Late payment regulations need beefing up

late payment penalty?In April this year I reported on the scepticism with which SMEs had greeted the appointment of a Small Business Commissioner to help SMEs to deal with larger businesses’ late and unfair payment practices.

Paul Uppal was appointed in December 2017 and ran his own small business for 20 years. In interviews since, he has reportedly said he hoped the problem can be solved by “cultural change rather than legislation”.

But in any case, Mr Uppal’s powers are limited to taking information from SMEs, investigating and helping them through a complaints procedure. Changing behaviour and holding to account larger business and especially public bodies this is not.

He said he will name and shame persistent late payers.  I don’t think he has offenders quaking in their boots! Indeed, given the practices they condone in their firms, or turn a blind eye to, I don’t believe ‘shame’ is something executives worry about. The new badge of honour is having the hide of a rhinoceros.

Mr Uppal’s appointment was the second of two measures introduced by the Government to tackle the problem of late payment.

Previously, from April 2017, it introduced a legal requirement on large businesses to report via a publicly available Government website on a half-yearly basis on their payment practices, policies and performance for financial years beginning on or after 6 April 2017. Failure to report or reporting misleading information has been made a criminal offence punishable by a fine.

The legislation covers businesses above a threshold of:

* £36 million annual turnover

* £18 million balance sheet total

* 250 employees

By December 2017 only 29% of larger businesses that had reported had paid invoices within 30 days on average.

So much for the shaming strategy.

Stronger penalties on late payment are needed

The calls for tougher action are growing stronger.

A report by YouGov has revealed that legislation that would force payment of bills within 45 days is strongly supported by 61% of British companies with fewer than 250 staff.

The FSB (Federation of Small Businesses) has estimated that 50,000 SMEs each year close because of late payments and that public bodies are among the worst offenders, with 89% of suppliers to government reporting that they had been paid late.

From my work with SME owners, I am well aware that waiting for up to 120 days for payment by a larger customer can play havoc with your cash flow and can push you into insolvency if you aren’t brutal with agreeing and enforcing appropriate terms for payment of your invoices.

It is a difficult balance to strike, payment terms versus your relationship with important customers. Managing the relationship involves making sure that your terms are followed. You can be sure they will demand theirs.

While tougher regulation might enforce a maximum time for paying invoices, together with meaningful penalties for failure to comply, I would argue that you need to establish payment terms up front and then make sure they are observed.

What is business anthropology and how useful is it?

business anthropology and the evolution of human behaviourAnthropology is the study of humans and human behaviour and societies in the past and present and business anthropology applies the same methodology to the business world.

It can therefore focus on a wide range of business behaviours, including management, operations, marketing, consumer behaviour, organizational culture, human resources management and international business.

If you read my blogs regularly you will know I am a firm advocate of knowing, understanding and monitoring every part of your business, from operations and processes to cash flow and profitability and of regularly reviewing your management accounts.

These are all very practical and crucial aspects of a business’ performance, but I would argue that no business can hope to sustain its success and profitability without also understanding the human beings with whom it engages.

So how and where is business anthropology most useful?

Understanding the interactions and likely behaviour of the human beings with whom your business is involved is important to many aspects of a business if you want to increase profitability and grow.

It can be especially important if you have identified a problem that needs to be addressed.

Employee engagement is crucial to sustaining and improving productivity, whether it is in developing new and more efficient processes or simply increasing sales. Issuing instructions is not enough.  Productivity initiatives are unlikely to yield results unless people are well-motivated and feel valued and it is therefore important to understand what matters to them and what is likely to motivate them. This is where business anthropology can be a useful tool.

Another aspect of business anthropology that can add to your insights is how the workforce communicates with each other and with external stakeholders such as customers; essentially this is its corporate culture.

Crucially, your behaviour as a leader and that of your managers defines the workplace environment and over time embeds the business culture. But if you want everyone to buy in to the business’ vision and culture you need to understand how to “press the right buttons” and again business anthropology can bring insights into this.

