Urgent – Third round of Small Farm Grant Scheme announced with limited application window

The third and final round of the Countryside Productivity Small Grants scheme was announced on 7 October. The scheme is aimed at encouraging farming businesses to acquire new equipment which will improve efficiency and animal welfare, and also benefit the environment. Only equipment on the approved list will be eligible for the grant, which can be between £3,000 and £12,000 per farm, and applications must be made through the online portal by 4 November 2020.

As previously, the grant will be based on a standard cost for the equipment concerned and will cover 40% (50% in Cornwall) of that cost irrespective of the actual price paid. The approved list includes, for example, livestock handling, weighing and testing equipment, precision drills, GPS updating and input monitoring systems, wireless network repeaters and digital weather stations.

Claimants for grants in earlier rounds of the system can make further application this round, but only up to a maximum of £12,000 overall. The budget for the current round of £25 million brings the total funding offered under the schemes to £60 million.

The press release announcing the grants, confirmed that this will be the final round of the scheme. However, it went on to add that, “Powers have been included in the Agriculture Bill to allow the government to provide financial assistance to support farmers to invest in equipment, technology and infrastructure that will not only boost their productivity, but also deliver environmental and other public benefits.”

This implies perhaps that new initiatives might follow in future, along much the same lines, as part of the wider policy of subsidy reform.

Commenting on the news, MHA Moore and Smalley agriculture manager, Yvonne Coulston, said, “We welcome a third round of this very popular scheme, but are concerned at the very tight timescale for applications. Clients will have to act quickly to decide what they need, check it’s on the approved list and complete the claim.”

Find out more  

To discuss this and how we can help your agriculture and rural business, please get in touch.

This update originally appeared on the website of our colleagues at MHA Larking Gowen.

Brexit Hub

Brexit Hub

How can UK businesses succeed in a post-Brexit world?

Now, for tomorrow

The last year has taught us that reliable information is key to dealing with the challenges we face. Trading with and in the EU is no different. Our post Brexit Hub provides the information you need to steer the right course for your business, whether you trade with or in the EU.

MHA Moore and Smalley will keep you informed and if necessary, manage any changes that may arise for you personally or for your business.

Although we now know the form of the free trade deal with the EU, we expect a succession of changes to domestic legislation during the course of 2021.

Please check back regularly for updates and remember to sign up to any webinars happening during the course of the year.

EU VAT and E-Commerce changes - webinar

On 1 July 2021, the EU will fundamentally change its VAT rules on B2C supplies of goods and services to EU consumers.

Changes from 1 July to sales to EU Customers

There will be fundamental changes from 1 July 2021 to the collection of VAT on the sale of both goods and services to EU customers.

New rules for goods moving from GB to NI

If you’re a Great British business moving goods into Northern Ireland it’s important you act to comply with the new rules.

Changes to VAT on Services

There are changes to the VAT treatment on services post-Brexit from 1 Jan and 1 Jul 2021.

Freeports usher in a new dawn for the UK

A announcement in the Budget was to approve 8 new freeports in England in regeneration regions.

Import VAT – Ways to Pay

UK based businesses need the correct ID numbers to allow goods to be cleared by HMRC.

Understanding Rules of Origin

The Rules of Origin: Why they matter, what they mean and how to use them in your business.

Post-Brexit changes to the VAT return

Updated guidance on how to fill in and submit your VAT return.

Trading Post-Brexit: Webinar recording

Our speakers covered the key issues affecting businesses importing and exporting in 2021.

Customs warehousing and IPR

Customs warehousing and inward processing relief (IPR) allow your business to import goods into the UK, which are intended to be sold to UK, EU or non-EU customers without incurring import duties or VAT when the goods arrive in the UK.

Can you feel the Force?

Was
the title of a 1979 disco hit by The Real Thing –  you tend to find it
played now only at Christmas parties and the like; more’s the pity, I think it
deserves more airtime.  The band originated in Liverpool by the way.

