son to · between the two parents, in a flexible way, explains james symons, associate at freeths...

It’s the law Understand employment regulation changes p4

Into India A continent ready to do business p10

Give to receiveCorporate responsibility can equal profit p12

Value of exitMaking your business more valuable p14

A business plan was the key to a smooth succession process, says Anthony Adler

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Issue 41 | www.hwca.com

Backing Your Business

to

One | Issue 41 | www.hwca.com

a Government that has promoted wider stock ownership. This will inevitably lead to a tightening of credit and result in a reduction in the growth rate of one of the largest domestic markets in the world.

So how can a business make decisions about its future? Many of our clients are concentrating on remaining lean and competitive, which involves being ready to take opportunities that present themselves in what remains an exciting but unstable global marketplace.

Here at Haines Watts, we focus on this strategy for both our own and our clients’ businesses, so we are well positioned to overcome challenges and look to the future.

This issue of One magazine explores our own insight and expertise on a range of key business issues, and how we have been able to help our clients as a result.

At Haines Watts we are proud of the relationships that we build with clients, and how we can help you with your evolving needs. To find out how we can help your business thrive, call your local office today.

TALENT

4 Get a handle on HR How do changes to parental leave and

holiday pay impact on you?

5 Bridge the gap How to identify and fill missing skill sets

so your business is not held back.

DESTINATION

6 Successful planning Anthony Adler on how he managed

to follow in his father’s footsteps.

14 Plan to build value How to unlock value in your business.

EFFICIENCIES

8 Delegation delights How do you learn to let go?

GROWTH

9 Boom or bust? Is there real investment potential

in property? We investigate.

10 Into India Looking at the main challenges of

doing business the Indian way.

12 Benefits of giving back

How focusing on corporate responsibility can increase profitability.

[ IN

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Haines Watts is a top 15 firm of chartered accountants which specialises in supporting business owners. We work with over 35,000 owners across a wide range of industries. This experience enables us to provide clients with access to a huge range of expertise and knowledge.

Our fresh thinking and practical approach underpin our values.

Commercial – Translating our technical knowledge into sound commercial advice.

Approachable – Access to your Haines Watts Partner whatever your issue, big or small.

Supportive – As a business owner you can rely on our experience to support your ideas and help you achieve your goals.

Challenging – We act as a sounding board and challenge your plans. It’s our way of ensuring that you consider all the options and make the best decisions.

Practical – We live in the real world. We’ll give you sensible, professional and appropriate advice.

WHO WE ARE

Welcome to the summer issue of One magazine, where we explore how you can strengthen your business to

maximise any opportunities that come your way.As I sit and write this, I realise that

uncertainty is yet again making it difficult to make decisions and set a future strategy for your business.

In the UK, this uncertainty has led to the ‘man in the street’ spending less. That said, we’ve just had a Budget which aims to transform us from being a country with low wages and a dependency on welfare benefits into a low-tax, high-wage economy with improved productivity.

Now that Greece has had a referendum, we’re waiting for the country to make a decision about whether it is going to ignore the democratic process and

make the concessions necessary to remain in the euro.

In China, the stock market has dropped by a third since June, leaving an army of personal investors seeing losses for the first time and upset with

WELCOME

Valued business insight

Andrew Minifie, National Managing Partner

PERSONAL

15 Taxing rules We look at how you can give to loved

ones without being overly penalised.

16 Countdown to saving Pension rules have changed, so we look

at the key risks to your savings.

17 Open about your options With greater pension freedom comes

more risk to your future wealth.

18 Haines Watts Update The latest news from Haines Watts.

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Backing your business 3One is published by Haines Watts and produced by

ROUND-UP

Employees are more willing to change roles, according to a 2015 survey from the Institute of Leadership and Management, which showed 37% plan to leave their current job – a dramatic increase in employee turnover on last year.

In 2014, one fifth of the more than 1,000 employees and managers surveyed planned to move jobs – a slight increase on

Recent research from the Federation of Small Businesses (FSB) suggests small firms are not protecting their intellectual property (IP).

Inadequate protection of IP such as patents, branding and product designs puts a business’s growth and innovation at risk.

Yet 25% of the businesses with intellectual property rights surveyed by the FSB have

suffered some sort of violation or wrongdoing within the past five years.

With almost one in three small businesses being reliant on such IP rights for 75% to 100% of their revenue, these infringements are damaging.

Tools and services have been developed by the Intellectual Property Office to help businesses, but this FSB research shows that small firms continue to find it difficult to use them.

IP needs protection

Accountancy Firm of the Year

Haines Watts has once again been recognised for its work, being named Accountancy Firm of the Year: Larger Clients at the FDs’ Excellence Awards 2015.

The firm also came a close second in the bid for the equivalent Smaller Clients award.

The awards, now in their 11th year, recognise the UK’s best finance directors and service providers and are voted for by business owners and finance directors across the UK.

Andrew Minifie, National Managing Partner, commented: “Our core client base is UK owner-managed businesses, so to get this endorsement from these SME business owners and FDs means a great deal to us.”

Haines Watts beat tough competition from other UK firms such as Grant Thornton, BDO, Crowe Clark Whitehill, Deloitte and KPMG to secure the award.

He added: “Scooping this award is fantastic and to be the only firm to have won it for four consecutive years makes me incredibly proud of all of our staff, who do an outstanding job for our clients.”

Thousands of SMEs are missing out on valuable tax breaks for research and development (R&D).

According to a report from HMRC, £1.4 billion was claimed in tax relief on R&D from April 2012 to April 2013. The good news is that, as of April this year, businesses can claim increased cash repayments of up to 33%.

R&D tax credit overlooked

On the move2013 levels of 13%. A further 31% were unsure whether to look for a new job.

But this year, 59% want more development opportunities, compared to 56% of employees hoping for an increase in salary. Half said a

more interesting role would tempt them to change jobs.

The survey also revealed that staff are feeling increasingly undervalued by their managers, with 25% planning to leave because they feel under-appreciated in their current role.