Knowing the causes of and how to manage performance and stress alongside profiling staff and customers to understand how they are likely to react can be helped by using business anthropology’s insights to improve the success of growth and productivity plans.

And finally, in an increasingly global culture where it is likely that once the UK has left the EU businesses will have to redouble their efforts to build trading relationships with many other countries the insights found in business anthropology can help to understand and apply the conventions found in other cultures and countries.

Are we being naïve about the powers of technology?

stormclouds over the power of technologyThere is no doubt that using various IT systems offers scope for huge time savings and efficiencies but at what cost and how do you cope with the expectations of technology that many companies and users are not familiar with, not least about its performance and reliability?

There seems to be an ever-growing list of IT failures and meltdowns. They include the problems TSB has had in installing its new system, which locked people out of their bank accounts, made several thousands vulnerable to their accounts being hacked and money stolen and, it seems, have still not been completely resolved eight weeks later.

Then the VISA payment system failed for a day, making it impossible for customers to pay for purchases in countless shops.  The London Stock Exchange recently had to open an hour late “due to a technical issue” and, as I recently reported the Government’s business rates appeal website has been castigated by SMEs as being less than user-friendly. Those are just examples from this year.

It is not uncommon for Government-commissioned websites to go way over budget or to be delayed, such as the roll-out of Making Tax Digital, parts of which will not now be implemented for several more years.

Yet we are constantly being advised, or even pushed, into using technology and in many cases businesses cannot function without it.

How much should SMEs rely on the powers of technology?

It is all very well for banks to be closing rural branches and encouraging everyone to bank online, but this can be frustrating, time consuming and therefore costly for the rurally-based SME in a location where the broadband service is less than reliable.

Indeed, the FCA has just revealed research findings that consumers in rural areas of the UK are far less likely to use their smartphones for banking than their urban counterparts, largely due to patchy mobile and broadband coverage.

In a recent Guardian Article James Bridle argues that “We have come to believe that everything is computable and can be resolved by the application of new technologies” about which he says we understand less and less.

He cites the example of the Cloud, which we use for working in and for storing often crucial business information.

As he says: “the cloud is not some magical faraway place” but actually a “physical infrastructure consisting of phone lines, fibre optics, satellites, cables on the ocean floor, and vast warehouses filled with computers”.

Any physical infrastructure is likely to have vulnerabilities and weaknesses, and this is something that you should take into account when developing IT systems for your business.

Essentially this means that wherever possible you should get the best possible advice when choosing any system to install, taking into account your location and the reliability of the infrastructure.

You should ask questions about its capabilities, and above all you should both understand the limitations of the powers of technology and should always have data back-ups, whether it be paper records or external and locally-based hard drives to avoid your business being unable to function in case of a failure.

You should also have fall-backs if the system is down but I shall deal with business continuity in another blog.

Ultimately the powers of technology are huge but exploiting them requires vision, reorganisation, planning, training and considerable investment.

The pros and cons of setting up business in the countryside

business in the countrysideThere are undoubtedly challenges to setting up business in the countryside but in this blog, I will argue that there are also benefits.

Obviously, for some businesses, such as those related to agriculture, leisure and tourism, a rural location is essential for access to customers, but it is taking a somewhat narrow view in an ever-more connected world to discount the possibility of moving out or setting up away from an urban location.

There are plenty of examples of all types of business, from digital media companies to engineering, already to be found in rural areas.

The drawbacks to setting up business in the countryside

High on the list of drawbacks are the adequacy or otherwise of the IT and transport infrastructures and the availability of employees.

For a business that relies heavily on IT and a decent broadband speed with uninterrupted access can be a problem. In theory, however, this is a problem that is already being addressed by the Government’s Broadband Delivery UK scheme albeit not quickly enough to suit some businesses.

The transport infrastructure may be more of an issue if your business needs access to a decent road system for the delivery of either goods or services, especially if you need access for HGVs, or to be sure that employees can get to work on time.

