Accountancy Firm Owners – How To Respond To The C19 Crisis

C19 crisis

Accountancy Firm Owners - How To Respond To The C19 Crisis

This transcript on how to respond to the C19 crisis was created using AI and may contain some mistakes.

hello, welcome to our Tuesday C19 Crisis Series for the last two to three weeks as Corona Virus came on the horizon on, then came into reality for day to day. Business is, we’ve worked a lot with accountants in the whole area of dealing with the technical issues and dealing with the client issues. But today’s session is a little bit different because Corona Virus does present an opportunity for accountants and accountancy businesses. So today I’m joined by Carrie Reader and an internationally acclaimed accountancy firm owner and but also a business advisor and a multi published author with another book in the pipeline.

And so card is going to share with us today his insights into Corona virus we’re going to look at, Well, you know, the short term, what should what should we be looking at now on what our other people looking at now? But then also looking at, Well, what does the future look like? And Carol is going to share his expert insights and as a firm owner and as well as a visionary on a significant influence on the accounting profession. So, first of all, I just want to welcome Carol Carol.

Thank you so much for coming on with us today. No deaths. Thank you so much for inviting me. It’s an absolute privilege. And Carol e. I see you’re working from home. That’s not your your normal domain. So, like, like a lot of, like, a lot of the world, and you’ve got a slightly different backdrop today and what you usually have. Yes. So, I mean, to be fair, I actually work. I personally have worked from home a lot more than my team half,

But it’s been a change for all of us, hasn’t it? You know, for May I would normally be out and about. So I’m a people person. I like meeting people face to face, but yeah, I’m stuck in this little, so back into my house. Makeshift home office. Excellent. Excellent. And Carrie, what are you What are you seeing happening out there on DWhite? Are you saying that that that the focus should be I kind of have described this that the first couple of weeks of crone of ours were dealing with the shock on dth e implementation,

the remote working, the dealing with the clients. And I think the first wave has no past by we’re kind of in the eye of the storm here at the moment. What as people emerge now and begin to look and really assess their business as accountants, their clients, businesses and what they need What? Where is the starting point? Do you think? Okay, so I messed It must report questions. We’ll try todo couple of every part of it. A to first. You asked to where we are on.

I think you’re absolutely right that we’ve we’ve gone past, be initial fear and panic now at least are certainly home. Um, you know, I think that for me, this process for accounting firms could be broken down into four key areas. So the first area was given panic on fear and panic really kicked in, I would say the second week of March on the second week of March. The reason I say that is it was my wife’s birthday. We were on bond. People were coughing near us on.

Do you know what it twisted her mind home? Do we want to be sat next to these people? That a coffee? And that’s the first time. But we’ve ever been conscious of on external health issue that could be transmitted in the same way that a virus can. You know, normally, if it’s a cold or flu, you wouldn’t think about it. But that Max when the reality here I also had a speaking stopped from the enough. My last speaking suffer I had done aan de hand sanitizers abound,

and the conversation was was all around the virus. It was around. How are you washing your hands for and so on? So is at that point that fear and panic kicked in on DS. The UK measures certainly took place at the end of that week. Start the next week. Ondo Accountancy firms have been in that stage, I would say for about two or three weeks, where now hit in the point of reflection of empathy and being there for clients. So, as you say, the eye of a storm,

the worst has happened insofar as the stock markets into powers Theo, economic shock and so on, without the point of being able to calmly reflect on what’s happening on making sure that we help our clients as much as possible. I think we thing got the next stage which is going to be a slow down. I think that slow down will be the natural impact of the lock down on the fact that businesses have stopped trading on Ben afterwards. We’ve got to deal with the growth of the resurgence because whilst this is being called of the session,

you know it’s been referred to as a recession in the media. It’s not like the other recession in that the economic fundamentals before we went into this were actually pretty sound, you know, we were we were in a pretty good place. It wasn’t like two thousand seven two thousand eight, where the financial institutions were carrying a lot of bad debt on DS over inflated property markets and so on. Instead, the fundamentals were good, but it was an external event What is known as a black swan that caused best onboard.