Nearly a third of employees looking for a new job this year said

better management would tempt them to take a new role, while 27% are looking for more training and development.

Another 31% said they wanted to spend more time doing things they enjoy away from the workplace.

Just 18% of respondents said more opportunities for flexible working was a priority for them when looking for a new role, and just 3% are looking for better options for parental leave.

of employees plan to leave

their current job

37%2015 SURVEY

A recent report shows an increase (79%) in SMEs reporting that they were profitable in Q1 2015, up from 60% in Q1 2013.

The SME Finance Monitor by BDRC Continental also showed 36% of SMEs are using external finance, with 29% using core forms of finance, such as loans or overdrafts, down from 40% in 2012. The number of SMEs relying on an injection of personal funds has fallen from 46% in 2012 to 26% in Q1 this year.

Source: www.bdrc-continental.com

Profits on the up


Employers must stay ahead of the curve to comply with employment law. For instance, the rules around parental leave

for employees whose partners are pregnant have changed.

The traditional 52 weeks that a mother could take as maternity leave can now be shared between the two parents, in a flexible way, explains James Symons, Associate at Freeths LLP.

“Previously, the father could take some of the mother’s leave after she had returned to work, but it was a rigid and seldom used regime,” he explains.

“Today, parents can use leave at the same time so, in theory, they could be off for 26 weeks each, with a degree of overlap, for the first few months after the child is born.”

Leave rules explainedShared parental leave also allows a mother who started her leave prior to the child’s birth to go back to work, potentially for a short period of time, then choose to finish her leave any time within the child’s first year.

“There’s nothing to stop the employee doing this, provided they have enough leave left to take and give eight weeks’ notice of the intended start date,” James says.

“The employer can reject discontinuous requests, which are single requests for multiple blocks of leave, which can be difficult to cover. But employees may still be able to create a discontinuous pattern by requesting single blocks of leave that the employer has to grant. This creates a pattern where the employee is on shared parental leave, returns to work and then has another period of shared parental leave.”

The lowdown on how employers can stay ahead of the latest holiday and parental legislation changes.

GROWTH EFFICIENCIES RISK DESTINATION PERSONAL TALENT

preparedLet’s get

Previously, the father could take some of the mother’s leave after she had returned to work, but it was a rigid and seldom used regime.” James Symons, Associate at Freeths LLP


Policy is the pointBusiness owners need a clear and legally compliant policy for determining these requests for shared parental leave.

“This should be in place before an employee approaches them with a request,” says James. “Employers are obligated to grant employees shared parental leave if the employee submits valid requests.”

Employers who currently offer enhanced maternity pay will also have to decide whether they will also offer enhanced shared parental pay.

Recent court judgments also mean employers must beware when calculating holiday pay.

“Companies are currently seeking advice on whether additional payments such as overtime and commission should be used in the calculation of holiday pay,” says Christopher Sing, Partner at Freeths LLP.

Pay under scrutinyIn one case, Lock v British Gas Trading Limited, the employee felt discouraged from taking holidays because his commission income, which substantially exceeded his basic salary, was reduced in the months following his return to work because he had not secured sales, and had therefore not generated commission, while he was on holiday.

But the Lock case has now established that it is unlawful to calculate statutory holiday pay based on basic salary alone when an employee is entitled to commission determined with reference to sales achieved.

For overtime, Christopher explains, the prevailing law is that non-guaranteed overtime should be used in the calculation. “If you don’t act, you’re taking a risk by hoping that the courts overturn the decision in subsequent cases. There’s unlikely to be any certainty for years to come, so firms should consider putting money aside for that potential liability in the future.

“Purely voluntary overtime has yet to be the subject of binding case law, so it’s

crucial that employers identify what kind of overtime they have, and

make sure it’s very clear in their documentation.”

Client reactionMany clients are already moving to change how they calculate holiday payments. “As well as preventing disputes in future, they can actually implement the changes as part of a wider salary review. There may be no overall increase in costs for them if they redistribute what may have been used for pay increases,” Christopher says.

skillsPlug your

Backing your business 5

W ith insufficient numbers of young people leaving education with the right skill

sets, businesses are struggling to find the talent they need to thrive and grow.

This ‘skills gap’ is a challenge for businesses across the UK and it isn’t going to be resolved overnight, according to Marcus Mason, Head of Business, Education and Skills at the British Chambers of Commerce.

“Over 90% of businesses we surveyed in 2014 identified a shortage of skills in a key area among their workforce. It’s something that affects businesses of all sizes,” he says.

No sector is immuneThe most common skill sets in short supply are: leadership and management; planning and organisation; computer literacy; and creativity.

The impact of these shortage has have been felt across almost every sector, particularly in the STEM industries (science, technology, engineering and maths).

As Marcus explains: “Research suggests the UK needs 100,000 new STEM graduates every year. But we’re only producing around 80% of that figure”.

When recruiting, owner-managers often find themselves advertising to fill a role three or four times before finding the right candidate.

Look overseasMany companies have begun to look overseas to meet their needs, especially in sectors such as IT, digital and engineering.

“If we want businesses that are competitive on a global scale, they need access to the global talent pool to succeed,” Marcus explains. “This is a short-term solution. In the long run, we need to make sure the UK is producing young people with the skill sets that businesses need.”


As many companies turn overseas to combat the growing skills shortage, One looks at how UK businesses can ensure they have access to the skills they need.

gap

Inspire the youngThe Government believes apprenticeships will play a major role in plugging the UK’s growing skills shortage, pledging an extra three million places over the course of this parliament.

This view is supported by an increase in the number of young people who are viewing this route to employment as a real alternative to further education. Around 920,000 young people are on an apprenticeship.

Careful consideration will need to be applied so apprenticeships continue to meet required standards, Marcus warns. “We need to make sure the quality of apprenticeships doesn’t

suffer just to make up the numbers.”He emphasises that inspiring

people at a young age is essential so they can build skills that will be genuinely useful in the workplace.

