Last Friday Duncan, Alex and Gemma from Riley joined with Matt, Craig and Mark from Nash & Co, Solicitors, to make up the Rash team for the Plymouth Professionals Cricket Tournament run by Begbies Traynor and Edward Symons.
The plucky but slightly makeshift team took on teams of cricketers from LloydsTSB, Clydesdale Bank, Bond Pearce, Begbies/Edward Symons and the eventual winners, Wolferstans to play at Plymstock Cricket Club.
Neither Alex nor Gemma had ever played cricket before but threw themselves into batting, bowling and wicket keeping (Alex) with gusto. Gemma won two prizes – firstly for the only member of any team to dare to wear pink trousers and secondly for the best dive of the day – she managed a treble somersault with pike while saving her wicket from an almost certain run-out – Tom Daly eat your heart out! Alex batted throughout one of the innings and took a Bond Pearce wicket to hoots of derision from the rest of the Bond Pearce team. Duncan batted and bowled well and even brought along his own kit – no, not a bat, pads or clothing, just a box!
While our results were not what we had hoped (we lost all our matches) we did have a great time and, I like to think, brought a touch of glamour to a game of cricket – well done guys!
Thanks to Matt, Craig and Mark from Nash & Co for putting up with us and also congratulations to the Rash team for winning a signed Exeter Chiefs rugby ball in the quiz – you will see more of that later this year!
I’ve just finished a webinar with a guy in Australia. An hour of screen demo and chat through my desktop. Nothing new there you might think but there was an interesting generational moment this morning at breakfast.
We were all discussing what we were doing today and (for once) the kids were quite animated as it’s the first day of the summer holidays – there was surfing for one and a friends for the day for the other. My turn came and I mentioned that I had to be in the office on time as I was having a webinar with an Australian. And the reaction? Well, normal blind acceptance from the kids and a “wow” moment from my wife to whom this was abnormal, unusual and surprising.
For children now this is not unusual – after all they are quite blasé about hearing conversations with astronauts on the space shuttle or participating in a web chat with a single-handed sailor in middle of the South Atlantic. However, for my generation it can still come as a surprise that we can chat quite happily through a screen mike and see what someone else is doing thousands of miles away live.
And how business has changed. No longer are we competing just with the businesses we see in our home towns. Our strategy has to cope with what is being offered to our customers from say bookkeeping services based in India, investment houses in the US or Taiwanese manufacturers. The internet has made all this relatively easy for all but the most IT phobic to deal with. To a certain extent we take it all for granted.
We take it for granted that we can get a review of something we have never held in our hands from someone who has; read a report of a hotel visited by someone we’ve never met or ask for advice from a forum we don’t participate in ourselves. It has become second nature for many of us, but we also need to check what is being said or checked or mentioned about our own business.
So do you run automated Google searches on mentions of your business, links to your website, blog, Twitter or Facebook pages? Do you do the same for your competitors and peers? Have you yet recognised that competition comes from the rest of the world, not just the rest of your town, city or country? Have you used Google Analytics to see where interest in your online presence is emanating from or checked LinkedIn to see who else is being checked out when they look at your profile.
All these things are easy to do and produce a wealth of information about how your business may be perceived in the wider world – and if you don’t do it you can be sure that there is generation out there to whom this a natural way of working.
It’s a massive world out there, and distance is no longer an object.
A team from Riley competed in the Blue Mile, Race for the Environment from the Mayflower Steps on Plymouth’s Barbican on Saturday 3 July. The weather was fantastic for the first running of the Blue Mile, designed to raise awareness of our water environment and to encourage mass participation in events based on and around the water.
There were three competitive events on the first day of the weekend, a mile open-water swim, single/double kayak and stand-up paddleboard. The swim was the most competitive event with nearly 150 swimmers in three “waves” throughout the morning and early afternoon. The kayak (in which there were 5 Riley competitors) starting at around 1.30 pm and the SUP (with 3 of the Riley team) at around 3pm.
