TAX

UK pledges to mitigate business’ Brexit damage from upfront VAT

The Treasury has said the UK will seek to mitigate any cash flow impacts if Britain leaves the EU VAT area after Brexit, meaning companies will have to pay VAT upfront. Meanwhile, business leaders have warned that real cash-flow issues could result from importing small firms being forced to stump up for VAT charges on products bought from overseas before having the chance to recover those costs through their own sales. FSB chairman Mike Cherry said: “Small firms are already having £18bn withheld from them due to the late payment crisis. Brexit should be seen as an opportunity to simplify the hugely cumbersome VAT regime.”

Financial Times Independent 

VAT burden to grow after Brexit

Legislation is being considered by MPs that could see over 130,000 UK firms forced to pay VAT upfront for the first time on all goods imported from the EU after Brexit. Nicky Morgan, the Tory chair of the all-party Treasury select committee, said the committee would launch an urgent investigation into the changes made by the taxation (cross-border trade) bill. Ms Morgan said she would be writing to HMRC to determine what contingency plans were being put in place to avoid pain for UK firms.

The Observer

OUTLOOK

Business more optimistic

A raft of new reports revealed that businesses are more optimistic about the global economic outlook, with hiring intentions returning to near record highs. The EEF said bosses believe a growing global economy will sustain new orders in the coming months, although many expected a deterioration in the UK. Research by Lloyds Bank found that business confidence was “steady,” with investment and hiring intentions set to increase despite wider concerns about the economy.

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FINANCE

Fewer zombie firms

The number of “zombie businesses” in Britain has hit a five-and-a-half-year low, according to R3. It found the proportion of organisations stagnating because they can pay only the interest on their debts fell to 3% in December – a two percentage point decline from April and down from 9% in November 2012. It is also the lowest figure since R3 began tracking zombie businesses in June 2012. R3’s research showed further signs that severe financial distress was in retreat. Only 1% of companies reported that they were having to negotiate payment terms with creditors, that they would be unable to repay debts if there were a small rise in interest rates, or were struggling to pay debts when they fell due.

The Times

Call to end insolvency losses for contractors

Business groups representing small construction firms are backing moves by a group of MPs to change the law so cash owed to suppliers is protected when a builder goes bust. The move is intended to address the issue of retentions, which have no insolvency protection. The proposed legislation, which is being supported by 29 construction and skills groups, would force builders to hold retention money in a separate account so that it could not be used for their own cashflow purposes.

The Times

Late payment trend could worsen

According to MarketInvoice, 62% of invoices issued by SMEs in in 2017 were not paid on time, with a third more than two weeks late. MarketInvoice spokesman Bilal Mahmood fears that this situation will only get worse unless small business step up and enforce their legal rights when it comes to late payments.

Small Business.co.uk

INVESTMENT

British tech start-ups attract £3bn in investment

New data reveals that early stage businesses in the UK attracted about £3bn in investment last year, almost double the amount raised in 2016 and more than four times the amount secured by start-ups in France and Germany. London Mayor Sadiq Khan said the figures from Pitchbook, a company that analyses the venture capital sector, serve as “further proof [that] London is the undisputed tech capital of Europe,” adding that entrepreneurs were attracted to London for its “diverse talent pool and unique business ecosystem” and that he is committed to “ensuring we take over from Silicon Valley as the world’s leading tech hub.” Meanwhile, Hussein Kanji of the venture capital firm Hoxton Ventures has predicted US investors will become even more active in Britain after Brexit. “I don’t think the US funds care about Brexit, just about the quality of the individual companies. And we have the most high-quality companies in all of Europe,” he said.< /p>

The Times

ENTREPRENEURS

Running a side hustle becoming a national pastime

The Sunday Times ’ Liam Kelly talks to entrepreneurs who decide to stick with their day job while starting and running a business – the so-called “side hustle.” “Starting a business while holding down a day job is becoming a national pastime,” said Emma Jones, founder of the small business network Enterprise Nation, who believes the number of side hustlers will only grow. “As wages continue to stagnate and employment becomes less fulfilling, we will see more people, not fewer, working this way in future,” she says.

The Sunday Times

MANUFACTURING

Strong end to year for manufacturing

The purchasing managers’ index (PMI) for manufacturing shows the sector finished 2017 with the best quarter of growth in more than three years. There was a slight slowdown in December’s growth following rapid expansion in November, but the average reading of the PMI survey for the final three months of the year came to 57, the best performance since the second quarter of 2014. Firms are benefitting from the drop in sterling’s value and broader global economic growth. The survey showed that manufacturers continued to see a “solid increase” in export sales, especially from the US, Europe, China and the Middle East.