While in recent years the focus has been more on academic skills such as maths, English and science, there’s a growing need for prominence to be placed on ‘soft skills’ such as communication and teamwork.

Businesses also need to work closely with young people during their school years so they have the right skills, knowledge and drive to work in a variety of industries.

This input could come from an involvement in curriculum planning, facilitating talks and workshops in schools and colleges or even offering apprenticeships and training.

Marcus concludes: “Without this two-way interaction, how are young people expected to be inspired to take up an apprenticeship, develop particular skills or want to work in a particular industry?”

How SMEs can grow skills1 Cast a wide net – recruit from

the largest pool of talent available by advertising on multiple job sites, forums and other channels.

2 Network – take advantage of local industry networks and local Chambers of Commerce. Make them aware of the skills required.

3 Build partnerships – work with local schools, education providers and training organisations, which have direct access to talent.

4 In-house training – enhance the skill sets of existing employees by providing external and in-house training.

Over 90% of businesses identified a shortage of skills in a key area among their workforce.” Marcus Mason, Head of Business, Education and Skills at British Chambers of Commerce.

For more information on securing talent for your business, contact your local Haines Watts office.


Plan to GROWTH EFFICIENCIES RISK DESTINATION PERSONAL TALENT

A detailed business plan can lay the foundation for a smooth business hand-over from one generation to the next, says Adler Insurance Brokers Ltd’s Managing Director Anthony Adler Dip Cll.

FACTFILE ISSUE: Destination | SECTOR: Insurance | LOCATION: Birmingham

Tell us about yourself and your businessAdler Insurance Brokers is an independent Chartered Insurance Broker that was

established by my father, Andy, in 1982. It offers tailored insurance services to small and medium-sized businesses throughout the UK, and currently employs over 30 staff.

Tell me about the succession process?Andy had wanted to retire for a few years. There were three other directors in the company but it was decided that I was the

most suitable person to take over as Managing Director, while he has become Chairman and is less involved in the day-to-day running of the business. The whole succession process took just over three years to complete.

What were the key challenges? We had to consider the impact on the business of the MD and Principal shareholder leaving. After all, it was his relationships with

clients, insurers and suppliers that made it a success. It was important to sit down as a board and

identify skills gaps and people’s strengths and weaknesses. My father has gradually delegated more duties to the other directors and I have worked more closely with him to ensure a successful phased transition.

Our Haines Watts Partner, Darren Holdway, suggested that we change the structure of the business too. He made us realise we should no longer think like a small business but like a large/medium-sized business. This involved creating a new level of middle management to allow the directors more time to concentrate on the strategic planning.

What core skills did you learn from your father?I learned the importance of building and maintaining relationships with clients and

suppliers from my father. I’ve also learned to listen to people and to ask questions if I don’t understand something.

What have you done to secure the business’s future?The directors introduced a detailed business plan to give the organisation direction. My

father has helped shape this plan, which has given him peace of mind that his business is in safe hands.

succeed

If you would like to know more about passing your business to a new generation, contact your local Haines Watts office.

Haines Watts doesn’t just look at our financials, but acts as a sounding board and an independent, third party adviser.”Anthony Adler, Managing Director, Adler Insurance Brokers

look at our financials, but acts as a sounding board and an independent third party adviser.

How has your business benefited from Haines Watts’ advice?Darren played a fundamental role in putting the shareholders’ agreement in

place as part of the succession plan. This contract ensures shareholders and directors know how much they need to pay the person leaving the business and avoids disputes later on.

How do you expect to continue working with Haines Watts?Darren and the team at Haines Watts will continue to work with us, but in a different

capacity. As we look for acquisitions and other business opportunities, we will need an unbiased sounding board and expert adviser.

It’s not always possible in a family-run business to find someone to speak to as everyone is too close. Having a person who can be objective and one-step removed is important.”

DARREN HOLDWAY, Managing Partner, Haines Watts “Passing on a business is a personal journey. Business owners have often built it from scratch and want to be certain that the next generation will do a good job.

My role has been as a trusted adviser to both Andy and Anthony during the process of succession planning.

The challenges are that business owners don’t tend to delegate well and there is a threat that the next generation will underperform and undermine the family wealth, and the business owner’s legacy.

It can be difficult to know if the business owner is being over-critical of their child, or if there are skill gaps – but I have identified Anthony’s strengths and how these can be developed to meet the requirements of the role.

It’s not always possible in a family-run business to find someone to speak to as everyone is too close. Having a person who can be objective and one-step removed is important.”

How has your father coped with no longer being the key decision-maker?The business plan has been the key to my father settling into his new role. He also

attends monthly meetings so he can check on the performance of the business.

What is your vision for the business?The business is now at the stage where it can grow to the next level. Many of our clients are doing well and expanding,

so some growth will be organic. We are also considering acquisitions.

We decided to become a Chartered Insurance Broker two years ago so that we would stand out from the crowd with our professional qualifications and knowledge.

How do you manage threats to your business?While the Financial Conduct Authority states that we must have a set amount in

our reserves, Adler Insurance has always allocated a larger percentage of its profits than required so we can overcome the unexpected and take advantage of any acquisition opportunities.

How has Haines Watts helped the business to achieve its goals?Darren has worked with my father for the past 20 years and, together, they have seen

the company grow. Haines Watts does not just


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H anding over the reins could help owner-managers to add value to their business, according to

business consultant and founder of Virtual PA Company Gail Thomas.

“Delegation allows you to free up time to improve your marketing, selling and networking – and form new services and products,” she explains.

While most people recognise the benefits of delegating, identifying what can usefully be handed over is more challenging.

How to let goOver-capability can present a particular barrier to delegating, Gail emphasises. “Business people tend to be naturally capable and able to turn their hand to most disciplines.”

A simple list can help identify tasks that can be delegated, which Gail calls a Task List Profile.

First, list tasks which you do over a one-month period; then rank tasks in the list according to:1 How dependent they are on you2 How much you enjoy doing them.

