Welcome to the AIMS blog, a unique insight into the world of SME's and Accountants. We all like to have our say..so take our word for it - have a look through and feel free to leave us your comment - they're an interesting read.
There are two different types of school. There's an old fashioned school (I am not saying that this is necessarily wrong) which talks about the demise of good spelling and grammar and links this with a problem with modern technology. There are many websites and many blogs discussing this topic.
On the other hand, there is a modern school which says that the most important aspect is the fact that the reader understands. For example, there was a test at Cambridge University which goes as follows:
Aoccdrnig to rseerach at Cmabrigde Uinervtisy, it deosn't mttaer in waht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be at the rghit pclae. The rset can be a total mses and you can sitll raed it wouthit porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Amzanig huh?
PS: Hwo'd yuo lkie to run tihs by yuor sepll ckehcer? "
Perhaps you are wondering how you can read the above so easily?
The point of this line of research is that proficient readers read most words (except very long ones) principally through the first and last letters and a rapid recognition of the general shape and content of the entire word. That's why we typically read misspelled words with no trouble.
I wonder what you think because ultimately it is very important for all our marketing if we understand how the receiver of our marketing messages thinks.
I don't know whether you have noticed that a little change has been introduced about the way VAT is to be charged on stamps/postage. It doesn't affect the day to day stamps you buy at the Post Office. This refers to bulk mailings. From now on VAT is chargeable on bulk mailing costs. This may have no influence on large commercial companies but charities will suffer a lot. Most charities cannot recover VAT and rely a great deal on dynamic marketing to promote their activities and reach out to their supporter base. It cannot be helpful to their activities if their mailing costs suddenly rise by 20%.
I am sure the Government had no intention of harming charities -the big society idea is very much promoted by the Government. I think it is just one of the things which was overlooked and not thought through. However, with good accounting advice there are ways to mitigate this additional tax charge but as with all things it is getting more complicated rather than easier.
Low value consignment relief (no I'm not talking about a contagious disease) is one of the pearls of wisdom of the Government in relation to VAT. Basically, it's a kind of officially sanctioned tax avoidance scheme. Goods with a value of £18 or less from Channel Islands do not attract VAT so businesses can set up mail order operations to do that. How successive Governments failed to prevent the abuse of this scheme escapes me. Shouldn't it be abolished? In fact is there any reason why the Channel Islands should have those massive tax reliefs whilst the rest of us work hard and pay tax?
Nobody is old enough to remember the window tax which was first imposed in 1696! But we can still see the stupid consequences because there are a fair number of bricked up windows in Central London as a result of this tax - it was certainly not the intention of the government of the day that people stay in the dark to reduce their tax! More recently governments have realised that tax can be raised under the camouflage of changing behaviour (duty on drink and tobacco), protecting the environment (Climate Change, Aggregates and Landfill levies) and jumping on populist bandwagons (Bank Payroll Tax).
It just shows those governments like ideas and whenever they think they have a good idea to raise a bit of tax they rush to implement it, especially if it ticks a particular political box. The result is that we have a total jungle of taxes; in fact at the last count there are twenty-six different taxes applicable in the UK (more if you start counting things like congestion charges, road tolls and parking fees) needing the world's largest body of tax legislation to control them.
I found a little gem of guidance from the HMRC. In 2007 HMRC felt that it is no longer compatible with the Human Rights Act to punish the personal representative of a tax payer who has deceased for offences committed by the deceased person!
I would have thought common sense suggests that you can’t apply a penalty on somebody who has died. I don’t think you need to drag the Human Rights into this consideration. Another bit of additional regulation which could have been avoided.
Do you know of any other “pearls of wisdom” from HMRC?
Please let me know and I would be happy to publish your feedback and input.
Everybody focuses on the big tax headline which means everybody overlooks the small print and the little hidden tax increases. How many of you remember that in June 2010 the Chancellor reduced the Annual Investment Allowance from £100,000 to £25,000. What does this mean? If a business wants to invest in commercial vehicles, plant, computers or other equipment it receives 100% tax relief on the amount invested. This is a big help for businesses but from April 2012 this help is going to be reduced as the maximum level of investment which will attract relief will go down by 75% from £100,000 to £25,000.
