs up the business.”

Instead, business owners need to learn how to step back and find the headspace to think strategically about the future of the business. To achieve this, they must learn to empower their management team with the ability to handle the day-to-day running of the business.

“We need to see an end to the short-termism which is pervasive in our business culture in the UK – we need to push power down the business,” Gaynor points out.

“While empowering people lower down the management structure to make decisions means allowing them to make mistakes, this can be done at minimal risk to the business if a framework is agreed upon and monitored.”

As a result, people take ownership of their work and responsibility for ensuring they don’t make mistakes. “At the same time, it helps to improve communication and provide valuable practice,” Gaynor says.

“Managers must set clear boundaries with individuals being given decision-making powers at the outset. These define the individual’s role and their responsibilities. When there is a problem, they should be encouraged to bring suggestions for a solution too.”

Coaching central to programme success

Olivia Parrish, Head of HR at Haines Watts, says one of the most successful parts of the programme has

been its adaptability, as it can

evolve along

the way to suit individuals’ needs and personal objectives. “Haines Watts needed that flexibility because we are a group which includes a wide range of businesses covering different areas of expertise,” she explains.

“We needed to foster a culture where we focus on people who are critical to the business and develop their commercial skills across the group. It’s an experiential programme, where individuals set their own objectives and work towards these – measuring their outcomes at local business level.”

Olivia highlights that a core part of the programme is one-to-one coaching, which helps individuals to identify barriers to their development. After just six months, the impact on individual performance has been dramatic.

“We are seeing these future leaders making fundamental decisions about their priorities, both in their work and in their family – they are questioning where they are today and where they want to go,” Olivia enthuses.

Whole workforce benefitsFeedback from those who work alongside participants has also been revealing. “Looking at the big picture and changing their behaviours means they are engaging with the people around them in a more constructive way. They are demonstrating leadership behaviours which have a positive impact on everyone in the business, regardless of role. This not only means other people want to work with them, but it translates into commercial benefits too.”

Olivia is proud of Haines Watts’ programme, seeing it as a market-leading investment. “Everyone is talking about it now. The next step is to gain accreditation for the programme so people who have put in all that hard work and graduated are rewarded with a recognised qualification.”

It’s about finding people who have the potential to be crucial contributors to the future success of the business and providing them with the skills to fulfil that potential.”


Important informationThe value of your investment can go down as well as up, and you can get back less than you originally invested. This article does not constitute personal advice. If you are in doubt as to the suitability of an investment please contact one of our advisers. Past performance is not a reliable indicator of future returns. Prevailing tax rates and relief are dependent on your individual circumstances and are subject to change.

When it comes to investment self-management, sometimes life just gets in the way, according to Richard

Dawes, Managing Director, Financial Planning, Tilney Bestinvest. “There are many reasons why it may be time to consider letting an investment manager do the hard work,” he says.

An investment manager’s role is to get to know their client, understand their personal objectives, financial circumstances and, finally, their attitude to risk.

“The more they understand you, such as your life goals, the more they can personalise your portfolio to meet long-term objectives,” Richard explains.

The right risksRichard points out that people have a tendency to take on more risk than they need to when managing their own investments. Often this risk is also overly concentrated in specific regions or markets.

Choosing and managing your own investments takes time and dedication. Unless dabbling in the markets is a keen hobby, most people can’t give their investments the attention they need.

“The starting point when building a portfolio is measuring how much risk you need to take to meet your personal objectives,” Richard says.

Investment managers’ expertise allows them to pay close attention to what could happen to the value of different investments as market conditions change over time. This aspect is especially important when the portfolio represents a large portion of somebody’s overall wealth or they are investing over a short period of time.

“They can reduce risk when valuations look stretched and respond quickly to changing market conditions,” Richard emphasises.

“It’s also important to consider other risks, such as portfolio liquidity, which needs careful attention as the client may need to access their money at short notice as their circumstances change over time.” Whether the client needs urgent care, to pay for a big family event or buy a holiday home, it’s important that their

investments can be redeemed for as close to the market value as possible, even during times of market stress.

Achieving the life you wantOf course, many people use investments to supplement their pension income in retirement. “When bond yields are low, it’s important to look at the total investment returns your portfolio offers and not just dividends and income,” says Richard. “An investment manager can use both income and growth-orientated investments in the portfolio to pay out a regular, set amount that works towards achieving your desired lifestyle.”