The atmosphere around the tented village at the Mayflower Steps was great, competitors mingling with musicians, street artists and visitors to create a frisson of excitement and anticipation. After registering for the event and changing into race gear, we headed to Elphinstone Car Park for a race and safety briefing before picking up our kit. Some of the Riley team were kayaking or on an SUP for the first time and with a bit of trepidation set out for the start. The breeze was fairly benign within the harbour but on rounding Fishers Nose, there was a fierce head-wind until the half-way mark was rounded. Then it was downwind all the way back to the finish and the most difficult part of the race, getting the “identitag” into the timing machine which was attached to a buoy at the end. There were a few misses there including Alex, who appears to have lost three minutes through a “double-beep”!
As a team we did really well in both our events, winning each heat and coming 6th and 5th in Kayak and SUP respectively. We were however soundly beaten by the Triple Challengers, who did all three events, what stars!
Once finished, a few beers and a good laugh rounded up a really great day. We will be back next year.
My son, Max Stacey has edited together some of the film from the day – we hope you enjoy it.
The first thing that struck me about yesterday’s budget speech was the ties. The shimmery bluey-green of Osbourne’s effort and the blue and yellow of Cameron and Clegg. Wow, what a change from the normal dull red efforts that we have seen for the past 13 years. Perhaps the fashionista broom really does sweep clean. But how would the coalition policy broom do?
Well, what the Chancellor had to do was to persuade all of us that the epic reconstruction job that he has started on the UK economy was worthwhile and capable of careful, intelligent implementation. The buzz during the selling phase of the pre-election waffle was all about “sharing the proceeds of growth”, a phrase that David Cameron spouted on numerous occasions. Well, this budget was all about sharing the proceeds alright, not of growth, but of failure. And to put that problem into its proper context, the Chancellor said he would give it to us straight – there would be no stealth taxes, no hidden bombshells buried in the small-print, no double and triple counting for effect. Figures would not be fiddled for political impact. And largely he appears to have done just that. Stealth and perception have not been buried entirely (this is politics when all is said and done) and we will have to wait until 25 October to feel the bite of the axe in spending – and when it falls, it will be heavy.
So to the highlights excluding those mentioned in our last budget report which you can find here.
Corporate taxation
Main corporation tax rate to reduce from 28% by 1 per cent every year for four years to 24 per cent in 2014/15.
Small companies rate to be cut to 20 per cent from 1 April 2011.
Thresholds for small companies rate and main rate of corporation tax to remain unchanged at £300k and £1.5m
Taxation of Foreign profits, intellectual property and R&D to be reformed to make UK more business friendly.
Reduction in capital allowances from 20 per cent to 18 per cent on main pools, and from 10 per cent to eight per cent on special rate pools, from 1 April 2012.
Annual investment allowance reduced from £100,000 in 2010/11 to £25,000 from 1 April 2012. There will be transitional rules which, you’ve guessed it, will be available in “due course” – or to translate, when they’ve been written!
Introduction of a bank balance sheet levy, initially at 0.04 per cent from January 2011, increasing to 0.07 per cent. This is intended to encourage the banks to move to less risky funding profiles rather than to take less risk!
In case you’re interested, the main rate of corporation tax for companies with profits from oil extraction and oil rights in the UK and the UK Continental Shelf (ring fence profits) will remain at 30 per cent
Draft legislation has been released to clarify the treatment of certain dividends within UK companies. Hopefully, this will clear up some of the uncertainties including the treatment of dividends from reserves created after a reduction in company capital.
In terms of planning, it’s all about timing, and mainly on the purchase of capital assets. Utilising the higher allowances in the next two years is crucial if you are planning capital expenditure. Any expenditure over and above the £100k AIA should be planned within the same timescale to allow for the higher capital allowances available during that period. However, overall the reduction in CA’s isn’t as large as many were expecting and the timing allows a benefit from the reduction in CT rates and increased levels of allowances at the same time.
The government have again expressed their commitment to countering tax avoidance and have announced their intention to consider whether a “general anti-avoidance rule” should be implemented. This would have potentially wide-ranging implications for all types of tax planning.
Employment taxation
Employers’ NIC threshold to increase above inflation as previously announced.
Employer Funded Retirement Benefit Schemes (EFRBS) have been included in the HMRC crackdown on “perceived avoidance”. Surely not?
Up to £5,000 exemption from Employer’s NIC for each of first 10 people employed by new businesses located (broadly) outside South East.
