What’s your ambition threshold?

The other day I heard a great quote. It came from a local entrepreneur who had just had his company described as an SME.

“That’s a wrong description actually. I’m not in business to be small or medium-sized. I want to be massive!”

It got me thinking about personal ambitions, work-life balance, fame and fortune, risk and reward ….. and importantly, what do I want out of my own life*?

Well, suffice to say that I’m fairly happy with my ambition and achievements at present, but that’s because I think I know my current ambition threshold. Do you know yours? It really isn’t that difficult to work out.

A friend of mine told me how he established his ambition threshold. You just need some time on your own (OK with your partner as well, if you like). My friend had plenty of time to think. He was stuck on the M25.

He simply asked himself what he wanted to realistically achieve in terms of health, wealth, home and happiness. Did he want to run the London Marathon? Run his own business or become the MD of the big corporate he was working for? Buy or rent his home? Get married and have two children? Travel? Play golf?

The trick, he says, is to be honest with yourself. Ditch all those things you really won’t do and don’t need, and concentrate on achievable ambitions that won’t cause you undue stress. Set reasonable long-term targets as well. If you achieve those ambitions, then you simply re-assess your ambition threshold again.

Which brings me back to thinking about that SME entrepreneur. He knows his ambition – he wants to be massive – but how massive, and how will he achieve it? Will he want to grow big and then sell-up, or be the next Sir Richard Branson? Can he do it alone, or will he need partners and professional advice?

Suddenly, I’ve got a new ambition. I must track down that chap and offer him the assistance of Vale & West!

Jason Pyke
Vale & West, Managing Partner

* Incidentally, one of my colleagues has an ambition to raise £5,000 for charity but undertaking five strenuous personal challenges. Click here to find out more

Spend! Spend! Spend!

“I’m going to spend, spend, spend!” said the soon-to-be pensioner interviewed on the TV news after The Budget.

He was reacting to the Chancellor’s announcement that it will no longer be necessary to take out an annuity on pensions, and it will be possible to draw down cash at will from personal pension-pots.

Which is fine, whether you view it as a long overdue right of an individual to freely manage their own ‘retirement nest-egg’ or an opportunity to treat yourself and ‘spend, spend, spend!’ as the chap on the TV suggests.

I simply ask you to consider two facts:

  • Average UK life expectancy is now around 81.
  • In 1961, Viv Nicholson won £152,319 on the football pools – equivalent to £5 million today. She vowed to ‘spend, spend, spend’ and her lavish lifestyle became the stuff of media headlines, a book, TV play and a successful West End musical. Viv was not so successful. She managed to blow her fortune in four years, ending up as a pensioner virtually penniless. She is now in her late 70s.

OK, so Viv’s example is not quite the same as the Chancellor’s pension-pot opportunity, but the cautionary message is clear.

Viv has since said: “I’ve had a lot of time to think over the past 50 years and looking back, like a lot of us, I made some foolish decisions - maybe I was different then, or maybe it was because I didn’t know who to turn to.”

It’s also worth noting that later in that TV newspiece, the chap rethought his ‘spend, spend, spend‘ first reaction, and said he’d probably not fritter away his pension-pot. After all, he’d got many more years left yet to fund and enjoy!

I doubt he’ll be the only one to think twice – and hopefully seek professional advice about what to do with this pensions opportunity.

Jason Pyke
Vale & West, Managing Partner

Ready for Real Time?

I think we are going to be very busy at Vale & West for the rest of the year.

It’s just that in my day-to-day work with local businesspeople, I’m getting the impression that very few are aware of Real Time Information and its potential impact on their businesses.

The HMRC is introducing RTI for reporting PAYE data starting in April 2013.

That statement alone is probably enough to make the eyes of many businessmen glaze over.

For one thing it mentions HM Revenue & Customs and Pay as You Earn taxation in the same sentence – neither being favoured topics of entrepreneurial and progressive companies. And, with RTI, it introduces another confusing TLA (Three Letter Acronym!) to the administrative backrooms of the corporate world.

