HMRC Leaps into Action

HMRC has been given substantial funding with the aim of raising an additional £7 billion each year – so unsurprisingly if has been very busy with a wide range of initiatives.

A new approach for HMRC is to use task forces for an intensive burst of activity targeting specific business sectors and locations where there is a high risk of tax evasion.  The first task force focused on the restaurant trade in London, with Scotland and the North West to follow.  The most recent task force tackles VAT abuse in London’s fast food outlets, with nine further task forces planned for 2011/12.  The latest software makes it very easy for HMRC to compare tax returns of different businesses, and to identify those that appear not to be doing so well.

HMRC is following up the Plumbers Tax Safe Plan with the VAT initiative, aimed at businesses that are trading above the VAT turnover threshold of £73,000, but are not VAT registered.  HMRC is writing to more than 40,000 businesses to make them aware of the initiative.  Businesses have until 30 September to notify HMRC of their intention to take part, and VAT registration is then required by 31 December.  A penalty of just 10% is likely to be charged on VAT that is paid late.

It has been estimated that last year HMRC investigated more than 9,000 inheritance tax valuations.  Many estates are only subject to tax because of the value of the deceased person’s home, and it is often a family member who takes on the task of administering the estate.  With a 40% tax rate, if can be tempting to value property below its true worth.  However, an undervaluation of, say, £25,000 will mean additional tax of £10,000 and a penalty of up to 100%.  It is therefore advisable to obtain several valuations and to have property professionally valued.

Finally, in an effort to collect tax as quickly as possible, HMRC has been sending letters to taxpayers  informing them that HMRC will be collecting and selling their goods in lieu of outstanding tax.  However, in many cases nothing is actually owed or payment plans have already been agreed.

Business confidence tumbles as economy trembles

Business confidence has plummeted by a record amount as fears persist the economy is set to contract in the final quarter this year.

The BCM Confidence Index collapsed from +8.1 in the third quarter to -9.7, according to the latest figures from ICAEW.

The index – a close indicator of GDP growth - is now at its lowest level since the nadir of the 2009 recession, fuelling concerns the economy will shrink by some 0.2% in the final quarter.

Growth for 2011 would therefore be 0.9% - a sharp drop on the 1.7% projected earlier this year.

The index revealed confidence across all business sectors has fallen, with just energy, water and mining remaining in positive territory at +2.3.

Weak property sector

The property sector is in the weakest position with confidence tumbling to -18.7, followed by banking, finance and insurance with -14.6.

Michael Izza, Chief Executive of ICAEW, said: "In the first nine months of the year, businesses have played their part in supporting economic growth.

"Many are proud of their success against a backdrop of a very slow and protracted recovery. Yet they are becoming increasingly worried about the immediate outlook and the risk of a double dip recession.

"They are looking to the Government which now needs to take urgent steps to restore business confidence and to show that it understands the need to rapidly change the mood that the business community clearly feels."

Turnover and profit growth expectations have now declined for two successive quarters, which has been compounded by a steep drop in capital investment growth expectations.

Headcount freeze

In total, more than three-fifths of UK companies are operating below capacity with the number of new employees expected to increase by just 0.9% as companies refrain from taking on new staff.

One ray of light was the BCM predicting – in line with the Bank of England – that the inflation rate will fall in 2012.

UK SMEs pessimistic about economy

Nearly three quarters of small businesses believe the UK economy will re-enter recession in 2012, according to new research from a credit reference agency.

In a sign that business confidence is still very low amongst UK small and medium-sized enterprises (SMEs), 73% of those polled by researchers anticipated that another recession was on the horizon, despite official figures revealing growth in the economy in the last three months.

Over 90% of small businesses also argued that the government should do more to encourage banks to lend to them, according to new research from credit reference agency, while only 8% of credit managers polled believe that the establishment of an SME bond market by the government would help businesses access funding. Over a third (38 per cent) predicted that such a fund will have no impact on firms seeking funds for growth.

Difficult Times for SME’s

Are these difficult times for SME’s – you bet they are! We are witnessing a significant increase in dialogue with business owners struggling with cashflow and needing to look at external support to relieve the pressure. Retailers particularly have been suffering, and it’s clear the flow of money has slowed over recent months across many business sectors.

The good news is that our investor network remains active and keen to look at providing capital quickly for the right business.

