2019 Spring Statement – the business reaction

Business groups have responded to Chancellor Philip Hammond’s Spring Statement speech.

Image result for 2019 Spring Statement ? what to expect

The Federation of Small Businesses (FSB) welcomed the Chancellor’s commitment to tackling the late payments issue. Mike Cherry, National Chairman of the FSB, said that the government must ‘tackle this scourge once and for all’.

He said: ‘The commitment from the Chancellor that the Business Secretary will see this through is welcome, and we are especially pleased that the first measure has been announced – to make a Non-Executive Director responsible for the supply chain through the Audit Committee of every large business, and to report back through the Annual Report on their progress.

‘The end of late payments could finally be in sight. It can’t come soon enough, to bolster small businesses at a time when they are in great need of support and a lift in confidence.’

The response from the British Chambers of Commerce (BCC), however, was decidedly lukewarm. Commenting on the speech, Suren Thiru, Head of Economics at the BCC, said: ‘The Office for Budget Responsibility’s forecasts for the Spring Statement indicate a more downbeat outlook for the UK economy, with GDP growth now projected to be lower in 2019 compared to their previous forecast.’

Meanwhile, the Confederation of British Industry (CBI) praised the Chancellor for making ‘an admirable attempt to set out a long-term vision for the UK economy’ while remaining ‘shackled’ by Brexit. However, it remains cautious about the UK’s plans to implement its so-called Digital Services Tax, especially as the EU has seemingly withdrawn its support of the Organisation for Economic Co-operation Development’s efforts.

Rain Newton-Smith, Chief Economist at the CBI, said: ‘Going it alone on a Digital Services Tax is high-risk, especially at a time when the UK already looks increasingly isolated.

‘The government needs to be doing all it can to encourage investment in the UK and adoption of new technologies, not putting up barriers.’

Advertisements

2019 Spring Statement ? what to expect

Chancellor Philip Hammond will deliver the 2019 Spring Statement today. We will be keeping you up-to-date on the latest developments.

Image result for 2019 Spring Statement ? what to expect

The Chancellor will respond to the latest economic and public finance forecasts from the Office for Budget Responsibility (OBR), and announce some areas for consultation on the longer-term tax challenges.

Ahead of the Spring Statement, business groups have outlined the actions that they would like Mr Hammond to take. The Trades Union Congress (TUC) has called for the Chancellor to increase funding for public services by an additional £15 billion, and increase capital spending by £10 billion.

Frances O’Grady, General Secretary of the TUC, said: ‘Positive action is needed from the government to direct funds to the public services people depend on and rescue them from breaking point. And every part of Britain must get investment in the modern infrastructure needed for growth.’

Meanwhile, the Federation of Small Businesses (FSB) has urged the Chancellor to tackle the UK’s ‘late payment crisis’; commit to a one-year ‘safe harbour’ approach to Making Tax Digital (MTD) fines; and introduce additional measures to make the business rates system fairer.

FSB advises Chancellor to use Spring Statement to ‘help small businesses’

The Federation of Small Businesses (FSB) has urged Chancellor Philip Hammond to use the upcoming Spring Statement to ‘help small firms’.

Image result for FSB advises Chancellor to use Spring Statement to 'help small businesses'

According to the FSB’s latest Small Business Index (SBI), confidence amongst small firms ‘remained negative’ in the first quarter of 2019, at -5.0. This represents the third consecutive negative reading. Mike Cherry, National Chairman of the FSB, stated that the SBI reading ‘must serve as a wake-up call for the Treasury’.

The business group has called for the government to use the Spring Statement to help reverse the slump in business optimism.

Mr Cherry commented: ‘Even in the wake of the crash, when the economy was well and truly on the ropes, we didn’t see negativity take hold like it has now.

‘Small firms still have no idea what regulatory framework they’ll be working to in three-and-a-half weeks’ time. Not only does the political stalemate surrounding Brexit make it impossible to plan, it has also distracted from the domestic policy agenda. Next week is the Chancellor’s chance to change this.’

The FSB is urging the Chancellor to tackle the UK’s ‘late payment crisis’, and to commit to a one-year ‘safe harbour’ approach to Making Tax Digital (MTD) fines. The initiative will come into effect from 1 April 2019.

The Chancellor is set to deliver the Spring Statement on Wednesday 13 March.

Treasury Committee launches business rates inquiry

The Treasury Committee has launched an inquiry into the UK’s business rates system, in order to assess the impact of business rates on firms.

