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Exploring new opportunities on land and sea
Business engagement growth at the University of Essex Marriage and money Why family businesses matter
Colour popping jewellery that makes a statement
BOOSTING INNOVATION IN THE EASTERN REGION...................................................... 4 RELIEF FOR FIRST TIME BUYERS.............................. 6 THE BUSINESS OF LUXURY TENDERS AND TOYS.. 8 Marriage and money... a perfect union?.... 12 WHAT CAN AN INTERNAL AUDIT DO FOR YOU?... 14 UP IN THE CLOUD, DOWN ON THE GROUND....... 16 PENSION SOLUTIONS FOR BUSINESS OWNERS................................................ 18 KEEPING IT IN THE FAMILY...................................... 20 PACKING A PUNCH.................................................. 22 PARTNERSHIP AND PURPOSE – THE RELATIONSHIP BETWEEN BUSINESS AND CHARITY.................................................................... 25 YOUR VIRTUAL DOCTOR WILL SEE YOU NOW..... 28 HOWZAT! SCRUTTON BLAND SIGN AN EXCITING DEAL WITH ESSEX CRICKET................................... 30 YOUR FARM IS YOUR FORTRESS........................... 32 THERE MAY NEVER BE A BETTER TIME TO SELL .......................................................... 34 VIRTUAL ASSETS AND ESTATES............................. 36 TAX RULES ON DIVORCE......................................... 38 CHARITY EVENTS..................................................... 40 FANTASY FUNDS – THE RESULTS........................... 42
Scrutton Bland is a leading provider of accountancy, tax, audit, insurance, employee benefits and independent financial planning advice to both business and private clients. Our philosophy is to offer clear, professional advice and to find the most effective solution to meet the individual needs of each client. We are committed to delivering great client service and constantly strive to exceed the expectations of our clients by providing a proactive and supportive service. If you would like professional advice on any of your business or personal finances please contact one of our experienced advisers who will be delighted to hear from you. 820 The Crescent Colchester Business Park Colchester
Essex CO4 9YQ 01206 838 400 Fitzroy House Crown Street Ipswich Suffolk IP1 3LG 01473 267 000 Merrick Hill
Victoria Road, Diss Norfolk IP22 4HZ 01379 643 444 www.merrickhill.co.uk Milton Hall Ely Road, Milton
Cambridge CB24 6WZ 01223 928 065
Scrutton Bland Financial Services Limited is authorised and regulated by the Financial Conduct Authority.
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T hink the work of universities has nothing to do with your business? Think again. SMEs in the UK spent £217 million on knowledge exchange projects with universities in 2014-15 and that figure has been growing for years. The government recognises that collaboration between businesses and universities can boost economic growth and innovation and is providing funding to make it happen. The University of Essex is at the forefront of university-business engagement in the eastern region. It’s one of the national leaders in collaborative projects that are helping businesses innovate and grow, and has created a hub for knowledge-based businesses at its campus in Colchester. Knowledge Gateway research and technology park The Knowledge Gateway is a research and technology park set in mature parkland at the University’s Colchester Campus. It’s already home to a thriving community of start-ups and SMEs and further developments will add space for more small companies and also larger businesses. The Knowledge Gateway provides a home for knowledge-based businesses in the science,
The Parkside community includes a diverse range of tech-savvy companies, from app developers to web designers to digital marketeers, and also includes Essex Chambers of Commerce, the Haven Gateway Partnership, the Economic and Social Research Council’s Business and Local Government Data Research Centre and the University’s own Institute for Analytics and Data Science (IADS). IADS brings together Essex’s experts in analytics and data science to look beyond the hype and focus on the real challenges and opportunities of data in society and business. Nurturing start-ups Entrepreneurship is further fostered by the University’s Start-up Hub which provides hot-desk space and hands-on business support for innovators including student and graduate start-ups. Now home to 14 businesses, the Start-Up Hub’s innovation fund awarded £30,000 this year to new businesses working on projects ranging from retail websites to healthcare apps utilising AI. Right next door is the unique, award-winning Games Hub which provides a training programme for aspiring game and app
technology and creative sectors. With the University having a global reputation for analytics and data science and providing lots of support for SMEs, it’s set to be a base for more than 2,000 jobs. Basing a business on the University campus offers several benefits. There are extensive on-site facilities including cafes, restaurants, meeting and event spaces, a nursery, and the four-star Wivenhoe House Hotel. There’s a huge talent pool of students and graduates with a dedicated University team providing advice on setting up internships, work placements and apprenticeships, and recruiting graduates. And there’s easy access to the University’s research expertise, with a team on hand to help guide companies through the options and funding available for partnering with the University on projects. A growing SME community Central to the Knowledge Gateway is Parkside Office Village which offers office space for SMEs. Parkside already has more than 20 resident companies and a further phase is now underway to build seven new units ranging from 1,750 to 3,735 square feet with completion in autumn 2018.