Typically we are introducing an average of four different investors to each client – an achievement in itself. That’s not to say that raising new capital is easy – far from it – however if business owners can make a compelling case of a brighter future, then we can normally offer a positive solution.

We are always happy to offer a professional view on what can be achieved, at no cost or commitment. Please call us if you know of a business in need; the earlier conversations take place, the better the chance of delivering capital to your client’s business.

FRAUD

It has come to our attention that Beer & Young’s good name and reputation is being used by fraudsters.  We take this matter extremely seriously and we’re doing everything we can to resolve this issue as quickly as possible.  Please note that Beer & Young Ltd and its Associates are in no way affiliated with Eilif Johnson Capital, EJC Capital, EJ-Capital or any other name in which these fraudsters are operating.

Business Rescue Funder of the Year 2011

We are delighted to announce that Beer & Young have won the ‘Business Rescue Funder of the Year’ award for the second year running.

The Insolvency & Rescue Awards is the biggest annual event in the turnaround industry. 550 people attended the gala, hosted at London’s Lancaster Hotel. Entertainment was provided by comedian Stephen K Amos who enlivened proceedings with a great set prior to the winners’ announcements.

Nick Young commented: “Winning the key Business Rescue Funder award two years on the bounce is great news and testament to the quality of the entire team at Beer & Young.  I am grateful for their efforts and look forward to continuing this excellent work through 2012.”

Insolvency & Rescue Awards This Week!

Finalists for the 4th Annual Insolvency & Rescue Awards were revealed back in August and finally the event has arrived!  This Wednesday, over 500 industry professionals will come together for a night of celebrations as once again turnaround specialists are recognised and rewarded for their excellence and contribution to the recovery sector throughout the year.

Beer & Young will be there defending their title as ‘Business Rescue Funder of the Year’ and also as finalists for the ‘Business Rescue of the Year – sub £20 million turnover’ category.

The event is being held at the prestigious London Lancaster Hotel.

An SME’s Guide to Private Investor Funding

As owners and senior managers of UK SMEs look ahead to the final quarter of the year and beyond, they face some serious challenges
.
With the latest figures showing that banks have once again failed to meet agreed targets for lending to small businesses, they can’t expect to receive much help from traditional sources.

Private investor funding offers hope for stressed small firms.

This free guide considers how SMEs can access the funding they need to survive and succeed in the future. Just click on the link below:

https://www.rapidrequest.co.uk/4/Default.aspx?95186.HWDSZIO8.1291960

Brits spend £9 billion every month paying off debt

Research from MoneySupermarket.com reveals one in four people are using over 40 per cent of their wages each month just to pay off non-mortgage debt.

This means a large proportion of the British public are eating into their available income on a regular basis, leaving less to fund rising bills and spiralling living costs.

The MoneySupermarket research showed the average amount of monthly debt per person is £322, a whopping 25 per cent of the average monthly income for a UK adult, which stands at £1,288.

The research also found eight per cent of people said they spent over 80 per cent of their wages repaying debt, highlighting how stretched the nation's finances are at the moment.

Men hold a greater proportion of personal debt (excluding mortgage) of £7,944 on average, when compared to women who owe over one thousand pounds less at £6,739, fifteen per cent less than their male counterparts.

Tim Moss, head of loans and debt at MoneySupermarket.com  said: 

"With the cost of living continuing to rise, consumers are feeling the squeeze on their wallets more than ever. It's therefore worrying to see such a high number of people needing to use so much of their income just to service existing debt.

"However, making the most of every pound really does count when it comes to the end of the month, and it's vital that those needing to repay debt are doing so using the best method.

"For someone with credit card debt, it is vital regular monthly payments are maintained, as a late or missing a payment could result in being charged fees or losing any promotional rates.

"Setting up a direct debit helps consumers avoid missing payments and forking out significantly more than expected in interest payments and fees."

The research found that Londoners have the highest amount of personal debt in the UK, owing £8,478 on average, compared to those in Yorks & Humber, who owe £5,796.

However, those in London only use 22 per cent of their wages on average in paying off this debt, while Yorks & Humber dip into 28 per cent of their wages to repay debt.

Tim Moss continued: 
"Consolidating debt payments can be a useful process for stretched consumers, either through a credit card or a personal loan, depending on their situation.

