Broomfield & Alexander in the Press « Broomfield & Alexander Chartered Accountants

Broomfield & Alexander in the Press

New service is response to increasing individual wealth in Wales

Wednesday, May 9th, 2012

Ian Thomas, Director, Broomfield & Alexander

Professional advisors Broomfield & Alexander have announced the creation of a new joint venture wealth management service in response to the increasing numbers of affluent people in Wales – where it’s expected there will be 85,000 millionaires in Wales by 2020.

Broomfield & Alexander Wealth Management Ltd will offer individuals with six-figures and above in-house stock broking and discretionary and advisory investment management alongside the existing high-level tax advice and planning.

Managing director Ian Thomas said the new venture, with independent financial advisory firm AFH Financial Group plc, was a response to client demands for greater interaction between tax planning and wealth management from individuals whose wealth was increasing.

Higher property values, the first baby boomer wills, higher professional salaries and even lottery winners are all combining to push the assets of an increasing number of people above the million mark, with estimates that the number of millionaires in the UK will be approaching the two million mark in the next six years.

“The personal and business assets of many of our clients are rising to significant levels, often above the £1,000,000 mark,” said Mr Thomas. “Our aim through this exciting joint venture is to be able to offer a complete integrated service to our clients. At the opposite end of the spectrum we can apply lateral thinking to propositions – for example, loan backs from pension schemes can sometimes assist businesses with cash-flow pressures.

“There’s an increase in the wealth of our clients and we saw an opportunity to combine seamless in-house wealth management and tax planning – something that is not covered well by other firms.”

AFH chairman and chief executive Alan Hudson said the joint venture marked the company’s first established foothold within a strong Welsh market.

“I see both Broomfield & Alexander and AFH as two complementary and client-focussed businesses, seeking to deliver end-to-end solutions for a wide range of clients,” he said.

“We are delighted they have chosen us as a partner and we look forward to working with them to grow Broomfield & Alexander Wealth Management Ltd into a leading and recognised brand.”

New Managing Director for Broomfield & Alexander

Wednesday, April 18th, 2012

Ian Thomas is to lead Broomfield & Alexander, taking over the role from Robert Preece, who held the position for almost 10 years.

Currently Audit Director, Ian worked for 17 years with a leading international firm in Cardiff before joining Broomfield & Alexander in 2002, offering commercial advice on audit, accounting and corporate finance issues, and working with a broad range of businesses including UK subsidiaries of large international groups.

Ian said he was very much looking forward to his new role. “Robert has moved the firm on in great strides during his time as managing director,” he said.

“He orchestrated our merger with the Swansea chartered accountancy firm, Griffith and Miles, moved the business into prestigious new offices on the Cardiff Gate Business Park, and took us into MHA (MacIntyre Hudson Association), the association of independent accountancy and business advisory firms, which is opening up national and international contracts for us.

“The result is that we have grown to become a highly-respected firm with 12 directors, around 90 staff, more than 4,500 clients and offices in Cardiff, Newport and Swansea.

“My aim is to build on that legacy. We are proud of the high standards of service and personal attention to client care which have characterised Broomfield & Alexander for 100 years, with each project led by a director who draws together a team offering the right blend of specialist expertise. I will ensure that ethos and approach is maintained and developed.”

Robert, who will be continuing as a director of Broomfield & Alexander, said the practice would benefit from the fresh impetus which Ian would bring to the leadership of the business, and wished his successor well in taking over the mantle of guiding the practice in its future development.

“Ian has numerous leadership qualities which he is able to bring to this role, and I am sure he will have the support of all his colleagues in the future, as I have had in the past,” he said.

Budget 2012 – commentary

Thursday, March 22nd, 2012

Leighton Reed, Director, Broomfield & Alexander

As always the Budget produces a mixed bag of changes, some win and some lose out. We can focus however on three groups of people; pensioners, those on higher incomes and businesses.

Much has already been said about the “granny tax” but to put this in perspective, it will affect pensioners who are not yet aged 65, who have annual income of more than about £9,200 but less than about £29,000.

Turning to those who have larger incomes, the cut in the top rate of tax to 45% is a good thing overall. Many business owners have tried to avoid the 50% tax hit by deferring income since the rate came in and by accelerated income before it came in. Entrepreneur’s and owners often say to me that the 50% tax rate stifles their enthusiasm to invest to make more profit because a bigger proportion of that profit is paid to the Government when you take National Insurance into account. We think the cut in the rate will reduce the need for tax avoidance plans, encourage more entrepreneurship and increase the Government’s tax take overall.