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them with leading academics and a graduate who is looking to put their academic knowledge to work in business. Companies working with Essex on KTPs include global brands – such as BT and Leonardo – plus SMEs and high-growth start-ups. The University is now in the top ten in the UK for the number of KTP projects it works on with its project portfolio worth more than £6 million. Examples include: • Signal Media has won multiple awards and secured investment of £5.8m for its AI-powered business intelligence platform. • Above Surveying is combining drone technology with AI to monitor Europe’s booming solar farms. • Orbital Media is using machine learning to revolutionise the way patients are treated by developing an automated online GP service. • CGEye Ltd is developing a new augmented reality toolkit to push the boundaries of commercial app development.
developers delivered by leading industry professionals. As well as technical training, the developers learn business skills and are supported in getting companies off the ground. A new Innovation Centre is under construction which will provide space for 50 more start-ups to grow and scale-up. Opportunities for larger companies Space for bespoke building development is also available at the Knowledge Gateway, offering larger companies in knowledge- based sectors the chance to locate themselves close to the University. Sharing expertise, driving innovation Businesses don’t have to be resident on the Knowledge Gateway to access the University’s research expertise. There are several ways to partner with universities, and an increasingly popular option is through a government-funded Knowledge Transfer Partnership (KTP). KTPs are Innovate UK’s flagship programme to help companies innovate and grow. Companies work on a specific, strategic innovation project through a part-funded partnership with a university which connects
Business support The University of Essex supports businesses in a huge number of ways. Find out more at www.essex.ac.uk/business Scrutton Bland have extensive experience in working with higher and further educational establishments providing insurance, accounting and audit services. Speak to our specialist team on 01473 267000 or 01206 838400 or see www.scruttonbland. co.uk
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Buying through a shared ownership scheme is another popular way in which first time buyers have been able to get onto the property ladder. First time buyer’s relief is available on these transactions if the total value of the property does not exceed £500,000. However, it is important to note that if for example, an individual purchases a 25% share in a shared ownership property and the total market value of the property is £500,000, relief would only be available if a market value election is made. SDLT would then be due on the total market value of the property. If no market value election is made or the total market value exceeds £500,000, no relief will be available. Although there are certain pitfalls that first time buyers need to consider carefully before making a purchase, the relief for first time buyers is a much welcome relief and if the conditions for relief are met, substantial savings are available to first time buyers. Gavin Birchall leads Scrutton Bland’s Property and Construction sector group and is a Tax Partner at Scrutton Bland. If you have any queries on SDLT or any of the issues raised by this article, please call any member of our Property and Construction Tax team on 01206 838400 or 01473 267000 or email firstname.lastname@example.org
Who is a first time buyer? A first time buyer is considered to be an individual who has never owned a residential property in the UK or anywhere else in the world, is purchasing a major interest in the residential property and who intends to occupy the property as their only or main residence. The relief is available on freehold and leasehold properties but not on leasehold properties with a term of less than 21 years. The good news is the relief is available for off plan purchases, e.g. new builds where contracts have been exchanged but the property is yet to be constructed. Important points to consider High property prices can make it difficult for first time buyers to get onto the property ladder without any help. Increasingly, parents help to fund their children’s purchase by either gifting them money for a deposit to assist in the purchase, purchasing an interest in the property themselves or acting as a guarantor for their mortgage. First time buyers may also aid their first time purchase by buying a property with a friend or buying a property through a shared ownership plan. However, there are some pitfalls that first time buyers need to be aware of with these approaches to ensure that they do not lose their relief and that much higher SDLT rates do not arise. A common situation is where a parent of a first time buyer, assists their child with the purchase of their first property and takes an interest in that property to reflect the amount contributed. A problem arises where the parent already owns a residential property as their main residence. In this situation, not only will first time buyer’s relief not be available but also the 3% SDLT surcharge may apply to the total consideration as the parent will be purchasing an interest in a second home which is not their main residence. This will mean that on a purchase price of £500,000, SDLT of 30,000 will be due in comparison to £10,000 (if first time buyer’s relief is available). Another situation we are seeing more often is where two siblings or friends purchase a residential property together and one of the individual’s has previously owned or inherited a property. If an individual has previously owned a property, they are not considered to be a first time buyer. If one of the individuals in the transaction is not a first time buyer, no first time buyer’s relief will be available on the transaction.