Anti-avoidance legislation relating to the Er’s NIC change will be published but guess what, it hasn’t been written yet!
Indirect taxation
20 per cent main VAT rate to be introduced on 4 January 2011, with continued exemptions for essential goods. This isn’t surprising given the amount that it raises (£13bn pa) and the fact that George had nowhere else to go for it as the cupboard was bare!
Insurance premium tax rates to increase from 5 per cent to 6 per cent and from 17.5 per cent to 20 per cent.
You’ll no doubt all be pleased to know that the Landline Duty that was proposed in the 2009 Pre-Budget Report will not be introduced.
Income tax
Personal allowance to increase by £1,000 from 5 April 2011.
Higher rate tax threshold will be reduced so that higher rate and top rate taxpayers will not benefit from the increased personal allowance.
Capital gains tax (CGT)
Rate of CGT to increase to 28 per cent for higher rate and top rate income taxpayers (basic rate taxpayers rate to remain at 18 per cent) with no tapering based on length of ownership.
New CGT rate to be introduced for gains made from midnight.
Gains arising before 23 June will not be taken into account in determining the rate at which gains arising after 23 June are subject to tax.
HMRC will not rule out the 28% rate changing for 2011/12
Entrepreneurs’ relief will apply to first £5m of qualifying gains made from midnight and will continue to produce an effective tax on gains of 10% subject to the qualifying rules.
The Government will not be following through with the proposal to repeal the special tax rules relating to furnished holiday lettings. Instead they will consult to ensure the UK rules meet EU legal requirements. Any changes will be effective from April 2011
Pension issues
The Government has announced that it will end the requirement to use a pension fund to buy an annuity by age 75 with effect from 2011/12. Pending implementation of this announcement, registered pension scheme members attaining age 75 after 21 June 2010 will not be required to secure an income until age 77.
There will be a “step-back” from the higher rate tax relief restriction that was to be introduced on pension contributions from 2011/12. However, HMRC have stated their intention to raise the same amount through other means – the best guess is that this means restricting the level of overall contributions allowable.
Remember the QWPS or NEST comments from our last budget commentary? No thought not and it was only a couple of months back too!
Well, NEST is the new State sponsored Trust-based Defined Contribution pension scheme being established to provide an alternative to Qualifying Workplace Pension Schemes (QWPS) when Workplace Pension Reform introduces auto enrolment for pensions for all “eligible jobholders”, starting in October 2012. Bet you can’t wait! The requirements in terms of timing drop down with size of the business. Employers of 50 eligible jobholders, for example, must auto-enrol by July 2014, at the latest.
There is an increasing scale of compulsory minimum contributions (beginning at 1 per cent of earnings from the employer, and 1 per cent from employees in 2012), reaching the “steady state” minima of 3 per cent employer and 5 per cent (gross) employee in October 2017.
So that, as they say, is that. The first Budget of the coalition Government pretty much lived up to its promise of being tough, with everyone having to pay something towards reducing the country’s deficit. Certainly, there wasn’t much to laugh about apart from the discomfort on the opposition benches and you have to feel sorry for them don’t you? You don’t?
Finally, Mr Osborne said the UK ‘will not be joining the euro in this Parliament’. This is not unexpected but George was also able to announce that he had therefore abolished the Treasury’s euro preparations unit. No doubt everyone will be relieved to know that ‘the official concerned has been redeployed to more productive activities’. What those activities are we’ll no doubt never know!
The buzz in accounting software at the moment is about the “cloud”. Actually, it’s not just in accounting software, it’s about all software.
There are many terms being bandied about but the most common seems to be “cloud-based” and “software as a service” or SaaS as it’s known. What it means is that instead of software being resident on your PC or network server, you use software which is stored elsewhere through your internet connection. This has been made possible because of the increase in speed and reliability of internet connections particularly for businesses.
Riley have been enthusiastic adopters of “cloud” computing for a couple of years now and I thought it would be useful to relate our experience of the change and how we see the future developing for our customers.
