15 seconds of fame

Andy Warhol once said that everyone would be famous for 15 minutes. Of course he lived in the more leisurely sixties, and if he was still alive today and coping with our ever decreasing attention spans, he would surely have rejoiced in the fact that everybody’s day in the sun would now be much briefer than he ever would have envisaged.
 
Anyway my 15 seconds have arrived. I was quoted in parliament yesterday during the budget debate, in a speech made by Mary Macleod, the newly elected MP for Brentford and Isleworth. In true deprecating accountant manner, it was not something I actively sought. I was asked by the Hounslow Chamber of Commerce to provide a suitable comment for inclusion in Ms Macleod’s speech, which I did. The rest, as Andy Warhol would no doubt say, is history. 
 
OK it may have been slightly tarnished by the fact that they got my first name wrong, but that isn’t unusual, and at least they spelt the surname correctly. Maybe the gods of fame might take pity on me and allow me another 15 seconds some other day…

Antony Doggwiler (don’t call me Andrew!)
ajd@orchardgrowth.com

An FD’s view of the Budget

Having been inundated with e-mails from various accounting firms providing both the highlights and the details of last week’s budget, I thought I would take a bit of time to digest them all before making any comment. That, and the fact that because of the Easter weekend, the last day to get anything done in the current tax year to mitigate the impact of the new 50% tax rate is actually April 1st.

Of course given that there is an election imminent, any thoughts that I might have could be totally redundant, as could the Chancellor and many of his colleagues. However, as this was probably one of the more SME friendly budgets of recent years, it is worth looking at some of the proposals put forward by the Chancellor last week.

The headline grabbers were the doubling of entrepreneurs’ relief, for those who sell their business, to £2mio, the cut in business rates from October 2010, and the doubling of the annual 100% investment allowance to £100,000. The latter is only a short term cash benefit rather than a subsidy, but very helpful if you were going to undertake that capital investment anyway. If you are only going to do it for the tax break, then the best advice is probably don’t.

There was an extension of the “time to pay” scheme in respect of business taxes for the lifetime of the next parliament (which in the case of a hung parliament may not be that long). This can be a very useful scheme, but its use needs to be used as part of an overall business restructuring plan, and not as a way of delaying the last rites of a failing business. Getting a scheme past the Revenue is also becoming more challenging.

There were a number of schemes aimed at providing loans and investment to smaller businesses, including a new national investment corporation, a new “green bank” and more money for university spin-outs. Reading the small print, many of these new funds are dependent on private sector and European Union funding as well as government money. However, assuming the application process is not too tortuous, these could provide useful funds to early stage businesses.

There will also be yet more pressure brought to bear on the banks to lend, including a “Credit Adjudication Service” who will deal with complaints from SMEs which have been refused bank loans, and who will have legal powers to “enforce its judgements” if credit has been “wrongly denied”. I can’t wait to see this in action, although I suspect the biggest business beneficiaries of this scheme will be the accounting and legal professions.

The elephant in the room for SMEs (and many larger businesses) remains the 1% increase in National Insurance that will kick in from April 2011. However you dress it up, it is a tax on employment, which seems perverse to me given that the economic confidence which comes from having a job will be a vital part of any recovery. 

So yes there were some very interesting proposals in the budget for smaller businesses and entrepreneurs but sadly, given the impending election, they are only proposals and will only be implemented if Labour is re-elected. So in the end the whole thing was possibly a waste of time, money and paper and maybe the government should have just enacted legislation to enable them to continue to collect taxes.

Personally I am looking forward, if that is the right phrase, to a proper budget once the election is out of the way, regardless of who wins, so I can start planning with some certainty. 
Antony Doggwiler

Antony on the road (6)

Sunday

It seems that a reduction in VAT has emerged as the favourite for the main weapon to be used by the Government to stimulate the economy. (http://news.bbc.co.uk/1/hi/uk_politics/7744273.stm) I am a little sceptical as to how effective this is going to be as retailers are already falling over themselves to cut prices and tempt people to spend. I still think that lack of confidence driven by fear of unemployment will be the main reason for people not spending and unless firms boost cash flow by keeping the benefit of this VAT cut to themselves (for which they will be castigated by all and sundry) I can’t see the cut doing much to address this. Let’s see what tomorrow will bring.