"Interest free balance transfer cards work well for those transferring borrowing smaller amounts, and are confident they can pay back the balance within the promotional period.

"Barclaycard for example offers 22 months interest free on balance transfers on its Platinum Credit Card - great for those looking for some financial flexibility and reduce their outgoings.

"Personal loans are also good alternative option as they offer a fixed monthly repayment amount over a fixed term. There are plenty of competitive options available at the moment, including Alliance & Leicester and Sainsbury's Finance personal loans, which have a current headline rate of 6.3 per cent for borrowing over £7,500, over a period of five years.

"However, the best credit card and loan deals are generally reserved for those customers with a good credit rating so it is worth checking your credit file before you apply.

"The golden rule for consumers is not to borrow money unless it is absolutely necessary. Anyone feeling the pinch needs to go through their finances making sure monthly outgoings are covered by what's coming in each month.

"For those seriously struggling to keep up with payments, I would advise seeking debt advice from one of the free debt advice charities who can help them get their finances back on track.

Toy company that owns the rights to children’s favourites Mr Men and Noddy to enter administration

The creditors of Chorion are preparing to place the company into administration just a week after the departures of its chairman, the Labour peer Lord Alli, and his deputy Viscount Astor.

It is understood that Chorion’s owner, the private equity firm 3i, has failed to find new funding for the company and is set to opt for administration because it stands to lose its £86 million investment into the business.

The company, which also owns the rights to the Agatha Christie series of crime novels, breached its covenants in March this year and has simultaneously failed to come to an agreement with creditors, which also include Lloyds Banking Group, on a refinancing package.

It was rumoured that 3i and Chorion were holding 11th hour talks with private equity houses in a bid to find fresh lines of capital, but a final deal could not be struck.

According to its most recent sect of accounts, for the year ending March 2010, Chorion has debts of around £70 million and annual interest payments of £35 million.

For the same period, the company’s earnings before interest, taxes, depreciation and amortisation of £14.9 million, while revenue reached £51.7 million.

Global economic turmoil damaging business confidence

The level of business confidence across the UK has fallen to its lowest level since the UK was still in recession, according to a national study published today.

The joint survey, by an accountancy firm and the Institute of Chartered Accountants in England and Wales (ICAEW), shows a widespread decline in confidence as global economic turmoil has impacted businesses’ future plans.

The UK Business Confidence Monitor (BCM) also shows that an increasing number of businesses see tax and red tape as major challenges, with 40% believing regulation is a greater burden than 12 months ago.

The monitor takes a measure of confidence among business owners and this index has fallen from to +8.1 in the third quarter of 2011, from +13.7 in the second quarter, and is now at its lowest level since the second half of 2009, when the UK was still in recession.

The confidence index has been on a downward trend since the first half of 2010.

Business owners who took part in the survey bemoaned the lack of progress to make it easier to do business in the UK.

Four in 10 firms, told the survey that regulatory requirements now pose a greater challenge than 12 months ago, up from 33% in the same quarter last year.

Despite the introduction of a one in, one out rule, for business regulation and a cut in corporation tax from 28% to 26% in April, many British firms still feel swamped under bureaucracy and red tape.

The BCM also brought to light that many firms are seeing turnover and profit growth weakening, forcing them to revise down future expectations.

This follows expectations that the Office for Budget Responsibility will revise down its own growth forecast of 1.7% for the current year in its forthcoming autumn statement

.

Overall, the survey showed that a positive trend in financial performance for many businesses has started to falter.

Average turnover growth for businesses who took part in the survey, for the 12 months to the third quarter of 2011, stands at 3.6%, while average gross profit growth is reported at 3.1%.

Insolvency News reveal the Shortlist for the Fourth Annual Insolvency & Rescue Awards

A record number of entries were submitted and the judges will soon be deciding the winners for the profession's most prestigious awards scheme.

The awards will be held at the Lancaster London hotel on October 5th, which will feature Edward Davey, the minister with responsibility for insolvency, as keynote speaker.

Beer & Young are once again finalists in two categories, they will be defending their title as ‘Business Rescue Funder of the Year – Broker / Equity’ and are also contenders for ‘Business Rescue of the Year - sub £20m turnover.’

HMRC to suppress time to pay statistics

HMRC has confirmed that July’s statistics on time to pay, which reveal that £1.02bn of taxpayers’ money remains outstanding under the scheme, will be the last to be published.