Our office systems were almost totally reliant on Lotus Notes – a secure groupware system which enabled us to store, catalogue, discuss and record the way we worked and the communications that we had with our customers, referrers of business and suppliers. Notes also handled our e-mail, contacts and diaries. We started using it in 1998 and quickly became dependent on it for all we did. However, over the years we started to see the deficiencies in the system, the difficulties of the technical management issues, the “clunkiness” of it’s user-interface (UI) even after major updates and the access issues compared to the personal e-mail systems we had all started to use at home.
But there is so much inertia related to mission-critical software – we were aware that alternatives existed but were so well tucked up by the fire with our pipe and slippers that we didn’t want to go out in the cold and see what the noise was outside. However, changes in our key team forced us to look properly at other solutions and we settled on migrating our e-mail, calendars and instant messaging to Google. The migration was handled painlessly by Glo-Networks and we moved the majority of our communication IT to web-browser access without a hitch.
That first step was a revelation. Not only was our information now accessible from anywhere in the world, from any computer or device (phone) with an internet connection, the move massively freed up resources of people (and cash) and removed the restrictions on our thinking about IT. We still had (and have) certain legacy databases on Notes but have started to wind these down as more content is now cloud based. For example our old Teamtalk database from Notes which contained office gossip, quick updates on who was where and why and news snippets has been moved to Yammer. This application also contains our “humour” database – a “must read” compendium of up to date jokes, links and general office twaddle. What we also found was that Google Apps allowed us to store all of our templates for letters, spreadsheets and many of our management tools too.
We have also been able to dispense with the office-based back-up solution which was the bane of many of our lives. This has been replaced by on-line back-up for server based systems and a reliance on the cloud for back-up of e-mail, calendars and contacts. And there have also been no problems with software updates – I’m sure that they exist but they happen painlessly when we don’t notice or incrementally as the developers finish a feature. We don’t have to buy an upgrade path or worry about compatibility – it just happens.
Sure, there are some who miss features from the old systems but there are way more new “goods” than old “bads”. And because the software is constantly improving, new features become available all the time.
Would we go back? No way, and in the next blog entry I will talk about some of the specific systems we are using for accounting and talk about a great new opportunity for our customers to have free accounting software for a year. I bet you can’t wait!
Our last blog entry about the possible changes in tax rates and targets for the “Emergency” budget on 22 June caused more calls to the office than any other we have written. Was the cause of those calls the possible rise in VAT to say 20%? Perhaps the dropped promise on IHT? The confusion on NIC changes? No, the possible increase in Capital Gains Tax (CGT) has been the over-riding issue. And rightly so if the commentators are to be believed.
The rumours are that the new government is planning to increase the CGT rate from 18% to 40% or 50% – in other words, the marginal rate of income tax. Sure, for some this would mean a rise to “only” 20% if the basic rate of tax remains the same – and there’s no suggestion that it won’t. But for others, more than doubling or potentially nearly trebling the rate of CGT is seen as highway robbery. It’s a change which would attack second-home owners, those with a portfolio of shares for investment and buy-to-let investors who prefer property to pensions. Business assets are seen as potentially getting a “fairer” crack of the whip with what is being touted as “generous exceptions for entrepreneurial activities”.
The issue that many people mention about the current system is the lack of what is called “indexation”. CGT was introduced by Harold Wilson’s government in 1965 to stop the increasing trend of passing off income as capital and hence avoiding tax. You see, there’s nothing new in tax policy! Gains pre-1965 were exempt (and still are). An Indexation allowance (using RPI as a measure) was introduced in 1982 in an attempt to remove the gains relating purely to inflation while leaving the growth in capital taxable. You can see why they did it from this graph.
The period after 1985 was obviously the perfect time to be a tax advisor as CGT calculations became ever more complex and phrases such as the “kink test” were bandied about in accountant’s offices. Although it sounded interesting, somewhat disappointingly, the “kink test” was a calculation designed to check whether it was better to elect for a March 1982 value to be used for the cost of an asset rather than a calculated value using the purchase price and allowing for the rule changes up to 1982.
Alastair Darling finally removed indexation and the “kink test” in the Pre-budget report in 2007 – probably because Gordon told him that he had laid inflation to rest with “no return to boom & bust”. This is a phrase we all remember but which Gordon now claims never to have uttered! At the same time Darling “simplified” CGT rates from 10%, 20% and 40% to a uniform 18%. It was argued that the effective reduction in rates more than compensated for the removal of the inflation adjustment which Gordon had told him was no longer required.