Foot
tapping disco banger it may be, but, tweak the title a little to ‘Can you
feel the Forces?
’ and  it is also a useful way to think about the
challenges you face in business; and not just in a business but in life
generally.

The
principle is simple and, rather elegantly, it also echoes the work of 17th
century polymath Sir Isaac Newton.

Let
me explain.

The
idea is that any challenge which we face in life can be considered to be being
acted upon by two opposing sets of forces –  those on the left which are
pushing the issue towards some form of resolution and those on the right which
are blocking progress or actually making the situation worse (or the other way
around; it is nothing to do with political persuasion).

If
the forces are balanced then the issue doesn’t become any worse but nor does it
become any better – remember your O level or GCSE physics and Newton’s First
Law of Motion that an object will remain at rest if the forces acting on it are
balanced? 

But if you can increase the effect of the forces pushing the issue to a successful conclusion and / or reduce the effect of the forces which are supporting the problem / preventing progress then you have the potential to deal with the challenge, overcome it  –  and move on to the next one.

We
have been using this idea of a Force Field with a number of clients who have
asked for help in dealing with a tricky issue in their business.  Rarely
is the underlying issue a financial one –  but it very often has a financial
implication and frequently it is this financial impact, showing up in the
management information reports / management accounts, which shines a harsh
light on the existence of the problem.  Because, let’s be honest, most
humans have a tendency to ‘let sleeping dogs lie’ and develop work arounds to
problems. But some are of such an impact, magnitude or risk of such, that not
to grasp the nettle isn’t really an option –  or not one which will
maximise the chance that the business or person will grow, improve and
flourish.

So
far, so simple and straightforward.

In
our experience, the real challenge in these situations is not to identify the
problem but to really get under its skin and work out what the helpful and
unhelpful forces are which are in play.  It is really important to bear in
mind Einstein’s (I think it was him?) idea that ‘The thinking that got us into
the problem is unlikely to be the thinking that will get us out of it’. 
And that goes to the nub of the issue with a tool like this; it usually
operates at its best when there is an external input or challenge into the
group’s thought processes to enable them to get out of their existing modes and
tramlines of thought and see the issue from a new perspective.

Once
the forces have been named and shamed so to speak, groups need then to agree
which are the most significant; or rather, if you could strengthen them /
remove them which would have the most beneficial impact.  This can be a
bit subjective but we have found that groups pretty quickly discuss and reach a
consensus upon what needs to be addressed.  A good way to do this is to
give each of them a magic wand and with a handful of wishes get them to make
clear what they would ‘fix’ if they could.

Now
it is time for a deeper dive.

We
know what we would change if we could –  so now we have to work out what
steps could be taken in order to change the power of the most important
forces.  And again, there are usually a range of views of what should be
done to improve things (which is good, we want this cognitive diversity) but we
ask the group to think really clearly about what small steps could be taken in
the next 15-30 days.  Not to solve the problem but to move a little closer
to solving it.  It is, if you like, a bit similar to the idea of marginal
gains or we consume something large one small mouthful at a time.

We
need to come back to Newtonian forces and the idea of momentum.  That,
unfortunately, is the biggest risk in any change process like this. It isn’t
identifying the need to change, it isn’t identifying what to change, it isn’t
even identifying how to change –  it is keeping up the momentum which the
group has created in their session to implement the changes required given all
the other distractions / priorities of everyday life whether that be business
or personal.

Fortunately,
there is a relatively easy way to overcome this risk –  and it has two
clear components:

  1. agreeing to being held to
    account.  By other members of the team and by us; and
  2. leaders committing to taking the
    agreed actions. They need to consciously live and demonstrate the values and
    behaviours which the group has said it needs to adopt in order to resolve the
    challenge satisfactorily. 

I
said that there are two components, that is true, but they are not of equal
importance.  Overwhelmingly it is the second which is the most important.

So,
there we go, a quick canter through one of the more frequent thinking and
problem solving tools we are using with clients. 

