Business news 15 February 2024
It’s official – the UK was in recession last quarter. Also inflation, tourist tax, pickup truck tax, house prices, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
It’s official – the UK was in recession last quarter
The UK entered a recession last quarter as for the second quarter in a row the economy shrank.
GDP fell 0.3% in Q4 having fallen by 0.1% in Q3.
Year on Year, GDP grew by a measly 0.1% in 2023. Ignoring the covid years, it was the worst performance since 2009.
The news that the UK slipped into recession will undoubtedly send ripples of concern through the business community, particularly for small business owners who often operate on tighter margins. As economic indicators show a decline in Gross Domestic Product (GDP) and sluggish growth across key sectors, it’s essential for small business owners to be proactive in navigating these uncertain times.
First and foremost, it’s crucial to reassess your business strategy in light of the changing economic landscape. This might involve revisiting your budget, identifying areas where costs can be trimmed without sacrificing quality or efficiency, and exploring new revenue streams or markets to diversify your income sources.
Moreover, maintaining open lines of communication with your customers and suppliers is vital. Transparency about any potential impacts on your business operations, such as changes in pricing or delivery schedules, can help to build trust and mitigate any negative fallout from the economic downturn.
Furthermore, now is the time to focus on enhancing your cash flow management. This includes closely monitoring your accounts receivable and accounts payable, negotiating favorable terms with vendors, and implementing strategies to accelerate cash inflows while minimizing outflows.
Talk to CPA about hwo we can help speed up your cash flow and warn you about at risk customers so you can set appropriate credit policies.
Lastly, maintain a long-term perspective and stay adaptable in your approach. While the current economic challenges may seem daunting, history has shown that resilience and innovation are key drivers of success for small businesses. By staying agile, responsive to market changes, and focused on delivering value to your customers, you can position your business to not only survive but thrive in the face of adversity.
In conclusion, while the news of a recession may bring uncertainty, small business owners have the opportunity to rise to the challenge by adopting proactive strategies, fostering strong relationships, and embracing innovation. By taking decisive action and staying resilient, you can navigate through these economic challenges and emerge stronger on the other side.
UK inflation holds steady at 4% in January
Inflation in the UK remained steady at 4% in January, defying expectations of a modest rise. Lower food prices offset an increase in energy costs, resulting in the better-than-expected reading. The Bank of England has managed to bring down inflation from a four-decade high by raising interest rates, but there are concerns about cutting rates too soon. The bank’s latest forecasts show inflation remaining above the target for much of this year and next, but Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said the journey back to the target “should now accelerate,” with a sizeable fall in energy bills from April and lower food costs likely. However, tax cuts in the upcoming budget could keep the bank’s policy tighter for longer, he warned.
Visitors are spending less, prompting renewed calls to scrap tourist tax
New figures show that visitor numbers in London remained level with 2019 in the three months to the end of December, but spending was down by 15%. The New West End Company, which represents businesses in central London, is calling for the removal of the tourist tax, which they believe is responsible for the reduced propensity to spend among tourists. Its chief executive, Dee Corsi, stated that the return of tax-free shopping would encourage tourists to spend more and boost the city’s economy.
HMRC closes tax loophole for pick-up trucks
The tax loophole that allows drivers of pick-up trucks to save thousands of pounds each year is set to be closed. From July, pick-up trucks such as the Ford Ranger and Nissan Navara will be reclassified as cars rather than vans, eliminating the significant benefit-in-kind (BIK) tax breaks they currently enjoy. Currently, pick-ups weighing over one tonne are classified as commercial vehicles, resulting in lower tax rates. However, under the planned changes, pick-ups will lose their commercial status and be classified as cars. This means that tax will be calculated based on the cost and carbon dioxide emissions of the vehicle, resulting in much higher charges for gas-guzzling pick-ups.
Stephanie Sharpe, a tax director with Moore Kingston Smith, warned that the costs for businesses would be “huge.” The changes come after a court case brought against HM Revenue & Customs by Coca-Cola, which claimed that certain pick-up trucks should be taxed as commercial vehicles for BIK purposes. The Court of Appeal ruled in favour of HMRC’s decision to tax the vehicles as private cars, leading to the rule change.
UK Government is failing to uphold its end of the taxation bargain
Annabel Denham paints a grim picture of the state of Britain in the Telegraph, with its high tax burden, state-backed interference in business and culture, and wasteful public spending. She says punitive taxes persuade people to leave the workforce and in the case of high earners, leave the country altogether. The UK lost an estimated 3,200 millionaires over the course of last year with many moving to Florida – where there is no state income tax, inheritance tax or capital gains tax. Denham says: “The logic is simple, and based on human nature. Allow people to keep more of their earnings and they will strive to earn more. Raise taxes, and people may work less, take fewer risks and – at worst – leave the country.”
Tax system disincentivises work for high and low income families
A new report from the Tax Law Review Committee, established by the Institute for Fiscal Studies, warns that parents are facing “insurmountable barriers” to work once they earn more than £100,000, forcing them to cut back working hours to keep hold of childcare perks. The Chancellor’s decision to withdraw free and tax-free childcare from high-earners once they cross the £100,000 pay threshold meant a parent in London with three children earning £140,000 could be worse-off than someone on £99,000, the body said. The report also pointed out that some of Britain’s lowest earners were also facing tax rates of almost 70% on every extra £1 of income earned, persuading many to stay in part-time jobs.