It’s probably more akin to a wartime scenario where the announcement of war’s taken place but fear and panic has subsided to some extent. We’re now dealing with the fallout, but there should be a resurgence coming up in, I don’t know, maybe three, maybe six, maybe nine months. We don’t know how long this will be a Yeah. I like that fear and panic reflection and empathy and slow down growth and resurgence. It’s very, very clear. Very succinct. Yeah. Now I think the challenge for accountancy firm owners.

He wants to pick out some challenges here. I think there’s been some massive opportunities. However, the challenge, but I’m seeing is but firm owners haven’t necessarily correlated. But the slow down is going to happen. If I haven’t seen already, it will kick in soon because the let’s be honest stairs. If your clients have shut down, they’ve closed the doors for three months. They don’t care about filing tax returns or completely Mary camps on. We’re going to find what is already a fairly seasonal business is going to have the seasonality enhanced on.

We’re going to have a time. We’re twittering our funds in a month or two. Remember gonna find huge workload as that work actually needs to be done. At some point on. That’s the That’s the big alarm bells ringing to me, but I don’t see others unnecessarily reacting to. Yeah, we’ve talked about this with our our prophet pro members that it’s it’s looking at how this short term is handled because the same work is going to be need to be done on. Maybe there will be an adjustment of tax deadlines,

but I’m not sure whether I’m not sure whether whether, whether either the UK are the Irish government well, really want that. But it’s there’s going to be this massive amount of work to be done. We’re seeing some people know where, as part of their, you know, the UK for low plan the Irish subsidy scheme are different. But just factoring in things like annual leave like you don’t want to everybody coming back. And now we’re going to have we’re going to have. So let me show you what we’ve done in our firm.

I can I can talk in more detail about my firm, and I can talk anecdotally about other firms. But we furloughed. I’m going t o guest when chips and about staff valley ality is. But that might need to be closer to thirty pretty quickly. That might need to even go up to potentially fifty, depending on how intense for slow down is love of them. The details of one we fellow in the important thing here is We’ve been very clear on the groupings of staff members that need to be furloughed on DS were able to move quite nimbly.

We’ve made all staff members aware of the litter process we’re going through on do we to begin with, we started with from a remote work in perspective, very non core staff. So what I mean by that is our receptionist who Yes, she could be redeployed. But actually her job is genuinely not needed in the same way, because there’s nobody walking through the door. One of our new business executives who was focus solely on new franchisees Recruitment Franchisee recruitment has slowed down across the UK. So s so. She had been furloughed.

Andre, the most junior apprentice who needed pretty much data they hand holding. We’ve been expanded out, get to the twenty percent wave and team members who had non critical roles at that point, critical not being critical. Winter flowers business as usual. But political winter fathers can may help how clients get through the next three months and keep the lights on. So that’s really how we’re looking at it now. Other steps. But we’ve taken we’ve mandated, but our teams take at least half of that and you leave before the end of June.

So so they’re all required to take half of them annually pra vision between now and June. What that does is it means that we’re not so impacted when things get busier afterwards. Because the natural temptation for team members is that you know what they don’t want to go on holiday at the moment because they’re just going to sit in the garden like making your weekend. Let’s save up till July August and have a holiday in the sun. Bat’s gonna cause us some massive pain in our business, so we’ve had to limit the risk of that.

We’ve also made sure that so Ben and I be to co owners of a practise. We’ve decided effectively to furlough ourselves in terms of payments. So whilst we’re doing more than we have done for a long time, we’ve reduced our own payments to eighty percent. The reason, but we’ve done that is not so much from a cash flow perspective because the reality of the pounds and pence of actors it doesn’t touch for sites of our business and our usual cash collections out. Dividends are minimal. Really. Bullet gives be right signal of intent.