Time to delegate?“The irony of delegation is that it takes time to think about what and to whom you’re going to delegate, and to train this person,” she says.

“I often hear people saying that they could do something themselves in the time it would take to delegate, but companies should think about it as an investment. If you take the time to train someone, it means that you’re into time-profitability the next time it happens.”

Guilt-free handoverIt’s common to feel a sense of guilt when delegating a task that you don’t enjoy yourself, but don’t let this affect your handover.

“Present a task as a training or development opportunity, rather than with an apology, and it instantly becomes more appealing. It’s much easier when you’ve taken the time to find the right person.”


Many SMEs’ growth potential is limited by a simple failure to make the most of a core business skill – delegation.

Communication is keyGreat delegation is about great communication, so both parties know each other’s motives for delegating, and for taking on work.

“It’s crucial you have a conversation to make sure your colleague wants and

understands the responsibility, and is willing to take it on.”

Gail recommends recording videos and calls so that people can remind themselves of what is required.

No more micro-managing“The process of delegating is essentially moving from doing the work, to getting the work done,” she explains. “So another danger is the owner-manager being dragged back into the day-to-day operations.

Gail Thomas

The art ofdelegating

I often hear people saying that they could do something themselves in the time it would take to delegate, but companies should think about it as an investment.”Gail Thomas, Virtual PA Company owner

“But there is a series of steps that can help a manager avoid micro-managing: this involves a gradual move from ‘I do’, to ‘I do, you watch’, then ‘we do’, then ‘you do, I watch’ and finally ‘you do’. Each step should be repeated until both parties feel comfortable.”

Gail says the reporting process must also be clear from the outset: 1 Agree on the level and method of

reporting, including agreed check-ups. Hanging over someone’s shoulder is a duplication of effort, demoralising for the employee and often results in the manager taking the work back.

2 Then move to an employee-led process.3 Finally, once everything is agreed,

rely on a report by exception where checking is informal, yet still essential to show interest.

“If you’re using a supplier, training and briefing is just as important as if you’re using one of your own employees. If you want to get the best out of someone, communication is key.”

To find more about delegating more efficiently, contact your local Haines Watts office.

P roperty still features strongly in the pension and investment portfolios of owner-managers in the UK, but there’s

one word upon which this sector’s growth hangs – stability.

The Government has taken a pro-business stance, which is likely to bring more of the same – a consistent tax regime and no change for the sake of change.

There are a number of factors that have driven the UK property market forward in the past few years, particularly in London, according to Paul Simmons, Haines Watts Partner and GGI Real Estate Practice Group Chairman.

“As my clients are based in London, I am more than aware that the capital has been the number one property market for buyers outside the UK,” he explains.

“This is because we’re financially secure, we’re on an island so there’s a low risk of terrorism compared to other cities, the shopping is great and the infrastructure – think hospitals etc – is also good.

“These are all strong incentives for international buyers looking for suitable locations in which to base their families.”

Paul’s expertise comes from his role as Chair of the GGI Real Estate PG, which includes members from around the world with a specific interest in the opportunities offered by real estate for their clients.

Does property still present a path to robust returns for investors in 2015? We look at whether the growth spurt seen in recent years can be sustained.

Firmfoundations


To bring additional insight into the room, he has recently begun to invite speakers from ‘the other side of the fence’, such as Rob Osborn, from property developer Consero London. These speakers are able to explore the marketplace from an alternative perspective and identify potential threats and opportunities to investors.

“Consero is an example of a builder focused on the premium, niche market, which can make high profits as a result,” Paul says. “Rob Osborn’s company is a great example of the kind of opportunity that investors look for.

“That said, it’s important not to be complacent as the market can change at any time. We have a conference coming up in the US, where we expect to hear that New York is poised to take over as the number one property market for foreign investors, because they perceive it to be a lower terrorism risk than London.”

While business owners often save for the future by purchasing commercial property, sometimes arranged through their pension, they also focus on buy-to-let property, and with record low mortgage deals available on the market, property is perhaps becoming, well, hot property.

“Experts in London are now forecasting a 20% rise in local property prices over the next five years,” Paul continues. “However, the rest of the country is also predicted to move forward.

“What we need to be aware of is that this growth is reliant on the perception of stability. Not only did we see activity grind to a halt prior to the General Election, we may see a similar effect over the EU referendum. Not all money in this market is from Russia and the oil states. A surprising amount of business also comes from the EU.”

We’re financially secure, there’s a low risk of terrorism compared to other cities and the shopping is great. These are all strong incentives for international buyers.”Paul Simmons, London Haines Watts Partner and GGI Real Estate Practice Group Chairman

For more information on property investment, contact your local Haines Watts office.



T he art of successful set-up in India is to understand the dynamics of the customer base, keep one step ahead

of compliance requirements and know how to look after your employees.

“Consumers here are very different to the UK,” says Ashish Bairagra, Director of GGI member PeriGrow Consulting. “The biggest mistake you see is businesses setting up here without understanding how the market functions and whether there’s a clear need for their product. Our online space is growing, but the look and feel of a product is still very important.”

Ashish is experienced in helping international clients to break into the Indian marketplace – and in facilitating Indian companies to move into UK markets. In the past 10 years alone, PeriGrow Consulting has supported more than 20 companies in getting established on the subcontinent. But experience tells him that businesspeople often fail at the research stage.

Take care to be compliant“Business owners need to carefully research the taxation and compliance requirements,” he continues. “Companies need to include these costs in their financial plans, but a surprising number forget to do this.

“The cost of running a business can rise much more rapidly in India too. We recently had to explain to a company that salaries in India typically increase by increments of 10-15% – much higher than in the UK – this changed their entire financial plan.”

Ashish warns that the Indian tax authorities tend to assume the business community is non-compliant unless proven otherwise, so it’s

Business is booming in India for any UK venture that is ready to scale up – fast. One explores the opportunities and challenges of starting out in one of the world’s fastest-growing economies.

poweredPeople


Salaries in India typically increase by increments of 10-15% – much higher than in the UK.”Ashish Bairagra, Director, PeriGrow Consulting


A foothold in IndiaIn the West, businesses are eager to seek out opportunities in India because they see a supportive government and marketplace – UK architects have recently been invited to design buildings and rail networks, for instance. “There’s a real drive to welcome UK talent here,” Ashish adds.

