The Institute of Chartered Accountants in England and Wales (ICAEW) has warned that businesses in the UK must prepare for a ‘no deal’ Brexit.
Research carried out by the Institute has revealed that a fifth of UK firms ‘haven’t considered the impact of Brexit’ on their business.
Many business owners believe that the UK’s exit from the EU will have ‘minimal to no impact’ on their firm, according to the ICAEW.
It has urged businesses to put contingency plans in place in order to prepare for a ‘no deal’ Brexit, and to consider what this scenario could mean for their firm.
‘With less than a year until Britain leaves the EU, the prospect of an agreement in time is looking increasingly unlikely,’ said Michael Izza, Chief Executive of the ICAEW.
‘Even with the transition period until the end of 2020, too much still needs to be determined on how UK businesses and professional services will work both with and in Europe.’
Meanwhile, the research also suggested that 77% of businesses do not consider EU regulations to be a burden to growth, with a further 80% of firms committing to complying with EU rules once the UK has left the bloc.
An end of year party can often prove to be an enjoyable way to celebrate the festive period with work colleagues. With this in mind, the Institute of Chartered Accountants in England and Wales (ICAEW) has advised businesses to ensure that their party is as tax-efficient as possible.
An annual staff party could qualify as a tax-free benefit for employees, provided certain conditions are met.
In order for a party to qualify, the total cost per head must not exceed £150 (including VAT, transport and accommodation). An event which exceeds the cost per head limit will be liable for income tax and national insurance.
In addition, the event must be held primarily for the purpose of entertaining staff, and the party must generally be open to all employees based in that location (separate departmental or divisional parties are permissible).
Commenting on tax-efficient seasonal parties, Sarah Ghaffari, Technical Manager of SME Business Tax at the ICAEW, said: ‘A Christmas party is a great way to reward staff for hard work, and as a little festive gift, HMRC allow up to £150 spend per employee, completely tax-free.
‘The Christmas tax exemption can be enjoyed by businesses of any size, so long as it’s within the £150 budget.’
A survey carried out by the Institute of Chartered Accountants in England and Wales (ICAEW) has revealed that confidence levels amongst UK businesses are below zero, despite an increase in profit growth.
In the fourth quarter of this year, profit growth rose to 4.1%, up from 3.4% in the previous quarter. Such growth is expected to increase to 4.7% in 2018 as a result of rising sales and a slowdown in input cost inflation.
However, business confidence levels were low, peaking at -3.4 on the ICAEW’s Business Confidence Monitor, although confidence levels did pick up within certain industries. Confidence in the IT, energy and construction sectors rose significantly.
Commenting on the findings, Michael Izza, Chief Executive of the ICAEW, said: ‘While businesses are struggling to be confident in the current environment, there are reasons to be more optimistic.
‘Businesses are controlling costs, and there is finally some improvement, though small, in export sales growth. These findings highlight the cliff edge that the UK economy is on at the moment.’
Mr Izza went on to say that whilst the recent rise in interest rates was not unexpected, any ‘sudden shocks’ from Chancellor Philip Hammond in the upcoming Autumn Budget could potentially have a ‘serious impact’.
A survey carried out by the Institute of Chartered Accountants in England and Wales (ICAEW) has suggested that the number of businesses declaring insolvency could potentially rise as a result of the impact of Brexit on the UK economy.
The survey revealed that 73% of individuals working in the insolvency and business restructuring industry believe that Brexit poses the ‘biggest threat’ to businesses over the coming years. Meanwhile, 56% of those surveyed also believe that a rise in interest rates presents a risk to UK businesses.
The survey suggested that the retail sector could be the worst affected by insolvency, with 77% of respondents believing that it would be the sector most likely to experience ‘increased financial difficulty’.
Affected firms should seek early help in a bid to restructure their finances, business processes or management, the ICAEW stated.
Reflecting on the issue, Bob Pinder, Regional Director at the ICAEW, said: ‘We are in no doubt that businesses in the UK face difficult times ahead. A sharp and unexpected rise in the cost of doing business can make managing liquidity tough.
‘We believe that a change in attitudes is critical in order to successfully avoid substantially increased corporate insolvencies – confronting business issues, rather than being ashamed of them.’
Data published by the Institute of Chartered Accountants in England and Wales (ICAEW) has revealed that confidence amongst businesses in the UK has taken a ‘major knock’, and has fallen into negative territory.
The ICAEW’s Business Confidence Monitor fell from a reading of 6.7 in the second quarter of this year to -8 during the third quarter.
Issues that came to light as a result of the snap General Election and the subsequent hung Parliament contributed towards the negative reading, the ICAEW suggested.
The data also revealed that the ongoing Brexit negotiations between the UK government and EU officials have also been having an effect on firms’ confidence levels.
Matthew Rideout, Director of Business at the ICAEW, commented: ‘Since the announcement of the General Election, a vacuum has been left with government’s attention swallowed by a hung Parliament and the start of EU negotiations.
‘The industrial strategy has been lost in the void, coupled with no clear signal towards post-Brexit policy. As a result, businesses cannot see through this haze of uncertainty and are struggling to look further than the end of the next quarter in terms of their decision making.’
A survey carried out by the Institute of Chartered Accountants in England and Wales (ICAEW) has suggested that just 43% of firms have discussed the risks that Brexit poses to their business.
The ICAEW found that only 29% of businesses surveyed have made Brexit plans. 6% of firms expect a positive Brexit outcome, whilst 40% predict that EU negotiations will have a negative impact on their business.
Additionally, only 21% of firms surveyed would be willing to explore new markets.
The research also suggested that 29% of businesses believe that the free movement of goods, services and capital between the UK and the EU is essential for growth. One fifth of respondents stated that they also value access to a skilled EU workforce.
Michael Izza, Chief Executive of the ICAEW, said: ‘With 20 months until departure, it is now the government’s responsibility to help pave the way for business success once we have exited the EU.
‘Issues raised within our research – such as access to skilled EU workers and the free movement of goods and services – should be firmly placed on the Prime Minister’s radar when she engages in talks with the EU to ensure the priorities of business are fully considered and complacency is avoided.’
The Small Business Taskforce has outlined its priorities for UK small firms ahead of the General Election on 8 June.
The Taskforce, which is comprised of 14 organisations, including the Institute of Chartered Accountants in England and Wales (ICAEW), Enterprise Nation and the Entrepreneurs Network, has set out six key recommendations in its election manifesto, which it believes will help ‘build a positive and progressive business case for Britain’.
Amongst these key recommendations is a requirement for the next government to provide an environment which ‘champions the role of small businesses’, create a tax system that supports businesses of all sizes and supply business support that adds value.
The manifesto also calls for the next government to provide an advantageous pensions and benefits system, supply procurement opportunities that are beneficial to all and create a workforce that is equipped for enterprise.
Clive Lewis, Head of Enterprise at the ICAEW, commented: ‘Whatever the outcome on 8 June, the incoming government must provide a solid platform for small businesses to flourish and grow.
‘Currently businesses are cautious about the future and are holding back on investment, therefore it’s vital that, in the run-up to the General Election, all political parties spell out how they plan to encourage businesses to invest in long-term growth.’