If everyone staff member asks us what we did or if we ever need to go to the bank to ask for extra funding, we can hand on heart say, Look, we followed what? People across the country have done so, so very first steps. But we’ve taken initially. But the key to this, I think it’s about being flexible as well. It’s about being able todo to turn the tap on and off as quickly as possible because we don’t know quite when the slow down will happen. If it will happen.

Yeah, that’s just my crystal ball at the moment. We don’t know how long this will stretch out for. Yeah, on d Think that’s important car like it’s planning for a worst case scenario and hope it doesn’t happen. Absolutely. Plan for the plan for the worst case scenario on Ben. Hopefully we will get a different result in terms of teams. Carol, Like the approach that we took internal Iwas from the from the start of March we have we’re having full team meetings, all hand meetings. We’ve been clear and transparent.

How do you feel the teams are taking these changes on what would your advice having gone through the process yourself off of following and reducing Andre and putting every too remote? How have you handled the communication? Okay, so I have not been done it involved in communications. But I can’t feed back what I’ve heard on the ground. So the communications were primarily through our executive board, so I’m not actively involved in the business. But the executive board of S O. The executive board were communicating these Hoover daily huddles,

but we’ve been running them only on very include one to one conversations with the individuals involved. I don’t believe Violet would have come as much of supplies because the reality is for our team members. They know people who’ve been laid off more to the point, they’ll know people who have been furloughed but aren’t being paid. You know where very employers are waiting for the government to pay or similar scenarios. They all know people who’ve lost their job and haven’t been furloughed. They’ve just been literally made redundant.

So actually, we’ve been able to demonstrate that we’re doing it in the best way possible. You know,

we’re not doing it over the aggressively. I’ve heard some. I’ve heard some holler storeys days now. I don’t know names.

I don’t want to know names, but I know a firms who are furloughed staff and ordered them laptops to work from home at the same time,

which is called You cannot do that. We’ve made sure that we’ve done everything because ethically as we can,

we’ve made sure that if a team member has been furloughed, he’s been done with as much empathy as possible as well,

on also with a real clarity. The reason for this is to protect the business longer term on and,

you know, ever bear to make the most of this time personally as well. Yeah, yeah, And you see that everything here is that the teams that we’re talking about,

the teams in my office, the teams in your office that the teams in your office to see over joining us,

it’s they’re accountants. They know they understand, you know, they know they understand. They they appreciate what’s happening.

So transparency, transparency is, I think it’s critical. Absolutely. The reality here is accountant can sometimes certainly accounting practise owners,

and I hope you don’t mind me upset and four hundred and fifty of among Miss Cole. But accountancy practise.

Owners can sometimes believe I need to keep things confidential on the books. Lied to be hidden. But look,

team members know when clients are phoning from up, saying they shutting the doors. And can you help You have a team?

Members know what’s going on on. It doesn’t take too much intelligence to work out, but whilst they might stay as a client,

they might stay open. Is a business longer term in the short term bears the very real risk. But instead of paying within fourteen days,

they might take three months to pay. Cash flow could potentially be a real impact. So, you know,

I think members aren’t sheep. If they see what’s going on ever wider. Well, they see that businesses are closing on.

They realised a little have a knock on effect. So the while she is important as a leader to keep the troops motivated,

it’s also important to be very honest about what you know, and also what you don’t know. Yeah,

just one thing. I forgot to say the start, folks, and obviously those of you who are here live on the Web in our witness.

If you want to go down to the chat box or into the Q and A box and putting your questions,

I last Carol. And for those of you who are joining us live stream on linked in on Facebook.

YouTube. If you put your comments into the box below, put your questions into the common box. The team here will transfer them through to us,

and there’s just a couple of quick questions in their car. And can you explain what what followed Means?

And Michael? There’s the Irish subsidy scheme. And then there’s the UK subsidy scheme on one of the one of the key components of the UK subsidy scheme.

Is this furlough, which is like a short term layoff? Absolutely so. So. Furlough is a American place for lonely came into usage in Vuk three weeks ago.

