Category: Business Advice

The word innovation can conjure up images of disruptive developments such as online streaming services or companies such as Uber, but you can still be an innovation champion. Fortunately, innovation doesn’t have to happen on a grand scale to make an impact in your business.

Driving innovation in any business begins with creating and encouraging an innovative and forward-thinking culture to allow your employees to bring new and interesting ideas to the table, and put them into effect. Your employees need to feel free to contribute, to feel their contribution is acknowledged, appreciated and taken into consideration.

You need to break down barriers between management and employees and ensure that there is regular two-way communication. Creating a team of innovation champions can help. Instead of putting innovation on the backburner until an opportunity presents itself (which it might not), task the right people in your business with driving innovation in a proactive manner. If your innovation champions have a particularly heavy workload, perhaps re-allocate some of their roles to allow them time to devote to driving innovation.

When things go well, it is good to celebrate success. However, your innovation champions shouldn’t be afraid to make mistakes. Managers need to help employees to feel comfortable and ready to share.

Good ideas should be recognised but equally, ones that don’t get off the ground should be applauded as something to learn from for the future.

Driving innovation involves focusing on what you do and what products or services you sell to your customers. Customer feedback can be used to drive innovation. Your customers are generally happy to tell you what it is they want from your firm. Perhaps they want flexibility or they really value quick turnaround times. Spend time gathering feedback from your customers and share this with your innovation champions.

From your perspective you don’t ever want to give your customers a reason to go elsewhere. Make this the central focus of your innovation strategy and task your innovation champions with finding new and better ways to keep your customers coming back again and again. Perhaps the solution to the problem lies in doing simple things a little bit better or perhaps you can utilise technology to make your product / service delivery more efficient. Focus on your customers, listen to their feedback and let that feedback drive your innovation strategy and the activity of your innovation champions.

Our team of chartered accountants have a wealth of experience in a broad range of sectors and love nothing more than helping you and your business. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. We offer a wide range of services which are unique to your businesses who are just getting going!

If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

Having a good strategy is one thing, executing it well can be a huge challenge.

Many business owners and managers are familiar with the scenario – you arrange a strategy day with your team, capture the outputs and create a strategic plan. Everyone goes back to the office, the strategy paper gets filed and that is the last you see of it until next year’s strategy day. The hardest part of any business strategy is implementationOnce you have created your strategy, you need to start engaging with your organisation. The communication process is key and needs to be two-way. You need to create a mechanism for people in your firm to feed back their view.

Once you have your feedback and have finalised your strategic plan, the next step is to start creating tangible objectives.

Each objective should have a dedicated owner (who is responsible and accountable), a deadline and regular updates on progress towards each goal should be provided at, for example, a monthly meeting.

Tracking and reporting are key components of executing any strategy. Monthly updates should be provided by the people responsible for each objective and should include a quantitative measure of progress and a short commentary to add background information about progress to date, expected timeline for delivery, resources required for the next stage, and so on.

Performance management is also key to successfully implementing your strategy. Your team need to be accountable and you need to create a connection between the strategic objectives of the business and your team member’s day jobs. Each person on your team should have a set of objectives which cascade from the overall company objectives that are set out in your strategy document. Aligning the objectives of each individual with the overall goals of your business ensures that your whole team is working towards the same common goal. You should measure and reward people for their contribution to achieving the firm’s strategy. This encourages the right behaviours among your team.

Executing your strategy isn’t a process. It is about developing a culture in your firm where everyone is working towards a common set of goals. At the end of each year, you should evaluate your strategy, keep the bits that are working well and update those parts that haven’t been so successful.

Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector, and above all are here for you and your business. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

Office space is expensive. Do you really need to have a dedicated desk for each and every employee?

Recent years have brought a lot of changes to the office environment, particularly as technology develops and the next generation of employees has come through to management. This new generation of managers brings new thinking about the modern office environment and what it should be.

For example, if a workforce of 100 has, on average, only 80 people in the office on a given day, those 20 empty desks take up space and are not being efficiently utilised. A hefty portion of business overhead is dedicated to office building space and maintenance. By trimming furniture and hardware costs, some of that wasted space can be better used as a meeting or project development space, saving money and benefiting the bottom line.

If your employees hot-desk, they tend to socialise more. Employees who sit beside someone different every day interact more, converse with a greater number of departments, and can find inspiration where it wasn’t possible to before. More interaction with a wider variety of people can lead to greater company cohesion and increased collaboration.

Employees will tend to optimise the space around them for productivity and might select a space that meets their needs for any given day. If they have conference calls on their schedule, they may gravitate towards a small meeting room or less-crowded alcove. If they are collaborating with colleagues on a specific project, they may choose to work in a room with presentation software and large screens, rather than huddling around a single desk.

When your office design allows for employee flexibility, your workers who thrive on mobility and independence are happier and more productive. They will find a way to optimise their office set-up for each and every day.

So, perhaps modern businesses are better off having flexible, open and collaborative offices rather than relying on the more old fashioned approach of assigning each employee a fixed desk. As an added bonus, the business may be able to reduce office overhead costs as office space can be used more efficiently.