Staying with business owners, the cut in corporate tax, combined with extra tax savings for those businesses investing in research and development and patents are very welcome indeed. That said, these tax benefits can only be accessed for businesses which have set themselves up as a company. There are several tax benefits for running a company and all business owners need to review their business structures.

You can download a detailed Budget Report 2012, and our 2012-13 Tax Rate Card is available for download also

Why not follow @BroomfieldWales on Twitter to keep up with the latest information on Tax and other business and financial topics, or simply register for our monthly newsletter.

International Association picks up a double!

Tuesday, March 20th, 2012

Robert Preece, Director, Broomfield & Alexander

Broomfield & Alexander’s global association, Morison International (MI), has picked up a brace of awards at the inaugural International Accounting Bulletin Awards.

MI won 2 out of the 13 award categories, picking up the awards for “Association of the Year” and “Rising Star Association”.

This is a great achievement for the association and testament to MI’s success over the past 12 months.

The awards, sponsored by Aon insurers, attracted over 100 nominations from all over the world with the awards being presented at an event held in London on Thursday 8 March. Further congratulations went to MI firm, Hansen Holm (Ecuador) who were shortlisted for Consultancy of the Year with regards to their significant work implementing IFRS in Ecuador.

Morison International is a global association of independent accountants, auditors, tax advisers, business consultants and lawyers established to serve the cross-border needs of their clients and has 90 member firms worldwide, representing 65 countries. For more information visit: morisoninternational.com

Growth in manufacturing predicted

Tuesday, March 6th, 2012

Ian Thomas, Director, Broomfield & Alexander

Almost two-thirds of manufacturers in Wales responding to a national survey of the sector are predicting growth during 2012, according to a new report.

A third of the firms are anticipating growth of over 10% and, in a vote of confidence for the battered financial services sector, 61% say that, despite changes in lending and loan security policies following the banking crash, they feel they are receiving adequate support from their bank.

But the confidence respondents expressed in the survey was tempered by pleas for more support at local and national Government levels, which business say would make a major contribution to the success of the sector.

One Welsh respondent said: “Reintroduction of non repayable grants from the Welsh Government is very welcome and is the way forward, but they need to redress the support for exporting companies. It is currently virtually non existent.”

The MHA survey questioned 145 manufacturers across the UK about a range of issues affecting their businesses, with the responses from Wales broadly mirroring the national picture.

The report echoes encouraging findings from Markit’s purchasing managers’ index (PMI) a month ago, indicating strong growth in the manufacturing sector.

It’s also good to see confidence in banks returning. We have been saying for some while to our clients that if businesses go about raising funds in the right way, they stand a good chance of success. A strong business plan and pitch are more essential than ever in the current climate, and robust financials and a coherent business plan are a must – and some businesses just aren’t going in with those.

According to the report, over 80% of manufacturers in Wales (compared to 90% nationally) do not believe that the UK Government currently has a specific manufacturing strategy in place, and that more support for R&D expenditure in particular would be a real boost.

Three quarters of Welsh respondents revealed they were planning to spend between 1-2% upwards of their turnover on R&D – but 59% of them (against almost three quarters nationally) said that an immediate credit from Government for R&D expenditure would encourage them to invest more.

The survey supports a wider consensus across the industry that the sector remains neglected at policy level, while competitor economies such as Germany, Norway and Japan reap the benefits of continued investment in their industries.

The Government’s proposal to reduce the corporation tax rate to 10% for profits made on patented technologies from April 2013 will aid growth in the UK economy.

We know the Government has expressed a commitment to rebalancing the role of manufacturing in terms of contributing to GDP, but this survey shows immediate and extensive action is necessary to deliver this.

We would join our MHA partners in urging the Government to consider a wider national manufacturing strategy and increased awareness in the support currently available to support the sector and ensure it maintains its place as a leading player in the global economy.

To request a copy of the report, please click here

Why not follow @BroomfieldWales on Twitter to keep up with the latest information on MHA and manufacturing, or simply register for our monthly newsletter.

Research & Development Tax Relief – Is your company claiming / maximising its entitlement?

Tuesday, February 14th, 2012

Paul Arnold, Director, Broomfield & Alexander

Many companies in South Wales are believed to have paid, and are continuing to pay, excessive amounts of tax because they are failing to claim (or maximise) a generous tax incentive which they are entitled to.

What is Research & Development (“R&D”) tax relief all about?

Ultimately, R&D tax relief is about reducing a company’s tax liability and thereby increasing the amount of cash in the company or in the hands of its shareholders.