Way all have to work out how how it was spelled, how it was pronounced. It was a completely new concept to us,

but it is exactly as they’re says. It’s a short term lay off where the government subsidised eighty percent of employees wage up to two thousand five hundred pounds.

The obligation of employment sticks with the employer, not the government. So it’s effectively a subsidy, not a dialect benefit to be employee.

And so what answer you seeing out of the ground, Carol outside of your own firm? In terms of things that are happening that either you’re looking at them going up,

that’s a good idea. Or actually, that doesn’t look like such a good idea. Okay, so I get a bit of insight of involved in a couple of industry groups.

Welcome. Discuss were fellow firm owners. I’m also I also served as head of accounting for practise ignition.

So food I’ll get to see some macro trends on get to see what’s going on across be accounting landscape not just in the UK,

but globally. So I guess the first coming is I’ve noticed but firms But her deducted monthly payment models are securing their cash flow and revenue a whole lot better than firms who on so firms who are expecting cash collections,

votes, cash collections are drying up. We noticed a very dramatic drying up of cash collections for week after lock down.

We’ve n noticed they’ve picked up again they’re not back to where they need to bay, but they’ve certainly picked up compared to where they were.

Returns of noting about thirty percent furlough seems to be accurate for firm owners. That’s what people are saying.

They’ve either done or will do. Twenty Tim production in partner drawings or dividends. A game seems to be quite common,

I’ve noticed, but some firms have already closed the doors over to new business or to their firm altogether on.

That’s been a very unfortunate knock on effect of child care, where husband and wife for work in one of the moments for practise,

the other one needs todo juggle the home schooling and so on. So So, yeah, there’s been some challenges,

but I I would say that accountant up until now have been busier than ever before. But going forwards that’s going to change.

What? There’s a question here that it feeds into this from Barry. How are you, Barry? And what’s your view?

Carol, On people taking a pay reduction whilst the workload increases? How does the firm owner motivate staff?

So the subsidy scheme in Ireland there’s a little bit different s Oh, it’s, you know, people at certain points end up taking homeless.

But what Irish accountants are experiencing now is due to a combination of existing work flows coming through the door,

the increased advisory requirement in the short term and combined with the working, slowing down production. It’s a great question.

How do you How do you motivate the team and what are you doing in that regard? Okay, so I need todo I need to pick up on a couple of bits.

I mean, first of all, the UK scheme is very different, So the pay reduction is only between myself and Ben,

my shareholders, and that was a fairly easy conversation. We both knew deep down we needed to do that with the team members.

If they’re furloughed, they get eighty ten pay. But they are not allowed to even open their email.

They’re not allowed to do a thing, so it’s very different. Why I can’t talk from experience with exactly that situation.

But what I can’t well, I can share is first of all week. We’ve actually found that remote working has included with activity,

which seems like madness, but I think bullets down to the reduced commuting times and so on. We found the team members are looking on at the time.

They would normally lead but work well in the time they would get in. We’ve also found, but we’ve been able to really build a a bit of team spirit around this.

Part of that is coming from client feedback. We found that our clients have been extremely supportive because we’ve been supportive to them on that.

Support has really resonated with the team members who wouldn’t necessarily Herve immediately dived in to advisory work so I can let first exposure of a very real thank you from the client on bond is actually the higher stop.

It’s motivating number of the pay packet right now. Where does that leave us in twelve months time? You know,

that’s possible big question, because maintaining a wartime team spirit is going to be very difficult. So I guess if this is all over on,

the lock down is relaxed within four weeks, which is best case scenario will be okay. But if we carry on for,

let’s say, six months, it could be very different. Yeah, I don’t think I don’t think anybody is.

I know I’m all for forward thinking in scenarios, and I haven’t got to six months in my scenarios.

Yes, I’ve I’ve got I’ve got two, three months, a question that that that keeps being asked.

Carol. So team costs are not going to drop. Okay? Operating costs are not going to drop for accountants.

They’re not. But yet our businesses and business owners are going to be smaller on maybe under cash flow pressure.

