Tag Archive | "Mark Prisk"

Why you should know your market before you apply for a loan

Owners of small businesses, contractors and freelancers should have in-depth knowledge of their own sector before approaching banks for investment funds, advises the British Bankers Association.

The BBA claims that SMEs will have a better chance of getting a loan if they are prepared to answer a barrage of questions about their respective industry.

Angela Knight, the BBA’s chief executive, said that it is imperative that you understand your market; what it looks like, is it a growth market? Is it vibrant? How large is your customer base?

Business owners should also compile a realistic set of forecasts showing costs and projected income. These numbers should be discussed with the bank to make sure they look right and are presented correctly.

In the financial year ending April 2010, total business angel investment activity dropped to £60.5 million, a decrease of 3.7% on the previous year, according to the Annual Report on Business Angel Activity in the UK.

Entrepreneurs have found it increasingly difficult to obtain funding for new start-ups. As a result, owners started exploring angel funding whereby wealthy individuals provide private equity and get shares in the business in return.

However, business angels were also affected by the recession and they had less money to invest in new ventures. The ARBAA report also showed that there were 4,555 registered business angels in the UK between 2009 and 2010, but only 37% of them were active and less than 10% made any investment during the period.

Despite the drop in activity, Mark Prisk, the business and enterprise minister, said the study shows the important role business angels have to play in financing new businesses. He went on to say he hoped businesses will continue to look to angels when they need business expertise and guidance as well as funding.

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Image: I don’t know by Hilary Perkins

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IR35 – a slap in the face? Well, no, not really

My blog for June last year was commenting on the first budget of the new Coalition government. It got a cautious welcome from me – which they no doubt appreciated greatly – and while the overall news wasn’t that wonderful, it at least looked like things were heading in the right direction.

I also mentioned an entry in the Red Book that “was a clear commitment to look hard at IR35. This was backed up by an interview in the Telegraph, where Mark Prisk emphasised the intention to lose IR35 altogether“. On that score for this budget, I have to say close, but no banana.

The Office of Tax Simplification made three suggestions for Mr Osborne; merge PAYE and NICs, either suspend IR35 or greatly improve how it is administered and maybe look at some tests to define who is employed and who is a freelance. Those of us in the “IR35 is the spawn of the devil” camp clearly hoped that suspension would be the result. Sadly, however, it was not to be; IR35 remains in place.

So a bit of a disaster then? Well, no, not really.

Firstly I’m inclined to believe Osborne and Gauke when they say that they could not afford to turn off IR35. Elsewhere in the Budget they confirmed the December 9th announcement regarding the closure of offshore EBTs that are being used to step around paying any taxes at all by many high earners. Without IR35, these guys would simply incorporate and go back to the same old job as a pretend freelance: the classic Friday-to-Monday soft shoe shuffle. With IR35 still there, they can still incorporate if they really want to, but the tax advantage would simply not be worthwhile. Which makes a degree of sense as far as I’m concerned.

Secondly, administration of IR35 is to be improved (I was going to say “greatly improved”, but it could hardly get any worse!). In other words, stop spending tens of thousands on five-year cases that invariably lose and focus instead on the ones where there may be a genuine case to answer – which, on current numbers, is about 3% of them. HMRC aren’t doing this by themselves, they will be talking to the experts on contracting who will be very clear that the net will be focused and not widened. HMG have invited PCG to be a key player in this, and for one I’m reasonably certain PCG won’t let anything through HMRC’s clutches that makes things worse for the genuine freelance.

Finally Osborne is now looking to merge PAYE and NICs. As I said last week this is a very difficult thing to achieve, but at least we have a chancellor willing to take it on. That means that if this can be made to happen, IR35 ceases to have any purpose anyway

The rest of the budget was, I thought, probably about as good as it could be given the starting position. OK, so Osborne has done a smoke and mirrors job by changing how inflation is measured and people who understand the Oil and Gas industry far better than I do are seriously dischuffed about the raid on their profits to fund the fuel equaliser, but the intent is sound.

So not the result we hoped for, nor even the result we would have quite liked, but at least we are still in there and having a direct say on how we are to be taxed. This is, despite the cries of outrage from the hard of thinking, no small achievement. PCG and Chairman Chris Bryce have done a seriously significant piece of work via the OTS and should be praised for it.

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited<

Image: The Small Hand that Kills (41th/52) by skippyjon

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Should contractor accountants suggest that struggling clients look overseas?

SMEs could find that trading overseas is the best way to survive the economic downturn, according to Mark Prisk, the enterprise minister.

In order to create a truly global business, firms who already trade abroad should offer help and advice to limited company contractors looking to do similarly. International advisers on trade should then work together and ministers should engage with their counterparts abroad to build economic relationships.

The Nat West / RBS banking group says that the UK could see a boom in exports but that will only happen if businesses get the requisite help. 69% of firms believe the time is right to increase their overseas trading but they cannot get the help they need to do so. Two-thirds of companies want to see more help from the banks and 58% say they would have more confidence to export if they received advice from overseas trade experts.

Nat West / RBS is now offering free training courses to advise firms on the best way to manage risk when venturing into overseas trading markets.

A separate survey from telecoms company O2 found that 40% of companies plan to trade overseas next year and over a third of them say overseas economies are becoming more welcoming towards small businesses. Out of the top 10 export markets of choice, six are outside Europe, with the most popular being the U.S.

Another problem facing small businesses is the excessive bureaucracy that comes with exporting goods and services. According to a recent report from the FSB, 25% of UK businesses already export but nearly a third of them say that excessive red tape is stifling their efforts, whilst 48% say they find fluctuations in currency to be a major obstacle.

The chairman of the FSB, Mike Cherry, said that the manufacturing and defence sectors offer big export opportunities for small businesses but in order to be successful they need to know how to access available support. The Federation has called on the government to be more pro-active when it comes to promoting assistance and also to launch a campaign that highlights the advantages of the Services Directive.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Destination for the day… by antwerpenR

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What now for IR35?

Contractor accountants can pass on this welcome news for freelancers and sole traders from Mark Prisk, the small business minister. In a recent interview he said that the comprehensive review the coalition is going to undertake of business taxation will seek to replace IR35 with a long-term alternative.

The rules surrounding IR35 are continually changing and the new government wants to put in place a lasting settlement. The chairman of the PCG, Chris Bryce, is delighted by the news. Although there is still a lot of work to be done in order to find a fair settlement, he is optimistic that his organisation can work together with the government to achieve this.

George Osborne’s budget speech only contained one mention of IR35 when he confirmed that the tax would be reviewed, along with the small business tax, and that the government would release more details soon. It is expected that the review will be launched in the summer.

The coalition has committed to simplifying the British taxation system. They want to implement measures that prevent tax avoidance whilst at the same time ensuring that the self-employed do not face undue administrative burdens.

There are currently around 1.4 million freelancers in the UK who are governed by IR35.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: a dilemma by Julia Manzerova

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