Property issues part 2

Sale and leaseback of practice property

A GP partnership will own many assets including fixtures and fittings, medical equipment and sometimes the property that the practice works from. There are many advantages to this such as control over how the property is used and maintained and also if you are in the fortunate position of being in a building that grows in value, potentially receiving more for your investment when leaving the partnership than you paid when joining. However, the property can also tie up capital and if mortgages and loans are involved then monthly repayments can significantly affect cash flow. Sale and leaseback can be viewed as a way of releasing the capital and enabling the money to be utilised for other things such as personal mortgages and school fees. The property will be sold by the partnership to a third party who then immediately grants a lease back to the partnership. The use of the property will then continue under the lease arrangement with the third party often for a term of 20-25 years.

Advantages of sale and leaseback

New partners are potentially reluctant to buy into a property particularly at a time when they are starting out in their career and may have other personal liabilities such as buying their own home.

If there are existing partnership loans in place secured on the property any increase in borrowings either within the partnership or personally to buy in might be at different rates  and new partners may not want to enter into such arrangements. There may be redemption penalties on the old loan arrangements that make shopping around for other competitive rates less viable.  Therefore it may seem to be more attractive to an incoming partner to be part of a lease arrangement rather than purchasing a property. The main advantage for leasing premises is that the equity in  the premises does not have to be funded by the partners.

Disadvantages of sale and leaseback

An incoming partner needs to be aware that all responsibilities of the partnership are jointly and severally liable, which means if they are taking on significant long term liabilities with respect to the lease and have no underlying property asset on which to secure those liabilities there is possibly a higher personal risk than if they were party to loan finance to own the building instead

When selling the property to the third party a capital gain (or loss) will crystallise. As the sale of the property is not classed as a cessation of the business then Entrepreneur’s Relief ( now known as Business Asset Disposal Relief)  will not be available and capital gains will be due at the current CGT  rate of 20% rather than the 10% reduced rate. If the property has increased in value since the partner purchased their share this may result in a significant amount of capital gains tax to pay.

Following leaseback, any subsequent growth in the value of the property is forgone by the partners and the third party will benefit from this.

Stamp duty land tax (SDLT) may be due on the lease and NHSE may not reimburse these costs. 

The partnership will be reliant on the third party making or approving significant improvements to the property such as an extension.

The terms of the lease may also transfer the responsibility to the partnership for the repair and maintenance of the property on an ongoing basis and will no doubt include a closing dilapidations provision at the end of the lease term. NHSE are unlikely to reimburse the full amount of these costs and therefore the partnership will have to fund the difference.

Prior to sale to the third party the partnership may have benefitted from notional rent and other rental income from other businesses such as pharmacies. Once the property has been sold  notional rent ceases and any third party  income will be that of the landlord owner unless permission is given to sub-let rooms.

If you are considering the sale and leaseback of your property,  we can help guide you through the maze of accounting and tax issues and can recommend solicitors to help with the legal aspects.

Chancellor’s ‘Winter Economy Plan’ aims to prevent massive job losses

Rishi Sunak has scrapped his November budget because in his own words “now is not the right time to outline long term plans” and “what people want to see is focused on the here and now”.  Instead he has today announced details of his ‘Winter Economy Plan’.

In his statement today, 24 September 2020, the Chancellor announced a support package to save jobs and help prevent the economy worsening.

Wage subsidies for part-time workers

The Furlough scheme will not be extended past 31 October 2020.  It will instead, be replaced by the Jobs Support Scheme, modelled on one in Germany, in which taxpayers subsidise the wages of workers returning to work part time after being furloughed.  The Chancellor said that employees will have to work for at least a third of their normal hours to quality for the new scheme, which begins on 1 November 2020.

VAT cut extension for hospitality and tourism

As widely predicted, the VAT cut for the hard hit hospitality and tourism sectors has now been extended to 31 March 2021 and the rate will remain at the reduced rate of 5% until that date.