In other words rather than encouraging businesses to invest the government is putting in hidden obstacles. How does this sit with the “commitment to growth”? Words like spin, deception, incompetence spring to mind.
When you open the paper or listen to the radio or watch TV the news is pretty depressing. It sounds like Armageddon is just around the corner.
However, careful analysis shows that there are some business opportunities and hardworking business people and entrepreneurs can actually enjoy success. Let me give you an example of successful businesses: nail bars, hairdressers, modern coffee shops, micro-breweries, camping and caravan sites, repair garages – to name a few. I’ve actually only focussed on smaller businesses to make the point that there are opportunities to start a business.
The question I am asking is why the media don’t write about these success stories because I believe that hearing these success stories would motivate all business people and entrepreneurs. Many of those businesses require very limited finance so we can’t blame it all on the banks (although there is still a lot of blame they need to accept!).
If you know of any other business sectors which are successful please let me know.
There was a brilliant article by Simon Jenkins in the Evening Standard. He picked up on a theme which I mentioned previously. The Government offered another £75 billion of quantitative easing (which in English means printing money and/or giving money to the banks). I pointed out that the big problem for the economy is confidence.
Simon touched on the idea - why not do a scrappage scheme for household durables? But we wanted to develop this idea further: why restrict it to household durables - why not allocate it to all products ‘made in Britain’. This will ensure the money will go straight into the economy, benefit UK consumers, benefit UK retailers, benefit UK manufactures and not benefit the banks. Many sectors will enjoy increased turnover, which means the government will recover much of the outlay – just think about VAT and income tax etc. - the costs will end up to be much lower than the initial £75 Billion. Consumers, Retailers and Manufacturers will feel more confident, they will employ staff, and they will invest and so on. Even the banks will then benefit. It is about restoring confidence in the British Economy and assisting businesses from the bottom - up.
Giving £75 billion to the general public to spend in the economy appears to be a much better way than giving £75 billion to bankers.
With the 2012 Finance Bill looming (and aren’t we all excited) HM Treasury are asking for your help.
Accounting professionals and lawyers - they want your comments to ensure the legislation works as intended before they put it before Parliament next spring.
Do they really think that busy professionals have the time to do this? The Finance Bill with explanatory notes is 1100 pages (ok - the overview is ‘only’ 300 pages) but who has the time (or desire) to wade through this document in their spare time?
The more practical solution for HM Treasury is - if their own accounting and legal professionals are unable to ensure it works as intended - hire ones that are - real professionals who have worked in the real world.
I am sure you’ve had an opportunity to read many commentaries about the Autumn Statement. Yes we all know it doesn’t say much and yes we all know that the small print will eat any positive idea alive. It is also pretty clear that this budget is a little bit like take from one hand and give with the other. And this therefore reminded me of the following economic analysis.
A small Irish town is struggling with the aftermath of the recession. As it happens a German tourist arrives who wants to stay overnight. Being suspicious he asks the hotel owner to inspect the room first. The hotel owner being suspicious says he will only allow access to the keys if there is a deposit of €100 which the visitor can have back if he doesn’t want to take the room. The visitor takes the keys and hands over the €100. He then goes upstairs to inspect the room. The hotel owner quickly takes the €100 and runs next door to pay his debt to the butcher. The butcher quickly takes the €100 note and runs down the street to repay his debt to the pig farmer. The pig farmer takes the €100 and heads off to pay his bill at the pub. The publican takes the €100 note and pays his debts to the local prostitute who had been forced to offer her services on credit. The prostitute then takes the €100 and rushes back to the hotel owner to pay her debt for using the hotel rooms. At that very moment the visitor from Germany comes down the stairs and states that the rooms are not satisfactory, picks up the €100 and leaves town. The moral of the story: no one produced anything, no one earned anything, but suddenly the whole town is out of debt and looking to the future with a lot more optimism.
Dear reader there is a serious point. Rather than having a tsunami of initiatives and giving money to banks and giving money to construction industries and so on would it not be simpler if the Chancellor simply injects money into the economy by giving it to real people who can make real use of it? Not only would it make the Statement much simpler it would also make the economy much better.