It is worth investigating the likelihood of planned work on roads with the local authority when considering a rural location.

Employees are also key, especially if you are moving location. While some people might be happy to move most are likely to need cars to get to work. The other issue is recruitment which can be a critical factor if you need skilled staff since they may not be locally available.

Amenities may be another issue, as rural areas experience a diminishing supply of local bank branches, post offices and village shops.

The benefits to setting up business in the countryside

A rural location does not have to be somewhere deep in the heart of a green landscape, although there are plenty of farms that have converted redundant barns into small business centres, if that appeals.

Scattered throughout the UK are plenty of small towns, many of which have industrial estates on their outskirts. It is quite possible that setting up your business on one of these will mean that in addition to a potentially more reliable IT and transport service, there will also be opportunities for collaboration with other, neighbouring businesses.

Equally, the cost savings may be considerable, not least on business rates, and it is often easier to access business support grants and other funding specifically directed at business in the countryside.

Recruitment and staff retention may also be easier as more and more housing estates are developed in smaller towns and those living on them may appreciate the opportunity to use their professional qualifications and skills to work locally rather than face a lengthy daily commute to an urban centre.

If you are thinking of setting up a business in the countryside it is also worth investigating the local crime figures. On the whole, it is still the case that the figures are lower outside of the urban areas but check with the local police for any schemes that that focus on protecting businesses.

There may be challenges to setting up a business in the countryside, but it is a mistake to discount the option without proper investigation.

The pros and cons of team building activities for SMEs

team building activities or socialising?There is considerable disagreement about the effectiveness of company team building activities, especially those that involve away-days for things like paintballing, go-karting, white water rafting and the like.

The question is whether team building activities away from the office will make a noticeable difference to your productivity, rather than simply to the bottom line of the businesses that offer such facilities.

According to Forbes Magazine, Kate Mercer, author of A Buzz in the Building: How to Build and Lead a Brilliant Organisation and a co-founder of the Leaders Lab consultancy, warns that such activities can actually damage your workplace because it takes a great deal of skill to bring out the learning points and to transfer them back to the workplace.

Not only that, she says, they can make some employees feel embarrassed and others feel patronised and too often they confuse socialising with actual team building activities.

Such exercises can also be expensive, particularly for a small business, and the American researcher Kenneth Stålsett argues in his doctoral thesis that while they may be fun – for some – they rarely alter established ties between colleagues or enhance communication and collaboration skills back in the workplace after the event.

Stålsett argues that team building should be tailored to the unique challenges that exist within each group, or business, and that team building should be a recurring exercise.

Do SMEs need team building activities?

There is a distinction between social and team-building events. During the planning, you need to be clear about the purpose and outcomes you want.

Of course, you want your business to function as efficiently and effectively as possible and therefore you want your employees to work well together.

This can be particularly crucial for an SME in today’s fast-paced economic environment where it is important to get new employees to fit in and become productive as quickly as possible.

There is no denying that your business productivity can benefit from a co-operative and well-knit team of employees and it is therefore important to encourage this.

This means your business environment needs to be comfortable, positive and welcoming, in the sense that everyone’s contribution is valued and where people are stimulated, challenged and recognised for doing their best.

Your team building activities need careful thought and design to encourage people to respect, trust and co-operate with each other and should be part of an ongoing process of building trust and reinforcing goals to ensure everybody is heading in the same direction and has a shared set of values.

So yes, your team building activities are important, but they are about a continuous process, not about expensive away-days.

Those should be seen as enjoyable social activities, perhaps as a reward or thank you for employees’ exceptional efforts. They should definitely not be compulsory.

How should SMEs approach their marketing post-GDPR?

guerilla marketing post-GDPRMany SMEs issued emails to the contacts on their lists asking them whether they still wished to receive their marketing post-GDPR.

It has been suggested that many of these businesses were already GDPR compliant and such action may not have been necessary. The estimated the opt-in rate in response to requests has been approximately 10%, drastically cutting business contact lists if those who haven’t opted-in are removed.