Relief for first time buyers One of the main points from the Chancellor’s budget last year was the introduction of a relief from Stamp Duty Land Tax (SDLT) for first time house buyers. This relief is of interest for both first time buyers and anyone who is looking to help to fund a first time buyer get on the housing ladder. How it works First time buyers will not pay any SDLT when they purchase a residential property for £300,000 or less. If the value of the property exceeds £300,000, SDLT will be payable on the value that exceeds this amount. First time buyers should note that if the value of the property purchased exceeds £500,000, no first time buyer’s relief will be available. For example, if an individual who is a first time buyer purchases a residential property for £475,000, the individual will not pay any SDLT on the first £300,000 and only £8,750 on the remaining amount (£175,000 at 5%). If however, the vendor also offered the first time buyer an additional piece of land that formed part of the garden and grounds of the residential property for an amount of £30,000, the total value of the consideration for the property and the grounds would exceed £500,000 and therefore no first time buyer’s relief would be available and SDLT of £15,250 (£125,000 at 0%, £125,001 to £250,000 at 2% and over £250,000 at 5%) would be payable under the standard rates. If instead the first time buyer negotiated the consideration down to £25,000 for the piece of land, first time buyer’s relief would be available on the purchase and only £10,000 (£300,000 at 0% and £200,000 at 5%) of SDLT would be payable on the transaction. It is also important to note from the above example that first time buyer’s relief is available on linked transactions in certain circumstances. The above example is one of the qualifying circumstances as the land purchase is linked to the property purchase and forms part of the garden and grounds of the house. Therefore relief is available if the total value of the consideration does not exceed £500,000.
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Your sales have increased by 157% and profits by almost 300% in the past three years, and last year won the Queen’s Award for International Trade. What do you attribute your success to? Well, we work hard and are highly motivated, but also there is no doubt that we have found a niche in an industry where there is opportunity. That said we have built the company in a way that supports growth and run the company in a way which I hope brings out the very best of all employees empowering them to succeed and enjoy work. We have a great team and no doubt the reason for our success is them. How much of your business is focused on the sale of the tenders and how much would you say is on the toys? It is around 50/50. One thing we identified very early on is that the market place for billionaires owning superyachts is not big. We soon worked out that we needed to be talking to our clients about everything, whether they were looking to buy a new tender, jetpack, or submarine. It was clear that if we were going to succeed we needed to supply the entire package.
Success in a business is often about spotting a gap in the market and acting to fill it. Was this the case with you? It certainly was. I guess the pivotal moment came whilst I was working for a superyacht management company in the South of France. I was outfitting a new build 70m superyacht with all the tenders and equipment for the owner and I was struggling to put together a cohesive package of all the options available for owners. There are literally hundreds of manufacturers and each one will tell you that they are the best - and this is just on the tender side (a tender is the boat which is used to go back and forth from the main mothership to the shore and the craft which people tend to use for water sports). The sheer volume of choice can lead to a very confusing marketplace for people, many of whom will not buy tenders on a day to day basis. What I was looking for was a knowledgeable company I could trust, and who could summarise the options available so that I could then present these in a clear and concise way to my client. That’s when I realised that there wasn’t anyone out there doing it, so we decided to fill that gap in the market and offer a service offering tender sales, but also including all the toys and other fun equipment.
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We couldn’t discuss a business such as yours without mentioning Brexit. What are your thoughts on how exiting the European Union will affect your industry? Only negatively. That said we have structured our company to make the most out of the opportunity to sell in Euros and buy in Sterling, making the most of some of the currency variances. In the short term this has led to around a 15% margin. We are however very concerned as we export all goods and the main market is France, Spain, Holland, Germany and Italy. Free trade makes a huge difference. Finally – if you could sail away over the horizon tomorrow, where would you choose to go? When we sailed from the Caribbean to New Zealand we stopped off in Galapagos, which was amazing, but 4000 miles further west we came to the Tuamotus north east of Tahiti. The one place on earth which I would like to go back to is a place called Fakarava. We did some amazing shark diving there and it was incredibly unspoilt. We have such good memories of the place and it was a real treat – particularly as our boss at the time paid for us to go with him!
