Stagnation is a prolonged period of little or no growth in the economy and it can have a serious impact on your business.

Whilst talking to The Guardian, Samuel Tombs, a leading UK economist, claimed that stagnation will cause “businesses to cut employment and investment, and trigger a sharp decline in residential investment.”

He added: “GDP will fall one per cent this year”, which, whilst not sounding significant, is a major blow to enterprising businesses.

Here’s an overview of what stagnation means for your business and how to navigate these times of economic uncertainty.

Diminished revenue growth

During times of economic stagnation, consumer spending often slows down. This can lead to reduced sales and revenue growth for small businesses.

Companies in discretionary spending sectors like leisure and retail are often the hardest hit because these tend to be areas in which consumers start to save money during periods of economic difficulty.

However, the effects can be felt across various industries and every business should be prepared to face difficulties.

You may need to focus on cutting costs and increasing profits through offers or adjustments to pricing strategies. In times like these, an accountant can help you make sense of the steps your business needs to take.

Cash flow challenges

Stagnation may lead to increased payment delays from customers, impacting your cash flow. Effective cash flow management becomes essential during these times as regular monitoring and robust credit control procedures can help maintain liquidity.

Ensuring your customers pay on time and forecasting your cash flow correctly can greatly increase your chances of avoiding cash-related crises. Don’t forget, cash flow issues are one of the most common factors in business insolvencies.

Having a sound financial plan and discussing these issues with your accountant can help to maintain resilience during cash flow instability.

Difficulty in accessing finance

Banks and other financial institutions may become more risk-averse during periods of stagnation, making it harder for businesses to access necessary funding or receive loans.

Exploring alternative financing options like crowdfunding or grants may become essential to secure investment into the business.

In addition, your savings and collateral can make a big difference when banks are unable to lend you money so exploring your surpluses and the value of existing assets is critical to understanding your position.

Potential opportunities

Despite the challenges, stagnation can also present opportunities. Businesses that can adapt, innovate, and find new markets or diversify their services may find ways to thrive in an economic downturn.

Stagnation is a complex issue that requires strategic planning and expert guidance to navigate successfully.

By understanding the potential impacts on your business, and with a proactive approach to management and innovation, you can mitigate risks and even find new avenues for growth.

Our team is here to assist you in developing strategies to survive and thrive during periods of stagnation. If you would like to receive expert advice tailored to your business needs, contact us today.

If your company is involved in the creative industry, then it could be eligible for significant tax relief from the Government.

These tax reliefs support the Government’s objective of becoming the technological centre of Europe by promoting growth in the digital, creative, and other high-technology areas.

Your business can claim creative industry tax relief if it falls into the following categories:

• It is liable to Corporation Tax.
• It is directly involved in the decision-making, production, and development (from start to finish) of:
• Films
• High-end, animated and children’s television
• Video games
• Theatrical productions and orchestral concerts
• Museum and gallery exhibitions

Sometimes the resulting production may need to pass a cultural test, qualifying it for a British Film Institute (BFI) certification, to claim tax relief.

Businesses involved in the production of live-action film, television and video games are entitled to up to 20 per cent of the core production cost back as Corporate Tax relief.

Theatre and orchestra productions, museums and galleries are entitled to up to 25 per cent of the core production costs of the piece.

Productions of animation and animated film can also claim up to 25 per cent as a tax rebate against the expenses of pre-production, principal photography, and post-production of an animated project.

If you are unsure if your business qualifies for creative industry tax relief, get in touch with our expert accountants today.

As experts in the field of accountancy, we understand the unique challenges business owners face when it comes to payroll.

We’ve put together three essential tips to help you manage maternity and paternity pay, ensuring legal compliance and employee satisfaction.

• Understand the statutory requirements: In the UK, employees are entitled to Statutory Maternity Pay (SMP) or Statutory Paternity Pay (SPP).

As an employer, it’s crucial to understand your obligations. The former is usually paid for up to 39 weeks, and the latter for one or two weeks.

Familiarise yourself with the eligibility criteria and payment rates and keep up to date.

• Maintain accurate records: Maintain clear records of when maternity or paternity leave begins and ends, and the amounts paid.

Proper documentation will not only help in providing transparency but will also make it easier to handle any future enquiries or inspections by HM Revenue & Customs (HMRC).

• Offer support and communication: Maternity and paternity leave are significant life events for your employees.

Open communication and support can create a positive experience for both parties.