The most recent figures on time to pay, provided by HMRC’s business payment support service, show that £7.71bn in total has been deferred by businesses with cash flow problems, although £6.69bn has been repaid.

The figures show that a total of 444,000 time to pay agreements have been made since November 2008, although the number of deferrals have been in decline since late 2009.

Just over £1bn remains outstanding, of which around £650m is overdue, but the insolvency profession and the public will be left in the dark over these levels after HMRC decided not to publish them in future.

The revenue ran a six-week consultation on the figures earlier this year, but only had two responses, one internally and another from the Treasury. After it closed, HMRC decided that it will stop publishing the statistics after July.

No press release was issued as HMRC did not view it as “high profile” enough, and none of the RPBs or the trade body R3 was made aware of the consultation. 

R3 president Frances Coulson said: “Time to pay has played a vital role in preventing the spike in corporate insolvency numbers that usually follow the end of a recession, and we are concerned to learn that HMRC will no longer publish the official statistics on this from July. We believe they are in the public interest.”

A spokesperson for the Insolvency Practitioners Association said: “It does seem that the IPA was not approached about this consultation. It is a little surprising that the HMRC representatives that spoke about time to pay at the IPA conference in April 2011 also did not mention it.”

A spokesperson for the Institute of Chartered Accountants in Scotland (ICAS) said: “ICAS was not aware of the consultation and we are in agreement that the stats would be useful for the industry.”

A spokesman for HMRC said: “Time to Pay should be a short term aid to businesses. Repeated requests may be a sign that the business is no longer viable. It is not fair if HMRC give preferential treatment to some businesses by giving them easier terms.

“Therefore, given that a repeat request is more likely to be refused it is entirely understandable that the number of refusals is increasing as a percentage of requests made.”

5,179 firms in critical condition

A total of 5,179 companies in the UK were facing critical problems in the second quarter of this year, representing liabilities of nearly £60bn, according to the latest Red Flag report.

The report, issued on 29^th July, shows a 12 per cent rise in the number of companies in a critical financial condition compared to the first three months of 2011.

Travel and tourism, hotels and accommodation and retail sectors continue to suffer with further decline. The number of companies suffering critical financial problems in the hotels and accommodation sector increased 47 per cent and for the travel and tourism industry, this figure spiked by 31 per cent. The retail sector also saw a 17 per cent increase.

But while these industries remain highly vulnerable, the report shows a 48 per cent fall, quarter on quarter, in the number of businesses facing ‘significant’ financial problems. This fall is an apparent glimmer of good news, but could be indicative of weaker businesses actively moving from significant to critical financial problems - and ultimately to insolvency, as well as seasonal factors which typically impact on the first quarter figures.

HM Revenue and Customs is taking a more robust stance. As the level of support from the revenue is gradually decreased, it is increasingly evident that businesses using the scheme are now struggling to cope with current trading conditions.  Many companies which made use of the time to pay scheme have failed to achieve a turnaround and are now seeking a second deferral agreement with HMRC. 

However, the government is finding it difficult to give second chances and the number of winding up petitions issued by HMRC in the second quarter of 2011 has more than doubled since the first quarter.

Property also showed no signs of improvement, according to the report. The level of companies in this sector showing signs of critical distress views was up by 42 per cent in the second quarter compared to the first.

There was also a 41 per cent rise in the haulage and logistics sector during the same period.

JULY 2011 NEWSLETTER

Welcome to our Summer Newsletter.

The first half of 2011 has been a challenging one for many involved in the SME community. Small businesses are struggling to generate good cashflow and finding it very hard to access new capital from their banks. We see many business owners who are behind with payments to HMRC, most recently corporation tax bills, and finding a less than sympathetic ear from the tax collectors.

Paradoxically, we have an ever increasing network of private investors who are seeking the right opportunities to invest capital. The vast majority of these individuals are self-made entrepreneurs who have exited their core business and have an appetite for backing established trading businesses who have a need for capital.

We’re finding ourselves able to generate significant investor interest for almost all of our clients; holding meetings between clients and investors often within days of being taken on. Over two thirds of our clients receive offers of funding, which is a testament to the quality of our investor network.

The tricky bit, of course, is managing expectations on both sides. Agreeing terms, valuations, keeping DD to an appropriate level, not allowing time to drift and maintaining deal momentum are all obstacles that need careful management.

