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BUSINESS REVIEW FEBRUARY 2020

CBI LOOKS TO THE FUTURE

The Confederation of British Industry (CBI) has said it’s now time to focus on the future as the country looks to forge a new relationship with Europe.

On the stroke of 11pm on Friday 31 January, the UK brought down the final curtain on 47 years of EU membership. However, while Brexit day certainly had huge political symbolism and marked a momentous point in the UK’s history, the CBI believes the real work is only just beginning.

The UK has now entered an 11-month transition period during which it will attempt to forge new relationships with nations around the world, as well as negotiating a trade deal that will determine future arrangements with the EU. And the CBI has called on politicians to maintain strong links with Europe.

CBI Director-General, Carolyn Fairbairn commented: “Today the UK leaves the EU, but our future prosperity remains connected. Despite the challenges of the last three years, together we have made progress. No deal has been avoided and a year of status quo gives time to shape that new relationship. Now the real work begins. It’s time to focus on the future and build a new relationship with Europe. This can reflect our shared values and mutual interest and support bold global trade ambitions.”

SMALL BUSINESS OPTIMISM

A survey conducted by Vistaprint has found that small business owners are overwhelmingly optimistic about their prospects in 2020.

The study of 500 UK entrepreneurs sought to gauge small business owners’ feelings about 2020, their main goals for the year and what marketing strategies they intend to use to achieve them. And, overall, the results were extremely positive with respondents most likely to say they feel ‘confident’, ‘optimistic’ and
‘prepared’ for 2020.

In addition, 86% of business owners said they were confident about achieving their main business goal this year. The top two goals business owners are striving to achieve were found to be increasing revenue and reaching new customers.

However, while the survey did highlight a sense of optimism amongst the small business community, a significant minority of entrepreneurs said simply surviving the year was their main aim. A quarter admitted they see 2020 as being a ‘struggle’.

The research also sought to identify key marketing channels for small businesses and, perhaps unsurprisingly, word-of-mouth was the one most commonly suggested. Indeed, nearly half of respondents said this would be their principal form of marketing in 2020, with a quarter relying on social media and one in ten on email marketing.

 

MTD FOR VAT CONCERNS

A study has found that the implementation of Making Tax Digital for VAT (MTD for VAT) has proved more costly than initially envisaged and also failed to reduce errors.

The survey of 1,091 businesses and agents with an interest in MTD was conducted by the Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians (ATT). The findings largely contradict government claims regarding the benefits of digital tax reporting.

For instance, in terms of costs, while HMRC has suggested an average transition cost of just £109 per VAT-registered business, less than 10% of survey respondents said this was actually the case. Indeed, 45% of those questioned estimated costs to be between £109 and £500, while 12% said they were over £5,000.

Almost 90% of businesses also said the scheme had not reduced errors. In addition, only 14% said their organisations had witnessed an increase in productivity as a result of MTD for VAT, while 55% of respondents said that productivity had decreased.

Overall, the CIOT and ATT believe the results confirm that the MTD project has so far failed to deliver its stated goals. The two organisations have called for a thorough review and further consultation before HMRC goes ahead with plans to roll out digital reporting obligations more widely. 

JACK’S LAW

New employment reforms are set to provide working parents who suffer the devastating loss of a child with the legal right to a minimum two weeks’ paid bereavement leave.

The Parental Bereavement Leave and Pay Regulations will be known as Jack’s Law in memory of Jack Herd whose mother Lucy has campaigned tirelessly on this issue for the past ten years. Under the proposed measures, all employed parents who lose a child under 18-years-old, or suffer a stillbirth from 24 weeks of pregnancy, will
be entitled to statutory paid leave, irrespective of how long they have been with their current employer.

Parents will be allowed to take the leave as either a single block of two weeks or as two separate blocks of one week taken at different times in the year after their child’s death. The new regulations are expected to come into force this April with estimates suggesting they will provide support to around 10,000 parents each year.

Commenting on the new legal right, CBI Director of People & Skills Policy, Matthew Percival said: “The loss of any child is unimaginably difficult. Offering this flexibility to bereaved parents is something businesses absolutely welcome. Giving time for families to grieve without the worry of what’s going on at work
is fundamental.”

Other News

UK START-UPS AT RECORD HIGH

Analysis by the Centre for Entrepreneurs shows a record 681,704 new businesses were formed in the UK during 2019, a 2.8% increase from the previous year. Over 45,000 of these businesses were tech start-ups, which equates to nearly 7% of all new firms. Companies were launched across a broad range of industries, however, with 429 driving schools established last year, as well as 10 new businesses raising llamas and alpacas.

TOP ‘ENTREPRENEURIAL’ UNIVERSITY

A study commissioned by Hitachi Capital Invoice Finance has revealed the best university for would-be entrepreneurs. The research ranked UK universities according to the proportion of former students who had started or were managing a business. And the University of the Arts London topped the table with one in five of the institution’s graduates becoming business leaders and almost one in ten starting their own business.

SMES MISSING OUT ON INTEREST

According to research by Shawbrook Bank, small and medium-sized firms will collectively miss out on £4.2bn in interest this year after accumulating £86bn of dormant cash in accounts paying little or no interest. While the Bank acknowledges firms need to keep some cash within easy reach, the analysis highlights how holding too much money in low or zero-interest accounts can adversely impact a firm’s finances.

QUIRKY QUOTE:

Almost everything will work again if you unplug it for a few minutes…Including you. – Anne Lamott

If any article in this market update has an effect on your finances and you would like professional advice, then please get in touch.

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