So why is indexation in the news again? Well, if the commentators are correct and CGT rates return to the marginal rates of tax including the shiny, new 50% rate, shouldn’t we take account of the fact that inflation again stalks the land? After all, on 18 May the Office for National Statistics announced that the RPI was now at 5.3%, the highest inflation figure for 19 years. And it’s pretty obvious that the longer you hold an asset, the bigger effect inflation can have on the value of it. Removing inflation so that CGT is only paid on the “real” gain, not the inflated figure, is just a fair tax policy. And fairness, as we all know is something that all parties claim they support.
Since the politicking has ceased (momentarily) and we now know the shape of our new Government, we also know a bit more about how the coalition views the tax regime and therefore the possible changes to tax policy that may be included in the emergency Budget within 50 days.
These might include:
A substantial increase in the rate of capital gains tax on non-business assets to marginal rates of tax which could therefore be 40% or 50% rather than 18%. Apparently, there will be “generous exceptions for entrepreneurial activities”.
A large increase in the income tax personal allowance in April 2011 as the Government aim to raise the threshold to £10,000 during this parliament. The first step on this transition will be to increase personal allowances by £1000. This will cost around £5bn and be paid for by not implementing the Conservative plan to raise the employee threshold for National Insurance. The remainder will come from raising capital gains tax for individuals as mentioned above.
Adoption of the Conservative proposal to recognise marriage in the tax system, although the Liberal Democrats will abstain from (rather than support) this measure.
Scrapping at least part of Labour’s proposed national insurance increase in April 2011.
Shelving the Conservatives’ proposal to increase the inheritance tax threshold to £1m, and the Liberal Democrats’ ‘mansion tax’ proposal.
An increase to 20% of the standard rate of VAT from “next year”
There are rumours that the increase in CGT rates could also include a return to either the retirement relief or taper relief regimes.
If you would like to discuss any issues prior to the 50 day budget, please give either Bernice Constantine (01752 203651), Nicola Cowie (01752 203600) or myself a ring.
We’ll update you as soon as we hear anything more, even if it’s just vicious rumours!
I always find it amazing how rumours spread through our local business community – only this morning I was breathlessly told by two people that one of our clients had “gone bust”. In fact I had met with them very recently to conclude some interesting planning work and knew that they were in rude financial health. I called anyway to see if they knew that the rumours were rife – they did, and in fact could identify the source with some confidence.
There were other rumours “doing the rounds” in the city too; a well known local entrepreneur can’t make the first payment on a CVA, another has failed to make his, a business was buying something I knew to have been sold to someone else – and so it goes on. Conclusions are drawn, connections made and the rumour mill runs wild with speculation – just another day in city business.
And it’s not just word of mouth either. The proliferation of social media through networks such as Twitter, Facebook and Buzz means that rumours don’t just pass from person to person any more, they spread by contagion through networked groups and become “viral”. Some local rumours are harmless, others such as the example mentioned above cost at least reputation and possibly more.
It’s obviously the same on an international stage too. To quote from the Independent;
“The Spanish markets fell 5.4 per cent on talk that the country would call for an emergency loan. It forced the Prime Minister, Jose Luis Rodriguez Zapatero, to respond: “I was told something about that rumour and the truth is I give it no credit, it is complete madness.”The Spanish premier added: “These rumours can increase differences and hurt the interests of our country, which is simply intolerable and of course we intend to fight it.”"
I’m not sure how much 5.4% of the Spanish market was worth or what the value change on a European scale has been. One thing’s for sure, “an unverified explanation of events circulating from person to person and pertaining to an issue of public concern” has cost someone a “shed-load of cash”.
I get up, breakfast and help my husband get the children ready for school. This morning involves a complicated hair do for my 8 year old daughter (not so much complicated, actually I am just rubbish at doing hair!) and my 5 year old son is ‘not happy with Mummy’ for some reason or other – nothing new there.
8am
As myself (@valdoyle) and Riley (@rileycom) are Twitterers and generally into social media as a whole, I have a quick look on Tweetdeck to see if we have had any mentions and have a look at what fellow tweeters are up to.