Pay as you grow

The repayment terms on Coronavirus loan schemes for hard-hit businesses have increased from 6 to 10 years to reduce monthly repayments.

Commenting on the Chancellor’s speech Danny Houghton, Business Development Partner at MHA Moore and Smalley said “Today’s announcements will be welcome news to employers and workers alike, however, there was no mention of when the delayed Budget might occur, so we are yet to find out about longer term spending and borrowing plans. This delay will give business a little extra time to plan ahead of any future tax reforms.”

Contact Us

For further information please get in touch with your MHA Moore and Smalley contact or, alternatively contact us here.

Save time by using Excel with Sage 50cloud reporting

Do you use Excel for your management reporting, manually exporting and inputting data from your Sage to update these reports?

Let’s be honest, people like Excel and you may already be doing this or are thinking about putting your reports or Sage transactions in Excel, which you can then use for your own bespoke management reporting.

Did you know that you can integrate your Sage data with Excel using the Sage 50 Accounts ODBC driver?  This will save you a significant amount of time compared to manually exporting and inputting data from Sage into Excel each month.

Using the ODBC driver

To help you transfer data quickly, easily, and accurately, you can use the Sage 50 Accounts ODBC driver to read your accounts data directly into Excel.

An ODBC driver translates the data files from one application, for example Sage 50 Accounts, so that they can be read by a Windows application that supports ODBC, such as Excel.

Once the connection has been made, you just need to refresh your Excel report and any new transactions added to Sage will be automatically pulled through.  The ODBC driver is read only, so you cannot write back to your software data files.

There are other ways

All of the reports explained below will need to be run and exported on a regular basis to keep your Excel reports up to date. 

Export

Run your report and preview on screen, click Export, choose the file type, name and location where to save.

If you selected Excel, open and format to remove merged cells and put the information into columns.

Report to Excel

Run your report and preview on screen, click Export.

This will use report formatting and may need tidying to remove merged cells and get information into columns.

Data to Excel

Run your report and preview on screen, click Data to Excel.

Report data will appear in Excel as a table, columns will be all neatly aligned.

Using the ODBC will allow you to automatically bring through your Sage transactions giving you meaningful up to date reports, saving you time from manually downloading and updating.

Contact Us

For more information on what management information you should be preparing, how you can prepare it and the costs involved please contact Nick Wetherall, Software Support Manager or contact the Digital Solutions team.

The Kickstart Scheme: how does it work?

Funding for employers and new jobs for young people

 

The Department of Work and Pensions (DWP) has launched the £2 billion Kickstart Scheme, designed to create fully subsidised new job placements lasting 6 months for young people across the country who are currently on Universal Credit and at risk of long-term unemployment.

The placements are open to those aged 16-24. They will be available across a range of different sectors in England, Scotland and Wales. The first placements are likely to be available from November.

Employers will receive funding for 100% of the relevant National Minimum Wage for 25 hours a week, plus associated employer National Insurance contributions and employer minimum auto-enrolment pension contributions.

There will also be extra funding to support young people to build their experience and help them move into sustained employment after they have completed their Kickstart funded job.

How to apply:

If you are an employer looking to create jobs placements for young people, you can apply here for funding as part of the scheme.

You can submit your application online. If you are applying for 30 or more job placements, you can apply directly.

If you are applying for less than 30 job placements, you must apply through a representative of a group of employers. They can submit an application on your behalf, using other employers to create 30 or more job placements in one application.

Application requirements:

  • Your Companies House reference number or Charity Commission number
  • Organisation address and contact details
  • Details of the job placements and their location
  • Supporting information to show that the job placements are new jobs and meet the Kickstart Scheme criteria
  • Information about the support the organisation can give to develop employability skills of young people

 What happens next:

Once your application has been submitted, it will be reviewed to check it meets the requirements of the Kickstart Scheme. It will then go to a panel for consideration. This is not a competitive process, but Kickstart will only provide funding when the job placements meet the criteria.

DWP aims to respond to applications within one month.

