Are you prepared for a Brexit storm?

A day doesn’t go past now without a news item about Brexit and with major talks scheduled for December it’s all very tense. The magnitude of work required to leave the EU seems to be hitting home. Talking to colleagues there is a feeling that it will work itself out. It has to, doesn’t it?

There are likely to be many more twists and turns and a deal will probably be done, but on what terms? As a business owner this uncertain future doesn’t help when you are trying to plan, especially when it’s combined with a fragile UK economy and unstable political environment.

There has been a lot of talk about the tariffs that may come into play if there is a hard Brexit, aka “no deal”. Tariffs are a protectionist measure countries adopt to enhance the competitiveness of industries in their economies. They work by applying what is effectively a mark up on goods entering the country thus making them more expensive compared to home made products.

Under World Trade Organisation rules, which the UK has signed up to, tariffs are not allowed to put at a disadvantage or advantage one country against another. So for example the UK government could not hit back at France for forcing a hard Brexit by applying a 70% tariff on cheese. Instead the tariff that applies to the “most favoured nation” i.e. the lowest must apply to all others. This is known as the MFN rate.

With the MFN weighted average of the EU in 2013 being around 2.3% you might argue that the benefit of being in the single market was reducing. But that’s not the whole story as the MFN tariff varies quite a lot on different products. On cars for example it’s around 10%. If the UK matched this rate on Brexit then cars imported from Europe would cost around 10% more on 1 April than 31 March 2019.

One other issue we need to be aware of is the reverse. Exporters whose goods are currently flowing into Europe tariff free may see the effective price of their goods rise if tariffs are added and therefore their competitiveness reduce against their EU competitors.

I guess that the silver lining is that it won’t come to this BUT what happens if it does? What impact will it have on your profits? How prepared are you?

As I was writing this, this Facebook advert popped up on my feed re-enforcing my view that we need to start planning now.

However, whilst planning might be difficult one thing you can do in preparation is research. Many of my clients have supply chains that stretch into Europe. Some buy directly from companies in France, Spain and Italy et al. others from companies in the UK who buy from Europe. Do you know where the goods you buy come from and what would you need to do if there were a 2.5%, 5.0% or 10% increase in prices because of the application of a tariff? Can you source goods from UK producers? Does your business model need to change? These are all questions I think you should have the answers to just in case.


Slips, trips & falls

In 2002 20.2% of all reportable injuries were as a result of slips, trips and falls; this is second only to Manual Handling injuries which were at 36.9%. By 2010 this number has increased to 37%, with 28% of all fatalities in the workplace being as a result of slips, trips and falls. By 2012 slips, trips and falls accounted for 53% of all major reported injuries.

Regretfully, the Co-op has been heavily fined following an accident in which a customer was killed in a slipping accident. In July 2015 74-year-old Stanley May visited the Truro branch of the Co-op. In the chilled food aisle there was a wet area of flooring where water had been leaking from a faulty sandwich chiller. Mr May slipped over, striking his head. He died two days later in hospital.

We all know that it is not uncommon to see a slippery floor in a supermarket; this can be for a number of reasons; cleaning activities, dropped fruit, product spillages or leaking equipment. In my experience supermarkets, in general, act very quickly in dealing with any spillages and will have a supply of mops and buckets, wet floor signs, matting, etc. at the ready. However, in this case in Truro the chiller had been leaking for 44 hours prior to the accident but customers had been allowed unrestricted access to the area.

Management had initially taken the correct approach by attempting to stop the leak at source. Engineers had been called in when the machine broke down, but it had continued to leak. Staff had also put up a wet floor sign. However, the prosecution explained that the wet area of flooring extended beyond the sign so this appears not to have been adequate as a means of risk control.

Any risk assessment should examine the hazards associated with those at risk; visitors, young people, employees, etc. and in any public place, like a supermarket then the risk assessment should be extended to consider the elderly, disabled, people pushing prams, etc.

In this particular case the supermarket should have done more and the Co-op pleaded guilty to a charge of failing to protect members of the public, under section 3 of the Health and Safety at Work etc. Act 1974. It was fined £400,000 and ordered to pay prosecution costs of £50,000.

As the statistics above show, slips and trips are the single most common cause of major injury accidents in UK workplaces, therefore wet floors need to be treated seriously and with urgency.

There is a logical order in which to control and then eliminate the hazard.

  1. Fixing the leak
  2. Removing the source
  3. Contain the liquid in a tray
  4. If the wet floor cannot be avoided, or if there will be a delay in making the area safe, staff should follow pre-determined procedures.
  5. Following the clean-up, the floor should be left as dry as possible and then a wet floor sign displayed.

If you would like more advice on employee or health & safety issues please contact Andrew Tomlinson on 01522 815100.


What is a days pay?

I was recently asked the question … “How do I calculate a days pay?”

Apparently an employee had used up their holiday entitlement but had then been offered the opportunity of going to a Test match at the Oval for the day. The employee had asked for this day to be counted as “unpaid leave” and the employer had no objections to this but was confused as to how to calculate a day’s pay.

