Businesses – What the 2013 Budget means for you

The announcement of Wednesday’s 2013 budget provided no real surprises but maybe some hope for businesses; we briefly examine changes and what they will mean.

Tax

The chancellor spoke of building the most competitive tax system in the world and wanting to support entrepreneurial spirit.

Corporation tax will be reduced by 1% to 20% in April 2015 to show that “Britain is open for business”, but the bank levy rate will increase to offset this by 0.142%

New measures against tax evasion are expected to bring in £3 billion in unpaid taxes. Three new anti-avoidance measures will target specific situations including corporate losses, partnerships and the use of off shore employment intermediaries. These measures reiterate the government’s policies creating a highly competitive but tax payer compliant system. The overwhelming majority of economic activity is already compliant but these newly announced measures are hoped to bring those that aren’t in line.

National Insurance

A new employment allowance is to be introduced that will cut the first £2,000 from employers NI bills. Around 450,000 small businesses will now pay no NI at all, around a third of all employers. This will be of little impact to larger companies but it will more than likely mean that smaller businesses can afford to hire more staff.

Infrastructure

Infrastructure will be boosted £3 billion a year from 2015-16 onwards which could provide medium term opportunities for the construction industry.

Anthony Fisher, Managing Director of Focus Insolvency Group commented, “It is encouraging to see that the Chancellor has helped businesses by reducing Corporation Tax and the costs of employing people. This should put more in the pockets of companies who will then be more willing to invest and hire employees. The UK economy must be attractive to business owners to obtain investment and growth.”

Businesses looking for safety and stability in the budget will have likely found what they are looking for, however the current economic environment will mean that growth will still be slow.

If you require any advice for your own business or for a client then please do not hesitate to get in touch.

Winding Up Petitions

Have you had a client issued with a Winding Up Petition (WUP) against their company?

In these situations it is extremely important to seek professional advice at the earliest opportunity in order to protect your client’s company and their interests as much as possible.

Due to the costs and implications involved in a WUP, issuing one to a company suggests that the creditor is very serious about recovering any money owed to them and probably sees this as a last resort after breakdowns in the business relationship. HMRC have been very quick in recent months to issue WUPs. Any creditor with a debt of £750 or more can move to issue a WUP.

A WUP, issued by HMRC or another creditor, is by far the most damaging and serious course of action that can be taken and will result in its closure and assets sold/employees dismissed if left to run its course in court with no defence or strategy/ proposal suggested as an alternative.

If the company is viable going forward and is to be saved then immediate action is essential! The very act of presenting a petition is likely to result in the bank account being frozen, which can cripple trading.

If the debt can be paid in full then this should be done immediately unless the debt is disputed, in which case legal representation is essential. Otherwise there may still be time to propose alternatives to the WUP such as a Company Voluntary Arrangement (CVA) or Administration. These are powerful tools to help rescue a company from collapse.

It is vital to seek professional insolvency advice by this stage to ascertain if the WUP can be halted and alternative arrangements made to pay the debt or risk the company being handed over to the Liquidator.

There may also be personal liability implications to the director or board members of a company issued with a WUP if personal guarantees have been made within the business or they are implicated in trading whilst insolvent.

If any of your clients have been issued with a WUP then do not hesitate to get in touch with us and we can work together to save the employees jobs and rescue the company.