Business Support

Companies House have issued an update on their first implementation of changes brought about by The Economic Crime and Corporate Transparency Act. We have copied in the relevant comments made in a recent blog post.

Companies House are aiming to introduce the first set of changes on 4 March 2024. The introduction of these changes needs secondary legislation and so this date is still dependent on parliamentary timetables. It will not be earlier than 4 March 2024.

The changes include:

• greater powers to query information and request supporting evidence;
• stronger checks on company names;
• new rules for registered office addresses;
• a requirement for all companies to supply a registered email address;
• a requirement for all companies to confirm they are forming the company for a lawful purpose when they incorporate, and to confirm its intended future activities will be lawful on their confirmation statement;
• the ability to annotate the register when information appears confusing or misleading;
• taking steps to clean up the register, using data matching to identify and remove inaccurate information; and
• sharing data with other government departments and law enforcement agencies.

Three items that will need your consideration before 4 March 2024 are:

1. If you are still using a PO Box address as your registered office, you will need to change this. You can still use a third-party agent’s address if they meet the conditions for an appropriate address.
2. From 4 March 2024, there will be a new requirement for all companies to give a registered email address to Companies House. This email address will not be published on the public register. From 4 March 2024, new companies will need to give a registered email address when they incorporate. Existing companies will need to give a registered email address when they file their next confirmation statement with a statement date from 5 March 2024. Companies House online services will prompt you to supply a registered email address when you file your next eligible confirmation statement.
3. When you incorporate a company from 4 March 2024, the subscribers (shareholders) will need to confirm they are forming the company for a lawful purpose. You will also need to confirm the company’s intended future activities are lawful on the confirmation statement. The intention of these new statements is to make it clear that all companies on the register, new and existing, have a duty to operate in a lawful way. Companies House may act against your company if they receive information that confirms you are not operating lawfully.

Leaving aside tax planning issues all businesses should be considering business planning opportunities if they presently have an accounting year end date of 31 March 2024.

For example:

• Do directors need to review year end bonuses or final dividends?
• Have capital expenditure budgets been considered? Should large investments in acquisition of new assets be completed before or after 31 March? What are the tax implications?
• Based on recent management accounts, what changes can be made in the final months of your trading year to improve liquidity, profitability and solvency?
• Start considering now how you will approach your bankers or business funders for continuing support next year. Are current challenges likely to result in a cashflow difficulties?

We have two months to consider your planning options. Once the 31 March 2024 Rubicon is passed, many planning options will disappear.

Many firms have a 31 March year end, but this heads up to have a pre-yearend review apply to all businesses, whatever their accounting date.

There are enough negative economic challenges at present and making the most of planning options before the end of your trading year makes sense.

Please call so we can organise a planning session with you.

Industry leaders have welcomed the Government’s new Critical Imports and Supply Chain Strategy, safeguarding UK supplies of critical goods such as medicines, minerals and semiconductors.

In a press release issued 17 January 2024, The Department for Business and Trade said:

“More than 100 top UK firms, including pharmaceutical and manufacturing leaders and business representative bodies like the Association of the British Pharmaceutical Industry (ABPI), the Society of Motor Manufacturers and Traders (SMMT) and the Critical Minerals Association have contributed to the strategy to ensure it helps develop resilient and secure supply chains that protect both their business and the consumers who rely on them.”

This issue has taken on critical importance now shipping is disrupted in the Red Sea.

Ross Baker, Chief Commercial Officer, Heathrow said:

“Heathrow connects the UK to 95% of the world’s economy and facilitates imports of the high value, time-critical goods that British industries like pharmaceuticals, manufacturing and technology rely on. We welcome Government initiatives that make doing business in the UK easier and more efficient, from shoring up supply chains to streamlining cargo processes at the airport, so Heathrow can meet growing demand to import and export across the globe.”

UK Chamber of Shipping Commercial and Governance Policy Director, Katrina Ross, said:

“We welcome the UK Government’s focus on critical imports and supply chains through the publishing of this strategy. 95% of UK imports and exports are moved by sea, and our sector’s challenges should be considered as part of the move to build supply chain resilience and to help deliver the UK and global net-zero ambitions.”