9am
After a hit of caffeine I am ready to function. Today I am finishing off some management accounts for a growing medium sized company who import from Europe and the Far East and sell to the UK and Ireland. The same company also require a minor tweak to their financial forecasts which I do and email over to the MD. I have a few emails and phone calls to deal with during the morning. We all have direct lines so we can act immediately.
1pm
Lunchtime is a quick bite to eat at my desk (its Friday so something hot from the Spar emporium across the road is called for and what’s this? a chocolate bar has somehow been purchased!).
2pm
This afternoon I review the data being produced by our online book keeping function for one of our clients to make sure that the results look as expected and to determine any action points to run through with the client. The online book keeping is proving popular as clients can keep control oftheir business whilst at the same time having the peace of mind that their records are maintained by our experienced team. I make a call to our client to arrange for me to pop out and run through the results with them and discuss business generally.
5:30pm
Time to go home.Plan to bribe the kids to go to bed early with a ‘DVD’.
8:00pm
The peace is heavenly so a (not unsubstantial) glass of wine is consumed along with a quick look on Facebook to see what my friends, family, colleagues and associates are up to this evening.
After 39 years in accountancy of which 27 years have been spent at Riley, today is my last day: I’m off to do exactly what I want to do. As long as my wife will allow it, of course.
I started acounting shortly after my eighteenth birthday and have worked for just 4 firms: Neville Russell (now Mazars) and Price Waterhouse (now PwC), both in London; Nevill Hovey in Plymouth (that didn’t last long!) and Riley. At the outset I had little idea of what the job would entail and I’m pleased to say that I’ve enjoyed it far more than I anticipated. It has its stressful moments, of course: any worthwhile activity does.
Working for a firm of chartered accountants offers the opportunity to experience many different workplaces. Like TV business gurus, we visit a range of enterprises, can ask just about anything to discover how the business works and we can then offer our own advice. Among the clients I’ve worked with have been large & small charities (one favourite in London was the Royal Institution); and…stockbrokers, solicitors, doctors, dentists, manufacturers (from machine tool makers to an assembler of rat traps); in the 1970s several Soviet-owned enterprises including an oil and a shipping company; house builders, hotels, property developers, financers of dodgy Greek shipping lines, eurobond traders, financial services firms. There’ve been retailers, wholesalers, motor traders, computer service companies, farms, wine importers, food distributors. But fortunately, no banks.
Some of the jobs have appealed to my inner nerd – a start-up company that designed and built medical electronics equipment, another that made non-electronic logic control circuits (they worked through fluidics), commercial radio stations. Others have offered a view of the differing commercial practices of other parts of the world, both within Europe as well as the USA, Canada, China, Japan, Nigeria (which was pretty much as you’d imagine) and the Gulf states.
The best part of it all has been the people. Colleagues, clients, clients’ employees. The chance to gain from their experiences and to offer advice to help their careers or businesses along, to help make their jobs easier. There’s a bit of a misconception that ours is a profession based on numeracy. That does play a part, but far more important is the ability to assimilate a large volume of business, accounting and legal information and then apply it to varying situations. Listening, interpretation, persuasion are key skills.
When I joined Peter Riley two years after he started Riley in 1981, we wanted to build a practice where the technical quality of our work and its ethical basis were the bedrock; where we offered a major and positive impact on the businesses and financial lives of our clients. To do that we needed bright and talented people to join us. Thankfully they did, and I’ve lost count of the number of accounting technicians, chartered and certified accountants who have trained and qualified with us. We also wanted our firm to be an open, warm, friendly place with everyone supportive of their colleagues and willing and able to push themselves to achieve more than they thought they could…
I’m very grateful to our current team and past employees, my current and past partners Jon, Bernice, Val and Peter and of course our clients for making this such a wonderful place to pass most of my working life. I’m confident that the success and growth of the firm will continue.
As to my future, I’ll be working with my wife in developing our smallholding and I’ll now have more time to design, build and use the radio and electronic gear that has always fascinated me. There’ll be long walks (the South Downs Way first, probably); travelling, wildlife watching, reading and perhaps writing. But you can be sure that I’ll be carefully avoiding any contact with anything to do with accounting and tax. It’s been fun, but enough is enough.
