MPs to tackle supply chain bullying

29 Jan 2015

The Federation of Small Businesses (FSB) has assembled a cross-party group of MPs to help tackle the problem of poor payment practices facing a significant number of small firms in the UK.

According to research carried out by the FSB, nearly one in five small businesses has been the victim of poor payment tactics, with 5% being subject to ‘supplier assessment charges’, otherwise known as ‘pay to stay’, whereby suppliers are asked to pay a fee in return for being considered for future business contracts.

Other key problems reported by small businesses include excessively long payment terms, exceeding or changing existing payment agreements, applying discounts for prompt payment and retrospective discounting.

Mike Cherry, FSB National Policy Chairman, said, ‘It is simply unacceptable for any company to exploit its market position to enforce unfair and unreasonable payment terms. The money outstanding in late payments is in the billions and has consistently grown larger and larger. We need greater leadership from all parties competing to be in the next Government to toughen up the prompt payment code and improve the UK’s payment culture’.

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UK economy ‘grows by 2.6%’ in 2014

28 Jan 2015

The UK economy grew by 2.6% in 2014, but experienced a slowdown in the final quarter of the year, according to the latest report from the Office for National Statistics (ONS).

In its preliminary estimate of GDP for the fourth quarter of 2014, the ONS suggests that GDP increased by 0.5% in the fourth quarter of 2014, compared with growth of 0.7% in the third quarter.

The economic growth figure of 2.6% for 2014 represents the fastest pace of growth in the UK since 2007, and would place the UK among the top economic performers for 2014.

However, some experts have expressed concerns over the significance and likely duration of the apparent slowdown in Q4.

Commenting on the findings, ONS chief economist Joe Grice, said, ‘The dominant services sector remains buoyant while the contraction has taken place in industries like construction, mining and energy supply, which can be erratic’.

Chancellor George Osborne argued that the figures demonstrated that the UK economy remains on track, but he also sought to highlight the importance of sticking to the Government’s economic plan in the face of ongoing challenges to the global economy.

Meanwhile, Rain Newton-Smith, director for economics at the Confederation of British Industry, said, ‘These figures confirm that growth slowed slightly compared with the previous quarter. Service sector growth remains robust, but manufacturing continues to struggle with weaker export orders, and construction output has fallen in the last three months.

‘The UK should benefit from the fillip that quantitative easing will provide to the Eurozone. However, this needs to go hand-in-hand with structural reforms, like making France’s labour market more flexible and greater infrastructure investment in Germany.’

Car insurance costs set to rise, says AA

Jan 2015

Car insurance costs are likely to rise in the coming year, perhaps by up to 10%, according to the AA.

The AA Insurance Shoparound survey takes an average premium from the five cheapest quotes from insurers and price comparison websites, for a standard set of risks.

The latest survey showed that the cost of annual comprehensive car insurance had risen by 0.2% to £540 in the final three months of 2014, and the organisation expects costs to continue to rise.

“Car insurance is extremely competitive. Nevertheless the underlying trend is upward,” said Janet Connor, managing director of AA Insurance.

However, the peak cost in 2014 of £540 was still £200 cheaper than the peak in 2011, there having been three consecutive years of price falls.

Meanwhile, the survey found that buildings and contents insurance premiums were little changed in the final three months of 2014, and the AA predicted that home insurance premiums were likely to remain static in 2015, barring significant weather damage claims over the winter.

Study suggests cost of business rising ahead of inflation

27 Jan 2015

The Forum for Private Business (FPB) has released research showing that small business costs rose 3.1% last, despite falling inflation rates.

Results from the FPB’s Cost of Doing Business survey show that 63% of businesses have seen an increase in their running costs. Additionally, 70% of respondents found their energy costs had increased along with marketing, staffing and transport costs.

Only 38% of small business owners said they felt unable to pass these costs onto their customers, with 3% able to pass their costs on in full.

Chief Executive of the FPB, Phil Orford MBE, said: ‘This is a timely reminder that despite all the talk of a need for above-inflation wage rises businesses continue to feel the strain of rising costs. With the auto enrolment of staff into pension schemes just around the corner, the affordability of significant wage rises coupled with increased pension contributions will be called into doubt’.

Tax crackdown sees improved results

26 Jan 2015

HM Revenue & Customs (HMRC) raised over £137 million from additional rate taxpayers in 2014.

A specialist HMRC division called the Affluent Unit was set up in 2011 to focus on tax avoidance of those with personal wealth of £1 million. Last year the division recruited 100 more tax inspectors, which helped increase revenues from £85.7 million in 2013.

Law firm Pincent Masons released the report which detailed the division’s results. Head of Litigation and Compliance, James Bullock, said: ‘This surge in extra revenue from Affluent Unit tax investigations serves as a reminder that HMRC is widening the lines of inquiry.

‘People who would just consider themselves moderately successful professionals and business people are now also coming under the scrutiny of HMRC’s specialist units’.

An estimated 500,000 UK residents are now under scrutiny as additional rate taxpayers. Official tax gap figures show a £35 billion deficit between what HMRC expects to collect in tax and what is actually collected.

New stamp duty rates announced for Scotland

22 Jan 2015

Scotland’s Finance Secretary John Swinney has confirmed that the planned new rates of stamp duty on residential property in Scotland will be amended, following a recent review of the system.

The Scottish property tax system is set to change significantly from 1 April 2015, with the introduction of a new Land and Buildings Transaction Tax (LBTT), which will replace the existing UK system in Scotland.

However, following the overhaul of stamp duty announced by Chancellor George Osborne in the 2014 Autumn Statement, which saw the introduction of new graduated rates, Mr Swinney announced that he would need to review the planned rates and bands for Scotland.

Previously, the threshold at which duty becomes payable in Scotland was to be set at £135,000 with effect from April. Rates were to range from a starting point of 2% up to 12% on the portion of any property costing more than £1m.

Following the review, the starting point for stamp duty in Scotland has now been raised to £145,000, while a 12% marginal rate will apply to properties costing more than £750,000, rather than £1m.

Commenting on the decision, Mr Swinney said, ‘This Government has put fairness, equity and the ability to pay at the very heart of the decisions that we have taken’.

However, MSP Jackie Baillie described the move as ‘the fastest U-turn in history’.

Chancellor George Osborne warned that the new powers being granted to Scotland could result in a UK-wide ‘tax competition’.

Treasury invites suggestions for 2015 Budget

21 Jan 2015

HM Treasury is encouraging interested parties to submit their ideas for consideration ahead of the 2015 Budget.

As part of its stated aim of ‘open and transparent policy-making’, interest groups, individuals and representative bodies are being invited to contribute comments and ‘original and innovative ideas’.

HM Treasury has also published guidance on the correct procedure for making a representation, which advises that ‘representations should contain policy suggestions for the upcoming fiscal event and explain the policy rationale, costs, benefits and deliverability of proposals’.

‘It should also be evidence based, providing clear arguments on how it contributes to the aims of the Budget.’

Written representations for the 2015 Budget can be submitted until Friday 13 February, via an online survey or by emailingbudget.representations@hmtreasury.gsi.gov.uk.

Chancellor George Osborne will present the 2015 Budget on Wednesday 18 March, less than two months before the General Election.