The beginning of a new year is an opportune time to undertake basic business planning. One aspect that needs continuous management is to protect your business capital.

The downturn in global trade continues to be affected by the war in Ukraine, the situation in the Middle East and now the disruption to movement of goods in the Red Sea. This is compounded by persistent inflation, high interest rates and consequent increases in costs.

In the face of these challenges what can beleaguered business owners do to protect their capital base and be in a position step back into the ring as and when consumers start to edge out of their front doors and start spending?

Here’s a few ideas for you to think about:

1. List all of your fixed costs, those that you have to pay even if you have no income coming in and cancel as many as you can that can be re-established when markets open up again. Obviously, many will be tied to contracts that cannot be broken. In which case:
2. Contact suppliers, landlords, service providers etc., and see if you can negotiate a moratorium on payments for a period, a reduction in payments or the cancellation of contracts.
3. When this work is done rework your business plan for the next year and speak to your bank or other sources to secure any cash required to meet the likely dips in cash resources.
4. Importantly, start to think about waking up your business when consumer interest in spending starts to increase demand for your goods or services.

And finally, speak to us. There is no substitute for sharing this planning process with your professional adviser. We know your business. We know how you have burned the midnight oil to develop your business and the problems you have overcome along the way. We can, and we want to help. Call now so we can start to consider your options.

The government Valuation Office Agency have issued the following warning to business owners who may have received unprompted approaches by an agent offering to negotiate a reduction in their business rates bill.

The Valuation Office Agency (VOA) is urging businesses to protect themselves from rogue business rates agents.

New rateable values for business properties came into effect in April 2023. Councils used these new values to calculate business rates bills. Businesses can challenge their valuation if they think it’s incorrect. They can use a rating agent do this.

But some rogue agents submit inaccurate information. This could result in penalties or increased rates bills. Be cautious of anyone who guarantees they can secure big business rates reductions.

Gary L Watson, Institute of Revenues, Rating, Valuation Chief Executive, said: 

“We strongly advise businesses do their own research and explore different options before appointing an agent. Make sure you choose your own agent – don’t let an agent choose you."

As Christmas arrives the week before the calendar year-end, many of us will enjoy a week’s shut down and have time to relax and enjoy the break with our family and friends.

The break also gives us time to consider our plans, personal and business, for the coming year.

Readers of this post who have not seriously considered their finances would be well advised to dust off their laptops and evaluate their “what-if” choices for 2024.

• If your present income exceeds your outgoings will that enviable state of affairs continue?
• How will you be affected by continuing upward pressure on prices?
• Is it time to consider creating new income streams?
• If your planned outgoings exceed your planned income, how will you fund the shortfall? From savings, by drifting into debt?
• And don’t forget to include debt repayment in your cashflow forecasts.

We have all experienced tough economic challenges as the effects of the banking crisis, Brexit, COVID and the war in Ukraine have impacted our daily lives. High inflation, high interest rates and a depressed economy are a direct result, and it is not clear if 2024 will see a significant reversal in these trends.

And so, if you get the time, give a little serious thought to your prospects for 2024 over the coming holiday. The scouting maxim, be prepared, comes to mind. Plan for the worst, hope for the best.

There are two ways to consider the effects or benefits of business and personal expenditure.

The payment of rates or utility costs are an essential part of our daily expenditure, but it would be difficult to view them as an investment.

Whereas the cost of building a new online sales platform for your business may open up the prospect to win additional sales for your business or additional income for your family finances. But the costs of the build are a real expense.

Any costs that you undertake that will have a direct impact on improving your financial situation should be considered an investment rather than an expense.

Having made this distinction, it makes sense, when you are considering cost cutting or planning your finances, to protect investment costs and see if you can reduce those costs that are not going to have a direct, positive influence in 2024.

In certain cases, the two distinctions may rub shoulders with each other. For example, investing in solar technology, while not impacting your ability to earn more, may help you reduce your ongoing electricity costs.