So inevitably, there’s going to be this focus on fees and downward feed pressure. Absolutely. So So So So So So what’s What’s your thoughts on that?

Yes. So our worst case scenario planning is for twenty five percent cut in turnover, despite the fact that we have not lost a single client.

Get so that’s how worse case baseline projections but we’re doing on what’s happened is by doing that, we Yeah,

we’ve got an end profit figure, but we need to make on that in profit figure is made up of INBio Deputy Payment,

plus Thebes dividends for myself, for my co shareholder to maintain, maintain quality of life so I’m not taking out anything,

goes and above. So what forces us to do is to say that This is the profit we need to make because it pays the household bills and being bov payment.

Here’s for worst case. Turn over. How do we fix for bit in between your How do we fix be costs of the business to make this equation work on?

Surprisingly, we actually made it work, but we had to think of things I do. We need an office,

you know? Do we really need to be spending a six figure sum on physical offices when we’re just have productive remotely we thought about?

Do we need to look at our Southwest description? Do we need to go back to a guerrilla marketing campaign like we used to do love oven spending a hundred and fifty grand a year on marketing?

Yeah, we were thinking about all of the big items in our P N L. Do we need to spend vote on what it’s done is it’s It’s really helped to sharpen our views on what we need to be spending as a business.

Now the reality is, but we probably won’t have a twenty five cent cut in turnover. I believe that on average,

case scenario first, given our growth rate and what we what we typically take on organically is we’ll probably fat line.

So we’ve done growth as usual, flatlining as a reasonable case scenario on Ben, twenty five percent flatlining is,

I believe, the most likely if a fee outcomes. I don’t believe we’re going to continue growing this we have done in the past,

but we are planning for the worst case of twenty five cent tip. We’ve also planning for the worst case of working conditions and cash flow,

which means longer locked down on someone so that we can a drop of a hat get extra funding if we need it,

and so on. You know, we’re making sure that we planned for the worst, But where were acting on going out with intention for normal to best case?

Two quick questions. When you talk about twenty five percent revenue drop, are you splitting that twenty five percent into last clients reduced fees?

Or are you just taking that as one lone figure? There’s a combination of both which I will take that as one lone figure.

Okay, Yeah, so normally out she earned a za practise would be it’s been higher in recent years because we’ve noticed quite to become more transition but hovers around eight percent on.

We believe that there is a risk you’re not not necessary a massive risk for a risk of fracture and being increased.

But also they’re being potentially down with FIFA Chef Carol. I have to be careful what I say because we’ve,

however, many were heading for five hundred on the Web in there. I don’t know how many are watching online and live on.

I don’t know, many we’re going to watch the recordings on. I’ve become very conscious over the last two weeks that as different people are in different places on their own personal and business journey through this,

that sometimes talking about opportunity and showing too much optimism can Concrete’s a negative reaction. So I’m using the opportunity word cautiously,

but I do believe that Corona, one of the Corona virus gifts, is the opportunity to remodel our businesses because because far too often I think accountancy firms have grown way.

Hire that person they charge so many hours at this race on. But that’s how it’s built up. But this is an opportunity to rebuild the business from the foundations the C19 crisis is giving us so many opportunities.

You know, I don’t say it, you know, we live in deer or whatever, but I like business.

I enjoy business. This morning I was mapping out a couple of new business ideas. You know, I totally outside of accountancy.

But the first one was the Netflix for education and health. You know, take the job which model on bone out next Netflix subscription,

with country classes, baking classes on as we’ve all got used to have a simpler life of being a home.

But there’s a load of opportunity, and we’re naive to think they won’t be opportunity out of it for proving it to accounting firms.

I think they’re huge opportunities in review in what we do is a practise internally and what we do externally.

So internally, we’ve got a great opportunity todo transform our business from the legacy business. But it once watts and take a blank canvas approach so that could be implementing practise management systems that could be even so far was wholesale changes like scrapping the office and someone but externally as well.

