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Archive for March, 2012

Budget 2012 at a glance: Key Points

Wednesday, March 21st, 2012

The key points of Chancellor George Osborne’s Budget on 21 March 2012.

INCOME TAX

  • From April 2013, the 50p top rate of tax will be cut to 45p.
  • Personal income tax allowance raised to £9,205 from April 2013, making 24 million people £220 a year better off, including higher rate earners.
  • New general anti-tax avoidance rule to be introduced.
  • Age-related allowances to be removed for new pensioners from April 2013, and replaced with a single personal allowance for all.
  • Allowances for those already of pension age to be frozen, but George Osborne said “no pensioner will lose in cash terms”.

 

CHILD BENEFIT

  • Will be phased out when someone in a household has an income of more than £50,000. It will fall by 1% for every £100 earned over £50,000.
  • Only those earning more than £60,000 will lose the entirety of the benefit.

 

ECONOMY

  • Independent Office for Budget Responsibility (OBR) revises up UK growth forecast for 2012 to 0.8% – from 0.7%.
  • Forecast for 2013 is 2%, for 2014 is 2.7%, and in each of the two years after that 3%.
  • Eurozone growth forecast for this year revised down from 0.5% to -0.3%.
  • UK inflation forecast to fall from 2.8% this year to 1.9% next year.

 

BORROWING

  • Borrowing this year to be £126bn – £1bn less than forecast in the autumn. Predicted to be £120bn in 2012-13 and £98bn in 2013-14. Forecast to fall to £21bn by 2016-17.
  • Consultation to be held on offering gilts – government bonds – with maturity terms of more than 50 years.

 

JOBS AND SKILLS

  • OBR forecasts unemployment to peak this year at 8.7% before falling each year to 6.3% by 2016-17.
  • One million more jobs to be created in the economy over five years, OBR says.

 

HOUSING

  • From midnight, new stamp duty level of 7% for homes worth more than £2m. Any such homes bought through companies will pay 15%.
  • Extra funding to help construction firms building new homes.

 

HELP FOR BUSINESS

  • Corporation tax cut to 24% from next month. By 2014 it will fall to 22%.
  • Enhanced capital allowances for businesses setting up in new Scottish enterprise zones in Dundee, Irvine and Nigg. A Welsh enterprise zone to be created in Deeside.
  • Consultation on simplifying the tax system for small firms with a turnover of up to £77,000.
  • Government support for £150m of tax increment financing to help councils promote development and an extra £270m for the Growing Places fund.
  • Tax relief for the video games, animation and high-end television production sectors.
  • Government considering enterprise loans for young people to start their own business.
  • Relaxation of Sunday trading laws on eight Sundays during Olympics and Paralympics, starting July 22.

 

ARMED FORCES

  • Cost of operations in Afghanistan to be £2.4bn less than expected.
  • Money saved will provide an extra £100m to improve military accommodation.
  • Personnel serving overseas will receive 100% relief on an average council tax bill.
  • Families welfare grant also doubled.

 

PUBLIC SECTOR

  • Government evidence to be published on the case for regional public sector pay.
  • Option for government departments to move to regional pay structures for civil servants when current freeze ends.

 

ENERGY

  • “Major package of tax changes” to boost oil and gas extraction in North Sea, along with £3bn new field allowance west of Shetland.

 

FUEL, CIGARETTE AND ALCOHOL DUTIES

  • Duty on all tobacco products to rise by 5% above inflation from 18:00 today – the equivalent of 37p on a packet of cigarettes.
  • No change to existing plans on alcohol duty.
  • New duty on gaming machines at a standard rate of 20% and a lower rate for low-prize machines of 5% of net takings.
  • No change to existing plans on fuel duty. Vehicle excise duty to rise by inflation, but frozen for road hauliers.
  • Existing fair fuel stabiliser means above-inflation rises in fuel duty will return only if price of oil falls below £45 ($70) a barrel.