If we are to recover from the economic challenges of the past few years, we must address a more considered reclassification of our planned outgoings.

Be wary of reducing investment expenditure.

Other aspects of your expenditure that will also need consideration in this exercise could include:

• Will an investment in a new piece of plant really have a positive impact on your sales or could the expenditure be deferred until trading conditions improve?
• Do you really need to change your car? It may get you from A to B more comfortably, but it will likely use financial resources that may be more profitably employed in improving productivity and sales/income.

Trimming costs or expenditure that will have little impact on your future financial prospects makes sense.

Trimming “investment” costs that could have a positive impact makes less sense.

We recommend that your take this distinction into your planning for 2024. And if you need help creating plans, pick up the phone. We can help.

It’s the directors’ responsibility to file their company’s accounts, and make sure they’re filed on time. It’s important to understand your role and how late filing could affect your company.

Missing your filing deadline could affect your credit score or access to finance. It can affect how others view your company and whether they want to do business with you. There are also financial penalties and legal consequences – you could get a criminal record, a fine or disqualification.

If you employ an accountant to file your company’s accounts, it’s still your responsibility, as director, to make sure they’re filed on time.

Over 65% of companies use software filing as their preferred method.

There are a variety of software providers who offer a range of accounting packages to prepare and file accounts. Most types of accounts can be filed using software, depending on the functionality of the software package you’re using.

If you file using the Companies House online services, you will be sent an email to confirm safe receipt. You will also be sent a further email when your accounts are registered at Companies House.

Company accounts need to be filed nine months after the accounting year end.

Which means before the end of December 2023 you will need to file accounts with a year end of 31 March 2023.

And on or before the 1 January 2024, you will need to pay any Corporation Tax due for the same year, to 31 March 2023.

Most dictionaries define “bottom line” as “the most important thing to consider”.

In financial circles it’s taken to mean a focus on profitability (the last line on a P&L accounts) or net worth (the bottom line of your Balance Sheet) rather than an obsession with sales (the top line on a profit statement).

Sales/turnover is obviously a key element of your business activity and meeting sales targets is usually uppermost in the minds of most small business owners.

However, profits – particularly profits retained in a business – are the cheapest way to maintain and increase net worth and cash flow.

Without retained profits, you will need to increase borrowings or capital introduced to maintain your balance sheet bottom line.

If you succeed in retaining profits this will have an immediate, positive impact on net worth, and eventually, will help you reduce debt (borrowings) and increase cash flow.

A focus on sales should always be accompanied by a keen interest in the bottom line indicators. Most accounts software will make these numbers available at the click of a mouse. If you need help to discover how your account’s software could produce indicators that will help you better manage your business during the present difficult times, please call, we can help.

In some respects, the Chancellor’s predicament is deserving of a sympathetic ear; its as if he has a long journey ahead but has one foot firmly nailed to the floor.

Stagnant growth in the UK and global economy has driven up taxation in order to meet the goals set to reduce borrowing as a percentage of GDP.

Inflation is reducing but is still above the Bank England’s target to have inflation back to 2%. In which case we will likely have high interest rates for some time.

It is difficult to see how tax rates could fall in the short or even medium term without an increase in economic activity. If tax rates were reduced, the fall in revenue would have to be met by more austerity, which in turn, would exaggerate the current cost of living crisis.

Where does this leave UK business owners?

We should probably consider elasticity of demand for products and services delivered. For example, if you sell products or services where demand is high or where there are few or no readily available substitutes for your products, you are likely to meet less resistance to raising your selling prices to pass on your increased costs. In this way you can maintain profitability and cash flow.

Compare this with businesses who sell goods or services where there are lower cost substitutes or where demand can be deferred, for example, a new kitchen. Businesses affected in this way will be less likely to recover increased costs by raising their prices. Profits will fall followed by loss of cash reserves and solvency.

We can help. Call now so that we can consider your options. What is clear, is that unlike our Chancellor, we can make choices and business planning during these uncertain times is a must-do activity.