Working in conjunction with a financial planner means investments are managed in line with the client and their family’s tax position and overall wealth, combining a view of their current financial position and future needs. “Financial planners can work with you to help in areas such as pensions and planning for retirement, Inheritance Tax planning and general tax efficiency,” Richard explains.

“We can also help you to maintain the tax efficiency of your portfolio. ISA wrappers, for instance, may constitute a small part of a portfolio, but can hold the highest-yielding investments without further Income Tax being applied.

“This allows the rest of the client’s portfolio to be more focused on growth, to use their Capital Gains Tax allowance each year. Joint portfolios between spouses can also be structured in a way so income-paying investments are held by whoever has the lower marginal rate of tax.”*

*Please note that Tilney Bestinvest does not offer tax advice as part of the Investment Management Service.

To find out how Tilney Bestinvest can help with your investment management, call us on 020 7189 2400 or download our investment management guide at tilneybestinvest.co.uk/im


managed?Time to have

your investments



SMEs are the engine of the British economy and have created the jobs which have fuelled its recovery over

the past few years. Their owners have often had to make many personal sacrifices, but are they being rewarded for their entrepreneurial spirit?

Nigel points out that these business leaders often take risks that the average employee on PAYE doesn’t have to worry about, and as a result they should be able to reap the rewards if their business does well.

“They may take a combination of salary, dividend and pension contributions, and in recent years dividends have become more tax efficient than salaries, with pension options being steadily reduced,” he says.

“But this 7.5% increase in the effective rate of tax on dividends means the gap between this tax and salaries has been closed. Taking account of the Corporation Tax deduction given, the gap between salaries and dividends is undoubtedly narrower than it might first appear.”

Nigel also highlights that many business owners have fixed their income at just below £100,000 to avoid the penal rates for income between £100,000 and £121,000.

“I suspect if this penal tax band was removed, a significant number of clients with income capped at £100,000 would be prepared to increase their salary.

“This would then potentially improve the

Government’s tax take – if you believe in that well-known economic construct, the Laffer Curve, which suggests lower tax rates have a positive impact on economic activity which, in turn, leads to an increase in the Government’s tax take.”

Nigel says that while the Government’s Autumn Statement did seem to favour a high-wage, low-tax economy, the dividend tax was an unfair hit on business owners.

“The Government will raise £1.5bn by raising this tax, which sounds a lot. But compare this to Working Tax Credits, which cost £30bn a year, and pensions tax relief, which costs £50bn a year, it’s not much of an investment to continue oiling the cogs of business.

This increase means the gap between salaries and dividends is undoubtedly narrower than it might first appear.”

Incentivise for

New tax rates on dividend incomes come into play on April 6 2016, with 7.5% being added across the board. Is this the stance of a pro-business Government asks Haines Watts Tax Director Nigel Syson.

growth

To find out how changes to the tax regime affect you, please contact your local Haines Watts office.


Publication Date: January 2016© 2016 Haines Watts Limited. All rights reserved. All published material remains the property of Haines Watts Limited and is replicated with the permission of Haines Watts Limited. All contents of the publication are correct as of publication date.

The Haines Watts Group consists of all firms in which Haines Watts Limited is a partner, member or shareholder, or with whom they have signed a participation agreement, or firms controlled by such firms. Generally, “HW”, “Haines Watts” and “Haines Watts Group” refer to the network of member organisations, each of which is a separate and independent legal entity. Member organisations are not members of one legal partnership and are only liable for their own acts and omissions, and not those of each other.

The majority of these firms are not authorised under the Financial Services and Markets Act 2000, but because they are licensed by the Institute of Chartered Accountants in England and Wales, are able to offer a limited range of investment services to clients if they are incidental and / or complementary to, or arise out of, the other professional services they have been engaged to provide.

It is Haines Watts Group policy to refer most investment business, excluding corporate finance work, to Financial Advisers, authorised and regulated by the Financial Conduct Authority. The Financial Adviser will take full responsibility for compliance with the requirements of the Financial Services and Markets Act 2000.

Bestinvest (Brokers) Limited (Reg. No. 2830297), Bestinvest (Consultants) Limited (Reg. No. 1550116) and HW Financial Services Limited (Reg. No. 02030706) are all part of the Bestinvest Group. These companies are registered in England and authorised and regulated by the Financial Conduct Authority.