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TRADE

Fox: Innovation and technology can drive trade

Liam Fox writes in the Telegraph that 2018 will be an important year for the UK’s trade and investment relationships, as it looks to build on record inward investment and a 14% increase in UK exports. Mr Fox adds that the government’s industrial strategy will encourage businesses to embrace workplace evolution and opportunities of technological change. Separately, it is reported that Mr Fox has not ruled out the UK joining the Trans-Pacific Partnership (TPP) after Brexit, after it emerged that ministers have held informal talks on joining the TPP. Responding to the reports, Mr Fox said: “We would be foolish to rule anything out. We know that Asia-Pacific will be a very important market and we know a lot of the global growth in the future will come from there.”

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EXPORTS

UK moves up exports table

The UK has risen from the middle of the pack to the top of the table among G7 peers on exports, following revised figures from the ONS. Since the pound’s depreciation began in late 2015, volumes have jumped 7.7% – nearly twice as fast as the 4.1% originally estimated by statisticians.

Evening Standard

REGULATION

Customer data sharing comes out of the shadows

The FT ‘s Barney Thompson reports on how the “obscure world” of information sharing will be exposed to far greater transparency when the EU’s General Data Protection Regulation takes effect in May.

Financial Times

EMPLOYMENT

Happier staff can boost productivity

Mark Price, the former MD of British supermarket Waitrose, writes in the Telegraph that employers can boost productivity by focussing on staff happiness. He says academic research shows a link between happy, engaged employees and long-term improved organisational performance. A survey by Mr Price’s engaging.works website found better work-life balance would most improve staff happiness in their workplace. The second most common request was for greater flexibility in working hours, followed by more workplace social events.

The Daily Telegraph

Robot warning over living wage rise

The Institute for Fiscal Studies (IFS) has warned that the rapid increase in the UK living wage could mean that more jobs are replaced by robots. The think tank says that the minimum wage will hit £8.56 an hour by 2020 and the resulting rise in outlay as staff become more expensive to employ could see firms increasingly turn to automation. IFS economist Agnes Norris Keiller said: “The fact that the higher minimum will increasingly affect jobs that appear to be more automatable is an additional reason why careful monitoring is required.” Occupations that are easier to automate, according to the IFS, include retail cashiers, bank clerks and receptionists. The minimum wage for over-25s has risen from £6.70 to £7.50 since 2015 and will rise again to £7.83 in April.

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Firms struggling with apprenticeship levy

UK businesses are becoming increasingly critical of the government’s apprenticeship levy. Many are complaining the funds raised do not cover training costs and the levy has, in effect, become another business tax. Other problems identified by SMEs are that the levy is too difficult to navigate, and that training programmes have not been certified so apprentices cannot be sent on the required courses. EEF described the situation as being “at breaking point,” as some employers have ceased training while others have stopped recruiting.

The Daily Telegraph

Brexit is a chance to reshape immigration policies

In a piece for the Sunday Telegraph , Lady Barbara Judge, the chairman of the Institute of Directors, says Brexit provides an opportunity to reshape immigration policy for the better. As part of regaining control, a streamlining of the visa system would make it easier for SMEs to hire talented foreign workers, and the allocation of visas by the Home Office could be more skills-focussed rather than pay-orientated, so potential teachers, nurses and care workers are not ignored.

The Sunday Telegraph

WORKPLACE

Bosses out of touch, say public

The majority of the British public believe that bosses are out of touch with ordinary people’s lives, a survey by the CBI has found. Analysis by the group reveals that despite years of corporate social responsibility work, reputation-building and stakeholder engagement, 68% of adults regard chief executives as too far removed from the lives of the general public. Pay fairness emerged as a strong theme from the survey, with 70% of respondents saying it was important that any company they chose to work for or buy from be actively taking steps to reduce unequal pay.

The Times

ECONOMY

UK productivity grows at quickest pace in six years

Figures from the ONS show a welcome rise in UK productivity as Britain languishes fifth in the rankings of G7 countries for output per hour worked. Output increased by 0.9% compared to the previous quarter – the biggest increase since the second quarter of 2011, when productivity grew by 1%. However, if productivity growth had followed its pre-financial crisis trend, then output per hour worked would be around 20% higher today.

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Services growth speeds up

The UK’s dominant services sector enjoyed faster growth in December. The purchasing managers’ index for the sector showed a balance of 54.2 in December, up from 53.8 in the previous month. Any balance above 50 represents growth. Although small, the monthly rise points to the economy having expanded by about 0.4% in the final quarter.

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