We’re always keen to talk with business owners who have a need for capital and are comfortable with an equity funding solution. Please don’t hesitate to contact myself or a colleague at any time.

INDUSTRY AWARDS

It’s that time of year again, the cutoff date has now passed and entries have been submitted for this year’s Insolvency & Rescue Awards. 

Now into its fourth year, The Insolvency and Rescue Awards is the biggest event in the insolvency and turnaround industry, where professional excellence and outstanding achievements are recognised.

We are back this year to defend our title as ‘Business Rescue Funder of the Year’. We have also entered a second category to highlight our achievements since the last awards ceremony with our entry for ‘Business Rescue of the Year’.

Finalists are due to be announced in the coming weeks and the awards will be held on 5th October at the Lancaster London Hotel.

Let’s keep our fingers crossed!

BIRTHDAY CELEBRATION

Now into his seventh year with Beer & Young, Senior Associate Michael Morley-Smith celebrated his 65th Birthday this month. Trained as an accountant, Michael has intimate knowledge of small business practice as well as company insolvency rules, and has become one of our in-house technical experts for company turnaround.

Michael is a huge fan of Formula 1 and cricket – we’re looking forward to a day out at the Rose Bowl to see England/India in September.

Congratulations on reaching this milestone. We expect several more years’ effort before we hand over the brass clock!

20 retail stores are closing every day

Britain’s beleaguered retailers closed an average of 20 stores a day between January and the end of May, according to a report from a research business specialising in retail.

The report also revealed that across multiple retailers in 300 town centres, clothes, shoe shops and jewellers have been amongst the hardest hit in 201 whilst supermarkets, convenience stores and cafes bucked the trend by showing growth in the first half of 2011.

It would appear that the combination of rising inflation and dented consumer confidence has led to people increasingly trying to find the best deal online. This has made life difficult for store-dependent high street retailers who have seen a drop in sales and reduced footfall.

Matthew Hopkinson, director of the research company, said that retailers now require fewer stores in fewer locations but with larger floorplates.

He added: “The negative trend seen here is, however, offset by the supermarkets and their move into convenience formats, along with the new opportunities presented to charity shops, pawnbrokers and betting shops.”

The companies analysis shows that Rochdale and Lancaster were the hardest hit towns in the north west. In the north west, 17 womenswear and childrenswear outlets closed and 12 bars, clubs and pubs closed, while there was a growth in charity shops and pet shops.

Retail bloodbath: IPs warn it's survival of the fittest

After household names including Habitat, Jane Norman and Thorntons all either collapsed into administration or announced store closures, insolvency specialists have warned that the retail sector will continue to endure pain this year.

The news also followed a report from the British Retail Consortium (BRC) that said retailers were being hit by weak demand and surging prices for commodities and property, while employment costs remain high.

Brian Green, a restructuring specialist at KPMG who worked on the company voluntary arrangements (CVAs) for retailers Blacks and JJB Sports, said: “For the retail industry it is now a question of survival of the fittest.

“Companies with healthy cash flow, low debt levels and sustained customer demand will survive; conversely retailers facing a cash squeeze, large debt burdens, faltering sales and - particularly those with expensive and large store portfolios - will face a tough time.”

Green highlighted the most recent set of figures published by the Insolvency Service for the first quarter of 2011. This showed that retail administration appointments jumped by a staggering 55 per cent, with retail CVAs increasing by 30 per cent.

He added: “With the cushioning effects of suppressed interest rates having worn off, persistently worsening consumer spend is starting to crystallise in business failure. Unfortunately the fundamental economic indicators suggest that retail insolvency figures will continue to worsen this year.”

Green’s comments follow news that HomeForm, owner of KitchensDirect, entered administration and an announcement from TJ Hughes that it may have to appoint administrators. This comes on the back of HMV, Waterstones and video games retailer Game all reducing the number of stores.

Last month the BRC said numbers from the Office for National Statistics showed the weakest growth in sales values so far this year.

BRC economist Richard Lim said: “After the feel-good boost of April, which saw retailers benefiting from sunny weather and bank holidays, May was a return to reality. Consumers are overwhelmingly cautious about their personal finances and are reluctant to spend, particularly on big ticket items.”

R3 president Frances Coulson said the recent last quarter day for rent in June was the catalyst for many retailers’ collapse.