What made you locate the business in East Anglia? Purely convenience. We have family in the area and after running and managing yachts abroad we wanted to move back to the UK. Claire, my wife got a job at Oyster Yachts in Ipswich and so our tickets were booked. We set up the company and it has grown from there. We do still travel a lot and in an international sector we need to ensure that we keep an eye on our marketing, but the comparatively low rent, ease of operations and other advantages such as having a good work life balance are much more important. We export 100% of sales and it would not make a lot of difference if we had an office in France, Monaco or Fort Lauderdale (the main yachting destinations) as we are regularly shipping to the UAE, Qatar, Saudi, USA, Australia and more. I think in the modern world we can work from anywhere. Some of the toys, such as jetskis and jetpacks look amazing! Who buys them, and do you think that market is growing? Unsurprisingly, many of our clients are billionaires, or multi- millionaires. Owning a yacht can be expensive, for example it costs around 10% of the original purchase price to run a yacht for a year. We deal with clients at all levels, sometimes the owners directly or we can deal with project managers, captains and crew at various levels. The outlook for our business is very positive we currently have contracts to supply yachts up to 147m in length at present. The largest yacht we ever supplied is 180m, so there is definitely a market out there! What do you think the next big thing is for boat toys? There is a lot of interest in foiling boats and toys at the moment. This is essentially where a wing is put into the water, lifting the boat or toy out of the water so it flies. We are currently supplying some foiling electric surfboards and have some boats in design.
Scrutton Bland’s Business Advisory team regularly work with businesses operating in the leisure and lifestyle market. Contact James Tucker on 01473 267068 or email@example.com
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Earnings are another key area of discussion. Being secretive or hiding your income does not bode well for your future together. Pretend you earn more than you do and sooner or later the shortfall will become a problem. Equally, lying about what you really earn shows a lack of trust. If you get these areas right from the outset it makes it much easier to work together and talk about your future hopes and dreams. In choosing to share your life with someone you will no doubt have hopes and dreams for the future. These may be starting a family, travelling the world or getting the house you always wanted. However, if you don’t create a financial plan and put in place a realistic strategy to achieve these goals, your dreams may never become a reality. At Scrutton Bland we use software which helps us to demonstrate to our clients what they need to do to achieve their goals. Looking at lifetime cash flow modelling is a very powerful tool and is a very clear and simple way to help people plan. Knowing how much you need to save to get the house deposit, the Porsche or early retirement is a great incentive. As ever, the key is to understand where you are now and where you want to get to. The financial plan we create for you will set out the course of action you need to follow. Of course, we will need to review this plan with you to make sure it remains on track as your life and plans change, and this is where a long term relationship with a trusted adviser is so important. If you would like to arrange a no obligation meeting please contact one of the financial planning team or Grant Buchanan on 01206 838436 or email grant.buchanan@ scruttonbland.co.uk
I’m not talking about what flowers to have at the wedding (although I readily accept this may not be mundane to some!) but more serious matters such as money. Once the honeymoon is over and day-to-day life resumes, the realities of living together and sharing your finances can quickly become problematic if the parameters are not clear from the start. It’s therefore a very good idea, before you get married, to take the time to have ‘the money conversation’. There are some definite financial advantages to getting married and bringing your financial assets together. Joint incomes can put you in a stronger position and can allow you to buy a bigger house and have more flexibility over sharing your bills and regular expenses. When it comes to saving and investing there also is more flexibility, with two sets of tax allowances to play with, which can in some cases be shared between spouses. However, money means different things to people, and it can be a very personal relationship. Some people are very careful with their money and others spend it like there’s no tomorrow. It is important to share your views with your partner to avoid arguments and potential problems down the line. It doesn’t have to be a problem if you have completely different attitudes to money. It can be an advantage to have different views and this may lead to a better balance for your finances if you complement each other. However, in order to be able to work together you have to understand each other’s attitude to money. Being honest about your debts is an important starting point. Around one in five people don’t tell their partner the full extent of their debts, according to one survey by the Debt Advisory Service, with women twice as likely to hide their debts as men. Worse still, 7% of those surveyed said they thought it was better not to share the revelation about their true debts until after the honeymoon. I wonder if Harry is in for a shock! If you become a joint holder on an account you may find your credit score will be adversely affected. More importantly, if you’re added to your spouse’s account on which they have debts, you’ll become jointly liable for paying off those debts, and if defaulted you may be liable for the entire debt, even for the amount your spouse was carrying before you were on the account.