What happens if your application is accepted:

If your application meets the requirements of the scheme, you will receive a letter with a grant agreement. This agreement will include what your company has agreed to provide, and how much funding you will receive from the Kickstart Scheme.

 Contact us

Please get in touch with Adam Parton, Partner if you need support, or alternatively contact us here.

This update originally appeared on the website of our colleagues at MHA Carpenter Box

Online sales tax – would it work?

Recent reports suggest that Chancellor Rishi Sunak is considering introducing an online sales tax as a ‘sustainable and meaningful revenue source’, amid mounting concern about the collapse of the high street, as Britain recovers from the Covid-19 pandemic.

The Treasury has highlighted concerns from retailers that business rates place an unreasonable burden on the high street, as they effectively penalise businesses with physical premises because online rivals do not need to rent “high-value” properties. The Treasury has stated that the Covid crisis “has had a significant impact on how business is done” and that the government must act to make sure that “the tax system raises sufficient revenue” to help bricks and mortar retailers to compete.

There could be two models that the Govt is looking at: 1) a straightforward levy of around 2% on sales of online goods, which would raise around £2bn a year or 2) a mandatory charge on consumer deliveries which would form part of a campaign to cut congestion and toxic emissions.

Is the ‘high street’ model broken?

The online sales tax in the UK has largely been discussed in the context of ‘levelling the playing field’ between physical shops and online retailers, particularly with regards to business rates. However, within the Retail sector, it is not widely viewed as a viable solution as it is unlikely to directly benefit or impact on the costs borne by smaller and bricks and mortar retailers.  Business rates have, of course, been suspended in the short term and this has been widely welcomed but a longer-term solution to the issue still needs to be found.

If the sales tax is passed on to consumers, it remains questionable whether it has been set at a level which would override the benefits of shopping online, particularly the convenience aspect. The recent lock down has, through necessity, introduced online shopping to traditional high street shoppers and it is likely that many of these will continue to shop online in future, even if only to a limited degree.

If a key driver behind introducing an online sales tax is to persuade consumers to return to the high street, then conducting some form of analysis to confirm the effectiveness of such a tax would be required before going further.

Other factors to consider

If the EU’s proposed directive requiring online platforms to report the level of online sales (i.e. DAC 7) gets approval, the tax authorities will have more information on online sales, which could be an underlying driver for the tax, as there are likely to be online sales in territory  that are not currently taxed notwithstanding any  obligation to register for VAT.

There is a strong indication that the VAT registration threshold will be reduced in the years ahead which would bring the UK in line with most other countries. The Government has consulted with interested bodies to try to find a solution to the issues surrounding business rates, but no viable solution has been agreed. One alternative could be a 1% rise in the rate of VAT, the revenue from which could be directed towards a reduction in business rates.

It is also rumoured that the Government could be considering a capital values tax to replace business rates, based on the value of the land and buildings, and paid by the property owner. Were a capital values tax to be introduced, it seems likely that landlords would ultimately try to pass it on to the lessee either by increased rents or other charges.

Ultimately, the demise of the high street cannot be wholly blamed on the rise of online shopping. Consumer expectations of the ‘shopping experience’ have also changed and bricks and mortar retailers must be versatile and adaptable to ensure that they are able to move in line with consumer expectations.

Contact us

Please get in touch with David Hackett, Tax Director, if you need support, or alternatively contact us here.

This update originally appeared on the website of our colleagues at MHA MacIntyre Hudson

Cash flow management once furlough ends

The furlough scheme has been supporting the salaries of approximately 7.5m (at an estimated cost c£80bn) workers during the Covid-19 pandemic, and has played a key role in preventing what could have been a catastrophic spike in unemployment levels. The scheme will now continue (as at 17/12/20) to the end of April 2021.

A gradual removal in lockdown restrictions has allowed many businesses to reopen, although often with a significantly lower capacity and therefore a lower turnover than prior to the pandemic. Many businesses will continue to operate at a significantly reduced level of profitability and therefore cash flow.  

