July 1, 2022

SME Business News

Small Business News UK

Accountants call on the Chancellor to ease taxes for SMEs

With dire warnings about zero growth and rising costs across the board, firms in the south east have been voicing concern about the potential of a recession and how this will affect them. As inflation surges and repayments are being made for BBLS & CBILS loans, businesses are increasingly looking to their accountants for help in navigating an uncertain future.

Nick Paterno, managing partner at McBrides Chartered Accountants in Foots Cray, says: “On behalf of our clients in the south east, we are calling on Chancellor Rishi Sunk to support business by reversing the national insurance increase put in place in April. It was a punitive tax move and one that hit smaller businesses hard.

“We would also like the Chancellor to put the brakes on his proposed increase in corporation tax and reduce VAT on fuel and energy too to give businesses a fighting chance of surviving the next 12 months.”

On the topic of VAT, Nick Paterno adds: “The government is actually pulling in even more money as VAT is applied to the higher petrol and diesel prices, so really it needs to acknowledge this and do something about it! It is within the Chancellor’s gift to reduce this additional VAT ‘take’.”

With rising prices and a dramatic slowing of growth in the economy many SMEs face a challenging time. Many are asking how they can plan for the coming 12 months to try to mitigate what might be the onset of stagflation or a recession.

Top tips on what SMEs can do

Andy Carey, partner at McBrides Chartered Accountants, provides outsourced business services to unincorporated businesses in the county as well as audit exempt limited companies. Experienced with advising a wide range of businesses, Andy provides proactive advice. He says:

Focus on credit control. Ensure you have clear invoice procedures and include clear payment terms on your invoices. If you haven’t already, then enlisting the help of a credit controller would be useful in the uncertain times ahead.

How much are you paying for your water, heating and essential services? Now is the time to look at your bills and find cheaper suppliers. Is there a facility for you to negotiate extended payment terms? If cash flow is a problem, then an extension could be the difference between sinking and surviving.

Look at your largest overheads now and without delay. Is your building your biggest overhead? If it is, there may be room for negotiation or the opportunity to rent it – or part of it – out to others.

If you have a warehouse, find out if you can share this space or rent it out to generate extra income.

Bringing in new people may come with additional cost but could bring new perspectives to your business, while apprenticeship routes enable businesses to hire less experienced staff who are

keen to learn and can be moulded to fit your business perfectly. You could also cross train existing staff to learn multiple roles if staff reduction becomes necessary this year.

Cash is king. If it’s viable, try to build up a cash reserve. This will give your company vital “breathing space” if required later down the line.

Review current customers – make sure the good ones know they are appreciated by you and decide whether to retain unprofitable ones.

Stay strong on prices. Although it may seem like a no brainer, do not reduce prices as it will be difficult to return to normal when things level out.

Market yourself: continue to undertake marketing as there will always be new markets or revenue streams to tap into – concentrate on these and remove multiple marketing streams.

Outsourcing has been a buzzword for some time now and with good reason, hiring can be expensive and outsourcing your finances, marketing or human resources to an experienced provider will save your firm not just in wages, National Insurance and pension contributions, but in office space, fuel costs and general staffing costs.

Time management. Precious time can be used up in meetings so don’t meet for meetings sake. Ask yourself: Is it essential? Is there an agenda? Is it outcomes-focused?

If you are worried about inflation, rising costs and staying afloat, there is a myriad of support via your accountant, the FSB, your local Chamber of Commerce or Institute of Directors.