They’re huge opportunities because most lots of us go down talking about advisory. Very few actually practise what they preach.

Advisory is for Stop that they do anyway, but they don’t necessarily call it advisory, but there’s no proactive advisory over and above the compliance functions that leads to it for many firms.

Now, what happened with groaner violence? We’ve all accidentally become advisers. We started speaking to our clients.

We started talking about future above historic. We’ve started paying cash flow forecast. We started helping them to apply for funding.

We’ve, you know, we’ve been doing lots of things to help them keep the lights on. We haven’t necessarily charged for those games,

but there’s a real key here. Dez, we’ve got past the barrier of client saying no, because for clients need it on,

we needed to keep our clients in business. Now the opportunity that that brings us is that we now have team members who can’t say I don’t know how to do this because they’ve done it.

They picked up the phone. I’ve spoken to a client. So accountant truly have had a catalyst now to get into becoming through business advisors.

Yeah, you see, And you know, I’ve always believed that accountants were the advisers of choice that accountants were the people in the position.

But the advisory conversation part of I think what’s happened over the years is accountants all believe they give advisory because that’s the chats.

That’s the value peace. But there’s two pieces around advisory. It’s about putting a structure on it. That structure is theirs to fold.

The structure is to keep the firm delivering the advisory on track and then having the structure to keep the client on track,

because when when it’s not a process, it’s just ad hoc. It doesn’t get the results. Once you put it in to a process,

you get exponentially better results, more tangible benefits on a service that you can actually package, and firm owners have got the great advantage of a slow down that’s coming up.

There will be a slow down in a couple of weeks. I don’t care what anybody says there will be a slow down.

There will be a point where the client phone calls about How do I claim my government glove or whatever will dry up because it’s very time down,

very intensive now, I mentioned. But we got time to focus on both internal and external stuff, the external stuff.

It’s the advisory. But we can build our internal systems to facilitate us doing this and commercialise it. Yeah,

on it. Part of part of, I think, what advisory is confidence. Like if you if you look at the firm’s who do advisory and truly do advisory?

A lot of it comes down to the confidence of one individual at a point in time. And I think every accountant could do it.

And this what you just said. Every accountant has demonstrated their advisory capabilities over the last two or three weeks.

So so now it’s just a question of maintaining the momentum on that confidence bond. Rolling it out absolutely by now,

I think that this brings us very nicely dead into a guess of you on. However, practise landscape is gonna change after this as well,

because I think that there will be some legacy old firms who still don’t allow their team members to have true engagement with their clients on bond.

It’s still very partner lead. I believe that they will be suffering through this because the partners would be working harder than ever.

But the team members will have less and less work to do. But there’ll be some boutique firms who have really stepped up on you.

I think we’re going to see on evolution of the type of firms. But succeeding on its fur stuck up,

we could see happening before It’s just we’ve now got an external catalyst to really drive through these changes. Yeah,

because because because people people often ask me like, Well, what does what does the firm look like?

And I described the firmas It’s an accountancy firm. They’ve they’ve structured how they delivered our products and services you talked about.

You know what? The biggest, most notable differences for me over the last three weeks. Carol is well,

I have zoom calls, and I have other groups of accountants, and everybody’s looking at me are dealing one to one you mentioned about DDS on.

People are collecting by direct debit rather than that, the historic old retrospective building model that they’ve got to build up a debtor’s those people who are on DVDs,

they’re experienced. This is fundamentally different. So technology enable firm’s ability to interact like Joe. Every account in the world has heard about that.

You know the cloud accounting model. It’s so it’s not actually necessarily going to be this fundamentally different firm.

Like I have personal beliefs around the subscription model. I have personal beliefs around embedded advisory. I have personal beliefs around levels of advisory in terms of the basic fundamentals,

but then more advanced advisory. But a lot of the these firms exist out there at the moment, so really the C19 crisis is a catalyst.

Firms will change, but I think it’s a catalyst that the middle market is going is going to need to move forward or be left behind.

