Welcome to the July 2011 Newsletter from Connolly Accountants Ltd

The Federation of Small Businesses (FSB) has called on the Government to cut the rate of VAT after a new study revealed a dramatic decline in confidence amongst small firms. According to the FSB, lowering VAT to just 5% for those operating in the tourism and construction sectors would help boost spending and job creation.

Meanwhile, several high street banks have launched a new scheme to mentor small businesses on key issues such as HR, finance and marketing. It is hoped the initiative will bring banks and businesses closer together and provide a welcome boost to SMEs throughout the UK.


Cut VAT to 5% and boost economic growth, says FSB

The Government is being urged to help stimulate economic growth in the construction and tourism industries by slashing VAT from its current rate of 20% to 5% for a one year period.

It follows the publication of a new study by the Federation of Small Businesses (FSB) which revealed a dramatic decline in confidence among its members.

According to the FSB's 'Voice of Small Business' Index, confidence declined in 13 of the 18 sectors monitored, while five sectors fell from a positive to a negative reading.

The survey, which measures the confidence of small firms across the UK, also showed that more firms reported falling revenues in the three months to June than in the first quarter of 2011 - the biggest fall since that recorded in the second quarter of 2010.

The FSB is now calling on the Government to follow the lead of other EU countries and cut VAT in the construction and tourism sectors to boost spending and job creation in what it considers key industries for the UK economy.

Firms in the North East saw the largest dip in confidence, with the Index score falling from +2 in the first quarter of 2011, to -30 in the second. Only those in the East Midlands and east of England enjoyed a rise in confidence.

Commenting, FSB chairman, John Walker, said: 'The economy is still in a fragile state and these figures clearly show that the Government's growth strategy is just not working in an economy characterised by high unemployment and muted demand. We now need the Government's actions to match its rhetoric and it must finally deliver on actions in its growth strategy.

'We must see a cut in VAT to 5% in the construction and tourism sectors to boost consumer demand. It is tangible measures like this that will actually help small businesses to be able to grow their businesses and grow the economy.'

However, research on behalf of the British Association of Leisure Parks, Piers and Attractions suggests that such a move would cost the Treasury around £1 billion in lost revenue.

The Treasury also remains sceptical over the advantages of a reduced VAT rate for targeted sectors.

'Any claim that a boost to foreign tourism or construction would outweigh these effects would need to be looked at very carefully indeed,' said a spokesperson for the Treasury.

To discuss how we can help you grow your business, or for advice on a range of business-related issues, please contact us.

New business mentoring scheme unveiled

Small and medium-sized enterprises (SMEs) will be offered more support on key business issues under a new scheme being launched by the banks.

Five of the UK's largest banks - Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Santander - will offer firms assistance with issues such as finance, HR and marketing.

They are believed to be recruiting current and retired employees to assist with the mentoring programme.

The initiative enables firms to search for and locate their local mentoring group, recruit would-be mentors and access resources such as help with business plans and lending requests.

Business and enterprise minister Mark Prisk said: 'From my own experiences running a small business I know how valuable insight can be from people who have done it all before.

'For the first time in the UK there will be a single, cohesive network of mentoring provision. Small firms are the lifeblood of our economy and we are determined to give them every opportunity to succeed and secure the long-term growth we need.'

Meanwhile, Stephen Pegg, director at Lloyds Banking Group, said: 'Having a bit of financial input, someone to ask the right questions... helps you put together better lending propositions so actually that finance can get out there and businesses can be encouraged to have the confidence to invest and the contacts to look at a wider range of finance.'

As part of the Project Merlin agreement, the UK's biggest banks are committed to lending £76bn to SMEs during 2011. However, the banks have been criticised over recent months for not lending enough to small firms.

Last month the Business Secretary Vince Cable said the Government was willing to take 'further action with tax on banks' if they do not increase lending.

More information on the mentoring scheme is available online at: www.mentorsme.co.uk.


ESSENTIAL TAX DATES AND DEADLINES

31 July Second self assessment payment on account for 2010/11.

Annual adjustment for VAT partial exemption calculations (April VAT year end).

Liability to 2nd £100 penalty arises for 2010 Tax Return still not filed.

5% surcharge on any tax unpaid for 2009/10.

Deadline for tax credit Annual Declaration (if estimated, final figures required by 31/01/12).

2 August Submission date of P46 (Car) for quarter to 5 July.

For more information on key tax dates and deadlines, visit our 2011/12 Tax Calendar.


QUOTE OF THE MONTH

'With wage pressures remaining modest, and with businesses and consumers facing acute pressures, it is right to wait before raising rates.'

David Kern, chief economist at the British Chambers of Commerce, welcomes news that the Bank of England is unlikely to increase interest rates in the near term


WEBSITE OF THE MONTH

www.thebusinessnetworkonline.com

Connects firms with valuable leads, contacts and opportunities across the UK


ON OUR WEBSITE

2011/12 tax and financial strategies

Discover how to maximise your business and personal wealth with our 2011/12 guide to tax and financial planning.

Making the most of your finances

For information and tips designed to help you make the most of your finances, visit the Your Money section of our website.

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