The above factors combined with the furlough scheme coming to an end means that many businesses, particularly those in sectors subject to full or partial lockdown measures, will need to carefully manage their short and medium term cash flow. It is therefore vital that management decisions are informed by both short and medium term profitability and cash flow projections.

Management teams will need to quickly understand the extent to which cash flow can be sufficiently improved through tighter control on working capital – for example reducing payment terms with customers, extending credit terms with suppliers, and securing payment holidays on loan agreements.

Where improvements in working capital will not be sufficient, management teams will need to seek external finance. For many businesses, the most accessible funding has been the widely publicised CBILS and Bounce Back Loan Schemes. These schemes have provided low cost and often unsecured funding to thousands of SME’s.

It is important to note that the deadline for the submission of applications is 31 September (the deadline for funds to be approved has been extended to 31 January) and therefore businesses requiring funding will need to move quickly to obtain this funding.  

Businesses should consider other sources of funding, for example those businesses with an unencumbered sales ledger, or plant and machinery should consider asset based lending. Where the business has access to equity funding either through existing equity investors or business angel networks these options should also be considered.

The above are just some of the areas which should be considered as part of a short and medium term funding strategy. If you would like to discuss further, please contact Ian Waddingham, Corporate Finance Senior Manager or a member of the Corporate Finance team on 0161 5195050.

Important changes in the Basic Payment Scheme Greening Rules for 2021

A short announcement from DEFRA on 27th July marked important changes in the Basic Payment Scheme (BPS) for the next few years and may also give a clue to how the transition from direct payments to Environmental Land Management Schemes (ELMS) may be eased.

Government to cut red tape for farmers as they plan for 2021

The paper released on 27th July was headed “Government to cut red tape for farmers as they plan for 2021”, and it gave details of a major simplifying initiative. With effect from the 2021 year, the greening requirements under BPS will be removed on the grounds that they produce little environmental benefit but are an administrative headache for farmers. In practical terms this will mean that it will no longer be necessary to provide an “ecological focus area” of hedges, tree lines, buffer strips etc., nor will it be necessary to grow two or three different crops (depending on the size of the farm). In practical terms one can see that the EFA changes will have little environmental impact since many farms already have the relevant features in place – they simply will no longer need to list them annually. The 30% greening payment will be added to the BPS payment.

The change in the cropping diversity may have benefits, in that where a small farm is cultivated using contractors, it will be far easier to “block crop” the land, since the contractors will no longer need to make multiple visits. Larger farms with simple cropping rotations and large fields may also find the new rules more practical. This rule had already been temporarily relaxed for 2020, but clearly the change will now be permanent.

These changes to the greening requirements are also likely to make completion of the annual BPS claim form much easier, since the level of detail in the greening section is far greater than anything else on the form. From an accounting perspective, the change will remove an area of technical uncertainty which could arise where greening requirements went beyond BPS reference period.

Looking ahead to the future, this announcement may give a clue to how the ELMS schemes may work in practice. At present some management practices are eligible for Countryside Stewardship payments and can alternatively be used as part of the greening EFA. If they are no longer needed for greening, they will presumably become available for Stewardship so there will be a positive financial encouragement for more farms to move into the stewardship regime without necessarily reducing their productive acreage. If, as expected, the basic ELMS schemes look very similar to stewardship, one can see that aspects of the transition might proceed quite seamlessly.

Commenting on the change, Head of Agriculture, Partner at MHA Macintyre Hudson, Sarah Dodds said;

“We very much welcome this announcement. Many farming businesses have always provided the environmental benefits which greening required but had to spend a lot of effort ensuring that they didn’t trip over the rulebook. It is hard to see anyone mourning the loss of red tape, and we would hope that this “light touch” will follow through to the ELMS rules in future.”

Contact us

Please get in touch with Yvonne Coulston, Corporate Services Senior Manager, if you need support, or alternatively contact us here.

This update originally appeared on the website of our colleagues at MHA MacIntyre Hudson