April 2018

tax tips & finance e-newsletter

In this issue

No major changes in Chancellor's Spring Statement
Cash & digital payments in the new economy
Upcoming General Data Protection Regulations (GDPR)
How to use Google Analytics effectively
Creating a great business strategy
Senior Partner Bob McTear retirement

No major changes in Chancellor's Spring Statement

As announced last year, the Chancellor’s Budget will in future take place in the Autumn each year as opposed to the Spring.

There was however a Statement by the Chancellor on 13 March, but he made little mention of tax changes, instead choosing to focus on the state of the economy and stating that there is “light at the end of the tunnel”. This contrasts with other recent Chancellors such as Gordon Brown and George Osborne who used both the Spring Budget and Autumn Statement to make announcements of tax changes.

New Consultations

The Chancellor did however announce a number of tax consultations into possible future changes. One of the consultations concerns possible changes to the VAT registration threshold as it is concerned that some businesses deliberately operate below the VAT threshold (currently £85,000) as that adds 20% to the price of the goods and services. One suggestion is that businesses could be allowed to exceed the threshold by up to 50% for one year without the need to register for VAT. In another consultation HMRC is seeking views on how they can engage with online platforms, such as eBay and Uber, to promote tax compliance among its users.

Download the Spring Statement

Cash & digital payments in the new economy

One of the announcements in the Spring Statement was the possible demise of the 1p and 2p coins and the £50 note, but for different reasons. It seems that more and more of us are paying for small transactions such as our morning coffee by using contactless payments.

Those who do pay in cash and where the cost is say £2.99 we put the penny change in the charity pot and many are thrown away! The £50 note has been linked to money laundering and other illegal cash-based payments.

The increase in contactless transactions and consequent reduction in the number of small coins in circulation will have a significant impact on the charity sector as many are reliant on peoples’ small change being donated outside supermarkets and stations.

The consultation on the future of cash in the economy also considers the role of cash in tax evasion and illegal activities. The vast majority of traders and businesses accepting payments in cash will do so honestly. However, in some cases, the anonymous and untraceable nature of cash transactions is perceived to facilitate tax evasion, hidden economy activity, or money laundering. This harms the honest majority of businesses who find it harder to compete, and means less money goes towards our vital public services.

HMRC are aware that payments in cash can be a problem for tax compliance. In some cases, this is because taxpayers find it difficult to keep accurate records of all their transactions. HMRC have identified that cash is used by a small minority of people to hide or disguise their taxable income by not reporting, or under-reporting, what they owe.

The consultation paper suggests that the increasing use of digital payments and reduction in the use of cash could have a positive impact on increasing tax compliance and decreasing money laundering. However, the increase in digital payments may only have a limited impact, if the dishonest minority continue to use cash to hide or suppress their income. Could the next step be to make it mandatory to pay your window cleaner or gardener electronically? Not yet…

Upcoming General Data Protection Regulations (GDPR)

You may be aware that new EU legislation aimed at protecting a person’s personal data and electronic privacy comes into effect on 25 May 2018. The introduction of General Data Protection Regulations (GDPR) means that all businesses that hold personal data will need to comply with these new wide-ranging obligations.

As a result, Humphrey & Co have updated our data protection policies. We will shortly be emailing our contacts to opt-in to receive future marketing in line with the new GDPR requirements. If you would like to continue to receive our news updates please complete our opt-in form.

To consider your business’s own GDPR requirements, please visit:-
https://ico.org.uk/for-organisations/guide-to-the-general-data-protection-regulation-gdpr/

How to use Google Analytics effectively

Google Analytics is a free service which allows you to analyse visitors to your website. You could have thousands of visitors to your firm’s website every month, but those visitors don’t mean much if you don’t know anything about them.

Google Analytics is one of the best of many tools available to analyse traffic to your website as it is designed to be easy to use and is free of charge. Used properly, it can help you to understand who is visiting your website and enable you to turn them into potential customers.

The system allows you to track everything from how much traffic your website is getting, to where that traffic is coming from, the behaviours of visitors, what they are clicking on, etc. In addition you can track mobile app traffic and identify trends to assist you in making decisions in relation to how you market your business.

To use Google Analytics you simply sign up for a free Google account, click on Google Analytics from your Google Account home page and go through the various steps. Then you must click on Get Tracking ID. You can install this tracking ID on your company’s website and this will allow you to monitor traffic and start using Google Analytics.

