Press Releases

Accountants Welcome Support for Businesses

Bradford chartered accountants Watson Buckle have cautiously welcomed Chancellor Alistair Darling’s 2008 Pre-Budget Report as a useful step in supporting smaller businesses.

Delivering the report yesterday (24 November), Mr Darling described the UK’s 4.7 million small and medium-sized enterprises (SMEs) as the “engine room of the economy” and unveiled a package of measures to provide extra funding and improve cash flow.

John Kinsella, tax partner at Watson Buckle, said: “SMEs have been feeling the full force of the downturn in the economy. This package will go some way to provide much-needed support but as the economic challenges continue, businesses are likely to be looking for more help in future.”

Among the measures Mr Darling announced to the House of Commons were:

HM Revenue & Customs will work with businesses in temporary financial difficulties so that they can spread their tax bills over a timetable they can afford. The arrangement will cover all taxes paid by businesses, including corporation tax, VAT, income tax and national insurance.

The government is deferring for one year the planned increase in the small companies’ rate of corporation tax. The rate will remain at 21 per cent during 2009-2010

For the financial year 2009-2010, empty properties with a rateable value of less than £15,000 will be exempt from business rates. Mr Darling said this would exempt an estimated 70% of empty properties.

To help the cash flow position of businesses that have recently become loss-making, trading loss carry back will be temporarily extended from one to three years for up to £50,000 of losses. The measure will apply for a year from 24 November 2008 to companies and unincorporated businesses. Mr Darling said 75,000 businesses would benefit.

A Small Business Finance Scheme will be launched early in 2009 as a temporary guarantee scheme to enable up to £1billion of new government-supported lending by banks

Working with the banks, the Export Credits Guarantee Department will introduce a temporary guarantee scheme to support a £1 billion facility, providing smaller exporters with better access to short-term working capital

£1 billion of European Investment Bank funds will be available through UK banks to SMEs by the end of 2008.

There was further good news for businesses anticipating measures to outlaw the practice known as "income shifting", common in family-run firms, where income is transferred from one person to another to maximise tax efficiency. The government has consulted on the issue but has decided to defer action and will not bring forward legislation in the Finance Bill 2009. Instead, it will keep the issue under review.

John Kinsella added: “We have been working with many SME businesses to help them strengthen their position in challenging trading conditions and to help them prepare to take advantage of a future upturn.

“The government has recognised the vital role smaller businesses play in the nation’s economy with measures designed to improve cash flow – vital to a business’s viability – and make funding more readily available. Businesses seeking to take advantage of these measures would be wise to seek the advice of a qualified professional, such as an accountant, to ensure that they do so in the most beneficial way.”

For more information, contact Watson Buckle on 01274 516700 or visit www.watsonbuckle.co.uk