“In the next couple of years, anything to do with IT – including engineering, construction and architecture design centres or Big Data – will do well, but the next big boom will be healthcare. This plays to our core strength of following process – we’re still a very textbook-orientated country.

“Most of the value-added work happens in the west and the south of India, while you’ll find most of the servicing level in the north. We also benefit from the fact that we conduct business in English – I rarely speak Hindi while in the office.”

Consumer is kingFor any B2C venture, India’s vast population is a huge advantage – and the potential for scaling up is just as vast.

“Another opportunity that’s worth considering is outsourcing a particular part of your process to a third party. We have some clients who do the talent acquisition for a UK-based HR company,” Ashish says.

“There’s definitely a two-way flow between India and the UK, with business opportunities at both ends. Lots of Indian companies are acquiring businesses in the UK, whether to access technology, the European market or a larger product profile, and there is definitely scope for UK companies to come to India to grow their market and cut costs.”

Doing business, Indian-style

1 Conduct market research to see if there’s demand

for your products or services

2 Be aware of tax and

compliance requirements

3 Be aware of cultural

expectations, such as high employee-focus and

reliance on face-to-face business practices.

important to make sure taxes are in good order. “The Government is trying to improve this, but

this compliance issue isn’t something that will change overnight,” he concedes. “Much litigation in India is merely technical in nature.”

Culture countsThere are also important cultural differences to consider before a company can tap into potential opportunities.

Ashish explains that most operations-led businesses in India are employee-focused, despite work being system and process-based, for example. HR also plays a very important role in India, with employees expecting companies to take care of them, so organisations must meet this demand.

“The second cultural difference is that business tends to be conducted in person. Long-term relationships don’t develop over the phone or via Skype; whether it’s a customer or a vendor, they’ll expect a meeting at least once a year – they want to see a face,” Ashish highlights.

“That culture is fading away in the West, so owner-managers may be surprised by it. Here, it’s still about two people doing business together, rather than the organisation.”

Long-term relationships don’t develop over the phone or via Skype; customers expect a meeting at least once a year – they want to see a face.” Ashish Bairagra, Director, PeriGrow Consulting

For more information on international opportunities, contact your local Haines Watts office.

Inside GGI Haines Watts is a

member of the Geneva Group International (GGI), a worldwide

alliance of over 450 independent professional firms in 115 countries.


One explores how a values-driven business model could help philanthropy take root and make a profit for your company.

Communitymatters


W ith 55% of global online customers willing to pay more to those who are committed to positive social and

environmental impacts,* corporate social responsibility is climbing the agenda for large firms. But how can smaller businesses get involved?

“After working for several conventional companies, I thought that there must be a better way of harnessing the power of capitalism in terms of the value that it can create,” answers Simon Biltcliffe, CEO of print management company and Haines Watts client Webmart.

“Personally, I don’t understand why you can’t be a philanthropist throughout the business journey, rather than just in the last third of your life.”

Value outside the box“Everyone is so focused on what happens inside their box, but the truth is that all the value you create is outside. In my business, our ethos is to maximise the intellectual, emotional and financial return of every person we work with or for.”

This is achieved using a two-sided business model, where customers and suppliers are treated with equal importance. “By creating that value on one side, there’s an equal opportunity to create value on the other,” Simon adds.

“We work to an 80/20 rule, spending 80% of our time looking at how we can make a positive impact outside our own organisation.

“We retain a set amount of money in the business as working capital, which has several advantages: it strengthens our balance sheet, gives confidence to the suppliers and customers trading with us and, importantly, it accumulates.


“We don’t do anything to earn the interest that we make, so we give it to

charity – that gives us a charity pool that has aggregated to £300,000 over the years.

“It also changes the dynamic of the business, giving us much more flexibility, more freedom to think creatively and laterally around the solutions that we give.”

Simon explains that this is a sustainable business model, which allows everyone to be aligned, both within the company and with suppliers and customers.

“For us, the company’s ethics is the only red line; everything else is open to evolution. The way we

*Nielsen, 2014. http://www.nielsen.com/us/en/press-room/2014/global-consumers-are-willing-to-put-their-money-where-their-heart-is.html

Alongside obviously climbing the leagues, the club’s purpose is to be part of and to support the community.”Julian Tagg, Chairman, Exeter City FC

strands: sports participation, health and wellbeing, education and social inclusion, and covers diverse activities from female football development to table tennis, and BTEC diplomas to over-60s’ walking football.”

Democracy in football“We have a particularly original way of running our club, which brings its own challenges, but it works because we have 3,000 trust members who all pay a small contribution to own their football club; if one of them leaves, it’s not a big problem. The complexity of our model is that we have thousands of people who want a say in what we do!”

This democratic model means someone can come directly from the terraces to the boardroom.

“This is beneficial to the business because people like the idea that we’re a non-profit organisation,” Julian continues.

“Football in the Community underpins everything that the trust stands for and has been built up over the years; it’s recognised across the city.

“It’s all about getting out in the community and giving back. We also act as a provider of Corporate Social Responsibility programmes, so businesses can put their money into our projects to help the community.”

Sponsors put money back directly into the community via the club, which acts as a conduit. Many would hope to get more business through their advertising, but they’re also attracted to the opportunity to improve the community.

“It’s great to see businesses across the country becoming aware that it’s not just the state’s responsibility to support their local area,” Julian concludes.

treat people and work with people, the transparent approach, is absolutely non-negotiable,” he says.

Sporting supportGiving something back to the community is also a priority for Haines Watts client Exeter City FC. “It’s not about the football,” explains club Chairman Julian Tagg. “People are always surprised when I tell them that.