The Traffic Sources section allows you to analyse where the visitors to your website are coming from. You can also set up custom reports in order to monitor metrics based on data specific to your business. For example, if you are an online retailer, you can monitor product codes in order to track which products are being purchased by your online visitors who are based in the EU.

You can also connect Google Analytics to your firm’s social media accounts. This allows you to track the results of your social media marketing. For example, is the article you published on LinkedIn driving people to click through to your website, etc.?

Creating a great business strategy

When many of us think about business strategy, academics and expensive business consultants tend to spring to mind. The good news is that creating a really great business strategy doesn’t have to be complex.

Put simply, a strategy is what you need to get your business from where it is today to where you want it to be in say, 5 years’ time. Here are three simple steps to creating an effective strategy for your business:

  1. Manage business risk

Business risk is a fact of life. Some risks can be mitigated and some can’t. Of those risks that cannot be mitigated, you need to ensure that the opportunity for your business outweighs the potential down side. Don’t try to sweep risk under the carpet. Instead, create a risk register and list all of the major risks to your business. Beside each line on your risk register, describe what you are doing to mitigate each risk. For example, next to “Cyber Security Risk” you might note that you have put a firewall and internet security software in place on your systems. Creating and maintaining a risk register will ensure that you don’t miss anything and that where possible, you do something to minimise business risk.

2. Understand your market

To develop a successful strategy you need to understand the market in which you operate. How big is the market sector that you are targeting? Is it growing and if so, how fast? Who are your competitors and how do you intend to compete with them for market share? If you understand the key drivers in your market, you can spot new opportunities, harness the forces that are driving change and create a product or service offering that is competitive.

A good understanding of your market will allow you to calibrate your offering in order to create the right balance of supply and demand, pricing and service levels.

  1. Competitive advantage

Every business has strengths and weaknesses. Your business strategy should take this into account. Take time to analyse your main competitors and identify their weaknesses. Now consider how your product or service offering can exploit these weaknesses to give your business a competitive advantage. For example, if your competitors are expensive, perhaps you could gain a competitive advantage by offering a lower price alternative. Perhaps you can focus on a particular niche sector in order to create an offering that is differentiated. This could give you a competitive advantage with the potential to last a long time.

Following over four decades of loyal service we say a fond farewell to Senior Partner Bob McTear

Bob retires from the firm on 30 April after 45 years’ service. He started as an articled clerk at the firm in 1972, becoming a Partner in 1978 and then Senior Partner in 2005.

As Senior Partner, all clients and staff agree that, Bob has been a very compassionate partner. He has taken time to get to know individuals on a personal basis thereby being able to advise not just from a financial view point but also a holistic one. As a devoted family man he has understood that when making business decisions these cannot be made in isolation of clients’ personal circumstances.

Although he has advised many individuals and businesses locally, Bob’s area of specialisation has been advising the Dental and Medical business community. He developed this area of specialisation within Humphrey & Co over the last 25 years. During this time Bob has led the Dental and Medical team at Humphrey & Co which has grown exponentially under his leadership. Humphrey & Co now has clients worldwide and is well respected in the dental community. He leaves this specialist team in safe hands led by Partners Greg Penfold, Ian Simpson and Karen Wicks.

When asked to comment on his time at Humphrey & Co Bob stated “I started at Humphrey & Co just after my 19th Birthday. At that time there were just 15 people in the firm and clients were mostly local businesses made up of mainly guest houses, taxi drivers and builders. We were still preparing accounts in ‘pounds, shillings and pence’ and there were no computers or calculators and no VAT.

During my time I have seen the firm grow from this small beginning to now being in the top 100 accountancy firms in the UK. Our clients range from small businesses to international companies and this year our staff will reach 90 people.

I consider myself extremely lucky that I can count on one hand the number of times I have woken up and thought ‘I don’t want to go into work today’. This is because of the amazing people that I have had the pleasure to work with, both colleagues and clients.

I know I will miss the firm but I depart knowing that the firm is in great hands with the Partners I leave behind. It has been an absolute pleasure.”

Bob is succeeded as Senior Partner by Anthony Smith who started at Humphrey & Co as a graduate trainee in 1997.

Senior Manager Claire Borsoi also retired at the end of March after over 30 years’ service, having joined in 1984. As part of the Dental Team Claire specialised in dental accounts and tax affairs working for Bob McTear. In addition, she supported the Retirement and Care Planning team working for Paul Potter.

Everyone at Humphrey & Co wishes Bob and Claire a very long and happy retirement.