However, rather than see this outcome as a disaster or as signalling the death of e-mail and digital marketing, it could be argued that it is a timely reminder that your marketing activity needs to be reviewed. I would argue that it should be regularly monitored, scrutinised and refreshed.

After all, as one small business recently told me, having a lengthy list of customers going back ten years or more is not in itself valuable if a proportion of them have neither communicated nor bought anything for years!

The beefing up of privacy regulations, therefore, can be seen as a prompt to review your marketing goals, tactics and strategies post-GDPR and there are a number of things you should do in response.

Obviously, you should have clear policies on privacy and these should be easily available for your customers to read on websites or as hard copy, as well as being mentioned on website contact forms and pages.

You should also review which of your staff have access to online platforms, such as Facebook, Twitter, Instagram and so on, that the business uses, ensure that they know exactly what they can and can’t say in line with both GDPR and company policy. They should also be aware that they may face disciplinary proceedings if they do anything that could damage the company’s reputation and most importantly they should be given adequate training to do it correctly.

Innovative and targeted marketing post-GDPR

But the change also means you may need to be more detailed and specific about the post-GDPR marketing in several other ways.

Firstly, you should look again at and refine the data you hold for your customers.  To effectively target the right potential customers or clients, data is key to the effective and economical use of marketing initiatives, but you should not hold inappropriate or unnecessary personal information.

If you monitor customer behaviour as a means of identifying key characteristics, as many e-commerce businesses do, you should ensure it is done in a way that is compliant with privacy regulations and does not constitute “spying” such as profiling or analysing without permission.

Secondly, as ever, the marketing goals post-GDPR need to be tightly defined and their effectiveness monitored whether they are about raising the business’ profile, encouraging trust or name recognition or for a specific initiative.

This means that any marketing activity, from emails to social media messages needs to be carefully and perhaps more tightly written.

It may also be worth exploring new marketing forms such as nudge marketing and guerrilla marketing.

Nudge marketing, first defined by Richard Thaler, is a technique for encouraging people to make decisions that are in their interests (as well as those of your business). A good example was the UK Government drive to encourage people to save for a pension. It introduced auto enrolment, which was compulsory on employers.

Employees had to actively opt-out and make their own provision if they did not want to be in the employer’s scheme.  The result was that the numbers of those saving for pensions increased significantly.

Guerrilla marketing uses low-cost and unconventional tactics, such as a flash mob, using stencil graffiti, stickers, or, as in one successful mobile phone campaign 2002, using actors who appeared to be just part of the general crowd and asked strangers to take a photo of them. During the interaction, the actors would rave about their cool new phone.  The point is to create a buzz, to be memorable and to get people talking in a way that spreads organically.

It may be that in the process of refreshing or redefining your marketing plan post-GDPR you will also find that some traditional forms of marketing, such as an actual letter to named customers advising them of a new initiative or offer that is time-limited, will also see a revival.

You should be mindful that marketing strategy and techniques never stand still and are constantly evolving and are only limited by the imagination.

As for how to deal with those who haven’t opted-in, it may be worth going through the list in detail to see if you have a ‘legitimate reason’ for keeping certain contacts. There is a huge difference between those on your database who made enquiries or were customers and those who were ‘scraped’ from a list. For B2B businesses you might consider that business emails are OK while personal ones should be removed. You might also send a more tailored email before simply deleting them.

Lawyers most likely will advise you to remove everyone who hasn’t opted in but this is understandable given that the new regulations haven’t been tested in court and they are right to be cautious. Whatever you do, you should log your decision and the reasoning behind it.

Happy marketing

HMRC consulting on closing another tax avoidance loophole

tax avoidanceThe drive to maximise tax revenue continues with another consultation document of very limited duration.

Launched in April with consultations due to end this coming Friday HM Revenue and Customs (HMRC) has this time turned its attention to “arrangements entered into by UK individuals and traders that aim to place profits proper to the UK outside the scope of UK taxation” also known as Profit fragmentation.