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Can an Internal Audit help with identifying fraud? We provide anti-fraud advice surrounding the framework in place as well as identifying vulnerabilities in controls, completing spot checks in higher risk areas, such stock, warehousing, payroll and finance office services and governance. We also provide a post-fraud investigation service. What are the areas you are currently being asked us to focus on? Recent assignments have focused on GDPR compliance, health and safety, financial controls, IT infrastructure, human resources and staff performance management and customer satisfaction. …but it’s expensive isn’t it? There are different approaches to meet different needs, for example:- • short, high-impact health check reviews that focus on key areas of risk, such as financial controls; • assurance reviews that focus on a full range of services delivered in a given area; • annual audit plans, where a number of different audits are completed during the year, and which can then provide an overall report at the year end. In a number of instances, our work has resulted in direct savings for our clients through our recommended improvements to controls and workflows. We also use specialist software that can interrogate 100% of a data population; in a number of cases this has enabled us to identify duplicate payments made to suppliers, which clients have then been able to recover. There is also the point that exposing and correcting risks in the short term can prevent them from becoming ruinous in the long term. To find out more about Internal Audit services please contact Paul Goddard on paul.goddard@scruttonbland. co.uk 01473 267033 for more information.
It’s not about finding fault? Certainly not. As auditors we deal with issues that are fundamental to the survival and prosperity of any organisation, looking beyond financial risks. Our primary aim as auditors is to help organisations to succeed . We do this through a combination of assurance and consulting. The assurance part of our work involves advising managers and governors how well their systems and processes are working. Then, we offer consulting services to help to improve those procedures where necessary. Fundamentally internal audit is about identifying any issues as early as possible, before they become a problem or risk. We help you manage risk All organisations face risks. For example, risks to reputation, health and safety, supplier failure, cyber and data security, regulatory and statutory compliance and financial risks as well as unknown risks. The key to an organisation’s success is to manage those risks as effectively as stakeholders demand, and more effectively than their competitors. So, for example, if managers have concerns around the efficiencies within their finance department, we would identify opportunities to improve current practice. This might mean recommending operational changes, or introducing new technology. Or perhaps a major new project is being undertaken where we can help to ensure that project risks are clearly identified and assessed, for example preparation for compliance with the General Data Protection Regulations (GDPR). How does the audit help the reputation and running of a business? By reporting to the executive on risk evaluation, and highlighting where improvements are necessary, we can help management and boards demonstrate that they are managing their organisation effectively on behalf of stakeholders. Operationally, managers need to understand how much risk their organisation is willing to live with, and implement controls to ensure these limits are not exceeded. Some organisations will have a higher appetite for risk if they need to respond quickly to changing trends and economic conditions. In these situations, an internal auditor is very helpful to help the business articulate their risk appetite and develop an effective means to track, evaluate and mitigate these risks.
What is an Internal Audit? For those organisations that are required to have an Internal Audit or have independently asked us to carry one out, our role and value is well understood (well in most cases!). But for others, the role of an Internal Auditor is often somewhat of a mystery. Put simply, we are here to enhance and protect your organisation’s value by providing risk-based and objective assurance, advice and insight. In practice this means that by evaluating a business’s systems and procedures, we can give independent assurances that their risk management, governance and internal control processes are operating efficiently and effectively. Furthermore, our independence enables us to provide an unbiased and objective view of the areas we review. Who is required to have Internal Audit? Within the Financial Services and Insurance Sectors, Internal Audit is a mandatory requirement. Within the public sector, Internal Audit is required in most cases. Charities are not required to have an Internal Audit presence although the Charity Commission Guidelines and the supplementary Charity Governance Code clearly points to seeking independent external assurance. Who can benefit from Internal Audit? Our experience has been that we have made a significant positive contribution to all of our Internal Audit clients. We will usually have most impact where a business has not previously sought Internal Audit advice. These are often organisations where we are immediately able to give practical advice, often improving efficiencies and saving time as well as improving compliance. Who sees the results of the Audit? We report to the highest level of financial accountability in an organisation: typically this will be the board of directors or trustees, the accounting officer or the audit committee.
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Cloud accounting has been part of Scrutton Bland’s offering for our business clients for a couple of years now, and our SBLive product has been taken up by many local firms. SBLive also made it to the final three in the 2017 Accountancy Awards for the ‘Best Client Project of the Year’.