Anyway, in practice this means that from April next year employers will have to send PAYE data electronically to HMRC each time they pay their employees as part of routine payroll processes, rather than sending a separate return at the end of the year.

Since these more frequent RTI returns will include details of all employees’ pay, tax and deductions, it will enable and underpin the introduction of Universal Credit – the Government’s flagship welfare programme. Basically, it will provide a more accurate means-tested regime in which eligible employees and those out of work will get the right amount of benefits paid to them.

But it also means, businesses will need to change outdated internal payroll systems or find suitable outsourced RTI-compliant payroll providers.

Either way, explanatory RTI letters from the HMRC will be dropping through 1.4 million employers’ letterboxes during October, and I predict our phones will be ringing consistently soon after as many companies seek Vale & West professional advice and assistance.

Lee Gardner

A fresh start, a new signing for the B-Team?

Well the football season is up and running! It’s a fresh start and a challenging one for some, not least our local team Reading FC.

Being in the Barclays Premier League is literally a whole new ball-game, not just for the Royals ‘A-Team’ onfield players, but also the off-the-pitch ‘players’ in the club – those in the business team, the ‘B-Team’ running operations such as marketing, ticketing, media-handling, fans and community liaison and matchday hospitality.

In many ways, league promotion has created a fresh ‘start-up’ situation.

Certainly it has rapidly broadened the scope and opportunities for this major Thames Valley sporting business called Reading Football Club. Because, although its our local football club, it’s also a major employer and potentially and economic driver in the region.

Of course, ‘The Royals’ business team is better placed than many such new season ‘start-ups’. They been there before and got the T-shirt – and no doubt learned valuable lessons.

But as with this season’s onfield teams, I’d suspect there may well have been some new signings for the ‘B-Teams’ of many newly promoted clubs – most probably of personnel with prior League experience, or at least knowledge and awareness of bigger business fields of play.

Certainly, that’s what I, as a company and accountancy start-up specialist, would be advising businesses in such start-up or fresh start situations.

And bearing in mind, that Vale & West have that experience and knowledge ourselves, I wonder what Sir John’s telephone number is ….maybe Anton Zingarevich needs a new local ‘B-Team’ signing...

Jason Pyke

Are we ready for the Premiership?

What fantastic news that the Reading Royals have gained promotion to the Premier League. Not only did they get promotion they did it style by winning the Championship – no uncertainty with the play offs this time round! A question that springs to my mind is - are the Royals ready to challenge for the big time? I think so. After the uncertainty of last year when they lost out in the play offs, Brian McDermott has done sterling work in building the team back up and with prospect of new owner with deep pockets the ingredients are place for an exciting new season ahead.

But as an accountant it also got me thinking– are Reading Thames Valley businesses ready to exploit the opportunities that the Royals promotion will bring? The promotion is a much needed shot in the arm and maybe an antidote to continuing poor economic news and also, losing out on city status. The obvious upside is an increase in away fans bringing revenue to the retailers in Reading. But perhaps less tangible to measure is the boost to business optimism in the Reading Thames Valley area. Reading has proved to be fairly resilient to the recessionary pressures over the past four years but that is not to say that local businesses have had it easy – building and construction, property and professional sectors have in particular experienced a slowdown in activity. Being back in the premiership will help shift national focus towards us and the success should be viewed as not only promotion for Reading Football Club but also promotion for Reading Thames Valley business. This is a key opportunity for local businesses to leverage interest and demand for goods and services, and make a play for the big time. So, come on URzzzzz!

Jason Pyke

Taxing times ahead?

The phone rang. “It’s arrived!” said one of our SME clients. “The HMRC reminder to get my tax return done.”

I could sense from the downturn in his voice that this year’s annual HMRC reminder, never welcome at the best of times, had been received with even less enthusiasm than the traditional resigned shrug and disparaging sigh.

Why? Well, it’s common knowledge that the HMRC is now taking a harder stance on the payment of tax – justifiable in this ‘age of austerity’ when the government needs every penny due to it to help pay of our national debt.

Admittedly, The Chancellor in his Spring Budget was highlighting a crackdown on the super-rich when the said: “Tax evasion and aggressive tax avoidance are morally repugnant”. But the underlying message is clear: Tax is under the spotlight.