Image result for Treasury Committee launches business rates inquiry

The Committee intends to examine how changes in government policy have altered the business rates system. It will also analyse ‘how the current business rates system is operating’.

Additionally, the inquiry will assess the ‘economic justification’ for a property-based business tax, taking into account the impact of business rates on rental prices and property prices. The Treasury Committee also stated that it will consider alternatives to property-based business taxes, such as the proposed Digital Services Tax.

The Federation of Small Businesses (FSB) welcomed the inquiry. Mike Cherry, its National Chairman, said: ‘The FSB has worked with the government to secure a set of reforms to business rates since 2016 – doubling small business rate relief, linking annual rises to CPI, transitional relief, and now a high streets discount.

‘The tax, however, remains regressive, and not linked to ability to pay.

‘We welcome the inquiry as the next step in building on the recent work to help, and sort out a modern tax system that balances the need to fund public services with protecting our vibrant 5.6 million-strong small business community.’

UK small firms spending ‘significant amount’ on tax and employment obligations

According to new research, UK small businesses are spending 15% more on tax and employment obligations when compared to 2011.

Image result for UK small firms  tax

The Impact of Government Policy Index (IGPI), which was compiled jointly by the Federation of Small Businesses (FSB) and the Centre for Economics and Business Research (CEBR), found that the average UK small business spends £480,788 on complying with government policies, including business rates, auto-enrolment and Insurance Premium Tax (IPT).

The IGPI also revealed that small firms lose an average of £5,000 per year to tax administration and paperwork.

‘Come the beginning of April, small firms will not only have Brexit Day to worry about, but also Making Tax Digital (MTD), a higher living wage, rising employer auto-enrolment contributions and further business rate hikes,’ said Mike Cherry, National Chairman of the FSB.

‘The competition to attract entrepreneurs to the UK is more intense than ever. With Brexit on the horizon, it’s critical that the government at all levels does its utmost to help, rather than hinder, the UK small business owners who are being tempted to other shores.’

As your accountants, we can assist you with your bookkeeping and compliance requirements. For more information, please contact us.

Small business confidence ‘falls to lowest level since 2011’

A survey carried out by the Federation of Small Businesses (FSB) has revealed that confidence amongst small firms has ‘fallen to its lowest level since 2011’.

Image result for Small business confidence low

The FSB’s Small Business Index (SBI) revealed that confidence has fallen to -9.9 – its lowest level since the wake of the financial crash in 2011.

According to the SBI, 58% of small firms believe that the domestic economy is ‘restricting their ability to grow’. Lack of consumer demand, limited access to skilled staff and rising labour costs were also cited as being barriers to growth.

Commenting on the findings, Mike Cherry, National Chairman of the FSB, said: ‘Two and a half years on from the Brexit vote and small businesses are looking ahead to Brexit day with no idea of what environment they’ll be faced with in less than ten weeks’ time.

‘Come the beginning of April, small firms will not only have Brexit day to worry about but also Making Tax Digital (MTD), a higher living wage, rising auto-enrolment contributions and further business rate hikes.’

UK ‘not where it should be’ in regard to Brexit, leading business groups warn

Five of the leading business groups in the UK have warned MPs that the UK is ‘not where it should be’ in regard to its Brexit plans.Image result for UK 'not where it should be' in regard to Brexit, leading business groups warnImage result for UK 'not where it should be' in regard to Brexit, leading business groups warn

Image result for UK 'not where it should be' in regard to Brexit, leading business groups warn

The government recently confirmed that it has decided to prioritise preparing for a ‘no deal’ Brexit, and intends to advise UK businesses to begin implementing their contingency plans.

In a joint letter, the Confederation of British Industry (CBI), the Institute of Directors (IoD), the Federation of Small Businesses (FSB), the British Chambers of Commerce (BCC) and manufacturers’ organisation the EEF stated that UK firms have been ‘watching in horror’ as politicians have focused on ‘factional disputes’ rather than the practical steps that need to be taken to secure an advantageous Brexit deal.

The letter also said that firms are ‘pausing or diverting investment’ in order to prepare for a potential no deal Brexit scenario.

The business groups believe that there is ‘not enough time’ to prevent the ‘severe dislocation and disruption’ that will come hand-in-hand with a no deal Brexit scenario. They have called for MPs to ‘talk to their local business communities’ over the festive break in order to help ‘find a way forward’ when they return to Parliament.