We are proud of our offices here at A&C Chartered Accountants. Each team member has a standing desk which also gives staff the option to sit too. If you would like to come into the offices to check it out please feel free to pop in at any time. We offer a wide range of services which are unique to your business. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

How can you raise prices without losing customers? The cost of running a business goes up every year, but when was the last time you increased your prices?

Many business owners and managers worry that if they were to increase prices, they would lose customers.

However, a customer will often be willing to pay a higher price if they feel they are getting value for their money.

A good way to increase your prices can be to bundle products or services together and offer the combined bundle at a price that offers value to the customer. For example, a phone contract might have a higher price but it may include a bundle such as unlimited calls and 20GB of data per month. The key is providing value to the customer.

Find a way to differentiate your offering. Perhaps you could offer new online services to your customers such as an online portal or an app. Maybe you could create faster, more efficient processes so that your customers get a faster, more efficient product or service from your firm, compared to the competition. If you offer something that is seen to be the best in its class, that offers a benefit to your customers, you may be able to increase your prices.

You can test a higher pricing strategy on new customers. Your existing customers might be resistant to a price increase but new clients will be unfamiliar with your pricing so they may accept the higher price if they feel that you offer more value to them than your competitors.

If you do increase prices for your existing customers, you need to communicate well and explain clearly why you had to make the decision to increase your prices. Do your market research to make sure that your pricing isn’t completely out of line with competitors. If your business is not significantly different to the nearest competition, you may run the risk of losing clients.

Large sudden jumps in your prices will not go down well. Instead, introduce gradual increases such as 5% or 10% per year, depending on the type of business that you run. Everyone knows that the cost of doing business goes up each year. If you communicate with your customers, they may be more receptive to small increases.

We love nothing more than learning about new start-ups and helping you get off on the right foot! We offer a wide range of services which are unique to businesses who are just getting going! As start-up accountants we have a wealth of experience in all sectors between our team. From restaurants, fashion brands, fitness centres and many creatives start their business correctly and ensure they are staying tax compliant. The team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

Many company owners work from home, this note looks at how you may obtain tax relief on the cost of converting the spare room or building a deluxe summerhouse to serve as an office in the garden.

• A director can reclaim any expenses incurred when working from home from their company.
• Alternatively, you can charge the company rent if you are required to work from home, or where the business is based at home provided that there is a licence agreement in place.

Claiming back the costs of converting part of a home into an office throws up several different tax concerns for a director.

If the director incurs the cost themselves, they need to consider:

• Capital Gains Tax (CGT) treatment of capital costs
• VAT
• Stamp Duty Land Tax
• Capital allowances on fixtures and plant and machinery
• Treatment of repairs and renewals

If his company incurs the cost (or reimburses his costs) they need to consider:

• PAYE and NICs including the benefits code
• VAT
• Capital allowances
• Treatment of repairs and renewals

Overview and FAQ

Modification and conversion work

These types of costs will generally be treated as capital expenditure, whoever incurs them.

Building an office or workshop

These costs will be treated as capital expenditure, whoever incurs them.

Repairs and renewals

Modification or conversion may include some expenditure which can be treated as repairs and renewals such as redecorating, replacement of old floors or windows, or floor coverings.

Tax consequences if the director incurs the costs

Capital costs and Capital Gains Tax (CGT)

• A private residence is exempt from CGT if it qualifies as a main Private Residence (Private Residence Relief – PRR applies); however the exemption is restricted where part of a home is used for business.• When part of a home is converted that part of the house should still qualify for PRR for the 18 months after conversion.
• The same will apply if part of the garden or grounds is moved into business use.
• If the grounds exceed .5 hectare it is likely that PRR may be restricted in any case.
• If PRR relief is restricted any gain on the disposal of a business asset (as apportioned) should qualify for CGT Entrepreneurs’ Relief if this is in connection with a sale of the business or retirement, however this will not be available if the property has been let to the director’s company.
• In general, a director will be at a CGT disadvantage in claiming the capital costs of creating a home office unless property prices are falling in that case a capital loss could be created when the property is sold.

VAT

• In most cases directors are not VAT registered in their individual capacity.
• If the director has constructed an outbuilding to rent out to their company, he could consider registering for VAT and opting to tax the building.
• Opting to tax would allow him as an individual to reclaim VAT.

Stamp Duty Land Tax (SDLT)

• SDLT is paid by the buyer.
• SDLT will be charged at residential rates when the director sells his private residence providing that the home is suitable for use as a dwelling.
• “Suitable for use”, is something that must be judged at the time of the transaction, so past use or intended use are not considered.
• Where a house is used as a B & B or guest house HMRC recommends that each case should be taken on its merits: if all the bedrooms have separate facilities and are available for letting all the year round it will be treated as non-residential.
• If part of the property is not suitable for residential use the mixed-use SDLT provisions will apply. These broadly apportion the consideration on a just and reasonable basis.
• HMRC considers that “outhouses” will be treated as residential property unless they have a specific non-residential purpose.