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S crutton Bland have a unique cloud solution, SBLive which provides accounting software combined with professional business advisory services Adviser spoke to Andy Yorke , General Manager at Ipswich Sports Club who has been using SBLive for over a year about their experience with the cloud-accounting software package. You recently moved onto the Cloud, how have you found the experience? “Firstly working with Scrutton Bland has been the key, due to their support and backup for this critical area of our business. Scrutton Bland provides both a professional service and the training a professional service and the training on how to post entries and reports and very importantly how to log VAT transactions. SBLive is powered by a range of accounting software and you chose Xero. Can you tell us how it has improved your business? It is important that Xero is set up in the best way to run your business. The SBLive people at Scrutton Bland have a great deal of knowledge about Xero which is used to run SBLive, but you have to maintain your own admin routines to get the best out of it. It’s really important for you to keep regular checks and ensure your month end is completed – but you can see all revenue and costs at a glance, so it actually is pretty straightforward. If you could list the ways in which introducing a cloud based system has helped Ipswich Sports Club, what would be your highlights? • Sage (one of the alternative accounting product) requires more specialised accounts people – Xero is much easier to use and less reliant on expensive book keepers to manage day-to-day inputting (and Sage reporting isn’t great either); • The package / software is modern and easy to use for businesses owners/ managers who are non-accountants; • I can get access to Xero from anywhere and at any time as long as I have access to the internet; • It is essential to me in my managerial role as we now have end of month reports available within days of the end of period;
• I learnt Xero in a few weeks including VAT coding etc. I still can’t get a real grip of Sage even after ten years at the club, it really isn’t very user friendly unless you have been using a long time and I was very reliant on a book keeper, which isn’t ideal if you’re like me and like having your finger on the pulse!; • Xero is more customisable and I can make corrections which are logged in my user profile. This allows me to adjust errors if I need to, or highlight these to my finance person so they can see what I expect; • When we started with Xero my finance person was inexperienced and making numerous posting errors, however after less than six months we are now seeing almost 100% accuracy on data input, albeit after a few long nights of going through every transaction! Neither of us are formally trained, but I can now input information with ease, and Xero provides very powerful reporting data. • If we still had Sage I would be waiting for a couple of months at least to get numbers and in fact used to use my EPOS (Electronic Point of Sale) system to predict numbers. Now I use EPOS to cross reference Xero; • Depreciation and irrecoverable VAT is forward planned, so each monthly report provides a fully accurate picture of the business. In other words, we don’t have to wait to the end of the financial quarter to see VAT and depreciation impact on the bottom line; • I can see all the figures for Ipswich Sports Club and the performance of all our sections at any time, and most importantly at month end and year-on- year comparisons. Which means I have an accurate combined trading position; • The budget process is massively improved after year one, as we now have all the data to work from. I can now sit down with all section heads for budgeting and can also make quick decisions on investment as we can see what we can afford.
Would you recommend moving to a cloud based solution? Over the past year we have seen significant improvements in our revenue from sports bookings, catering and club membership. I believe this has been achieved because, thanks to SBLive, we now have accountability to the £1. As I now have the most current numbers I can manage the club more efficiently and deal with poor performing areas, but also, most importantly, I can now see where our success comes from and drive that too. Using SBLive has also meant we have stopped using guess work and generalised opinions on how the club is doing. If you are dealing with the facts and the numbers then there’s no room for error. So, for example, if one month our membership has gone down, we can look into what has happened and respond quickly. Finally I’d say that if your business is similar to ours (with lots of different revenue streams) then I dare say you will have quite a volume of codes to input, especially at the set up – but if you do invest with SBLive then stick with it because it really will pay off.” Andy Yorke is the general manager at Ipswich Sports Club www.ipswichsportsclub.co.uk If you are considering moving to the Cloud and want to improve your management information you can contact one of the team at at info@ sblive.co.uk tel 0333 234 7411 or see www.sblive.co.uk
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M any of the business owners we talk to have implemented workplace pensions for their employees but some may have neglected to give proper consideration to their own long term financial security. Some of these business owners may see the value of their business as their pension, as they anticipate selling their business before they retire. But there is an inherent risk to relying solely on the sale of the business, and such a plan should be underwritten by sensible financial planning and adequate pension provision. Such a strategy can present an opportunity for the owner’s pension plan to interact with their business to mitigate tax through remuneration planning, and to provide funding to grow the business and hold property. This balances short term liquidity of the business with long term financial security of its owner. Pension planning for business owners and senior management can involve the creation of either a SIPP (Self-Invested Personal Pension) or a SSAS (Small Self- Administered Scheme). What are the key differences, and is one more advantageous than the other? Both are regulated pension schemes but a SSAS is an occupational pension scheme and a SIPP is a personal pension. SSAS requires a sponsoring employer, and members are usually employees and directors of the sponsoring employer but limited in number. There are a number of other aspects of governance and regulation on scheme trustee duties and investment policies which this article does not consider and independent expert advice should always be taken. A key difference though between a SIPP and a SSAS and one which represents tax planning opportunities is the ability for the SSAS to loan money to its sponsoring employer. Example Terry and his wife June are both 50 and own a company. They are considering an investment in machinery of £200,000 for which the company can pay cash. They each have an income from the company of £75,000 comprising a mixture of dividend and salary.