This magazine is designed for the general information of readers. The information represents Haines Watts Group’s present understanding of current and proposed legislation and HM Revenue and Customs practice. Whilst every effort has been made to ensure accuracy, information contained in this briefing may not be comprehensive and recipients should not act upon it without seeking professional advice from their usual adviser. The values of investments may go down as well as up and are not guaranteed.

HAINES WATTS UPDATE

Nick Coleman and Udhi Silva, founders of Aylesbury-based company Medical Supermarket, have been named the 2015 Haines Watts Young Entrepreneurs of the Year.

Finalists who attended the event in Reading were selected from Haines Watts’ offices across the Thames Valley region and represented a range of disciplines.

Nick and Udhi are from the High Wycombe region and started Medical Supermarket in 2010, offering healthcare products online

with a discount of up to 50% from the RRP. They have also branched out to supply a ‘one-stop-shop’ to other businesses, selling stationery and cleaning items to sectors such as hotels and shops, as well as hospitals and GP surgeries.

All finalists received a year of free mentoring with Haines Watts Partners and £250. As overall winners, Nick and Udhi also received £500.

For further details on Haines Watts Young Entrepreneur competition: www.hwye.co.uk

Over half (52%) of business owners and senior managers are concerned about improving sales growth in 2016, Haines Watts research has found.

A recent Haines Watts survey of visitors to the Herefordshire and Worcestershire Chamber of Commerce Business Expo asked businesspeople about their key business challenges and what they felt they were doing well.

‘Improving sales growth’ also came top of the business challenges highlighted in a national survey conducted by Haines Watts in 2015.

Around a third of Expo respondents identified

‘strengthening management capability’ as key business challenge.

‘Keeping customers’ was the top-ranked competency in the local survey whereas nationally businesses did not enjoy such a high level of customer loyalty.

‘Identifying ‘better-quality customers’ and ‘improving marketing’ were highlighted as issues by Expo visitors.

Two of the highest ranked challenges in the national survey were ‘increasing business value’ and moving from a ‘big/small’ business to a ‘small/big’ business, however.

To read the survey in full, visit www.hwca.com/chamber-business-expo-report

Staff at Haines Watts offices around the UK gave back this Christmas.

As part of National Christmas Jumper Day on Friday 18 December, many teams raised money for local charities by donning their favourite festive jerseys. Haines Watts National Managing Partner, Andy Minifie, selected a winner and contributed £250 to a charity of their choice.

Haines Watts staff at Kettering also continued their ‘Giving back to the community’ work by purchasing festive presents for children of all ages in care and from a disadvantaged background.

Haines Watts Young Entrepreneurs of the Year 2015, Nick Coleman and Udhi Silva, (centre), with other finalists, judges and guest speakers at the recent awards ceremony.

Inspiring young duo

Regional vs national concerns Time to give back

At One with our clients

Working as One team

One place for all your business needs

One path to success

One-to-One relationship

HELPING YOU REACH YOUR GOALSWe offer a fresh-thinking approach to your business

If you have an hour to spare, why don’t you arrange a meeting with Haines Watts to find out how we can help you with your business needs? Contact your local office. Visit: www.hwca.com/offices

HELPING OVER

VIA OUR INTERNATIONAL ALLIANCE

SMES AT FD EXCELLENCE AWARDS

WINNERACCOUNTANCY FIRM

OF THE YEAR

WINNERACCOUNTANCY FIRM

- LARGER CLIENTS

FUNDRAISINGFOR OVER 100 LOCAL CHARITIES

WINNERAUDITOR OF THEYEAR FOR SMES

2012 & 2013

OVER 1,000 PEOPLE

AROUND THE UK WORKING TO SUPPORT CLIENTS

ACCESS TO

SPECIALIST SERVICES

TO HELP WITH EVERY ASPECT OF YOUR BUSINESS & PERSONAL NEEDS

OVER 100

Having advisers that can add expert advice and value to both your business and personal wealth aspirations is important for most business owners. By understanding what you want to achieve, Haines Watts is able to work with you to identify opportunities for growth, saving money and managing risk to help you reach your goals. If you have an hour to spare, why don’t you arrange a meeting with Haines Watts to find out how we can help you with your business needs? Contact your local office: www.hwca.com/offices

EXPERTS IN OWNER-MANAGED BUSINESSES

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