Putting MTD software into place ‘will cost firms an average of £564’, FSB finds

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Research published by the Federation of Small Businesses (FSB) has found that putting Making Tax Digital (MTD) software into place ‘could cost UK small firms an average of £564’.

MTD for VAT is set to come into effect from 1 April 2019 for businesses which have a taxable turnover above the VAT registration threshold (currently £85,000). As part of the initiative, businesses must keep some records digitally, using ‘functional compatible software’. This means a ‘software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API)’.

The FSB revealed that 23% of small businesses have received quotes for MTD-compliant software, but are yet to make a purchase.

According to the research, bigger businesses must pay higher prices for MTD-compliant software. Firms with a turnover between £500,001 and £1 million could be landed with an average bill of £872 for MTD software. Businesses with a turnover of more than £1 million could be given a bill of £1,019.

‘We’re only three weeks away from the roll-out of MTD, and small businesses are clearly not prepared for it,’ said Mike Cherry, National Chairman of the FSB.

‘That being the case, the Chancellor must double down on his commitment to light-touch enforcement when he delivers the Spring Statement on Wednesday.

‘At a time when small business confidence is in the doldrums – and wages, auto-enrolment contributions and business rates are rising – more costs and admin burdens are the last thing they need.’

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Small businesses ‘worrying about access to finance after Brexit’, according to report

A report published by the British Business Bank has revealed that a third of small businesses believe it will become ‘more difficult’ to access finance once the UK leaves the EU.

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The Bank’s 2019 Small Business Finance Markets report also revealed that, although 29% of small firms expect Brexit to have a ‘negative impact’ on their business, many remain optimistic about growth, with half of small businesses still aspiring to expand over the next 12 months.

However, the overall demand for external finance has declined, according to the report: just 36% of small businesses used external finance in 2018. Evidence also suggests that some firms are delaying longer-term investment decisions until after Brexit.

Commenting on the report, Keith Morgan, CEO of the British Business Bank, said: ‘It is clear that a lack of confidence is affecting many smaller businesses, as evidenced by a continuing drop in demand for external finance. It is, however, encouraging to see that half still aspire to grow, and that there’s increased awareness of a broader range of finance options.

‘This will be an important factor in ensuring that smaller businesses are better placed to make the right finance choices as uncertainty diminishes and confidence returns.’

SMEs ‘waiting 43 days to be paid by government contractors’, research suggests

Research carried out by online business finance supermarket Funding Options has suggested that UK small and medium-sized enterprises (SMEs) have to wait an average of 43 days to be paid by government contractors.

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Funding Options found that top government contractors took more than six weeks to pay their suppliers in 2017.

It warned that late payments can help to push small firms into insolvency. According to Funding Options, late payments have played a significant role in generating construction sector insolvencies: in the year to September 2018, 2,924 construction firms were declared insolvent – a rise when compared to the previous year’s figure of 2,645.

In 2015, the government vowed to pay 80% of its invoices in five days, and the rest within 30 days. However, the research has suggested that government contractors are failing to meet this target.

Commenting on the issue, Phil Hall, Head of Public Affairs and Public Policy at the Association of Accounting Technicians (AAT), said: ‘Government action to tackle this problem, from the voluntary payment code to compulsory but feeble reporting requirements – as well as the creation of a Small Business Commissioner with no real power – have all predictably failed to stem the scourge of late payments.’

UK SMEs ‘unmindful of risks posed by cyber-attacks’, poll suggests

A poll commissioned by insurance firm Aon has suggested that UK small and medium-sized enterprises (SMEs) are ‘unmindful of the risks’ that cyber-attacks and data breaches pose to their business.

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The poll found that eight out of ten small firms don’t regard cyber-attacks or data breaches to be significant risks to their business.

Earlier this year, a survey carried out by the National Cyber Security Centre (NCSC) revealed that almost half of UK firms fell victim to a cyber-attack or data breach in 2017. 66% of SMEs were affected by a loss of data, according to the survey.

Aon’s poll also revealed that 31% of SMEs don’t currently insure against cyber and data risks. An additional 68% were unaware that data breaches must be reported to the Information Commissioner’s Office (ICO).