The consultation, announced in the Autumn 2017 budget, is the first step to drafting new legislation, aimed at dealing with individuals and smaller enterprises who are deemed to be deliberately allocating excess profits to an overseas entity from which they, or someone else connected to them, can benefit.

Examples are described in the consultation document as service providers, such as an entertainer, asset manager or specialist producer of high value items. One such example cited is a management consultant resident in the UK and providing their services in the UK and overseas, where a proportion of the fees are paid in the UK but the rest is paid directly by customers to an offshore company.

The argument made by users of such arrangements is that the offshore company has no assets apart from access to the skills of the consultant who is exercising their skill from the UK.

HMRC argues that all the income comes from a single underlying activity operating solely from the UK and that therefore it should all be taxed in the UK as the consultant’s profits.

It emphasises that any proposed legislation should be properly targeted and not “weigh inappropriately” on those UK businesses that do pay all their tax in the UK.

It admits that there is existing legislation to tackle at least some of this issue and that the legislation, such as the transfer pricing and Diverted Profits Tax, contains specific exclusions for SMEs. It also admits that it can be difficult to identify persons using such arrangements.

It proposes that the legislation should include a legal requirement for people using such arrangements to notify HMRC. It calculates that it will affect “8-10,000 wealthy individuals who control a small number of businesses” and increase tax receipts by up to £50 million.

Assuming that such legislation is adopted it will be announced in the budget this autumn and is expected to commence from April 2019.

While maximising the tax revenue is perhaps a laudable aim I have to question whether the acknowledged difficulties of obtaining the detailed information required from offshore entities, as HMRC mentions in the consultation, for a relatively small number of targets and potential revenue is the best use of HMRC’s limited resources.

As with the HMRC consultation to prevent directors using insolvency to “game the tax collection system” that I covered in my blog of May 15 the question is whether these two consultations are straw clutching exercises resulting from pressure on HMRC by the Government.

 

K2 Key Indicator: is the UK construction industry in terminal decline?

construction industry at workThere is no doubt that the UK’s construction industry is facing a number of pressures including a lack of funding, inadequate planning approval processes and a severe skills shortage.

In this first of a monthly Key Indicator series that looks at major industries and their future, this month I look at the construction industry.

In the November 2017 Budget, the Government set a target to build 300,000 new homes per year to address the country’s chronic housing shortage. This has been estimated by the lender Urban Exposure as requiring £20 billion-plus of new funding.

In January this year, the Government launched a new national housing agency, Homes England, in order to help achieve this target. Its aim is to bring together existing planning expertise and new land buying powers.

Financing new housing development

There is a distinction to be made between the smaller house-building companies (those building 100-150 homes per year) and the relatively small number of large concerns.

Despite the controversial profits made by some larger house builders from the Help-to-Buy scheme, the House Builders Federation (HBF) estimated that between 2007 and 2009 after the 2008 Financial Crash one third of smaller companies stopped building homes. This equated to a loss of 25,000 homes per year being built.

Since then, of course, a combination of massive losses post-2008, consequent risk aversion and the tighter Basel 3 regulations on bank lending to what are termed High-Volatility Commercial Real Estate Loans (HVCRE Loans) has made borrowing by developers much more difficult.  Basel 3 means that banks are now required to set aside 18% of capital as a buffer for these loans compared to buy to let property loans of just 4%.

Consequently, lending to developers by the big banks, particularly to the smaller construction companies, who cannot access the bond markets direct, has plummeted. In 2016, CityAM reported that UK banks had halved their lending to property developers, down from £32.5bn in April 2014 to £14.9bn in April 2016.

The lending policies are clearly daft given that Loan-To-Value (LTV) on development property is typically 60% whereas the LTV on buy-to-let can be 95%

This has led to the growth of specialist property lenders such as Shawcross, Close Brothers and Paragon, the first two of which won top awards in this year’s online publication Moneyfacts awards. None of these specialist lenders has incurred any losses for some years which begs the question about the banks’ understanding of the market.