“Alongside obviously climbing the leagues, the club’s purpose is to be part of and to support the community. We’re responsible for the brand of the city, but that also presents an incredible opportunity. Football is the honey and the glue that makes it possible for us to engage [for example] children with learning opportunities that they would reject in a normal classroom environment.

“Because there’s a link to football, they’re happy to participate in courses that can get them back into mainstream education. Football is very powerful in this way,” Julian highlights.

“We’re a community-owned club and are always looking to give something back. The Football in the Community Programme, a registered charity that I chair, is aimed at people of all ages, abilities and genders, and is central to this drive. The programme now comprises four

DAVID TECKOE Haines Watts Tax Partner, Oxford“Giving back is not the sole preserve of large corporations. Smaller businesses can both share wealth with their employees and help them donate to their favoured causes within a tax-efficient scheme.

In return, the employer receives loyalty and commitment, but it’s a complex area, and important to get the right advice.

Share schemes, share incentive plans or the award of share options all offer favourable tax treatment if certain conditions are met compared to simply offering staff a pay rise – where they could lose up to 30% in PAYE and NI.

Employees, particularly higher-rate taxpayers, can also benefit from making donations through a payroll gift scheme on a regular basis, the donation being made before tax is deducted from salary. Individual taxpayers can make charitable donations. The recipient charity will receive Gift Aid equivalent to 25% of the donation made by a basic-rate taxpayer. Higher-rate taxpayers will also receive tax relief at their higher rate of tax.

Companies will also receive a Corporation Tax deduction on the gross amount of any qualifying charitable donations made by the company. However, the recipient charity cannot recover Gift Aid in this instance.”

We don’t do anything to earn the interest that we make, so we give it to charity – that gives us a charity pool that has aggregated to £300,000 over the years.”Simon Biltcliffe, Webmart CEO

For more information on charitable donations, contact your local Haines Watts office.


Business owners often overlook the importance of exit planning until late in the sale process – but this may be too late to maximise their venture’s potential value.

Value creation should be a central focus of any long-term business strategy, whether it is ‘build to run’ or ‘build to exit’.

In fact, the exit journey should be embedded as part of planning for both the long-term and for the day-to-day running of the business.

A long-term strategy helps owner-managers to put more effective systems and processes in place, increase profit and improve cashflow, and build a stronger business.

This makes an operation more attractive to investors and buyers, increasing its value as a result.

People powerPeople are at the heart of every business and a strong second-tier management team is particularly important for attracting a potential buyer and increasing value, as it shows the success of the company is not reliant on just one person.

David Brophy, Director at Haines Watts Business Services, says that to maximise the value of your business in a sale, you need to make yourself dispensable.

“Owners need to ask themselves, ‘If I walk away, can the business continue without me?’” he says.

“A modest turnover doesn’t always mean a low valuation either – this process provides opportunities to spot and take advantage of potential chances for cross-selling, for instance.”

Quality not quantityThe quality of a business’s earnings, profits and cashflow is defined by the profit multiple that a potential new owner is prepared to pay. A well-thought-out approach to raising the profit multiple of the business can sometimes delay the satisfaction of shorter-term profits, but in the long-run you could see a big difference in the price a potential owner is willing to pay.

Managing Director of Haines Watts Advisory Services, David Welling, explains how it’s not all about profits: “Thinking about quality of profits is not only the preserve of those planning an exit: it is just as valid if your motive is to build and run a business to be proud of. The earlier you start thinking about it and the less mature the business is, the better the outcome,” he says.

When the time comesSelling a company can be a long, drawn-out process which represents a heavy drain on owner-managers’ time and energy. It can also have a negative impact on business performance when it matters most.

So when you decide it is the right time to sell, keep your focus on the performance of the business and let someone else take care of the selling process.

This is an easier path to follow when planned well in advance, as any business information and documents will be up to date and the emotional impact will be kept to a minimum.

To find out more about increasing the value of your business, contact your local Haines Watts office.

The buyer’s perspectiveAnother useful technique is to view the business from the perspective of a potential buyer. Will they see a business primed for growth, with achievable margins? Is the current owner-manager acting to solve potential issues now?

In fact, a buyer may have the expertise to release the company’s potential and add value in a way the current management can’t.

Identifying issues in advance, and drawing up plans to correct them, will put the vendor in a stronger position and help them avoid surprises.

Unlocking valueOwner-managers often have a different view of the worth of their business compared to that of a potential buyer. Seeking expert guidance at the right time can be as essential part of unlocking its true value.

“An adviser can take the broader view and help identify a business’s key selling points as well as any potential problems. And by acting well in advance of any sale, an owner-manager then has an opportunity to create the right conditions,” David adds.

David Brophy

The earlier you start thinking about the quality of profits, and the less mature the business is, the better the outcome.” David Welling, Director of Haines Watts Advisory Services

Unlock

David Welling

value



Could making a cash gift to a loved one leave them with an unexpected tax liability? David Smith, Director, Financial Planning, Tilney Bestinvest, explores the rules and regulations surrounding the potential tax treatment of gifts.

Important informationThe value of investments can go down as well as up, and you may get back less than you originally invested. This article is not a personal recommendation or advice to invest. Prevailing tax rates and the availability of tax reliefs are dependent on your individual circumstances and are subject to change. Please note we do not provide tax advice.

G iving away your wealth can be a complex part of your financial planning. When you make a

cash gift, neither you nor the recipient has to pay any tax upon receiving the money. However, it’s wise to be more cautious when gifting assets such as shares or property to your children.

Even if you don’t receive any payment for the asset and it’s an outright gift, you could still be liable for Capital Gains Tax (CGT) on the asset.

CGT is calculated as if you sold the asset for its market value at the time of making the gift, so if you’re unsure about what this means in your case, you should contact a qualified financial planner.