Commenting on the poll, Chris Mallett, Broking Manager at Aon, said: ‘What’s more, it revealed one in three don’t see personal information stolen as a result of a cyber-attack or fraud as a data breach.’

‘There is a lot of misunderstanding of risks, and still a worry among SMEs that it must be complicated,’ said Dr Emma Philpott, Founder of the UK Cyber Security Forum.

‘It is not always about high end security. It’s about having the basics in place to protect you from indiscriminate attacks. Educating staff takes time, but doesn’t cost anything at all.’

‘Bad payment practices lead to SME failures’, report suggests

A new report published by the Business, Energy and Industrial Strategy (BEIS) Committee has highlighted how ‘bad payment practices’ have led to the ‘failure’ of many small and medium-sized enterprises (SMEs).

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The government’s Prompt Payment Code, which was created to address poor payment practices, has ‘too often’ been ‘ineffective’, according to the Committee.

A ‘statutory requirement’ for companies to pay within 30 days should be introduced, the Committee stated. It also recommends giving the Small Business Commissioner the power to fine large businesses who pay their suppliers late.

Commenting on the report, Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said: ‘Eliminating the scourge of late payments would see 50,000 businesses saved each year, [and] add £2.5 billion to GDP, which would be a real boost to UK productivity.

‘The government must respond to this report with tough action on late payments, supporting smaller businesses to further develop their leadership and management capability, and to improve the adoption of basic digital technologies that small businesses need to grow and become more productive.’

Late payments and restricted access to finance ‘impacting firms’ ability to grow’

A survey carried out by data provider Dun & Bradstreet has suggested that small firms’ plans for growth are being adversely affected by late payments and restricted access to finance.

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Overdue payments ‘remain a prevalent challenge’ for many businesses, the survey revealed. The average amount owed to small and medium-sized enterprises (SMEs) currently totals £80,000 – a significant increase from last year’s figure of £64,000.

The survey also outlined other factors that have hindered SMEs’ ability to grow, including restricted access to appropriate finance; managing General Data Protection Regulation (GDPR) compliance; adopting new technology; and sourcing the right talent for their business.

The uncertainty surrounding Brexit has also negatively affected firms: 40% reported that Brexit has ‘significantly slowed’ their growth. An additional 64% of survey respondents stated that Brexit will be the deciding factor in determining the success of their business.

Commenting on the findings, Tim Vine, Head of European Trade Credit at Dun & Bradstreet, said: ‘There’s no doubt the months ahead will continue to be challenging as we move towards the Brexit deadline. Small business leaders are having to contend with scenario planning on top of dealing with day-to-day priorities such as cashflow management, late payments and securing finance for future growth.’

CBI publishes wishlist for 2018 Autumn Budget

The Confederation of British Industry (CBI) has published its wishlist ahead of the Autumn Budget, which is set to be delivered on Monday 29 October.

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Within its Budget submission, the CBI outlines ways to ‘unlock enterprise, increase the country’s competitiveness and attract more investors’.

Carolyn Fairbairn, Director General of the CBI, has urged Chancellor Philip Hammond to focus on three key areas in order to ‘unlock growth’:

  • Overhaul the UK’s business rates model to ensure firms can invest and grow
  • Make the Apprenticeship Levy ‘work effectively’ by raising the limit on transfers and reducing the cap for small and medium-sized enterprises (SMEs) from 10% to 5%
  • Review the capital allowances regime, with a focus on new technology, and with a view to increasing the Annual Investment Allowance (AIA) to £500,000 from its current figure of £200,000.

The CBI’s Budget submission also puts forward several policy recommendations, including delivering the world’s ‘most competitive’ R&D tax credit; delaying the introduction of new tax rules, such as the off-payroll working rules in the private sector, until April 2020; and creating an online ‘one-stop shop’ for firms’ Brexit queries.

Commenting on the wishlist, Ms Fairbairn said: ‘As we near the end of Brexit negotiations, the world’s gaze is fixed on these shores. This Budget is a pivotal moment and a chance to showcase the UK as an open, collaborative and confident nation.’