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Finance General Insolvency

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.

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Banks, Lenders & Investors Business Development & Marketing Finance General Rescue, Restructuring & Recovery Turnaround

Should SMEs stop complaining and just get on with business?

As another large bank, HSBC, is named for helping wealthy clients to evade tax payments, a new poll carried out among 2000 SMEs has revealed that three quarters of those responding felt that big companies put profits before ethical standards.
76% of them also felt that big businesses acted unfairly towards them.
The poll has prompted the FPB (Forum of Private Business) to call for a five-point business ethics plan to protect and promote the UK’s SMEs.
There is likely to be a clamour of complaint and demand in the run-up to the election, not to mention party promises to ditch red tape, make lending to SMEs easier and so on. Do they really care or simply want our vote?
Whether any of this actually happens, whichever party, or parties are elected, remains to be seen.
However, all of this is wearyingly familiar and leads us to question whether it would be wiser for SMEs to just get on with business, sell, keep control of cash flow, spending and growth plans, and not expect politicians to make things better?

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Banks, Lenders & Investors Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

What help was the budget to SMEs?

 

A post-budget vote in Kent by 100 business people revealed that 80% of them were more confident about the prospects for the economy in the South East than at this time last year.

But looked at closely, there was very little in the budget that was likely to make things any easier for the UK’s SMEs, which account for more than half our output and two thirds of all employment.

Admittedly, direct lending from government to UK businesses to promote exports was doubled to £3bn and interest rates on that lending cut by a third and business rate discounts and enhanced capital allowances in enterprise zones were extended for three years. But how many SMEs will benefit from these measures?

Admittedly also, some small builders may benefit from the extension to Help to Buy until 2020 and the “support” for the building of more than 200,000 new homes.

But there was not a word about the review of business rates that had been pressed for by so many businesses, not only High Street Retailers, in the days leading up to the Budget statement, nor about the previously oft-repeated promises to reduce red tape.

Given that the Chancellor himself has conceded that economic recovery is built on very fragile foundations is such an increase in confidence on the part of the businesses of Kent a case of too much too soon?

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Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

Can SMEs afford to bid for public sector contracts?

 

By coincidence on the same day that the British Chambers of Commerce (BCC) announced revised growth forecasts, predicting that the economy would overtake its pre-2008 crisis peak in the second quarter of 2014 rather than in 2016, an SME announced that it was pulling out of further involvement in a valuable contract with the Ministry of Justice (MoJ).

Sara Murray, founder of Aylesbury technology company Buddi, said in an interview with the Daily Telegraph that tendering for the contract to supply software and tags for tracking 24,000 offenders had eaten up nearly two years of the company’s time and cost £2 million to assemble the documentation required for the bid. The paperwork filled 13 large boxes delivered in two taxis.  It was the only SME to win a part of the 4-Lot contract.

Then came further MoJ requests for “thousands of pages of information” to be given to other bidders and requests to share Buddi’s intellectual property with other bidders.  Buddi also had to deal with constantly changing specifications until finally the demand that Buddi would do further development work free of charge. This was the final straw that triggered Ms Murray’s decision to withdraw from the tender process.

In 2005 Buddi was a start-up. When it began working on the bid it had 25 staff. While preparing the tender for this contract with the MoJ it was servicing existing contracts both nationally and internationally and focused on growth. It now employs 40 people.

Ms Murray said the company has tendered for and won work overseas and found their processes far faster and far less complex.  She sits on a number of Government advisory panels and is passionate about getting SMEs working with Government.

Government claims it wants to help SMEs grow, it promises to remove red tape, and it wants more SMEs to work with them. It seems there’s a long way to go.

If the BCC’s prediction is proved accurate, given Buddi’s experience one has to ask whether all this growth will be confined to the “usual big-company suspects”.

Are you aware of SMEs tendering for public sector contracts? Is there one bit of red tape above all others that you would like to see removed?