She added: “The high-street and the way consumers shop is changing and the rate of change has been sped up by the protracted economic downturn. The most significant change is consumers shift to the internet.

“Close to a third (31 per cent) are now shopping online more and this has definitely impacted on those retailers that have a heavy high-street presence.”

HMRC: £650m overdue under time to pay “is collectable”

HMRC was responding to figures which revealed the taxman was owed £970m by businesses under time to pay, and that £650m of this was overdue, while £320 is due for payment within an agreed deadline.

It was claimed that some businesses have deferred payment of their tax debts as many as four times under the scheme.

The latest figures emerged after a parliamentary question was put to HMRC from Lord Newby, co-chair of the Liberal Democrat Treasury parliamentary policy committee. Lord Newby asked how much money remains outstanding under the business payments support service, under which the time to pay operates.

Lord Newby was told that 395,400 time to pay arrangements have been made, involving £6.8bn of tax, of which £5.87bn has already been repaid.

Meanwhile insolvencynews.com has discovered that HMRC will not be publishing any more figures on time to pay after July.

A spokesman for HMRC said a consultation on continuing to publish the figures was launched earlier this year, although no press release was issued because the subject was not deemed “high profile” enough.

The consultation received no responses other than one from the Treasury and one internal response from HMRC. HMRC then decided that the July 2011 release of time to pay figures will be the last.

HMRC added that the majority of businesses that have entered into time to pay arrangements are “fundamentally viable” and are still in business “in no small part” due to the practical support provided by its arrangements.

The spokesman for the authority added: “Around 90 per cent of the tax rescheduled has been paid and this, coupled with the enormous benefits that small businesses deliver to the country through tax revenues, jobs, and long term expansion, strongly justifies our pragmatic approach.”

HMRC said the £650m is collectable and will either be subject to further time to pay when appropriate, or to its normal debt collection procedures.

Those arrangements which have not been paid in accordance with their schedules will have undergone standard HMRC recovery and enforcement action.

This will involve further recoveries, but HMRC said it is not possible to identify these separately as being related to earlier time to pay agreements.

HMRC’s spokesperson added: “Time to pay is designed to help businesses with short term cash flow difficulties and we are well aware that multiple applications may be evidence of a deeper structural problem with implications for the long term survival of the business.

“So when a business makes multiple applications we probe to ensure the request is driven by a short term cash flow problem, rather than a deeper and insurmountable one.”

Private Investor to the Rescue!

This month we’re offering two short case studies highlighting recent work we’ve carried out for clients. As you know we are set up as a transaction based business. We rely on referrals and will never seek to overlap work that our introducer can ably carry out. That said we don’t believe there is anyone in the UK who so regularly delivers urgent capital to businesses as we do.

Talk to us if you know of a business that has a need for capital. Our network of investors is unparalleled in the UK numbering well in excess of one thousand high net worth individuals. We offer an honest and swift appraisal of any situation and we'll happily meet with the owners at no cost or commitment.

Interior Design & Consultants  - Case Study

Our client provides high quality interior design and consultancy services primarily to the commercial market.  The business owner has enjoyed success over a period of more than 20 years and has a customer list with a truly global reach. Post-recession, a number of client relationships have regenerated and an impressive order book has been built up.

In 2010 we introduced our client to investors and helped close the investment transaction. The investor concerned worked within the industry and this element was seen as crucial to the fit. Unfortunately, over a relatively short period of time, this relationship broke down and we were engaged for a second time to find a new investor.

In a very short timeframe, not only had we found and introduced a new investor – also an established individual within the trade, but we helped negotiate exit terms from the previous relationship. An amicable settlement was reached, leaving our client clear to enter terms with this new party.

"I was completely happy and satisfied with the service that we received from Beer & Young who clearly understood both parties’ needs and acted accordingly. They were always on the ball, reacted speedily to all situations and we are completely indebted to them for introducing us to an ideal investor partner enabling the business to survive and grow from a very precarious position and in addition complementing the investor’s business. I would have no hesitation in recommending Beer & Young to others".

