In his Autumn Budget delivered 29 October 2018, Philip Hammond made a number of promises including measures to improve the lack-lustre retail sector in our High Streets.

There is no doubt that the major online retailers have caused a major shift in the way we shop. As faster broadband has become more commonplace, and the use of computers a regular feature at home, the drift away from viewing and buying goods on the shelf to viewing pictures and click and buy on the internet, will likely continue.

At present, online retailers have a competitive advantage over their High Street competitors. They don’t have to pay:

• business rates or rent for shop front property or
• salaries to sales staff.

And in the case of the mega online retailers, who can afford to exploit the use of tax havens to shelter their trading profits, they do not pay comparable tax on their trading profits.

The recent Budget offered a one-third reduction in business rates for retailers with smaller shop premises: those with a rateable value below £51,000. Although this reduction is for a limited period, two years from April 2019.

He has committed what seems to be a modest sum, £675m, to rejuvenating city centre areas. This will support the cost of:

• improving traffic flows to shopping areas,
• the renovation of empty retail premises to provide residential accommodation, and
• the repurposing of older or historical property.

City centre shops depend on foot-fall, if shoppers don’t pass by, then it’s unlikely they will become customers. In this respect, the above investment should encourage people to live and shop in city centre areas.

Mr Hammond also committed to start the process of increasing the UK tax take from online retailers, social media outlets and search engines, who sell goods and services to UK users. A new digital services tax will commence April 2020 and will levy a charge of 2% on the revenues generated by these concerns to customers in the UK.

When you buy a new commercial vehicle, you will pay 20% VAT on the purchase price and in most cases this VAT can be reclaimed. This assumes of course, that the motor trader selling you the vehicle is VAT registered.

If you purchase a second-hand commercial vehicle there are three VAT options:

1. The second-hand dealer is not registered for VAT and therefore, you will not be charged VAT.
2. The second-hand dealer is registered for VAT and only charges you VAT on the profit he is making on the sale under the VAT margin scheme, in which case you will not be provided with a VAT invoice and you cannot reclaim the VAT charged.
3. The second-hand dealer is registered for VAT and charges you VAT at 20% on the sale price. In this case you will get a VAT invoice and can reclaim the VAT charged.

Let’s say that Jerry is looking at a second-hand van at his local dealers that has a sales price of £20,000. Primed by his accountant, he asks if the VAT included is calculated under the margin scheme.

After a hasty conversation with their accounts department, the rather flustered sales person says “yes, it is,” and after more enquiries Jerry is advised that the VAT element is £700. Jerry switches on his phone accesses the calculator, taps in £700 divides by 20 and multiplies by 100. The number £3,500 emerges.

Jerry knows that he cannot recover this £700 and he also knows that the dealer will have to pay the £700 out of his profit margin. Armed with this information, Jerry asks if he can pay outside the margin scheme, and more importantly, could he and dealer split the £700 saved by dropping the sales price to £19,650 plus VAT at 20%.

In this way, the dealer will collect and pay the VAT added of £3,930 and will receive £19,650 for the van instead of £19,300 (£20,000 less the £700 margin scheme VAT).

Jerry will have to pay out £23,580 initially but will be able to claim back the full £3,950 of VAT and will have acquired the van for £19,650 instead of £20,000.

The dealer accepts. A classic win-win outcome.

Did you know that there is going to be a Small Business Saturday on 1 December 2018? We have reproduced below some of the help that will be available.

Access finance available to support small businesses

Are you and your business looking to start up, scale up or stay ahead? Start Up Loans of up to £25,000 can give you a much-needed boost if you’re just starting out. Or take a look at the Finance Hub and the British Business Bankfor more finance options for smaller businesses.

Call the Business Support Helpline

The free Business Support Helpline can help businesses of all sizes find the right advice and support at all stages of the business journey – whether you’re starting out, growing or looking to stay ahead.

You can email enquiries@businesssupporthelpline.org, live chat or call 0300 456 3565 Monday to Friday, 9:00am to 6:00pm.

Contact the Small Business Commissioner to resolve late payment disputes

If you’re having issues with not being paid on time, the Small Business Commissioner can provide advice on late and unfair payment, help you act and work to resolve disputes.