 

PENSIONS

  • Automatic review of state pension age to ensure it keeps pace with increasing lifespans.
  • New single-tier state pension for future pensioners to be set at about £140 and based on contributions.

 

TRANSPORT AND INFRASTRUCTURE

  • Extend electrification of the Transpennine route between Manchester and Sheffield. Further improvements to the lines between Manchester and Preston, and Manchester and Blackpool.
  • Report on the future of aviation in south-east England to be published in the summer.
  • Funding for superfast broadband and wi-fi in the UK’s 10 largest cities.

 

OTHER TAXES AND ALLOWANCES

  • Bank levy to be increased to 0.105% from January 2013 “to ensure that corporation tax cuts do not benefit the banks”. The levy will raise £2.5bn a year.
  • New cap on tax reliefs set at 25% of total income for anyone claiming more than £50,000 in a year, but no significant change to pensions relief.
  • VAT loopholes and anomalies to be removed – including removing exemptions for sports nutrition drinks and hot takeaway products in supermarkets.
  • Existing exemptions will remain for food, children’s clothes, books and newspapers.
  • Personal tax statement to be sent to 20 million taxpayers from 2014.

 

GREEN MEASURES

  • Government to seek “major savings” in the administrative cost of the Carbon Reduction Commitment, and bring forward an alternative environment tax this autumn if such savings cannot be found.

Please note: Information in this blog post is content property of the British Broadcasting Corporation (‘BBC’) and the full original article can be found by clicking here.

UK Budget 2012 – Chancellor George Osborne ‘to reward work’

Wednesday, March 21st, 2012

http://www.independent.co.uk/incoming/article7580190.ece/ALTERNATES/w380/osborne.jpgGeorge Osborne is delivering his third Budget, beginning it by saying that it was a package “to reward work” and lift “millions of people” out of tax.

The chancellor said growth forecasts for this year had been slightly revised up and borrowing would come in £1bn below forecasts this year.

He said he was “on course” to eliminate the structural deficit by 2016/7.

The chancellor is expected to say that the top 50p rate of tax will be cut and the personal tax allowance raised.

The threshold at which income tax is paid, due to rise to £8,105 next month, could increase to £9,205 in 2013.

The 50p tax rate on earnings over £150,000 could be cut to 45p in 2013.

Tax cuts are expected to be funded by a clampdown on legal tax avoidance and a new 7% rate of stamp duty on homes over £2m.

In his last big financial update – the Autumn Statement in November – the chancellor lowered growth forecasts for the UK economy and extended the period of spending cuts by a year to 2016-17.

But he was able to nudge up the growth forecast for 2012 – which had been revised down from 2.5% to 0.7% – to 0.8%.

He also said the Independent Office for Budget Responsibility expected the UK would avoid a “technical recession” – but that the eurozone crisis and a spike in oil prices continued to pose risks.

 

WHAT IS EXPECTED IN BUDGET

  • Increase in personal tax allowances – the amount of income that is tax free – to more than £9,000
  • Top rate of tax reduced from 50p to 45p but not for a year
  • Measures to clamp down on tax avoidance
  • Rise in stamp duty for sales of houses worth £2m
  • Regional pay rates for some public sector workers
  • Support for infrastructure and cutting business red tape

At the start of his speech, Mr Osborne said the OBR forecast that unemployment would peak this year at 8.7% before falling, and said the number of people claiming benefits had been revised down by 100,000 a year over the next four years.

He said the deficit was falling, borrowing was falling and would be £11bn less than forecast last autumn by 2016/7.

But Mr Osborne said the Budget would be “fiscally neutral” with “no deficit-funded giveaways”.

In other announcements, he said the state pension age would be automatically reviewed, to ensure it kept pace with changing life expectancy.

More help for the armed forces was announced – with £100m improvements to accommodation and council tax relief for those serving overseas.

And he said the UK must “confront” the lack of airport capacity in the south east – and more would be announced this summer. The government scrapped plans for a third runway at Heathrow.

