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Thursday 19 April 2012

Setting up a business with a partner

Going into business with a partner?  Forming a limited company and each having 50% of the shares would seem reasonable.  It sounds fair but could lead to a deadlock if you ever disagree over something serious. 

Common causes of disputes include:
  • disagreements over strategy
  • power struggles and poor personal relationships
  • conflicts of interest, and dealings between the company and a private business owned by one of the directors
  • concern as to whether the board is meeting its legal responsibilities
  • concern over financial issues and potential insolvency
  • service contracts and remuneration
  • a change in personal circumstances of one of the key parties
If the company can't make a decision it could lead to the collapse of the company or being stuck in a company you can't get out of.  Resolving these issues can be a long and costly process, especially if you have to get legal counsel, bring in outside experts or go to mediation or arbitration.

The solution:  Get a well drafted shareholders' agreement in place, and before you fall out.

Monday 16 April 2012

Walker Thompson Newsletter 54

Have you visited our new website yet? If not, please have a look and let us know what you think: http://www.walkerthompson.co.uk/

We are now keeping clients up to date with regular articles on Facebook, Twitter and Linkedin.

Please follow any of the links below for more information on each topic.

BUDGET 2012

George Osborne presented his third Budget on Wednesday 21 March 2012.

INCREASED PERSONAL ALLOWANCE FOR 2012/13

For those aged under 65 the personal allowance will be increased by £630 to £8,105. This increase is greater than the minimum required and is part of the plan of the government to ultimately raise the allowance to £10,000.

AGE ALLOWANCES

It was announced in the Budget that from 2013/14 the higher age related personal allowances will not be increased and their availability will be restricted.

CHILD BENEFIT

Legislation will be introduced to impose a new charge on a taxpayer who has adjusted net income over £50,000 in a tax year where either they or their partner are in receipt of Child Benefit for the year.

CORPORATION TAX RATES

A further reduction in the main rate of corporation tax has been announced.

STAMP DUTY LAND TAX (SDLT)

A new rate of 7% will be introduced where the chargeable consideration for a residential property is more than £2 million.

EMPLOYER END OF YEAR FORMS

HMRC are reminding employers that in order to avoid penalties they must file the Employer Annual Return (P35 and P14s) online and on time.

REIMBURSING ADDITIONAL HOUSEHOLD EXPENSES

From 6 April 2012 HMRC are increasing the guideline rate which employers can use to reimburse employees for additional household expenses incurred because they have to work from home to £4 per week (currently £3 a week).

ADVISORY FUEL RATES FOR COMPANY CARS

New company car advisory fuel rates have been published to take effect from 1 March 2012.

UPDATED GUIDANCE ON GIFT AID AND NEW DECLARATIONS

HMRC have updated their guidance on Gift Aid declarations and provided new model declarations.

NATIONAL MINIMUM WAGE RATES

The government has accepted the Low Pay Commission’s recommendations for National Minimum Wage rates from 1 October 2012.

NATIONAL LOAN GUARANTEE SCHEME

The Chancellor George Osborne has launched the National Loan Guarantee Scheme (NLGS), which is designed to help ‘smaller businesses’ across the UK access cheaper finance.

Friday 13 April 2012

Fact or Fiction

Without facts at your fingertips it is difficult to take the right business decisions.  Don't expect brilliant insights if you haven't collected the right information in a useable format.

Do you actually know which of your products, services or markets generate the largest revenues?

In an uncertain world, the more information directors have, the more confident they should be about their decisions.

Businesses are often swamped with data but those that can quickly decide what is important will strengthen their performance.

Make sensible decisions about which information you need to collect and how to categorise it.

Collect the right information in an easy to use format.

Thursday 12 April 2012

2012 Budget - The Aftermath

The facts below are extracts taken from a wide variety of professional & trade press articles following the Budget of Chancellor George Osborne. The proposals set out within the Budget speech will be ratified in due course through The Finance Act 2012 although some measures were introduced as part of the previous announcements.

In most peoples opinions it is probably fair to say that when the cosmetic appearance was stripped away, the 2012 Budget was somewhat neutral overall. There are certain areas which have caused controversy and others which have caused comedy. 2012 will in our view always be remembered as the Pasty, Pie & Pensioners Budget.

When the country is looking to emerge from an economic recession, are we really employing civil servants with the sole aim of further complicating already complex VAT legislation against a background of a Parliament keen to reduce red tape & encourage business entrepreneurship? Moreover are we concerned whether Mr Osborne has ever eaten a sausage roll from Greggs?
Income Tax rates were almost a non event as they were announced in 2011. A 5% drop in the higher 50% rate was announced but only effective from April 2013.

For Inheritance Tax purposes there was no change in limits but a 4% tax discount will be applied if the estate is over £325,000 & over 10% is left to a registered charity. A nice idea given that charitable donations have been hit by the recession but for higher rate tax payers who are minded to give to charity anyway, a lifetime donation would seem to have more benefit.

Various Benefits including State Pension & Jobseekers Allowance are increased in line with the Consumer Price Index set in September 2011 at 5.2%. Pensioners however are still mainly affected by the low rates of investment returns which affect their day to day lives and were planned to top up pensions through retirement.

The most controversial change in this area was in respect of Working Tax Credit where couples with children must work 24 hours per week instead of 16 hours and that one person must work at least 16 hours. We believe that this will have a short term impact upon businesses who have arranged part time staffing around the original rules and may now face employee requests to change their hours. Failure of an SME employer to be able to respond could see increasing movement of employees with the consequent associated costs.

On the periphery of the Budget, businesses are still struggling to obtain finance from a banking system which claims to be releasing credit in line with expectations. Whose expectations these are we cannot say as in the SME sector it is fairly clear that banks are only lending where the level of security available not only from the business but from owners personal guarantees is up to 4x the amount of borrowings. Suffice to say that Government statistics announced on 11 April showed that British firms were not investing in capital which would enable them to pull clear of recession & that they might struggle to do so. – If they cannot borrow to invest then perhaps the idea of a nationally owned business bank is the way forward? We still see banks visiting businesses, not to lend money but to sell Life Assurance & Pensions.

Finally it is worth commending our Chancellor on his astute awareness of the tax system over which he has stewardship. As recorded in an interview with the Daily Telegraph:

“Chancellor George Osborne has expressed shock after looking at 20 anonymised tax returns of multi-millionaires which demonstrated they have exploited tax loopholes to legally reduce their tax bills.”