News in brief: Entrepreneurs Relief, Atom Bank, HR

News in brief
News in brief

Number of business owners using Entrepreneurs Relief jumps 27%

There was a 27% increase in the number of business owners who used Entrepreneurs’ Relief to reduce the tax they paid on the disposal of their businesses last year. This figure rose to 43,000, up from 37,000 the year before, says top ten accountancy firm Moore Stephens.

This represents a new record high in the number of claims for Entrepreneurs’ Relief in a year.

Moore Stephens says that Entrepreneurs’ Relief provides a key incentive for SME owners to grow their businesses. Reducing the tax liability on a business sale increases the potential return and so makes it more worthwhile for entrepreneurs to take on the risks involved in additional investment. This helps boost business and job creation among small businesses in the UK.

Entrepreneurs’ Relief reduces the amount of capital gains tax due on the sale of a business to 10%, down from 28% without the relief, up to a lifetime limit of £10m.

Spanish bank acquires stake in UK’s first digital-only lender, Atom Bank

Members of the UK200Group of independent accountancy and law firms have commented on news that Spanish bank BBVA has acquired a 29.5% stake in the UK's first digital-only lender, Atom Bank.

The chief executive of Atom Bank Mark Mullen told The Times that the company plans to reinvent small business lending through technology. It will achieve this by fully automating applications and approvals, as well as credit decisions.

Tax Partner at UK200Group member firm Whittingham Riddell, Duncan Montgomery, said: "Lending to SMEs is often a rigorous process with local offices saying 'yes' and referring to credit who say 'no', or local offices trying to ensure the customer meets the credit criteria. This is a huge leap forward and as long as there is both an automated system and one with human input running side by side, SMEs will be better served for it."

Jonathan Russell, Partner at UK200Group member firm ReesRussell, added: "Slow and cumbersome' is probably instilling some level of urgency which is not present in the current thinking of the main clearing banks when it comes to small businesses. Whilst there are now many online loan facilities, it will be new to bring it to the business sector to any great degree.”

Breathing Space HR develops strategic programme for SMEs

Leeds-based Breathing Space HR has developed a new strategic HR programme for SMEs called up&up. The programme is a quality cycle for continuous improvement designed to help a small or medium-sized company achieve award-winning performance.

The focus of the programme is on familiar but often intractable issues that Breathing Space HR has observed in almost every SME that they have worked with:

• Sub-optimal productivity

• Unclear or inappropriate goals for individuals

• Low morale and commitment to the business

Up&up starts with a thorough audit of the organisation’s HR processes and practices and then puts in place a bespoke plan based on the five stages. As the organisation moves through them there is a continuous review of performance and early intervention if goals are not being met. Breathing Space claims that what makes up&up different is this rigorous quality cycle that is an integral part of the programme.

Accountants warn SMEs of HMRC’s crack down on tax collections

With the VAT tribunal recently fining a company £70,000 for paying its VAT bill just one day late, accountants James Cowper Kreston says the case should serve as a reminder of HMRC's increasing tough stance on tax collections and the need to keep on top of your VAT payment schedule.

The case involved regional newspaper publisher Trinity Mirror, which was required to make VAT Payments on Account (POA) paying two monthly instalments followed by a third balancing payment. Whilst the company's first two payments and VAT return was submitted on time, their final balancing payment was one day late. The overdue instalment coupled with a default surcharge due to previous late returns meant that Trinity Mirror was fined more than £70,000.

VAT senior manager at James Cowper Kreston, Meera Rajah, comments: "This decision contrasts with other cases where a default surcharge was considered disproportionate and so this remains an area of risk and uncertainty. It is really important that businesses recognise and understand the potential impact of either late submission or late payment.

"It is crucial to remember that, no matter what the size of the company, if your VAT is overdue then it will alert HMRC that your company is potentially insolvent. To avoid such a mishap, it is imperative that you understand the solutions available and keep on top of your VAT returns."

SMEs warned to be vigilant against cyber-attacks in 2016

Small businesses must be more proactive to protect themselves against cyber-attacks and make the issue a core part of their business strategy for 2016. That’s according to the Cyber Streetwise Forum, a group of specialists in business and technology that came together for the first time in London last week to discuss the latest online trends and threats to affect small businesses and consumers.

With more cyber-attacks hitting the headlines than ever before, the pressure from customers and the supply chain for small businesses to keep their data secure is understandably increasing. However the Forum warned that uncertainty around what steps to take in order to boost their online security means that many small business owners ignore the issue until they are forced into action, by either becoming, or knowing, a victim of cyber-crime.

Director of Cyber Security and Information Assurance at the Cabinet Office Matthew Gould says: “We are living in an increasingly digital economy but many people just don’t think about cyber security until it affects them personally. As well as advice specifically targeted to SMEs on Cyber Streetwise, a raft of practical guidance is also available on for businesses of all sizes. If businesses aren’t already signed up to the Cyber Essentials scheme, they should do so.”