As yet, however, these specialist lenders, along with newer entrants such as HCA, Titlestone and Urban exposure, have not filled the funding gap.

In the meantime, according to a Reuters report on a survey mid-2017, the directors of small British construction businesses have been plugging the funding gap with their own resources but this has been limited and not at the amounts required, hence a significant scaling back by small builders.

Still, UK Finance reported in February 2018 that while, manufacturers’ borrowing had expanded slightly, the construction and property-related sectors had contracted.

Meanwhile despite the 300,000 target and the new Government agency, the Government continues to push its Help-to-Buy scheme that has improved the profits for larger firms by pushing up house prices due to limited supply.

The construction industry, planning, Brexit and the skills shortage

It would be impossible to fairly assess the future of the UK construction industry without considering planning, Brexit and the industry’s skills shortage. I make no apologies for calling it a crisis, not least because that is what the Federation of Master Builders (FMB) called it earlier this year.

This was after its quarterly survey into skills revealed that companies are particularly struggling to recruit bricklayers and carpenters, but that demand for skilled plumbers, electricians and plasterers is also outstripping supply.

This is also pushing up wages, thus adding to the costs being borne particularly by the smaller businesses many of which are losing staff to larger firms.

It has been estimated that one in five construction workers in the housebuilding sectors is foreign-born with 17.7% from EU countries. Across the country, Romania is by far the most common country of origin, followed by Poland, Lithuania and Ireland.

There has been plenty of evidence that EU nationals including construction workers have been leaving the UK in large numbers, while fewer have been coming since the June 2016 decision to leave the EU.

A combination of rising hostility towards migrant workers, the tediously lengthy and uncertain process of agreeing the status of migrant labour during the Brexit negotiations and more recently the revelations by the Home Office of a “hostile environment” for immigrants despite them having lived and worked in the UK for years are not helping the UK plug its construction skills gap.

Planning consent has been for some time an issue causing delay by depleted departments drowning in applications and appeals. This along with the system of local and regional planning committees staffed by inexperienced councillors dealing with NIMBY local inhabitants and the lack of local and regional frameworks to identify land for housebuilding are all contributing to a sclerosis in the planning system.

Myopia and an absence of joined-up thinking seem, sadly, to have been the characteristic features of Governments for some time and despite the rhetoric it continues, which bodes ill for the future of the construction industry.

I am not however yet willing to drive the final nail into the industry coffin.  There is a chorus of voices from many sectors of UK industry warning against the foolishness that characterises much of the Brexit negotiating stance, and the volume of noise is rising as the consequences emerge.

Being an optimist, I hope that they will be listened to and sanity will prevail before it is too late.

SMEs demand fair treatment from their High Street Banks

High Street banks sharkEver since the eruption of the 2008 Financial Crisis there has been a seemingly never-ending series of revelations about the way the big banks have treated their SME customers.

Perhaps the most high-profile of these has been RBS (Royal Bank of Scotland) and the devastation it has allegedly wreaked on approximately 16,000 small businesses through GRG, its so-called restructuring division.

Its behaviour was first highlighted in 2013 by the Government’s then business advisor Lawrence Tomlinson, suggesting that GRG applied higher interest rates, extorted high interest rate swaps, pressured customers to sell assets to repay loans, took equity stakes in businesses and pushed them into administration and in some instances bought their former client from their appointed administrator.

Eventually, after considerable lobbying, the situation was investigated by the Financial Conduct Authority (FCA), which published a summary of its findings earlier this year, although it took pressure from the Treasury Select Committee to get it published in full. RBS had a lot of dirty laundry that they wanted to hide from their clients.

However, RBS was only the most high-profile of such scandals, with HBOS, since acquired by Lloyds, also being exposed for its treatment of SMEs. HBOS Reading between 2003 and 2007, referred distressed clients to Quayside Corporate Services, a consultancy that in collusion with the bank plundered the clients’ assets. In this case, six people including bank managers have been jailed for fraud.