Absolutely. So I think it’s very similar to making tax ditch tool here on how making tax digital had really ramped up the adoption of online accounting.

You know, online accounting wasn’t new. We’re doing it back in two thousand two. We was zero’s first partner outside in New Zealand in two thousand seven.

You know, we were I think it’s safe to stay ahead of the curve on that stuff. But the reality is,

but the mass adoption only took place when making tax to store became real. Not just an announcement, but actually it became a all Michael,

this is really happening. Okay, now, unfortunately, is a profession. We tend to need external catalysts to really drive change on believed that this is another one of those external catalysts,

but is going to drive change in how we do. Things can only be a positive thing. Dez.

Yeah, well, it’s it’s it’s changing everything. It’s it’s changing. And it’s not just changing. How we operate is changing.

How business happens is changing how people interact. It’s changing people’s values. It’s on. It’s not that is changing their values,

but it’s uncovering people’s values as firm owners, as accounting firm teens, business owners. And I think something that you said in there,

Carol, that the change process accountants don’t need to be told the changes, not their forte, but but But I just see now was really a time to lean in and trying to lean in on,

decide a little bit like you can start with your blank sheet. Well, here’s the Here’s the prophet that we need and want.

Here’s where we believe our turnover is what goes in the middle. Well, now is the time to take a look at our entire business and our entire firms and say Okay,

what’s in here that’s absolutely working. Here’s the bottom line results we want and here’s what we want to be and what we want to deliver on.

This gives us the freedom to make decisions, to cut out the bits that aren’t working and move to the model that we know does work.

Definitely. And I think we need to be conscious and this might seem a bit blue sky or whether faces now,

this might seem a bit out there, but we need to think about what the longer term impact of this fire this is on society as well,

because I think it will impact the way we do things and the way that we as humans act as well.

So if we look at, for example, the customer, the average customer desire over time, and it’s been a very gradual shift,

we’ve gone for wanting more stuff to actually want in time health. We’ve wanted luxury and service on. We’ve wanted novelty,

but we can share on Instagram. That’s kind of where we are now. People value experience over material items on.

There’s been a gradual shift over time, and I think that what we’re going to sit this bio, this is it’s going to really bring home the value of time,

the value of health. You know, some of the simpler things in life. There’s an argument to save.

It’s the way we should have all been living. But I think that yeah, the guard bliss of how well put together you feel you are how well your mindset is adapted to this stuff.

We’ve all been anxious about this. We’ve all had fear. We’ve all looked at this bios and for all No.

Am I gonna catch it in my family going to catch it? We’ve all So we’ve all been through panic and fear.

We’ve all been through a state of acceptance and I believe we’ve all been proved to whatever extent a state of growth as well.

But as a community and to society as a whole, we have all gonna change afterwards as well, and I think it’s really important to remember that.

But what our clients one, when we come out of this might be very different to our clients wanted when they came into it,

they might value different drivers. We don’t know what those drivers all leave is going to pay you see you see.

But this is looping back to your earlier point around advisory, right? So we can’t say for definite what business owners are going to want to the end of this.

There’s a couple of things we can say for definite. And some of these, we could say for definite is businesses that are online have fared much better through this than businesses that are not online.

So every business owner the future is going to want our should focus on developing some form of online capabilities.

Now, with developing online capabilities there become structures and processes on. I think accountants general need need to be conscious of that.

Now. The fundamental thing here is the fear. So the fear. There’s an awful lot of business owners around the world now who are wishing they had done things a little bit differently there,

wishing they had listened to their accountants. They’re SEPA, whoever it is on. You know, the the accounts on the statutory work that needs to be done.

It’s still going to need to be done, but I think this has opened every business owner in the world now,

whether they make if true, this or not, there’s going to be businesses, and there’s going to be there’s going to be growth when this is over.

And so there may be new businesses. Absolutely, Because things comes back to the coughing that I mentioned death.

We went into this with sound economic fundamentals. We haven’t got into this in a state of possession. It’s of the session caused by a black swan event.