The chancellor said he wanted the UK to become Europe’s technology centre and announced plans to help keep video games and the animation industry in the UK.

There has been widespread speculation about the content of the Budget – which Mr Osborne has said will be a “coalition Budget”, agreed between the two governing parties.

He risks a political backlash if he reduces or phases out the top rate of tax, introduced by Labour in 2010, which businesses have complained is anti-entrepreneurial and damaging the UK economy and is opposed by some Conservatives.

Labour has said that to prioritise tax cuts for the wealthiest at a time of austerity shows the government is “out of touch”.

Fuel duty

It is thought the Liberal Democrats, who had warned against cutting the top 50p rate of tax too soon, have demanded other measures to tax the rich.

The chancellor has already confirmed that there will be “aggressive” measures against stamp duty avoidance, by people who transfer properties into the ownership of offshore companies, and a more general “anti-avoidance rule” is expected.

Other measures could include reducing tax relief on pension contributions.

The threshold at which anyone pays income tax is set to increase to over £9,000 next year, which would leave the average standard rate taxpayer £305 a year better off. It had already been increased by £1,000 to £7,475 last April and a further £630 increase to £8,105 is due next month.

The coalition is committed to raise it to £10,000 by 2015. It is expected that a change to the higher rate threshold will mean higher earners will not gain from the change.

Mr Osborne is expected to confirm that the 3p rise in fuel duty expected in August will go ahead, despite high pump prices.

Mr Osborne has also been under pressure from some Conservatives to change his policy on child benefit, having announced in 2010 that it would be stopped for families with at least one 40% higher rate tax payer – someone earning more than about £42,000 – from January 2013.

He has said it is important for all sections of society to contribute to cutting the deficit, but has hinted that there may be a change to the way the policy is implemented.

- We will bring further news on the Budget 2012 later this afternoon.

Please note: Information in this blog post is content property of the British Broadcasting Corporation (‘BBC’) and the full original article can be found by clicking here.

 

Domestic gloom offset by export growth

Tuesday, March 20th, 2012

Small business turnover decreased by 3 per cent between Q3 and Q4 2011 according to The Cashflow Barometer, a quarterly report from Invoice and Asset Based Lender, ABN AMRO Commercial Finance.

Small businesses also saw a reduction in average customer numbers in the same period, falling by 7 per cent.

This slight contraction in performance comes despite an overall year on year (YoY) growth of 3 per cent between 2010 and 2011.

Peter Ewen, Managing Director of ABN AMRO Commercial Finance, comments, “This dip in Q4 mirrors a lot of the economic statistics we are seeing at the moment. Things haven’t improved as much as we hoped and businesses will need to fight hard to get back on track in the first half of 2012.

“It’s important that businesses get the support they need from government, advisors and lenders to help them stabilise and spot growth opportunities.”

The Cashflow Barometer is a quarterly indicator of the financial performance
of UK small businesses, based on analysis of 700 companies.

Sector Slowdown

The fourth quarter also showed slight decreases in performance in manufacturing, services and engineering sectors.

Turnover in manufacturing and engineering firms decreased by 4 per cent and 1 per cent respectively while turnover for services firms contracted by 3 per cent.

Similarly, recruitment turnover dipped by 3 per cent in the same period following an increase of 11 per cent between Q2 and Q3.

The average number of customers per company also fell by 8 per cent in engineering and 2 per cent in manufacturing.

Despite increases between Q2 and Q3 2011 of 8 per cent and 7 per cent, the number of customers of services and recruitment companies contracted again by 9 per cent and 5 per cent respectively between Q3 and Q4 2011.

Peter Ewen comments, “The shaky economic picture is reflected in these key business sectors. The overall trend is upwards but growth is slow and continued expansion is by no means guaranteed.

“Businesses must have their wits about them to come back from an uncertain fourth quarter and seek stability in 2012.”