Lloyds seems to have done a good job with affected clients, either settling claims or at least managing its PR. RBS, however, has been publicly criticised for its poor progress in compensating the small business owners mistreated by GRG.

The UK’s future economy will depend on SMEs being able to trust their High Street Banks

It should be no surprise, therefore, in the light of such scandals and given the regular reports of the big banks’ inadequate support for their clients in difficulties and their lack of lending to SMEs, that trust among small firms in banks has been undermined and has resulted in SMEs feeling exploited.

Nor should it be surprising that many SMEs are not seeking finance from banks, and if they are seeking finance they are turning to alternative finance providers to fund their growth plans.

Indeed, the FCA’s report into GRG recommended that the turnaround units in all banks should be reviewed, as well as how banks interact with insolvency practitioners who generally act as their advisers when dealing with clients in difficulties. It also recommended enforceable standards of conduct for turnaround units.

There have been calls from the All Parliamentary Group on Fair Business Banking (APPG) for tougher action to protect SMEs from bullying by banks.

The Treasury Select Committee has also launched an inquiry into the whole issue of finance for SMEs, which will consider banks’ duties when dealing with SMEs as well as avenues for dispute resolution and redress.

It has taken 10 years to get to this point.  How many more years will it take before SMEs, the backbone of the UK economy, see effective, concrete action? And how many more for them to trust their bank?

Given the UK economy’s reliance on SMEs, when will banks support them and treat them fairly?

SMEs need help to navigate the business rates system

the potential effects of business rates?Retailers are the most high-profile sector of SMEs that are struggling with business rates and the appeals system following the April 2017 revaluation that came into force last month.

But it is not only the small retailers that are facing challenges.

SMEs’ problems have been repeatedly raised by the Federation of Small Businesses (FSB) and the British Retail Consortium (BRC) both of which have highlighted two issues.

These are the disproportionate business rates rises on smaller businesses compared with larger ones, and a new, revamped appeals system that the FSB in particular has criticised as seemingly “designed to be hostile” to companies.

National FSB chairman Mike Cherry has described the appeals system as bureaucratic and beset by glitches, while offering no in-person support, no phoneline or live chat options and involving a time consuming and opaque process for uploading supporting material when making an appeal.

Why am I not surprised that yet another Government-inspired online system is proving not fit for purpose?  Excessive reliance on digital systems is something to which I shall return in a forthcoming blog.

According to the Government’s guidance on business rates relief SMEs are eligible for relief if their business property’s rateable value is less than £15,000. Those whose property’s rateable value is less than £12,000 are exempt from business rates. There are also transitional reliefs if SMEs’ revaluations took them out of exemption with a cap on bills so that their monthly payments would not increase by more than £50.

However, it seems that 71% of companies are “very dissatisfied” with the Valuation Office appeals process and that appeals had plummeted by as much as 99% between April and December 2017, according to a report in the Daily Telegraph.

On top of this a £500 fine was introduced for any business that was found to have appealed wrongly.

In April the then Communities Minister, Sajid Javid, announced an independent review of the way the business rates system operates. The review is to be led by former Director General for Public Services at Her Majesty’s Treasury, Andrew Hudson. Who had also previously held the position of chief executive of the Valuation Office Agency, as well as having worked in local government. Business rates are collected on the Government’s behalf by local authorities.

Of course, Javid has since relocated to the Home Office, and, so far, there has been no further information on the review.

It is often said that SMEs are the backbone of the UK economy, and according to FSB and BRC figures they inhabit approximately 1 million of the 1.7 million business premises in the UK on which the tax is payable.

If the economy is to survive the still unknown outcomes of Brexit in anything like reasonable shape it will be relying on these SMEs to preserve jobs, to grow and expand.

This means they need a system of fair taxation, a robust and user-friendly rates appeal system and the minimum of red tape and bureaucracy to have a fighting chance of doing more than simply surviving.