Welcome to the July 2008 Newsletter from Connolly Accountants Ltd

Bowing to public and political pressure, Alistair Darling this month announced that the 2p increase in fuel tax duty will be delayed. While the move has been largely welcomed, small business representatives warn that further action will need to be taken to combat the crippling price of fuel.

Meanwhile, large companies are being accused of exploiting smaller firms after it emerged that pharmaceuticals giant, Boots, wrote to its suppliers saying that invoices would be paid up to 75 days from the end of the invoice month. The news comes as new research reveals that late payment is a growing problem for small and medium-sized enterprises.


Hot Topic: In the current economic climate, sound financial planning is crucial. Click here to read our guide to safeguarding your business during an economic downturn.


Darling delays 2p fuel tax increase

Chancellor Alistair Darling has confirmed that a 2p rise in fuel duty scheduled for the Autumn will be postponed.

It was widely anticipated that the annual increase in petrol tax, which was already deferred from March until October, would be scrapped due to rising oil prices.

In a statement to the House of Commons, the Chancellor said: ‘This measure is taken in response to sharp rises in world commodity prices, with the price of oil almost doubling over the past year to reach a real-terms record high of $146 (£73) a barrel recently.

‘This has inevitably had significant knock-on effects on the price of road fuels, which the Government is committed to taking into account when considering decisions on fuel duties.’

The announcement means the road fuel duty rate will remain at 50.35p a litre for at least another six months.

This month’s decision, which follows a series of protests by haulage firms, will provide a welcome reprieve for motorists and businesses in what Darling has described as a ‘difficult time for everyone.’

However, the Forum of Private Business (FPB) insists more action needs to be taken and is now backing a Freight Transport Authority (FTA) campaign to decouple diesel duty on heavy lorries.

The FPB's Director of Finance and Administration, Nick Palin, said: ‘While the postponement of the proposed 2p rise in fuel duty is welcome news […] the FPB would like the Government to go further and actually cut VAT on fuel, instead of deferring the increase every six months.

‘With surging oil prices, adopting the FTA's proposals would at least bring some relief for small businesses,’ he added.

Figures show petrol prices have risen nearly one-quarter during the past year, and diesel 36%.

The latest deferment is expected to cost the Treasury an estimated £550 million.


Big firms ‘exploiting’ small businesses, claims FSB

Large organisations are ‘abusing’ small businesses’ trust by failing to settle invoices quickly, the Federation of Small Businesses (FSB) has claimed.

According to the lobby group, new evidence suggests that smaller firms are being forced to wait for up to 100 days before receiving payment for goods or services.

Delays in payment, along with last-minute changes in terms and conditions, can create significant cash flow difficulties for many businesses.

However John Wright, FSB National Chairman, warned that small firms are reluctant to confront large corporate organisations over the issue.

‘Big companies appear to be aware that small businesses are afraid of taking them on over payment terms and are abusing their power as a result,’ he said.

‘At a time when small businesses are finding it difficult to deal with a slowing economy and rising costs, it is shocking that large companies think it is acceptable to use them as an unofficial source of credit.’

Meanwhile, a recent study has revealed that late payment is a growing problem for small and medium-sized enterprises, with almost 82% of respondents reporting an increase in the number of customers that are paying late.

Under the Late Payment of Commercial Debts Act 2002, businesses have a statutory right to charge interest for the late payment of commercial debt, at a rate of 8% above the Bank of England’s reference rate.

We can work with you to tackle late payment before it becomes an issue for your firm – please contact us for more information.


ESSENTIAL TAX DATES AND DEADLINES

Click here for key tax deadlines for the coming month.


QUOTE OF THE MONTH

‘There has been a sea change on maternity leave and flexible work and we welcome that. […] The thing I worry about is that the current legislation and regulations have had the unintended consequence of making women a less attractive prospect to employers.’
Dr Nicola Brewer, Chief Executive of the Equality and Human Rights Commission, on why extended maternity rights could damage women’s careers


WEBSITE OF THE MONTH

www.employersforwork-lifebalance.org.uk
Constructive strategies to help sustain a healthy work-life balance, including a handy jargon buster and questionnaire for SMEs.


ON OUR WEBSITE

What’s new in the world of tax and business?
Visit our recently added Hot Topics section – here you will find a guide to planning through an economic downturn.

Personal tax information and guidance
Access a variety of information on personal taxation issues by visiting the ‘Your Money’ section of our website.

Recruitment process 'costly' for UK firms
Britain's businesses are losing valuable time and money by failing to track employee turnover and recruitment costs, according to a new report.
Click here for the full story

Consumer watchdog calls for bank account reform
The Office of Fair Trading has called for a major shake-up of current bank accounts, claiming that they do not work well for consumers.
Click here for the full story

EU plans VAT cuts for local businesses
EU member states may soon be able to cut VAT rates for local service firms, under new proposals unveiled by the European Commission.
Click here for the full story

Businesses face 'serious risk' of recession
A recent report by the British Chambers of Commerce suggests that Britain could be facing a recession within months.
Click here for the full story

Darling increases protection for savers
Chancellor Alistair Darling has outlined plans to increase protection for savers in the event of their bank or building society running into financial difficulties.
Click here for the full story