Overriding any strategy to utilise a pension fund to best effect are the annual pension contribution limits and the lifetime allowance that can apply to members contributions. The annual contribution limit of £40,000 is tapered if income is greater than £150,000 and reduced to £10,000 in the event that income is greater than £210,000. The lifetime allowance is £1,030,000. Unused allowances from the previous three years are available to enable lump sum contributions greater than the annual allowance to be made. A SSAS structured as a defined benefit scheme means the basis of calculating the contribution required to invest in the scheme can differ from a SIPP. The actuarial calculation of the contribution the sponsoring employer can make is based on the pension fund that is required to fund the retirement benefits of the members. The retirement benefit of the member is the part tested against the annual allowance not the contribution paid by the sponsoring employer. This means that the level of contribution might be greater than the annual pension limit of an individual member. This can be advantageous for business owners who may have inadequate pension provision yet enjoy a level of income which restricts their annual pension limit, or a business owner who may have already drawn benefits from a pension scheme which can restrict contributions made to a defined contribution scheme (such as a SIPP) to £4,000 in a tax year. Scrutton Bland have considerable experience in advising SME business owners on this topic. If you are interested in finding out more, please remember that getting expert independent advice is paramount to ensure the right strategy is devised and implemented to take advantage of the most appropriate pension solution for you and your business. Contact Nick Banks on 01473 267073 or nick. firstname.lastname@example.org , or James Wright on 01473 267000 or email@example.com
Terry and June currently hold existing pensions totalling £200,000 but have not made pension contributions in recent years, and acknowledge they have inadequate pension funds for their retirement. They are very aware that the machinery purchase will qualify for 100% capital allowance and reduce their company tax bill by £38,000. Pension solution Terry and June could set up a SSAS of which they would be members and their company the sponsoring employer. The company could make an employer contribution of £100,000 each to the SSAS. As an expense to the company, this pension contribution would reduce the company tax bill by £38,000. There are important considerations to ensure that the contribution can be allowed for tax purposes. In addition they can transfer in their existing pension arrangements. The SSAS could then loan the money back (up to 50% of the SSAS net assets) to the company with an appropriate loan agreement requiring security and interest being paid over a fixed term. The company purchases the machinery and secures the capital allowances and therefore a further tax reduction of £38,000. In this example, by using a SSAS, Terry and June have doubled the tax relief they might otherwise have obtained simply by purchasing the machinery. Ownership of company property can be managed in both a SIPP and a SSAS, and it is a very tax efficient model since the rent the business might be paying to a third party landlord can be diverted to the benefit of the owners’ pension fund. Both a SIPP and a SSAS can borrow money of up to 50% of the pension fund, and this can leverage the pension fund to acquire the property, with the ongoing rent servicing the debt. The purchase of commercial property directly affords very limited scope for tax relief, but securing tax relief on pension contributions to fund the acquisition indirectly will enable a tax saving to be made on a major investment. Holding property in a pension fund manages business risk and can protect an asset in the event of business failure. Forward planning may be required, depending on the value of the premises to be acquired, to ensure sufficient contributions can be committed to the pension fund within prevailing limits applicable to pension contributions.
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Notcutts is a name familiar to many throughout our region. Their garden centres have been a destination for keen horticulturalists for many years, but William Notcutt , one of the fourth generation of the family, has recently taken on the chair of the eastern division of the Institute for Family Business (IFB). Adviser spoke to him about the story of his family business, his recent business venture and why family businesses are so important.
You have been a strong advocate of the role family businesses play in our economy and society for many years. What drives this passion? I have long appreciated the responsibility and opportunity that family businesses represent and have been keen to learn about it and communicate on behalf of the sector. Family businesses have the potential to provide the greatest luxury of all, choice, and when carefully nurtured, they can be a powerful force for good. What do you think makes family business different? There is a tremendous sense of duty that a kitchen table apprenticeship cultivates, a feeling of stewardship, with often illiquid but patient capital and the willingness to do what is right by past, present and for future generations; not just of the family, but of staff, customers and all stakeholders. This goes above and beyond a mere job or a financial investment, or the short term reporting cycles which might encourage short term high risk strategies. For me, family business is all about sustained creation and preservation of wealth over generations.
You are a fourth generation member of Notcutts Ltd. Tell us about your family business. I am one of six fourth-generation owners of the business. In 1892 my great grandfather started with a small nursery in Ipswich and in 1897 purchased a more established nursery business in Woodbridge, which supplied the country estates and large townhouses of the day. Diversifying into landscaping, the business developed its range and scale and opened its first garden centre in 1958. This side of the business grew rapidly during the 1980’s and 90’s. Since 2007 it has divested itself of almost all the other business activities inherited or accumulated by the third generation and is now almost exclusively focused on garden centre retail, operating the fourth largest chain of garden centres in the country. You recently started your own business venture. What drove you to do so and could you tell us a bit more about what this business is all about? After twenty years at Notcutts, I left six years ago after strategic differences and have since developed my own diversified agricultural estate business, William Notcutts Estates. It includes arable farming, renewables and forestry, commercial and residential property, and furnished holiday lets.