David Smith

tailin the

To find out more about how you can manage your tax liabilities, contact your local Haines Watts office or visit www.tilneybestinvest.co.uk


You can also make as many small gifts of up to £250 as you like, but no more than £250 per recipient.”David Smith, Director, Financial Planning, Tilney Bestinvest

Is Inheritance Tax a liability?If someone dies within seven years of making a substantial cash gift, it will form part of their estate and could be subject to Inheritance Tax (IHT) if the overall value of the estate is more than the nil-rate band threshold (currently £325,000 per person for 2015/16).

This tax liability could be taken from your estate or paid by the recipient of the gift. Anything to pay may be subject to taper relief (if the gift is in excess of the nil-rate band) and could be reduced depending on how long ago the gift was made.

Tax-exempt giftsThere are certain situations where a gift will be completely free from Inheritance Tax – for example, if you have not exceeded your £3,000 annual exemption (the annual allowance for financial gifts set by HMRC). You will also pay no tax when making financial gifts to your husband, wife or civil partner (if they live in the UK), as well as to certain charities and national institutions.

You can also make as many small gifts of up to £250 as you like, but no more than £250 per recipient; wedding or civil ceremony gifts, made on or shortly before the date of the ceremony; and regular gifts as long as they are taken from ‘excess income’ and don’t affect your normal lifestyle.

This is a complicated area of taxation, with many different conditions and exceptions. For more information on tax-exempt gifts, visit www.tilneybestinvest.co.uk/guides to download your factsheet.

Sting


3Underestimating income needs

Life expectancy is increasing and you might need an income for longer than you think. This is particularly relevant if you decide to purchase an unsecured income such as drawdown, which needs to be carefully monitored.


7Taking chances The recent regulatory changes

mean it’s important that you complete a nomination form to make sure your pension is paid to the correct person in the event of your death and that your tax arrangements take account of Inheritance Tax.

Important informationThe value of investments can go down as well as up, and you may get back less than you originally invested. This article is not a personal recommendation or advice to invest. Prevailing tax rates and the availability of tax reliefs are dependent on your individual circumstances and are subject to change.

Zoe Dickinson

If you fail to manage your pensions effectively, your savings could run out in retirement, and you may not be able to live the life you want to lead.

7The pensiontraps

* Based on a standard annuity with no tax-free cash, 50% spouse’s pension, level in payment and payable monthly in advance. Source: IRESS

I t’s never too early to start thinking about funding your retirement if you want to achieve a comfortable lifestyle in your

later years, says Zoe Dickinson, Financial Planner at Tilney Bestinvest.

“Don’t fall into the trap of putting off what you can do today,” she advises.

Zoe highlights seven common ‘mistakes’ when it comes to saving for retirement:

For more information or to arrange a review of your pension arrangements, contact your local Haines Watts office or visit www.tilneybestinvest.co.uk

1Savings complacencyIt often costs more than you think

to purchase a sufficient retirement income. For instance, if a 70-year-old man purchases an annuity with a fund of £100,000, he would currently only secure a standard annuity income of about £6,000 a year.*

2Misreading your requirements

There are various stages to retirement and it’s important that you assess your needs carefully. You may want to spend more on travel in early retirement, but less in later years. Long-term healthcare also needs to be considered, for instance.

4“I’ll do it tomorrow”

Reviewing a pension plan is easily put off, but it’s important that you do this task on a regular basis to make sure your plans are aligned with your long-term objectives. Neglecting them now may mean less money in retirement.

5Forgetting old pensions Do you have old pension

policies that you have forgotten about? These may be small, or have complicated historic structures. However, they may have more value than you realise, or it may be appropriate to consolidate them with other pension pots so that they are suitably invested.

6Misjudging your optionsYour investment options are

an important part of pension planning. You may have limited investment options within your pension wrapper, or just be invested in underperforming funds, but it’s vital that your underlying investments are reviewed so they meet your specific aims and objectives.


I t’s an exciting time to be approaching retirement, says Richard Dawes, Managing Director, Financial Planning, Tilney Bestinvest. But with this greater freedom comes a responsibility to find

an option that best suits your personal circumstances.“This new freedom means that you could technically withdraw

your entire pension as a single lump sum,” Richard explains. “But a pension needs to last your whole retirement, so most people are likely to stick to taking their 25% tax-free cash.”

Retirees are no longer required to buy an annuity with the remaining 75% of their pension, although this option remains an excellent choice for people seeking a guaranteed income for life.

“You should compare annuity rates to find the best deal before making a purchase, as you may get a better deal by applying for an enhanced annuity – which bases your level of income on your lifestyle choices and health condition,” Richard adds.

While annuities offer the security of a guaranteed income, they do mean you have no flexibility or control over your money. “This is why many people consider drawdown – where your pension stays invested and you take a regular income from it directly,” Richard continues.

“Under the new rules, freedom is available to everyone, although you will need a pension that allows it.”

Time to planDeciding which pension option is best for you will have important implications for you for the rest of your life, but making this decision is more complex than ever. This means seeking help from a financial planner has never been more important.

Understand

Important informationThe value of investments can go down as well as up, and you may get back less than you originally invested. This article is not a personal recommendation or advice to invest. If you are unsure of your options, you should seek professional financial advice or visit Pensionwise.gov.uk. Prevailing tax rates and reliefs are dependent on your individual circumstances and are subject to change.

Richard Dawes

Tilney Bestinvest’s Your options at retirement guide

youroptions

To make an appointment with a financial planner who can support your pension decision making, contact your local Haines Watts office or visit www.tilneybestinvest.co.uk


New rules which came into effect in April mean people have unlimited access to their money when they retire. But with greater choice comes a need to understand all the options available.

A meeting with a financial planner provides an opportunity to talk through your retirement plans, review your current financial circumstances and work on a strategy to help you achieve your goals.

This discussion would include the new freedom to take lump-sum withdrawals exceeding your 25% tax-free amount. While, in the words of former Pensions Minister Steve Webb, you could technically withdraw your entire pension fund in one go and buy a Lamborghini, people are likely to be more sensible.

Retirees are more likely to use this freedom to pay off a remaining mortgage, but a pension is designed to provide an income for the rest of your life. Consider talking to an expert before making any lump-sum withdrawal.