Clearly outline your company’s policies and be available to answer any queries your employees may have.

Managing maternity and paternity pay doesn’t have to be a complicated process. By understanding the statutory requirements, maintaining accurate records, and offering robust support, you can ensure a smooth experience for both you and your employees.

If you need assistance in navigating these waters, our dedicated team of professionals is here to help.

Contact us today to discover how we can assist you with this important aspect of your business.

John Moffat, our CEO has completed his first 50 days of the Walk 100 challenge for the Scottish Huntington’s Association!

As an accounting firm, we love our numbers and statistics.

Check out John’s stats so far:

• 910,787 steps
• £360.00 raised so far
• £2000.00 fundraising target
• 40,293 highest daily steps
• 18,216 average daily steps
• 4 drenchings
• 7lbs in weight loss
• 26 Strathclyde country park circuits
• 5 Chatelherault country park circuits

If you want to help John reach his fundraising target, please donate today here.

As of 8 August 2023, all Research and Development (R&D) Tax Credit claims require the submission of an online Additional Information Form (AIF) providing supplementary project details.

The form must be completed prior to the submission of the company tax return. If the form is not submitted, the R&D claim will not be incorporated into the company tax return (CT600).

The form can be completed by a representative of the company or an agent, but it must include information about the senior internal R&D contact who is responsible for the claim, as well as any agent involved in the claim process.

HM Revenue & Customs (HMRC) has expressed concerns about the behaviour of some agents in relation to R&D.

The requirement for details about the agent and a senior responsible individual is designed to foster transparency in the claim process and ensure that R&D compliance is supervised at a high level within organisations.

The form applies both to ongoing projects and accounting periods that have already concluded.

Companies must capture all necessary information, and they may need to adjust their internal systems to collect this information efficiently.

The form also demands details about qualifying expenditure, encompassing qualifying indirect activities and specifics about the R&D projects undertaken.

Companies with a large number of projects can provide information about a selection of the projects, but this must include at least three projects that account for a minimum of 50 per cent of the qualifying R&D expenditure.

Details must also be provided of advancements in technology, the technological baseline, the technological uncertainties, and the strategies used to overcome them.

There are concerns among some advisers that current reports may not meet the new requirements, particularly if the projects are similar and relate to the same technological uncertainties.

Allocating costs between projects may also pose challenges, potentially leading to increased administrative costs for businesses that comply with the new rules.

Unsure of how these changes affect you and your claims, now and in the future? Speak to our experienced team today.

In the second quarter of 2023, overpayments on pension tax in the UK reached £56 million.

This was an increase of nearly £8 million from the first quarter of the year, according to HM Revenue & Customs (HMRC).

This figure is almost double the £33.7 million collected in the same period the previous year.

During this quarter, approximately 16,000 reclaim forms were processed, with an average reclaim amounting to £3,551. This is the second-highest figure since the introduction of pension freedoms in 2015.

Over the past eight years, people aged 55 and over who have been overtaxed on their early pension withdrawals have reclaimed almost £1.1 billion.

The need for taxpayers to reclaim overpayments has arisen because people withdrawing from their pension pots early have typically been charged emergency tax, usually significantly above the amount that is ultimately owed.

The figures suggest that an increasing number of over-55s are using their pension freedoms, with some commentators suggesting that this is a result of the cost-of-living crisis.

The HMRC data also revealed a decrease in the number of transfers into qualified recognised overseas pension schemes (Qrops), falling from 3,900 in 2021 to 2022 to 3,250 in 2022 to 2023.

Despite this, the total value of these transfers increased from £517 million to £680 million over the same period.

If you are concerned that you may have paid too much tax on pension withdrawals in the past, please get in touch.

Introduced in 2014, Employee Ownership Trusts (EOTs) provide an attractive alternative to traditional business succession strategies, offering a series of unique benefits to businesses, their employees, and the wider economy.

Employee engagement and productivity

One of the most immediate benefits of EOTs is their positive impact on employee engagement and productivity.

As beneficiaries of the trust, employees have a direct, vested interest in the success of the business.

They become not just workers, but also part-owners, which nurtures a stronger commitment to the company’s objectives.

Studies suggest that companies with engaged employees perform better on multiple measures, including reduced absenteeism, increased productivity and higher customer satisfaction rates.

Financial incentives

From a financial perspective, EOTs also offer significant benefits. For business owners looking to sell, the sale of a controlling interest (more than 50 per cent) of the business to an EOT is free from Capital Gains Tax (CGT), providing a cost-effective route for succession planning.