Export Growth

Despite a contraction in domestic turnover, small businesses are seeing significant export growth with YoY turnover up by 83% to the end of 2011.

While export turnover dipped by 4% in the fourth quarter this followed increase of 42 per cent between Q2 and Q3.

Average invoice payment times have also improved, falling by 2% YoY from 64 in 2010 to 62 in 2011.

Peter Brinsley, international manager at ABN AMRO Commercial Finance commented, “Whilst these stats highly positive, most firms are starting from a low base in exports. Many businesses have been forced to seek overseas opportunities for the first time as they continue to struggle at home.

“This said, the fact that SMEs are increasingly enjoying international, and emerging market, success is certainly a step in the right direction. For example, we are seeing particular international uplift in recruitment and metal sectors across EMEA markets.”

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

Tackle lending and late payment in Budget to mend small business cash flow crisis, says Forum of Private Business

Tuesday, March 20th, 2012

Forum calls for better lending information to support new National Loan Guarantee Scheme, increase choice and help alternative funders compete with banks

As part of its Budget focus on boosting bank competition and prompt payment the Forum of Private Business is calling for better, more standardised lending data to support the Government’s new National Loan Guarantee Scheme (NLGS) and increase choice for small firms.

The Forum believes the Government should work towards increased standardisation in order to provide firms with better information about the many different financial products available, and to make it easier to securitise or underwrite loan portfolios as part of any long-term ‘credit easing’ initiative – such as the imminent NLGS, which is being launched in an attempt to bring down the cost of lending.

The not-for-profit employer organisation is welcoming the scheme in principle but, with figures from the British Bankers’ Association (BBA) showing small businesses are seeking loans of approximately £20,000 on average, warning that credit easing must work for the smallest businesses that need it most.

In addition to tackling the perennial problem of late payment the Forum believes that greater competition in parallel to the NLGS is necessary to avoid a cash flow crisis for small firms – particularly allowing alternative funding platforms to compete more effectively with the big banks.

“Small business owners are being expected to drive the economy forward yet find that relentless cost increases, mounting late payments and continued credit restrictions severely hinder their ability to control cash flow,” said the Forum’s Senior Policy Adviser Alex Jackman. “Cash is the lifeblood of any business and there must be definite action in the Budget if we are to mend this cash flow crisis among small firms.

“Providing it works, and crucially reaches the smallest firms that need it most, the new National Loan Guarantee Scheme will be a welcome step towards bringing down the steep cost of lending – but we also need more competition allowing non-bank funders to compete more effectively in small business finance markets dominated by the big banks.

“Particularly, we want support for innovative crowdsourced funding models that are less dependent on automated risk criteria, the over-reliance on these being a central criticism levelled at major lenders in recent years.”

Mr Jackman added: “In addition to tax incentives to act as a stimulus, it is important to provide better, more standardised information for non-banks funders and small business customers – and for use in the operation of the NLGS itself.”

Banking competition

In September 2011, the Independent Commission on Banking reported that 85% of SME current accounts are controlled by just four banks – a lack of competition compounded by various barriers to switching lenders.

In the same month, the findings of the Forum’s Cash Flow and Finance Panel member survey suggested business owners are sceptical about recent finance initiatives – including the government-brokered Project Merlin, where the banks fell short of their lending target by £1 billion – coinciding with declining confidence in mainstream lenders and falling demand.

Alienated by restrictive risk criteria and subsequently steep costs, there are increasing signs business owners are looking elsewhere for affordable funding. Around a quarter of respondents called for more choice between ‘traditional’ banking services and 21% want better access to non-bank funding. Approximately 1 in 5 businesses were positive about the potential of using crowdsourced funding, suggesting it could offer a good solution to their finance needs in the near future.

In its Budget submission the Forum is calling for more published information to be made available to allow alternative lenders to better assess whether to enter small business finance markets traditionally dominated by the mainstream banks.