R&D tax relief enables companies to claim an enhanced tax deduction for all qualifying expenditure incurred. The rate of this enhanced tax deduction has now increased to 200%, and is set to increase to 225% from next April.

For example, based on the rate to apply from next April:

Qualifying R&D expenditure 10,000

Enhanced R&D tax deduction 12,500

(in addition to the tax relief for the actual £10,000 spent)

Potential tax saving (i.e. increase in cash) 3,125

If these additional funds were withdrawn by the company’s shareholders they could receive nearly £2,500 of cash, after tax, simply as a result of the company submitting the R&D tax relief claim it is entitled to.

In addition, loss making SMEs (small and medium sized enterprises) are able to surrender tax losses for a tax free cash receipt, potentially equivalent to 25% of the R&D spend. This can provide vital cash flow at a time it is most required.

For companies that exceed the SME limits (generally being those with 500 or more employees), a 30% enhanced tax deduction can be claimed. SMEs in receipt of grants can also potentially claim under this scheme.

Qualifying costs

There are a wide range of costs that potentially qualify, including staffing costs, consumables (including power, fuel and water), computer software, contracted out activities and the use of agency workers to name but a few.

Understanding the wide range of costs is important, but where companies tend to derive the most value is when they correctly identify the full range of activities that qualify. This is where claims can increase significantly, although it requires detailed knowledge of the R&D tax relief rules.

Qualifying activities

Companies which are:

investing resources to enhance their products or processes;

doing something that is innovative or unique; or

working on solving a problem that has never been solved before

could all potentially derive these cash benefits, as these types of activities are indicative of what may qualify as R&D for tax purposes.

Most companies are surprised to hear the range of activities that can qualify as R&D given the widely held perception that R&D relates only to high tech companies.

Time limit to making R&D claims

As a company has two years from the end of its accounting period to submit or amend an R&D claim, it is important that previous activities are considered as well as current and future activities.

Recent changes/announcements to the schemes

In addition to the aforementioned rate increases, the £10,000 minimum R&D spend condition is set to be removed next April, greater relief may be available for the use of outside help and certain routine company projects may also qualify.

Why not follow @BroomfieldWales on Twitter to keep up with the latest information on Tax and other business and financial topics, or simply register for our monthly newsletter.

Business succession – tax planning and potential pitfalls

Tuesday, February 14th, 2012

Paul Arnold, Director, Broomfield & Alexander

For all family businesses, succession planning is a must, given that sooner or later everyone wants or needs to retire.

However, if you own a family business (whether that be in whole or in part), there is more to retirement than just deciding not to go into the office any more. Aside from ensuring that you have sufficient funds to retire, the question of what happens to the business becomes paramount.

Key issues for consideration include, who will manage the business after you retire and how will ownership be transferred?

There are a number of potential exit strategies for a retiring business owner, such as an outright sale, a management buyout or a transfer of ownership to other family members.

Another key issue to consider is tax, with careful planning required to ensure that any potential tax exposure is minimised. Two of the key tax implications for succession planning are briefly discussed below. In addition, some of the potential pitfalls are also identified, which highlights the need not only to obtain specialist advice but also to start the planning process as soon as possible.

1. Entrepreneurs’ relief
The highest capital gains tax rate of 28% is reduced to 10% if the business owner qualifies for entrepreneurs’ relief. This could potentially apply on the sale of an unincorporated business or a sale of shares, provided certain qualifying conditions are satisfied. Each individual now has a £10 million lifetime allowance, where this 10% tax rate can apply.

For a company’s shareholders to qualify for this relief they must, throughout the twelve month period prior to any disposal, hold at least 5% of the ordinary share capital of a trading company and be an employee or officer (i.e. a director or company secretary) of the company (or another group company).

Scenarios where shareholders can (unexpectedly for them) fail to qualify for this lower tax rate can include the following:
• a spouse may own shares but not actually work for the company;
• share options may be exercised prior to a sale, with someone holding at least 5% of the shares falling below the required 5% limit after the share options have been exercised;
• those exercising their share options prior to the sale, and therefore not satisfying the 12 month ownership condition; and
• holding shares with restricted voting rights.

As the rules are complex and not necessary logical many companies have found that they have to restructure their share capital to ensure shareholders qualify, especially given that this relief potentially gives rise to a tax saving of £1.8 million per individual.

There are also other issues to consider, such as business property (for example, the business premises) being held outside the company/partnership. Although a sale of business property may still qualify for entrepreneurs’ relief if sold within three years of the share/partnership sale, if rent has been charged for use of this property it would restrict the element of the gain which qualifies.