A financial planner can advise you about the effects of your withdrawals on your tax liability, how much you can afford to take and how this could affect your income in later life.

With so many options available, it can be difficult to know what to do next. A good starting point is our guide, Your options at retirement, which you can read at bestinvest.co.uk/retirement-options


Publication Date: July 2015© 2015 Haines Watts Limited. All rights reserved. All published material remains the property of Haines Watts Limited and is replicated with the permission of Haines Watts Limited. All contents of the publication are correct as of publication date.

The Haines Watts Group consists of all firms in which Haines Watts Limited is a partner, member or shareholder, or with whom they have signed a participation agreement, or firms controlled by such firms. Generally, “HW”, “Haines Watts” and “Haines Watts Group” refer to the network of member organisations, each of which is a separate and independent legal entity. Member organisations are not members of one legal partnership and are only liable for their own acts and omissions, and not those of each other.

The majority of these firms are not authorised under the Financial Services and Markets Act 2000, but because they are licensed by the Institute of Chartered Accountants in England and Wales, are able to offer a limited range of investment services to clients if they are incidental and / or complementary to, or arise out of, the other professional services they have been engaged to provide.

It is Haines Watts Group policy to refer most investment business, excluding corporate finance work, to Financial Advisers, authorised and regulated by the Financial Conduct Authority. The Financial Adviser will take full responsibility for compliance with the requirements of the Financial Services and Markets Act 2000.

Bestinvest (Brokers) Limited (Reg. No. 2830297), Bestinvest (Consultants) Limited (Reg. No. 1550116) and HW Financial Services Limited (Reg. No. 02030706) are all part of the Bestinvest Group. These companies are registered in England and authorised and regulated by the Financial Conduct Authority.

This magazine is designed for the general information of readers. The information represents Haines Watts Group’s present understanding of current and proposed legislation and HM Revenue and Customs practice. Whilst every effort has been made to ensure accuracy, information contained in this briefing may not be comprehensive and recipients should not act upon it without seeking professional advice from their usual adviser. The values of investments may go down as well as up and are not guaranteed.

HAINES WATTS UPDATE

Award-winning coffeeHaines Watts client and coffee shop 200 Degrees, has been recognised as being the best for Working Out of Office at the 2015 Coffee Shop Awards.

The Nottingham-based café, part of an artisan coffee roasting business, also came second for Best Coffee Shop in Britain.

The business supplies coffee to top restaurants, hotels and businesses across the Midlands and the UK, and runs a barista training school.

Excellence recognised

The Haines Watts Kettering and Northampton offices have signed a three-year sponsorship deal with a local cricket club.

Loddington & Mawsley, a community club originally founded 120 years ago, will use the money to build a new pavilion and improve facilities, such as practice nets and a bowling machine.

It’s hoped the funds will help it to bring on the next generation through its schools and after-school clubs and into senior cricket. It’s also looking to start a thirds team.

Chris Timms, Regional Managing Partner for Haines Watts East, comments:

“At Haines Watts, we’re keen to support young talent in a local, community-based environment. The aims and ambitions of

Loddington & Mawsley CC closely match our own internal development programmes, so it was a natural fit.”

Three-year cricket deal

Haines Watts Hereford has once again sponsored the Entrepreneurs’ Prize as part of the Herefordshire heats of the National Young Enterprise Competition.

Schools and college teams across the county set up and run their own business for a year, working together to deal with business management challenges, from raising capital, product design and production to business planning, accounting and sales and marketing.

Haines Watts Managing Director, Karen McLellan, was also part of the judging panel that decided which businesses went on to the Herefordshire and Worcestershire finals.

“The programme offers young people a chance to learn about what it takes to run a business, which benefits both the entrants and their future employers when they enter the world of work,” Karen explains.

Winner of the Haines Watts Entrepreneurs’ Prize was Untitled Visuals, a team whose willingness to adapt their products and services for different markets allowed them to develop a client base ranging from art students to West Mercia Police.

Peter Johnson, Haines Watts Hereford Partner, with Haines Watts Entrepreneurs’ Award winners, Untitled Visuals.

3D innovatorDeeThree Ltd, an offshoot of Northampton University, has been able to adapt to the demands of a challenging new client, thanks to support from Haines Watts.

The company specialises in building models by combining three-dimensional printing with traditional model-building techniques. Haines Watts has helped the business put funds in place so it can invest in new technology to meet its client’s brief, and deliver.

The end result was an app which displays the client’s product, high-end yachts, in 3D as well as a range of promotional material, statistics and pricing information.

At One with our clients

Working as One team

One place for all your business needs

One path to success

One-to-One relationship

HELPING YOU REACH YOUR GOALSWe offer a fresh-thinking approach to your business

If you have an hour to spare, why don’t you arrange a meeting with Haines Watts to find out how we can help you with your business needs? Contact your local office. Visit: www.hwca.com/offices

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BUSINESS OWNERS REACH THEIR GOALS

60LOCATIONS AROUND THE UKmore offices than other accountants

HELPING OVER

OVER

EXPERTS IN OWNER-MANAGED BUSINESSES

PRESENCE IN OVER

100countries around the world via our international alliance

We are a top 15 firm of chartered accountants with an unrivalled network of offices throughout the UK. Being more accessible to you helps build a relationship that we hope will last a lifetime

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PEOPLE AROUND THE UK working to support clients

FUNDRAISING FOR OVER 100 LOCAL CHARITIES

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to help with EVERY ASPECT of your business and personal needs

Having advisers that can add expert advice and value to both your business and personal wealth aspirations is important for most business owners. By understanding what you want to achieve, Haines Watts is able to work with you to identify opportunities for growth, saving money and managing risk to help you reach your goals. If you have an hour to spare, why don’t you arrange a meeting with Haines Watts to find out how we can help you with your business needs? Contact your local office: www.hwca.com/offices

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Accountancy firm of the year: SMEs at this year’s FD

Excellence Awards

2014

2012 &

Auditor of the Year for SMEs

2013

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