Further, in order to help non-mainstream financial services play a greater role in providing sustainable lending in the future, the Forum wants the Government to financially back peer-to-peer lending projects under the Business Finance Partnership and hand private lenders further tax breaks.

Specifically, the Government is being urged to reduce to 0% on the tax on interest received during the lifetime of a loan, instead of the 50% top tax rate, providing the loan is still outstanding after three years and an additional tax relief if a business fails before the loan is repaid.

The Forum is also calling on the Government to open up the Enterprise Investment Scheme (EIS) to alternative lenders who wish to lend to small businesses.

In addition to addressing competitive barriers to alternative funders in its Budget submission the Forum has submitted evidence to the Government’s Breedon Review aimed at boosting SME access to alternative, non-bank finance.

Late Payment

With the latest figures from payment body BACS showing that SMEs are owed an all time high of £33.6 billion, up from £30.4bn in 2010, the Forum is leading the call to action on late payment.

The organisation’s Budget submission calls for measures that enable prompt invoice payment to cascade down the supply chain, beginning with large companies at the top.

These are: introduce the new EU Late Payment Directive – which standardises 30-day payments – into UK law as soon as possible, subject to a review of its transposition into UK law; use the public procurement process to promote best practice by avoiding using businesses with over 250 employees if they are notoriously bad payers; require more detailed information on payment times from FTSE companies and, finally, work towards a strengthened Prompt Payment Code.

The Forum led a recent late payment campaign backed by many of the UK’s leading trade bodies. The campaign has secured a commitment from the Government to address the issue without delay and has resulted in the re-formation of the Late Payment Working Group.

With one emphasis being how business owners can proactively minimise the problem, the Forum is carrying out research with Graydon UK, a credit rating agency, into firms’ payment and cash flow management systems and barriers to implementing them.

The Forum is lobbying for better access to finance and payment practices in order to improve cash flow as part of its headline Get Britain Trading campaign. For more information and to join the campaign visit www.getbritaintrading.co.uk or call 0845 130 1722.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

Chancellor launches Scheme to boost small business lending

Tuesday, March 20th, 2012

Chancellor launches Scheme to boost small business lending

News Release issued by the COI News Distribution Service on 19 March 2012

The Chancellor has today launched the National Loan Guarantee Scheme (NLGS), helping smaller businesses across the UK (with an annual group turnover of up to £50 million) access cheaper finance.

The Government is using the UK’s budget credibility in financial markets to provide up to £20 billion of government guarantees on unsecured borrowing by banks, enabling them to borrow at a cheaper rate. Around £5 billion in guarantees will be made available in the first tranche.
Participating banks will pass on the entire benefit that they receive from the guarantees to smaller businesses across the UK through cheaper loans. Businesses that take out an NLGS loan will receive a discount of 1 percentage point compared to the interest rate that they would otherwise have received from that bank outside the scheme.

The Chancellor said:
“The Government promised to help small businesses get access to lower interest rates. Today, we deliver on that promise with a nationwide scheme. It’s only because we’ve earned credibility with our deficit reduction plan that we have low interest rates, and it’s only because of this scheme that we can pass the benefits of those low rates onto businesses.”

The Government is not guaranteeing individual loans to businesses and thus not taking on the credit risk of loans made under the scheme. The banks retain the credit risk and therefore their usual lending and credit parameters will apply.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

 

ONLINE CHAT – Discuss your Debt Collection requirements online with CBC International – http://www.cbc-international.co.uk

Monday, March 19th, 2012

Following a successful trial, we decided to implement a new online chat function for the use of both current & prospective clients.  Through in-depth customer research and following overwhelming positive feedback, we established that this facility would be beneficial for visitors to our website.

Clients are able to speak with an online advisor about their files, in conjunction with conventional methods such as telephone or email, which provides them with as  many ways as possible to keep up to date with the work they have passed to CBC.

The chat function is also beneficial for prospective clients who want to discuss their requirements with CBC.  We are able to provide fast feedback through our highly skilled online operators.