Another brilliant idea from the Government. Yes you did read it correctly. I use the word brilliant with a hint of sarcasm. Business people don't need buddies. They need customers. They need conditions which allow them to start and develop their business. There are so many consultants trying to offer business advice and the common factor of most consultants is that none of them have ever run a business. In order to run a business you do need to be a little bit mad. You have to chase your dreams. It's not all financial analysis and spread sheets. The interpretation of this data is a personal assessment and the personality of the business person is at that point far more important. I think rather than trying to create more schemes the Government should create conditions allowing business people to start, operate and develop their businesses.
Having read through the HMRC penalty regimes - I sit and wonder whether they have thought this one through. I appreciate their need to reduce the amount of penalties they currently have (approximately 350) to make it a simpler and more efficient process - something I could have told them a long time ago, but what I don't understand is the reasoning behind their new penalties they are thinking of introducing. am I alone in thinking this??
The one that stood out to me were:
"Exemption tax of corporate taxis" where if employees are working unusually late and the company pays for your taxi home, there are no tax complications. But under the new proposal the employee would have to pay tax on the fare (or your company could pay it for you) and they will also have to pay NIC, on top of this your company will have to administer the taxation!
Forgive me if I am mistaken but the HMRC are now penalising employees for working longer and harder? Although we are only discussing consultations of proposals and not "done deals" - the thought of introducing the penalty I have stated above is somewhat absurd.
I can't open a marketing magazine these days without seeing at least three or four articles dedicated to social media. You'd think it was the bee-all and end-all to marketing. The on-going debate of whether social media is beneficial to specific types of industries continues and the benefits do somewhat depend on 'you'll get out what you put in'. It does make us think will our business really subside if we are not on Facebook, Twitter or LinkedIN? Somehow I think not! We all hear how great social media is but with global brands using a large team of online marketing specialists it does make a large portion of SME's think how can I compete?
SME's do not need to compete with global brands, unless you have bags of money to spend on social media - SME's will never apply the same time based attention and structure to social media sites as global brands such as Coca Cola and Starbucks and they will to an extent not need to. Having a presence on social media sites really is based on the career of a socialite - it's all about being seen.
Although it may not seem it..we do vouch for the benefits of social media if it is done right, after all we are doing it ourselves for our 240 accountants. We do believe SME's should embrace modern marketing tools, just bear in mind a lot of time and effort is involved in maintaining a successful social media site and if mismanaged it can be just as detrimental to your brand as it is positive. The only thing we know which doesn't work is to quickly design a Facebook site, a Twitter presence and a website and then leave it at that and hope that clients will rush to you.
Here we are again - having eagerly awaited the 2011 budget - it finally arrived and it's no surprise we remain slightly deflated, it's a budget based on keeping the accountants busy and SME's none the wiser. We realise the budget doesn't help businesses much during this bad economic period and once again assists in helping the rich get richer and leave us normal folk in the rat race behind. There was one area of the budget that was devised to fool the averse budget reader and bring a sense of clarity and a "what a joke" mumble from the avid budget reader.
Although we thought "brilliant £200 better off a year - better than nothing I suppose as in this climate every penny helps?" our small celebration was short lived as they have also decided to increase the national insurance rates by 1%. If one does the calculations - forgive me if I'm wrong but don't we pretty much remain as we currently are?! I surprise myself that I'm even surprised - after all what did we really expect from the government?
But, I am somehow once again perplexed by the governments? decision and just cannot comprehend this illogical 2011 budget offering. Maybe next year eh!
It's the start of a new year and with tax returns out of the way it's a good time to focus on your core business.
It looks like 2011 is going to be a different kind of year for most businesses. You can be affected by the doom and gloom talk which the media is spreading like wildfire - or to work closely with your Professional Advisor.
It is not all doom and gloom, we can say this because many of our clients enjoy impressive growth rates ? they are taking advantage of some of the fantastic opportunities to operate and develop their business. Click on the link to see the new AIMS Accountants for Business Spring Update
There are various online groups discussing ?shall I tell the truth to my lender?? The fact that there is a public discussion confirms this is happening.
Again, I do not condone this practice but lenders should be aware that their restrictive lending policy is a double edged sword.