Capital allowances

• A director will be able to claim capital allowances on the cost of any fixtures or plant and machinery which he purchases to convert or create a home office; however, there is a restriction when a residential property is used for letting, and the director is also unlikely to be able to reclaim the VAT. There are also PAYE and NICs concerns in respect of fixtures (see below). To this end it might be sensible for the company to incur the cost of purchasing any moveable plant and machinery instead.
• The position with fixtures is not straightforward because it is thought unlikely that HMRC will allow the company to claim back VAT on the cost of something that is fixed to the director’s personal property. It may also be difficult to prove that there is no private use of a fixture which means that this could trigger a PAYE and NICs charge for use of the asset as well.
• When the property is sold and capital allowances have been claimed on fixtures an election covering fixtures may be a consideration.

Repairs and renewals

• A director will be able to claim the cost of repairs and renewals as a deduction against any rental income received if he has a licence in place with his company and the expenditure is incurred:
o Wholly and necessarily for the purposes of letting, or a proportion of the cost is attributable to business use.
• Any reasonable basis can be used to apportion business use, commonly this is done on the basis of:
o The number of rooms in the house
o Floor space, or area
o Time in use

Alternatively, the director can recharge the cost of repairs and renewals to the company as part of a home working expense claim. However, you should not reclaim any expense that has been incurred for mixed business and private use without weighing up the PAYE consequences.
If the company incurs the cost (or reimburses the director’s costs)
• PAYE and NICS and benefits
• VAT
• Capital allowances on fixtures and plant and machinery
• Treatment of repairs and renewals

PAYE and NIC aspects

It is strongly advised to ensure that there is paperwork to explain who is doing what and who is paying for what during a building process.

Company pays director’s personal bills

• If the company pays any bills which are the director’s personal liability the cost is immediately subject Class 1 NICs as earnings. However, for income tax purposes this is a benefit in kind to be included on box B of form P11D, unless the director “makes good” the cost (see below).
• This type of expense can simply be payrolled.
• Or if the director has a credit balance on his loan account, the cost can be offset against the loan. It is advised to agree this before the expense is incurred.
• When income tax applies, this is a one-off tax charge; tax is charged in the year in which the company incurs the cost. For example, where the company pays for the director’s light and heat at home.

Company asset made available to an employee

• If the company constructs, manufactures or purchases an asset which is then made available to a director for private use there will be an ongoing annual taxable benefit in kind for each year in which the asset is made available.
• The benefit will be calculated under s205 ITEPA 2003, at 20% of the higher of:
o The cost, unless the asset is land/buildings, in which case the annual rental value is used, and
o Actual annual costs incurred by the employer.
For example, if the company rents a satellite dish which it attaches to the director’s home and he and his family benefit from it. The benefit will be the higher of 20% of cost or the annual rental cost paid by the employer.

Company construction of assets on a director’s land

If the company creates an asset which is fixed to the director’s private land, such as building for personal use the taxable value of the benefit will be its cost less any amounts by the director.
• This is a one-off tax charge per s204 ITEPA 2003, made in the year in which the benefit is provided.
• If the building is then also used privately there is no additional charge but there will be an ongoing benefit in respect of expenses if the company is providing services such as light and heat in addition to the use of the building.
Note that where the employer is a builder, the costs of construction will be the higher of salaries of the workers used or the costs of contractors engaged to fulfil the workers’ normal duties while they worked on this project.

Transfer of asset to director

Where assets are depreciating assets, this would include temporary structures, such as caravans or static caravans, perhaps wooden cabins which have a short life: s206 provides that an asset which has been used or depreciated and then transferred to an employee will be taxed at the higher amount of:
• the market value of the asset at the date of transfer or
• the market value of the asset when first made available for the private use of a director less the aggregate of the amount of the cost of the benefit during the period when it was provided as a benefit (calculated according to s205) less
• any sum paid by the individual receiving the asset to the person transferring it.

VAT and capital costs

HMRC will disallow any claim to input tax if the expenditure is incurred for the private benefit of a director.
• A company can reclaim the VAT on the purchase of business assets, so it can still reclaim the cost of VAT on any plant and machinery used by the director in the home office.
• It may be possible for the company to reclaim part of the input tax on any conversion costs incurred when converting an outbuilding or completing internal modifications to create an office or workshop, provided that there is a licence in place and any private benefit received by the director is minor.

Capital allowances

• A company will be able to claim capital allowances on the cost of plant and machinery purchased to convert or create a home office.
• It may be possible to claim capital allowances on the cost of fixtures however, fixtures are immoveable, and so the ownership of the fixtures passes to the director. It will then be difficult to try and argue that the cost was incurred for the purposes of the company’s trade. The director may, as an employee claim capital allowances on plant which he provides for the company.

Repairs

• A company can claim the cost of repairs and renewals and associated VAT in respect of any building that it occupies.
• A claim may be disallowed if the expense also benefits the director as it will not be wholly and necessarily incurred for the purposes of the business.

We love nothing more than learning about new start-ups and helping you get off on the right foot! We offer a wide range of services which are unique to businesses who are just getting going! As start-up accountants we have a wealth of experience in all sectors between our team. From restaurants, fashion brands, fitness centres and many creatives start their business correctly and ensure they are staying tax compliant. The team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.