The employees, as beneficiaries of the EOT, also gain the opportunity to receive tax-free bonuses, up to a capped limit per annum.

These incentives can result in substantial tax advantages for both the selling owners and the employee beneficiaries.

Stability and longevity

EOTs promote business stability and longevity, particularly in the context of succession planning.

In contrast to a traditional sale of a business, where future directions may be uncertain, a sale to an EOT ensures that the business continues in a manner consistent with its established values and goals.

The employees, many of whom may have dedicated significant portions of their careers to the business, are naturally invested in its continued success.

This can reduce business disruption during the transition phase and enhance long-term business prospects.

Economic resilience

On a macro level, businesses owned by EOTs contribute to the resilience of the economy. Research has shown that employee-owned businesses are less likely to fail during economic downturns.

This resilience stems from their focus on long-term sustainability over short-term profits.

Additionally, they are more likely to retain employees during tough economic times, providing stability at a company and community level.

Societal impact

Finally, EOTs can foster a sense of social responsibility and collective welfare.

Businesses owned by their employees are often more invested in their local communities, contributing positively to societal welfare.

EOTs offer a robust alternative to traditional business structures and should be considered as part of a business’s succession or exit planning.

These trusts are likely to play an increasingly significant role in shaping a more inclusive, resilient, and sustainable business environment. If you would like advice on EOTs, please speak to us.

Accountants are often seen as guardians of tax and compliance. However, their expertise extends far beyond these areas.

They can act as problem solvers, assisting with a range of tasks that can set the stage for a smooth and profitable business operation. Here are eight ways your accountant can help your business flourish:

Assisting with business formation

Launching a new business is never straightforward, and there can be bumps in the road that may not become apparent until it is too late.

The structure of your business, whether it is a sole trader, partnership, or company, comes with unique tax obligations, paperwork, and, potentially, personal liabilities.

An accountant can guide you in choosing the most suitable structure for your business, potentially saving you significant time and money.

Guiding business acquisitions or sales

If you are considering selling your business or acquiring a new one, consulting with your accountant should be your first step.

Accountants can assist with business valuations, develop exit strategies, and compile the necessary financial reports and documents to ensure you make informed decisions.

They can also help minimise costs and protect you from entering into deals that will not benefit you in the long run.

Improving cash flow

Inadequate cash flow management is a common cause of business failure. Your accountant can help by conducting a comprehensive business analysis, rebalancing your budget and debts, optimising your cash flow, and building cash flow forecasts.

By helping you understand your financial obligations and adjusting the way funds are used in the business, you can avoid disrupting relationships with suppliers and staff, ensuring your business operates as smoothly as possible.

Streamlining business operations

Decisions that may seem straightforward can become critical when they involve financial considerations.

Accountants can assist with decisions such as whether to buy or lease equipment, where to rent office space, and how to evaluate supplier terms and conditions.

They can help price your products to maximise profit and reach a broader customer base. Accountants can also identify underperforming areas in the business and suggest potential expansion opportunities.

Implementing cloud software

Your accountant can help automate many of your business’s monthly bookkeeping tasks and establish an invoicing system that provides a clear overview of paid and unpaid invoices using the latest cloud accounting packages.

This intelligent software, such as Xero, Sage or QuickBooks, can even send reminder emails to clients about unpaid invoices, saving you time and helping you stay on top of your finances.

Networking

Effective accountants build relationships with other successful businesses. If you are seeking suppliers or investors, your accountant may be able to connect you with the right people.

Securing funding

At some point in the life of a successful business, additional financing may be necessary.

Whether it is securing a loan to navigate challenging times or attracting investors for essential expansion, obtaining this funding will require well-structured and clear financials.

Your accountant can help you structure your investment proposals and loan applications in a way that appeals to investors, showcasing your business and increasing the likelihood of your funding efforts succeeding.

Managing inventory

Daily inventory management can be challenging. However, your financial records can provide your accountant with valuable insights into your stock room operations.

Your accountant can analyse trends over time and suggest necessary changes to ensure peak operational efficiency.

The role of an accountant can extend far beyond just assisting with taxes.

By helping you in every aspect of your business, your accountant can help you sidestep various challenges and contribute to the creation of a successful, efficient, and streamlined business.

If you would like to know more about how we can help your business flourish, please contact us today.