CBC is always at the forefront of website design and development, looking at ways to make our website as accessible as possible for visitors.

 

Mother’s Day, the facts & figures

Monday, March 19th, 2012

At various points throughout the year, a number of countries celebrate ‘Mother’s Day’, a celebration honouring mothers and celebrating motherhood, maternal bonds and the influence of mothers in society.

In the United Kingdom we celebrated Mother’s Day yesterday, on 18th March 2012.  As our office is closed at the weekend, we thought we would break away from ‘the norm’ and give our own celebration to mothers today, with an infographic containing a variety of facts & figures.

 

 

 

Please note: Information in this blog post is content property of www.babyshowerhost.co.uk and the full original articles and source content can be found by clicking here

Taskforce publishes SME finance proposals

Monday, March 19th, 2012

Taskforce publishes SME finance proposals

Proposals to widen business access to new and alternative sources of finance have been published today by the independent Taskforce on non-bank lending.

The Taskforce, chaired by Tim Breedon, CEO of Legal and General plc, was commissioned by the Government to examine a range of alternative and sustainable finance sources, particularly for small and medium-sized enterprises (SMEs).

Bank lending is by far the largest source of external finance currently used by businesses, but the Taskforce believes there is significant potential to develop both the demand and supply of non-bank lending to match the financial landscape of countries like the US.

The main recommendations from the Taskforce’s report to Business Secretary Vince Cable are:

Increase awareness of alternative financing by creating a single brand and a single business support agency to deliver the Government’s range of SME finance programmes, drawing on international examples such as Germany’s KfW. Industry to establish a Business Finance Advice network, comprising the main accountancy bodies. Open up access to capital markets financing for smaller companies through the creation of a body to bundle and securitise SME loans. Consider the potential for the Government’s Business Finance Partnership to invest in innovative products such as mezzanine loan funds and peer to peer lending.Encourage large businesses to support smaller companies by reinforcing prompt payment practices, supporting greater use of invoice discounting and utilising supply chain financing to invest in smaller suppliers.Government and industry to review the impact of international prudential regulation such as bank and insurance capital rules on the supply of SME finance.Increase the UK retail investor appetite for corporate bonds.

Business Secretary Vince Cable said:

“We need to reshape the UK’s finance landscape to better serve the needs of ordinary businesses, helping more companies find the support they need to start and grow.

“Tim Breedon’s Taskforce has brought together industry, investors and advisers to provide evidence and ideas on increasing the range of finance sources available to small businesses. I thank them for their hard work and detailed recommendations, and I hope this will represent a turning point in business finance in this country.”

Tim Breedon, Chairman of the non-bank lending Taskforce, said:

“There is compelling evidence that access to finance is expected to become more acute as business confidence and growth returns, whilst continuing bank deleveraging is likely to leave a significant funding shortfall.

“Whilst there is no silver bullet to addressing this issue, we have made a number of recommendations which I believe will collectively help open up alternative financing channels for UK SMEs.”

John Walker, National Chairman, Federation of Small Businesses, said:

“We very much welcome this report as the recommendations chime closely with changes the FSB has called for to open up finance for small businesses. Bold action needs to be taken to ensure a behavioural shift so that small firms know what alternatives to bank finance are available.

“Putting the Government’s financial products under one umbrella organisation and looking at a pilot SME bond scheme, as well as learning what works well in other countries is a good step forward and we urge the Government to take forward the recommendations as soon as possible.”

The report anticipates growth in demand for finance as the economy recovers, and the expected constraint on availability from banks as they deleverage could create a finance gap for businesses of £84 billion to £191 billion over the next five years.

The Taskforce’s recommendations on increasing the supply and take-up of alternative sources of finance are aimed at closing this gap.