Wholesaler / Distributor – Client Testimonial

As you can see from the testimonial below, our client had a serious issue with HMRC

Our business had been re-financed but had significant historic arrears with HMRC. We reached the point where HMRC moved our case to the solicitors’ office who would then issue a winding up petition. We called Beer &Young who swung into action straight away. They were able to persuade HMRC to take an immediate step back, giving us the chance to re-submit proposals for repayment. Beer & Young managed the whole process for us and we’re delighted that they were able to negotiate workable terms for us. I recommend any business with HMRC problems to contact them. They will act immediately, clearly have an excellent reputation within HMRC and are able to deliver results. Thanks again for your help.

AW, Director

Helping business owners deal with tax arrears

For this month’s news story we thought we’d highlight our non-core, but extremely important, area of our business – namely helping business owners’ deal with tax arrears.

Over the past 10 years or so we’ve been dealing with HMRC in their various forms, and since early 2009 when the recession started to bite we’ve been really active in this area. Since this time we’ve helped many dozens of businesses negotiate or re-negotiate workable payment terms with HMRC. We’ve offered a couple of client testimonials below. Before we move onto these comments, it’s worth offering a few pointers to business owners and finance directors.

1.     Don’t ignore the letters that arrive, once your case has become live, it won’t go away by ignoring it.

2.     HMRC have been very helpful in offering time to pay arrangements. Whilst these are not coming to an end, there is value to you in having a third party negotiate on your behalf as the scheme has been tightened significantly.

3.     There is a point where the taxman loses patience with the business owner or their management and begins to take action. This is not the end of the road, but a realisation that you must take advice and engage with a specialist firm.

If you are at the early stage of arrears, or about to miss your first payment, be it PAYE or VAT, it is important to communicate effectively with the relevant department.

Here are some recent testimonials demonstrating the quality of Beer & Young’s work in this area. Please contact us to talk about any issues you have.

Wholesaler / Distributor

Our business had been re-financed but had significant historic arrears with HMRC. We reached the point where HMRC moved our case to the solicitors’ office who would then issue a winding up petition. We called Beer &Young who swung into action straight away. They were able to persuade HMRC to take an immediate step back, giving us the chance to re-submit proposals for repayment. Beer & Young managed the whole process for us and we’re delighted that they were able to negotiate workable terms for us. I recommend any business with HMRC problems to contact them. They will act immediately, clearly have an excellent reputation within HMRC and are able to deliver results. Thanks again for your help.

AW, Director

Manufacturer of Specialist Fastenings

“Before I met with Beer & Young, my Company was in serious financial difficulties.  I had been through a poor trading period and our tenant had recently gone bust.  I

had creditors chasing me and we had arrears of both PAYE and VAT.  The sales finance company were restricting our facility and I was being advised to liquidate the business, which was the last thing I wanted to do. Beer & Young suggested the Company propose a CVA and on my behalf they talked to HMRC, the sales finance company as well as some key trade suppliers with the result that the CVA was agreed.  Thanks to Beer & Young, my company has survived the crisis and now sales have recovered to record levels I am confident my business has a future.”

Owner

Six million people behind on bills, says R3

Around six million people are behind with their bills and payments as record numbers experience financial distress, according to insolvency trade body R3.

About eight million people are due to go into their overdraft this month, with two million believing that they will go into an unauthorised overdraft position, according to research published in R3’s latest Personal Debt Snapshot report.

The study also finds that 36 per cent of  people believe that their financial situation will worsen over the next six months, while 32 per cent of people are now saving less than they used to – this equates to 15 million people.

R3 president Frances Coulson said: “These figures make for worrying reading. It is clear that many have found themselves in a position whereby they have to go into and often exceed their agreed overdraft in order to keep on top of their bills and debt repayments. “Unfortunately, more often than not this leads to bank charges, which further deplete the amount available for bills. It’s a catch-22 situation which can result in debts snowballing.”

Coulson said a sudden change in circumstance such as redundancy tends to trigger insolvency.

She explained that  with many people effectively experiencing a pay cut as living costs continue to rise, it is not always possible to set aside money for a “buffer”.

Coulson added: “Our research shows that 19 percent of people now set a budget. This is definitely a positive step as, for those who are struggling with their debts, a budget is a key tool which allows you to clearly compare how much money you spend against your income. This will help to identify if any savings can be saved and where.”

Project Merlin fails to hit target

Bank loans to small businesses fell £2.2 billion short of their target for the first quarter of 2011 under the Project Merlin agreement, according to official figures. Loans to small and medium-sized enterprises (SMEs) from the Merlin banks totalled £16.8 billion for the first three months of this year, falling short of the £19 billion lending target set out in the Merlin agreement between the banks and the government.

