PROSPER MAGAZINE: ISSUE 01 | BUSINESS VOICES
MIDLANDS MANAGING PARTNER FROM ACCOUNTANCY FIRM CROWE
URGES MIDLANDS MANUFACTURERS TO ACT ON DEMAND FOR UK EXPORTS ACROSS THE WORLD
Recent data released by the Office for National Statistics (ONS), show that the demand for UK goods and services is growing across the globe with national audit, tax, advisory and risk firm, Crowe, identifying this as an opportunity for manufacturers to take their ideas and products out to global markets.
The ONS figures reveal that UK exports continued to increase and were up by 2.7% to £634.1 billion in 2018 and exports to non-EU trading partners in 2018 hit a new record high of £345.1 billion.
UK exports to India are increasing at the fastest rate among the UK’s top non-EU trading partners, with exports up by 19.3%. This was followed by Japan (7.9%), China (4.6%) and Canada (4.2%). While the UK’s trade with the rest of the world has been increasing, the share of UK exports to the EU over the past ten years has declined by nearly 5% to 45.6%.
Johnathan tells Prosper, “Businesses should make the most of this positive news for UK exports and outlines the tax incentives available to many businesses. There are huge incentives in the UK to innovate, particularly through the Patent Box tax relief regime, but too many manufacturers are put off by its complexity.”
The Patent Box regime was introduced in the UK in 2013 to promote innovation and research and development. The scheme provides a tax incentive to businesses to make profits from their patents by reducing the tax on those profits. Johnathan says: “By electing into the Patent Box, an innovative company can achieve a significant long-term reduction in its corporation tax bill.”
Johnathan added that the recent Jaguar Land Rover (JLR) copyright win is another rallying call to UK manufacturers. “Many business owners and directors have, until now, viewed JLR’s court case with apprehension. They have taken the view that applying for a worldwide patent and seeking to embed the maximum protection for their products and processes is costly to set up and to enforce, and JLR’s battle in China has not helped ease this assumption.
“However, a worldwide patent should be a mark of quality in the goods and services that UK businesses provide. The conclusion of this case reaffirms the fact that UK products and services are in demand and well respected across the world, and now is a prime time for UK manufacturers to consider entering global markets.”
CROWE UK | WEBSITE
A PARTNER AT HIGGS & SONS AND BLACK COUNTRY CHAMBER BOARD MEMBER
TELLS PROSPER BUSINESSES ARE NOT READY FOR CONTRACTOR TAX UPHEAVAL
Employers are largely unprepared for changes to off-payroll working in the private sector, which are due to come into effect in April 2020. That is according to new research from recruitment trade body, the Association of Professional Staffing Companies (APSCo).
The new rules mean that changes to IR35 legislation, which were introduced in the public sector in April 2017, will be extended to medium and large private sector companies. From next year, businesses engaging independent workers will become responsible for setting the tax status of these individuals. As part of this reform, the tax liability will also transfer from the contractor to the fee-paying party in the supply chain, which is typically the recruiter or the company that directly engages the individual.
A survey of the trade association’s membership revealed that fewer than half (39%) of the professional recruitment firms polled believe that most of the businesses they work with are aware of the incoming changes. In addition, just 12% said the majority of their clients are actively preparing for the updated legislation.
Simon said, “Many private-sector employers have voiced serious misgivings about IR35 and the apparent haste with which it is being applied to the private sector. Those sectors and industries that have traditionally relied on off-payroll workers face significant challenges in implementing IR35. For example, the IT and technology sectors rely heavily on the use of contractors and face the huge task of assessing large numbers of workers in order to become IR35 compliant.
“Assessing workers’ status is far from straight forward given the increasingly complex nature of working relationships. HMRC has produced an online “status checker” known as CEST (Check Employment Status for Tax); however, CEST has been criticised for, perhaps unsurprisingly, advising too readily that IR35 applies. To add to the confusion faced by businesses, the tests used by Courts and Tribunals to assess employment status are not the same as those used by CEST, meaning that different conclusions can be reached on status for the same working relationship.
“It seems that IR35 may well have unintended consequences for those contractor-heavy businesses – for example, it has been reported that 85% of tech firms say that IR35 will affect the number of contractors they hire. The tension between, on the one hand, IR35 compliance and the practical difficulties of changing a worker’s status, on the other, means that the introduction of IR35 to the private sector threatens to bring with its increased cost, talent drain and possible legal action.”
HIGGS & SONS | WEBSITE