HMRC issues scam warning over bogus tax refund offers
HMRC has issued a warning about fake tax refund offers that could trick people who have recently submitted their tax return. Fraudsters may use email, phone calls, or text messages to offer a bogus tax rebate, mimicking the design and branding of genuine websites. In the year leading up to January, HMRC responded to 207,800 referrals about suspicious contact, many of which offered fake tax rebates. Kelly Paterson, HMRC’s chief security officer, said if taxpayers come across suspicious emails or scam calls, they should report them to HMRC.
House Prices
House Prices decreased by 1.4% in the 12 months to December 2023 (provisional estimate), up from a decrease of 2.3% (revised estimate) in the 12 months to November 2023. The average UK house price was £285,000 in December 2023, which was £4,000 lower than 12 months previous.
Markets
The S&P 500 rose 1% overnight to retake the 5,000 mark. That retraced the bulk of losses spurred by data showing US core inflation for January rose more than expected, dashing hopes that a first Federal Reserve interest-rate cut is imminent. Despite the recession announcement the UK market is up this morning. That might have more to do with the pound falling to $1.255. Brent slipped to $81.2.
Nvidia
the designer behind AI enabling chips, Nvidia overtook Alphabet to become America’s third-largest company by market capitalisation. The news comes one day after Nvidia closed with a higher market value than Amazon. Microsoft and Apple remain above it.
Latest Insolvencies
Appointment of Administrator – UNDERGROUND COMMUNICATIONS LIMITED
Appointment of Administrator – MOLOTOVS AND MARSHMALLOWS LIMITED
Appointment of Liquidators – MONITISE LIMITED
Appointment of Liquidators – SEARLE & COMPANY,LIMITED
Appointment of Liquidators – OUTDOOR LAND LIMITED
Appointment of Liquidators – THINK STACK LIMITED
Appointment of Liquidators – HEALS CONTRACTING SERVICES LIMITED
Appointment of Liquidators – S J CHARLES LIMITED
Appointment of Liquidators – REDSYS LIMITED
Appointment of Liquidators – J.J. TRAINING SERVICES LTD
Appointment of Liquidators – ROOS GRANGE FARMING LIMITED
Appointment of Liquidators – CG SIGMA LTD
Appointment of Liquidators – FRASER HELIX LTD
Appointment of Liquidators – AVON FINANCE NO.1 PLC
Appointment of Liquidators – TYCHE INVESTMENTS LIMITED
Winding up Order (Companies) – MAYFAIR OUTLET LIMITED
Appointment of Administrator – A. & S. CARPETS & VINYLS LIMITED
Appointment of Liquidators – B H SCAFFOLDING SERVICES LIMITED
Petitions to wind up (Companies) – BSX INTERNATIONAL LIMITED
Petitions to wind up (Companies) – KOLLIDER PROJECTS LIMITED
Petitions to wind up (Companies) – KOLLIDER SOCIAL LIMITED
Petitions to wind up (Companies) – STONES GROUP LIMITED
Petitions to wind up (Companies) – REDITUM CAPITAL LTD
Petitions to wind up (Companies) – SMART PROPERTIES (SOUTH LEEDS) LTD
Petitions to wind up (Companies) – REDITUM CAPITAL MANAGEMENT LIMITED
Petitions to wind up (Companies) – DRAGONSEA LOGISTICS LTD
Appointment of Liquidators – MELODY MANUFACTURING LTD
Appointment of Liquidators – FOCAL POINT REFURB LIMITED
Appointment of Liquidators – SMART WEB SERVICES LTD
Appointment of Liquidators – BKRAND MANAGEMENT SERVICES LIMITED
Appointment of Liquidators – BROAD OAK SECURITY LTD
Why should you become a CPA member!
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for some time to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers.
Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the debt value maybe!
Just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you have a commercial late payer that is causing you grief? Use CPA’s no-win, no-fee, commercial debt recovery service!
If you have a particular business customer who is late paying and causing you sleepless nights, why not offer it to CPA for purchase on recourse?
CPA’s collection department will then pursue the debt. We will be liable for any costs incurred and then when we have recovered the debt, we will pay you the net principle debt recovered less our percentage.
Once you have enjoyed that success then you can consider the more cost effective membership which includes our Overdue Account Recovery service and Status/Credit reports as well as a range of other complimentary services.
Just call 020 8846 0000 and ask for Godfrey Nelson or Cris Shirley (business hours) or email debtpurchase@cpa.co.uk today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
Get compensated for previous late payments
Have you been paid late by business customers in the last six years?
Maybe you no longer work with them. Under legislation, you are entitled to compensation you for those late payments you have suffered.
You put up with the PAIN – now claim the GAIN!
Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!
CPA (LPC) Recoveries is using our bespoke software and decades of experience to do just that for our clients
Check our compensation calculator to see how much your business could be owed!
Discover NOW the potential value of late payment compensation hidden in your sales ledger!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.