The Government will now review the recommendations presented by the Taskforce and announce its response shortly.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

Asset finance essential to business lending solution, says FLA

Friday, March 16th, 2012

On the day that the non-bank debt industry taskforce publishes its proposals for non-bank lending to small and medium-sized businesses, the Finance and Leasing Association’s (FLA)’s latest statistics show continued growth in asset finance (leasing and hire purchase of business equipment).

Asset finance is the largest alternative lending option to conventional bank loans and overdrafts for SMEs. Earlier this month Lord Sassoon, Commercial Secretary to the Treasury, launched a new on-line directory of around 1,000 sources of asset finance and other alternatives to conventional ban loans www.smallbusinessfinancedirectory.co.uk The free directory is intended to help 60,000 businesses to access alternative finance in its first year. .

Overall, asset finance new business in January 2012 grew by 14% compared with January 2011, to almost £1.5 billion. The value of new business contracts of up to £20 million increased by 23% over the same period.

The FLA figures show that in January, the sales finance channel reported the strongest rate of growth, with new business 36% higher in January than in the same month in the previous year, at £408m.

Broker-sourced asset finance grew by 30% over the same period to £282 million. The direct finance channel reported double-digit growth for the third consecutive month, with new business up by 16% to £778 million.

Finance for commercial vehicles grew by 23% in January, which means that this sector has grown year-on-year in each of the past eighteen months. Growth in plant and machinery finance was at its strongest in more than three and half years, with new business up by 40% compared with January 2011.

Geraldine Kilkelly, Chief Economist and Head of Research at the Finance & Leasing Association, commented:

“Our latest figures follow the trend of growth in asset finance that we have seen over the past twelve months. While cash flow is important for small businesses, the evidence is that many are using asset finance to invest in new equipment and to expand their businesses.

“Initiatives, such as the Small Business Finance Directory, present options for alternative finance. We hope that the taskforce’s report will raise awareness of the funding sources that are available to small and medium-sized businesses.”

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

LCVR must go, judicial review rules Government decision correct

Friday, March 16th, 2012

The Forum of Private Business has welcomed today’s judicial review in to Low Value Consignment Relief, ruling the Government’s decision to outlaw the practice as legal and just.

George Osborne announced in November he was outlawing LVCR, a system which effectively allows goods coming from the Channel Islands worth less than £15 to ship VAT free.

That decision was, however, challenged in the courts by the Governments of Jersey and Guernsey, who claimed that closing the loophole on April 1 would be discriminatory and illegal.

But law lords today said that was not the case following a three day hearing in London.

“This is a victory for common sense in what has become something of case of David v Goliath.

“But the judiciary has today reaffirmed what George Osborne said in November, and that is LCVR is tax avoidance, plain and simple, and has to stop.

“Unfortunately it is too late for countless small firms which went to the wall, unable to compete with giants such as Amazon and Tesco, who have been able to unfairly use this loop hole to avoid paying billions in tax and undercut their small rivals by significant margins.

“Had the Government’s decision been overturned there would have been serious consequences for high streets across the UK.”

The Forum and pressure group Retailers Against VAT Abuse Schemes (RAVAS) have long argued that exploitation of LVCR by large companies was both anti-competitive and amounted to tax avoidance. Together they have argued that the change is lawful and necessary to protect small high street shops and internet traders.

EU law even stipulates that the Government is obliged to act in order to prevent tax abuse and avoidance.

RAVAS spokesman Richard Allen, who provided evidence at the inquiry, said: “The long-term and blatant abuse has destroyed many UK businesses which, other than for the lack of a 20% trading advantage, would have been viable healthy operations giving people jobs and generating tax revenue in the UK.

“While of course we have sympathy for the effect on employment in the Channel Islands that the closure of this industry will have, it is for the people of the Islands to strongly question their elected representatives as to how they could possibly allow an industry that was based on the abuse of tax to become so important to their economy.”

LVCR was created almost 30 years ago as an administrative relief for perishable goods sent by post. However, in the past decade many large companies have moved operations off-shore in order to exploit it, undercutting smaller retailers unable to compete on price.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

 

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