My immediate thought was to do a simple calculation;

52 weeks in the year multiplied by 5 days per week gives 260 working days, therefore one day of unpaid leave is simply 1/260 x annual salary.

However, before I answered the query I thought it best to do some research, and I found that this calculation was used in Hartley v King Edward V1 College 2017; in this case it was a deduction from pay following a one-day strike.

The Court of Appeal had also used the same 1/260 approach as I had, but I found that the employees involved had appealed this method to the Supreme Court.

The Supreme Court overturned this calculation and held that, in the absence of any express contractual wording to the contrary, the correct rate of deduction is 1/365th of the employee’s annual salary. It also stated that this 1/365th approach does not apply where an employee on an annual contract has a set hourly rate rather than a fixed salary.

For more information about human resources or to discuss a particular employee issue please contact Andrew Tomlinson on 01522 815100.

Head of Human Resource at Nicholsons Chartered Accountants Lincoln HR


Make XERO your library for all finance related files and documents

Since XEROCON 2017 in early Autumn I have been spending a lot of time thinking about “frictionless finance”. How do we use technology to do finance related activities; better, faster and more accurately?

There is a lot of scope to add apps and set your systems and procedures up in an integrated way that will help with this but there are ways that you can work too that will also help you save time.

For me one of the best features in XERO is the ability to store an image of a purchase invoice or other documents actually with the transactional details. Not revolutionary but if used a real time saver. How often do you need to go and look for a purchase invoice, either because you want the supplier details or want to know how much “that” cost?

One question I often get asked when talking to clients about this is “Don’t  I need to keep paper copies for the taxman?” The simple answer to this is no. In the VAT section of the .gov website under record keeping guidance says:

“You can keep VAT records on paper, electronically or as part of a software programme. Records must be accurate, complete and readable.”

https://www.gov.uk/vat-record-keeping

So it seems logical that if you can copy documents and files to transactions and make them available when you need them, then why wouldn’t you?

XERO enables you to attach files to lots of different kinds of transactions such as; invoices, quotes, manual journals, accounts in your chart of accounts and stock items. You can even send attached files to customers with their invoices and you can attach the same file to many transactions.

Files or documents can be uploaded from your computer or other shared location or stored in the file library in XERO. To do this click on the little file icon next to the inbox icon on the header bar.

You can then create folders just as you would on your computer and manage your documents.

Another neat feature allows you to email documents to your file library.  You are allocated a unique email address and can create a V Card to store in your email address list. You could also share the V Card with colleagues making the process of getting emails to XERO; better, faster and more accurate!

For more information about files visit the XERO help centre by clicking on the image below.

If you want to learn more about XERO and how it can help your business please contact either myself or colleague Stephanie Smith on 01522 81 51100.


Growing Your Business – Common Pitfalls

Many people running their own business want to grow and become more profitable. Why should this be a problem you may ask? Surely everyone is in business to make a profit? Very true, however a business can grow too fast and actually fail as a result of this. Cash (or lack of it) is one of the key causes of business failure.

Growing a business may require new equipment or capital investment. Where does this cash come from? There are many funding options available that will help to ease the cash flow burden. Your accountant should be able to assist in obtaining the right funding for your business, along with helping to prepare any forecasts and projections needed to obtain it.

Securing some large contracts may seem like a really good business plan, but ……….reliance on a handful of large customers can have a negative effect on your cash flow. Larger customers can often extend the terms over which they pay, hindering your cash cycle. You will have paid your suppliers but may have to wait a further period of time to receive the income owed to you.  Do you have a sufficient overdraft facility in place to cover this?

You may currently be below the VAT threshold, but growth may mean you must become VAT registered. How do you pass this cost on if you provide products or services to the general public or not another VAT registered business? Adding 20% onto you sales may result in you becoming less competitively priced. When your business starts to grow, you should speak to your accountant to help guide you through this.

Whilst it’s perfectly natural to want your business to grow and be as profitable as possible, be cautious and seek advice before leaping into the unknown.


As You Were!

The Budget announcement, and subsequent withdrawal, regarding the increase in NI contributions for the self-employed has been a debacle. Philip Hammond was supposed to be a safe pair of hands as Chancellor of the Exchequer, but any more gaffes like this and he will earn the nickname “Butterfingers”!

Simplifying the tax system is a noble aim, and the abolition of Class 2 NIC from 6th April 2018 is a good step along this road. It seems that the Chancellor was trying to claw back
some of this lost revenue by his Class 4 NIC hike, but this was politically unacceptable. Continue reading


Budget 2017 – Payroll Changes

With the new tax year looming, the payroll year end is at the top of the list of ‘to do’ for all of us processing payrolls.  I thought it might helpful if I run through a few of the things that we need to keep in mind this month and into the next:

If you haven’t already ordered, and don’t want to waste ink, the Revenue are still providing blank P60 forms for free, just search for the online order form on HMRC.GOV.UK. Continue reading