And while George Osborne’s Budget gave scant rewards for the country’s hard working SMEs, he underlined another message: “This country borrowed its way into trouble. Now we are going to earn our way out”.

The Chancellor believes he has delivered a budget for growth, and certainly the immediate main Corporation Tax cut to 24% may help, although noticeably the small company rate remains unchanged at 20%. Writing down allowances are reduced to 18% for 2012/13, and allowances for cars are again adjusted, but this is mainly tinkering with business tax.

New reliefs for investors started from this April with the introduction of Seed Enterprise Investment Schemes (SEIS). Income Tax relief for an EIS investor is currently 30%. The new SEIS will give an increased rate of relief, albeit on a reduced maximum amount. Again some signs of support for some business sectors, but for SMEs?

The Chancellor’s predictions of growth remain to be seen.

Meanwhile, I was explaining to my client that most of the Chancellor’s changes take place from April 2013, and he was best advised to focus on the future rather than bemoaning his tax return, which covers his past activities.

I told him: “Prepare to pay that tax return by improving your SME’s cash-efficiency and performance right now!” And I gave him my ‘Six of the Best’ on how to do it.

Click here if you want to see them.

Peter Ringrow
Senior Partner

The valuable view from the outside

I’ve been a Reading FC fan since their Elm Park days and have watched The Royals go through many ups and downs. But, the news that Sir John Madejski is selling a majority shareholding to Thames Sports Investment is the most positive boost since we gained promotion to the Premiership in 2006. Talking of which, promotion this year is definitely on!

Either way, with the massive financial backing of the Russian tycoon behind TSI, I’m sure, put the club is stepping into a whole new football bracket. We could be looking at European football soon!

Which got me thinking. As a Royals fan I am very excited about the future, but as a professional business adviser I’m aware that major change within any organization needs to be handled calmly and carefully with experience.

It’s clear that Sir John and the TSI team are not getting carried away until the deal is finally done – due diligence examination is underway and my colleague Jason Pyke, who handles a lot of our M&A work, reckons that could take a few months yet. ­ Royals manager Brian McDermott is doggedly ‘taking one match at a time’.

But, things are definitely set to change at Reading’s ‘Mad Stad’. And, while the fans are getting caught up with their dreams, it occurred to me that experienced, independent and knowledgeable external views can be an extremely valuable thing to have when commercial matters get stirred by internal emotions, local ambitions and the media spotlight.

Maybe, there are times when those looking from the outside can actually see things more clearly.

Richard Ziemba
Tax Senior

HMRC Business Records Check - No let up for small to medium sized businesses

On the back of an enhanced penalty regime HMRC have recently embarked on a campaign to check the accuracy of business records of 80,000 SMEs over the next four years. SMEs typically employ up to 250 employees and are the back bone of the commercial sector in the UK. For many years businesses have been the unpaid tax collectors for HMRC and this new initiative poses a significant risk to those businesses whose records are not up to scratch. HMRC intend to carry out their record checks at short notice and fines for non-compliance are significant for serious failures. Good record keeping is essential to ward off the unwarranted attention of HMRC and businesses should act now to make sure their records are adequate and accurate. In times of economic uncertainty and the rising tide of compliance this new tax office initiative is yet another burden on business.

Vale and West can assist businesses who face an inspection and give advice on record keeping requirements. For further information and a free consultation please call 0118 957 3238 or email accountants@valewest.com

Insurance Sexism

Interesting news this week from the European Court of Justice – Insurance companies are no longer able to take gender into account for car insurance premiums as it is now considered sex discrimination!

Women drivers can expect their annual car insurance premiums to rise on average by 25%, despite the fact that men are more likely to have a car accident. Political correctness - yet again - wins the day over common sense.

Not so widely publicised is the impact that this ruling will have on the pensions and life assurance market. Pension annuities rates for women have always been less than men as they have a greater life expectancy. Now the European Court of Justice has abolished ‘actuarial sexism’ retiring ladies can expect a higher annuity and this time are the winners over the retiring gentlemen.