Therefore, in assessing ongoing remuneration strategy it is important to factor in the implications that rental income has for entrepreneurs’ relief. In addition, there are further adverse implications should only one spouse own the shares (or be a partner), but both spouses personally own the property used by the business.

It is worth noting that transferring a business to family members may be possible without this giving rise to an immediate tax charge, with any gain being deferred until the transferee themselves disposes of the business.

2. Inheritance tax (“IHT”)
Businesses will often fall outside the inheritance tax regime as they can qualify for Business Property Relief (“BPR”).

This applies for a number of corporate structures, such as unincorporated businesses and unquoted shares (for example, family companies held for at least two years). BPR works by taking the value of the business out of the value of the individual’s estate for IHT purposes, and thereby provides a valuable way for businesses to be left to the next generation.

However, where land, buildings, machinery and plant is held personally and used in the company’s (or partnership’s) business, it will only qualify for 50% BPR. Therefore, 50% of the value will be included in the individual’s estate and potentially be subject to IHT.

Planning can be undertaken in such circumstances, although other taxes such as stamp duty need to be considered. In addition, the use of trusts remains a valuable tax planning instrument.

It is therefore important that appropriate professional advice is sought, and the earlier these issues are considered the better.

Broomfield & Alexander are holding seminars in Cardiff & Swansea entitled Exit & Succession Planning. For more details and registration for each seminar, click on the relevant links below:

Cardiff, 28 March (8:30-10am)

Swansea, 25 April (8:30-10am)

Why not follow @BroomfieldWales on Twitter to keep up with the latest information on Tax and other business and financial topics, or simply register for our monthly newsletter.

How to get the backing of a bank – deals can still be done

Thursday, February 9th, 2012

Seamus Gates, Director, Broomfield & Alexander

There are still deals to be done, despite banks sometimes getting unfairly blamed for not offering finance. Businesses could consolidate and develop if bids for finance were properly put together.

Banks are saying that demand for lending is actually relatively low, in part that’s because businesses’ cash balances are at an all-time high, but also because the quality of funding requests is often low.

Businesses need to go about raising funds in the right way. If you’re going to a bank, a strong business plan and pitch are more essential than ever in the current climate. Robust financials and a coherent business plan are a must – and some businesses just aren’t going in with those.

Businesses also needed to explore alternative financing options and be open to ideas. Asset-backed lenders, private equity and venture capital houses, invoice discounting providers and international banks may all be able to compete with the high street lenders, whoever you talk to, all will expect to see a well thought out and realistic business plan and supporting financial forecasts.

The plan needs to be delivered by all the key members of the management team. Funders need to be convinced not only about the skills and experience of the finance director, but also of the managing director to drive forward the business and, for example, the sales director to drive forward top line growth.

Why not follow @BroomfieldWales on Twitter to keep up with the latest information on funding and corporate finance, or simply register for our monthly newsletter.

Engagement in the workplace

Wednesday, December 21st, 2011

In an interview with the Creative Work Place’s Karen Whiteside, Rob Preece explains how Broomfield & Alexander has reaped the benefits of implementing a policy of engagement.

Autumn statement reaction

Tuesday, November 29th, 2011

Leighton Reed, Director, Broomfield & Alexander

You can download a full Autumn Statement report here

A reduction in borrowing costs on loans of up to £40bn, underwritten by the Government, is a positive move as SMEs brace themselves for yet another tough year ahead. It’s worth noting that this may not in itself increase the number of loans to small and medium-sized businesses. However, because the money will be allocated to the banks in proportion to their lending, it should encourage more lending in the sector. This is a move desperately required within the sector if we’re to see meaningful growth.

The extension to the Enterprise Investment Scheme will be further appreciated by business start ups, as the Government tries to garner more support, 50% income tax relief for investment of up to £100,000, whatever the rate at which the investor pays Income Tax, in start ups is a positive move for those looking to drive business growth and will be welcomed by our clients.

The plan to simplify EIS by relaxing the connected person rules and the definition of shares that qualify for relief is another positive move. EIS is a valuable and well targeted relief, but the rules can mean that SMEs inadvertently fall foul of the anti-avoidance. Simplification will give greater certainty to businesses and their investors.

The announcement of the above the line R&D tax credit is also welcome for larger companies, encouraging greater R&D activity and spend. More specifically appreciated is the assurance that the proposed changes will not have a negative impact on SMEs.

HMRC’s full Autumn Statement can be viewed here.

Broomfield & Alexander in the Press

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