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The Institute for Family Business (IFB) is a not for profit, membership organisation supporting and promoting UK family business through events, connections, advocacy and the latest family business knowledge. They provide family businesses with key insights on important family business issues, through programme of events and their knowledge hub. They offer access to family business expertise and best practice from within and outside the family business community, thanks to connections with leading family firms and experts from all over the world. For more information please see www.ifb.org.uk email firstname.lastname@example.org or tel 0207 630 6250 . Running your family business is an all- consuming and often stressful process, and it is important that you have the right support processes in place to allow you to get on with doing just that. At Scrutton Bland, all of our business advisory, tax, financial advisory and insurance broking teams work together to ensure our clients receive a fully supportive service. If you would like to talk to us about ways that we may be able to help your business please contact Nick Banks on 01473 267073 or email@example.com
You’ve recently become the IFB East of England Chair – why did you take on this role, and what do you hope to achieve during your tenure? I wish to encourage other family businesses to engage with each other on local level. We are in an era of great economic and political uncertainty. The cross-fertilisation of ideas and sharing of stories in a non- competitive environment could be of solace and support to regional family businesses, as they adapt to the new environment. The recipients should be business owners, their next generations or non-family managers engaged within the businesses. On a regional basis we need to ensure the sector maximises the opportunity to be that “power for good”, in support of the wider IFB objectives. What one piece of advice would you offer to a family business owner? To communicate. Engage early with the next generation and managers, to talk and listen widely to our own and the older generation and to reaffirm values with the next generation.
Family companies are often ‘unsung heroes’ of our communities. What do you see as some of the myths that surround family firms? The greatest myth around family business is nepotism. The responsibility of sustainably running a business for all stakeholders, for now and future generations, and adopting change to adapt to the opportunities of the economic environment means that all family members need to keep their foot to the floor; there are and there should be no easy jobs. Why did you join the IFB and how has it helped you? We joined the IFB because I appreciated the opportunity that a peer group of family business owners presented in enabling improved governance and succession in our business. It provided the context for our older generation to gain the reassurance they needed before we embarked on the governance review, creation of family constitution and family council. It has helped to inform our wider family as responsible shareholders as they in turn have engaged with the IFB through Family Council chair forums, NXG meetings as well as drawing on other IFB resources.
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Visitors to this year’s Suffolk Show may have noticed that the advertising and promotional material featured a Suffolk Punch foal, with the strapline, ‘The Show That packs a punch’.
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T he reference to the Suffolk that the numbers have now fallen so far that it is a rare breed classified as more endangered than the panda. In the past twelve months the number of breeding females has dropped by 5% to 70, which means the breed is now categorised as ‘critical’. punch is timely. Not only is it the farm animal most strongly associated with Suffolk, but recent reports have highlighted
Looking at the photographs of the Suffolk punch it is easy to see how the breed is so loved, and was so popular on farms in the region. Strong, reliable and’ packing a punch’ it is shorter and stockier than other heavy horses such as the Clydesdale the Shire, which are used primarily for road rather than land work. The Suffolk Punch also lacks the long ‘feathers’ around its feet, meaning that the mud of the East Anglian fields is easier to remove at the end of the working day. Finally, the punch has a smaller appetite than other breeds, so upkeep costs for the farmer are reduced, another reason why the breed was favoured by farmers. According to the breed guidelines, the only colour for a Suffolk Punch is chestnut (traditionally spelt in the breed books as chesnut without the middle ‘t’), but there are seven inspired variations of that colour: Dark Liver, Dull Dark, Light Mealy, Red, Golden, Lemon and Bright.
But before we start predicting extinction for the breed, it is worth remembering the tremendous journey the breed has been on over the past few years. The amazing efforts of societies such as the Suffolk Horse Society and the Suffolk Punch Trust in raising awareness and promoting breeding programmes has significantly helped to increase the number of these beautiful creatures. In 1964 there were just seven fillies and five colts registered with the Suffolk Horse Society, and things had become so bad that there was talk of closing the society. A dynamic new breed secretary proved to be a catalyst for change and the numbers rose over the next twenty years to 30-50 foals produced each year. Sadly this upward curve has not continued, and the latest figures really are a serious cause for concern for the future of the breed.
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