Put your business up for a Queen’s Award

Winning a prestigious award can give your small business a boost. The Queen’s Awards for Enterprise are recognised globally as a mark of quality for UK business and entrepreneurs. Almost any UK business can apply for free. The next round of applications opens in May 2019.

Apply for government contracts

Our Contracts Finder lets you search for information about government and agency contracts worth over £10,000 and explore information on previous tenders to see whether one might work for you.

See which large businesses pay their invoices on time

Large businesses have a duty to report on their payment practices. You can access this information to find out whether a business you’re intending to trade with is likely to pay on time.

Take advantage of support for innovation

If you’re a UK-based small business developing an innovative product, process or service, Innovate UK could help you get your idea off the ground.

Become more competitive by making a few simple changes

Be the Business can help small and medium sized companies across the UK supercharge productivity and earning power by making a few small but effective changes.

Get advice on selling overseas

If your small business sells overseas, UK Export Finance can help you access the right finance and insurance to help you win vital international contracts.

Get involved in Small Business Saturday

Visit the Small Business Saturday website to register and advertise your business for free on their Small Business Finder and find out how else you can get involved. Don’t forget to use local small businesses near you and encourage others to do the same this 1 December.

March 2017 was the date we declared we were going to exit from the EU. This set the deadline for our national drawbridge to be raised on the rest of Europe at the 29 March 2019. This is the first time we have separated ourselves from our largest trading partner since we joined the Common Market – the precursor to the EU – 1 January 1973.

It is useful, when considering the effective strategies we could employ to weather the changes that this process will likely create, to visualise the exit as running a marathon.

The comparison may seem to be a little left-field but bear with us.

If you have ever participated in a marathon you will have embarked on a fairly rigorous training program prior to running the race. In like manner, it may be prudent if you are running a business to get into shape before the Brexit transition starts next year. Whatever the outcome, a deal or no-deal conclusion, change will be upon us, and until we get used to the new paradigm, there will be a possible dip in economic activity.

We are all holding our breath, waiting for the politicians to reach an agreement, and hopeful that the outcome will lead to a positive increase in our international trading status with the rest of the world.

However, there is work we could engage in now that will prepare us in a positive way for whatever variety of Brexit is secured. In short, we could get into training, only this time to get financially fit, not race fit.

There are no downsides to this process. Even if there is a smooth Brexit you will be match fit and ready to hit the ground running, ready to take advantage of businesses opportunities as they become available.

At the very least businesses could:

• Create an impact assessment if they import or export goods from and to the EU, and
• Undertake a comprehensive balance sheet review. This would involve converting unused assets into cash and shortening the time it takes your business to transform sales into money in the bank.

We would request that all our readers seriously consider these options, unless they are already ahead of the game. We would be delighted to help.

The Chancellor picked out business investment as his preferred give-away to the business sector in his Autumn Budget 2018.

The Annual Investment Allowance is being increased from 1 January 2019, to £1m from the present base level set some years ago of £200,000. The increase is due to be available for two years, until 31 December 2020. At this later date the AIA will presumably return to the £200,000 limit.

The AIA allows for the 100% write down of qualifying asset purchases against business profits. For profitable companies, partnerships (excluding partnerships where one of the partners is a company or another partnership) and sole traders this is a generous tax break.

The AIA is available for most plant and equipment purchases. These include:

• items that you keep using in your business, including commercial vehicles and cars if they are working assets, for example taxi cabs or driving school, dual control vehicles;
• costs of demolishing plant and machinery;
• parts of a building considered integral, known as ‘integral features’;
• some fixtures e.g. fitted kitchens or bathroom suites;
• alterations to a building to install other plant and machinery – this doesn’t include repairs.

The AIA is not available for purchases of:

• cars that are not working assets;
• items you owned for another reason before you started using them in your business; and
• items given to you or your business.

Whether or not businesses will be encouraged to invest based on this additional tax break is another matter. It will not go unnoticed that the increases allowance is offered in the two years following our exit from the EU. It would be a brave, and perhaps rash business person that would make investment decisions in this transition period based purely on tax considerations.

If you are motivated to reconsider future investment in qualifying plant and equipment to take advantage of this £1m tax allowance can we suggest that you consider funding and return on investment considerations as well as possible reductions in your tax bill before signing on the dotted line. Please call if you would like our help.