The shortfall was attributed to a lack of demand from SMEs, according to a statement released by the British Bankers’ Association (BBA) on behalf of the banks signed up to Project Merlin. 

HMRC in £1.5bn debt collection tender

HM Revenue and Customs has selected 10 debt collection agencies (DCAs) to work placements valued at between £500 million and £1.5 billion following a tender process.

The 10 agencies selected are in line to share between £30 million and £70 million in fees from the two-year deal, were notified of their selection on May 20, following what one DCA chief executive called “the largest tender the industry has seen in 20 years”.

Probes into bank failures to be made public

The Prudential Regulation Authority, the new financial services regulator, will have greater powers over the banks and will make public its investigations into banking failures.

Hector Sants, chief executive of the Financial Services Authority, which will be replaced by the Prudential Regulation Authority (PRA), said the new agency will also be given more powers to block bonuses and dividend payments by UK banks.

The new powers will come under a more intensive supervisory approach that has been adopted by the FSA since the financial crisis.

Sants said the PRA will utilise powers to block bonuses if it believes that such payments break new rules on risk management and capital adequacy. 

His comments emerged as the Bank of England and the FSA published a joint paper, entitled The Bank of England, Prudential Regulation Authority – Our approach to banking supervision, which sets out how the PRA will supervise banks, building societies, credit unions and investment firms.

Hector Sants, PRA chief executive designate, said: “The PRA’s purpose is fundamentally different from that of previous regulatory regimes and will lead to a significantly different model of supervision to that which was in use pre-2007.

“In designing this new model we have incorporated both the lessons learned from the last financial crisis and those from firm failures of the past.”

He said the new regulatory model will be based on forward looking judgements and will be underpinned by the fact that the PRA has a single objective: to promote the stability of the UK financial system.

Andrew Bailey, FSA director of UK banks and building societies and PRA deputy chief executive designate, said: “Maintaining financial stability is an objective in public policy which we should all value highly. We have seen what happens when we lose it. 

"But achieving and maintaining financial stability does not mean that we have an industry in which no-one can fail."

Angela Knight, chief executive of the British Bankers’ Association (BBA), said the trade body supported “sensible reform” and the formation of the PRA to “take forward the lessons we have all learned.”

She added that the new body needed to attract high calibre staff as supervisors.

Small firms may miss out on £2.5bn fund

Most small businesses seeking affordable finance will miss out on a new £2.5bn equity fund launched by the UK’s largest banks, a business lobby group has warned.

The Forum of Private Business said the criteria to access the Business Growth Fund, launched by banks and the British Bankers’ Association (BBA), will put many businesses off from using the scheme.

The Business Growth Fund allows banks to take stakes of between 10 per cent and 50 per cent in high growth businesses, with turnovers of between £10m and £100m, in return for investments of £2m to £10m.

But according to the latest figures from the Department of Business, Innovation and Skills (BIS), just five per cent of small and medium-sized enterprises (SMEs) have funding requirements of £1m or more, with just under a quarter (23 per cent) needing between £10,000 and £24,000.

The FPB said a paltry one per cent of SMEs are seeking equity finance (down from two per cent in 2006/2007), with most choosing not to sacrifice a stake in their businesses and preferring debt lending in the form of bank loans (40 per cent), and overdrafts (35 per cent).

The forum said it is concerned that the fund will not help the vast majority of firms struggling to find the cost-effective finance necessary to compete for new contracts, create jobs and drive economic growth.

FPB senior policy adviser Alex Jackman said: “The Business Growth Fund aims to bridge the clear gap in funding for high growth firms identified in the Rowlands Review back in 2009 and so is certainly a welcome step and one that is long overdue.

“But we cannot allow this to overshadow the real problem – the lack of affordable lending being made available by banks to start-ups and other small businesses – those that are not eligible to benefit from the fund.”

Jackman added: “There is a real danger that these firms will be left behind and that would be disastrous for the economy.”

Under the Business Growth Fund the banks are committing to provide £1bn of equity capital over three years and £1.5bn over 10 years.

Conceived as part of the BBA's taskforce last autumn, the fund was central to the Project Merlin deal struck between the government and major banks. The deal included an increase in lending to SMEs and restraint on bank bonuses.