No, no, a recession, but was bound to happen, something t over. So from that perspective,

it’s reasonable to presume that there will be casualties. But those casualties in business will be replaced over time.

Verbally from the latest economic report alive late last night is that GDP will return to normality. When I say normality,

I mean not back to where it where it wasthe the day before lock down. But I mean normality ist where it would have been had been ordinary levels of growth by the end of twenty twenty one.

Now, that’s not a long period of time. Okay, a match we take into account the huge government subsidies and so on.

There’s been a huge tip, but then an even bigger rise to bring back to normality. So from that perspective,

death we need to remember for actually visit temporary onboard, be actions. But we take now in terms of climbing our business internally and solidifying our client relationships will tears up going forward.

What? One of the other things. And I know this is diving back in to a practical point of what we’ve done.

One of things. We’ve been very clear on doing that. Dante is focusing on client attention on DK Lime advocacy more than anything else,

because I think invest scenario, there’s a number of different levels for firm owners can focus on. They can focus on some really easy,

short term opportunistic stuff. So perhaps the easiest, most short term, most opportunistic thing, but you could do is a firm owner is to charge more for the existing stuff that you do.

The second level is to charge more for new stuff. We’ve actually decided our buyers. We will be free of charge.

Over this time on, we won’t a email with some heartfelt semper fi twelve clients. Just a look.

This is what we’re doing. We put putting aside all of our billable work. We’re focusing on this emergency.

Yeah, we are your emergency services during this time and we don’t want you to feel as a clock tick in.

We would hate you to be suffering his silence of Please phone us. So we way set the landscape for we’ve had more positive feedback from our client of the last three weeks.

But we’ve had for years we’ve had Mawr team advocacy based on that feedback from we’ve had for years, I would wager if we did on NPS and Net promoter score on our clients about staff will be higher than ever,

and the beauty of that is, but we’re building waving fans who are business so both waving fans. But it might not put more pounds in our pocket now,

but just wait. Just give it. You know, a year or two, they’ll be recommending their friends,

their family. The team members will be recommending their flint to come and work for us because such a rewarding place to work and all of our stuff on dit will help us set ourselves apart where the opportunity is about the growth S o.

I think that’s another fine balance, but also an opportunity for firms to think about the first thing that comes into my head When you describe that Carol,

I call it the Accountants Growth Loop and the accountants Growth group. You start at the top and you have a client and if you get that kind of result well,

when you get that kind of result now that client has a storey. Now when that client has a storey and your team are the same when they have a storey,

if you can frame that storey for them on asked them to share that storey. So rather than just letting the being ad hoc ward amount referrals that we actually frame the storey get the claim to understand the winds they have had they asked them to consciously share the storey.

But even if not juvenile opportunity to share Storey the the second thing, the second thing that I’m seeing there Carol is like it’s you’re almost describing what I would call a Freemium model.

Okay, so so right When the clients have their greatest need, you’re reaching out to them and saying,

Look, we’re here to help and you’re introducing them to the concept of advisory. So when the time comes,

we’ll then it makes it easier for you to lead them they’ve experienced. It makes it easier for you to lead them as an appropriate time into into a model.

And one of the concerns that I do have is I do have concerns about accountants who unconsciously doing it that way because the danger,

then, is if this becomes the norm, Are we giving away free service? So I think it’s very,

very important that that firms who if they follow in your footsteps that they structure and they think about the long game like Freemium is a way of attracting new customers.

And but like like like the whole thing is on. I love what you’re saying. Do we focus on Where’s the opportunity?

Where’s the quick winds? Will? Actually, where is the best platform to grow your business? The best back from grow your business?

Is your existing customers on your team completely completely? Because that were very conscious that there’s going to be a couple of challenges this year?

First of all, new business is going to be harder to come by now. The reality is, but business formation certainly in the UK,

have dropped, but not massively. There’s you know, there’s still a tremendous number of businesses being formed every day on both businesses have been formed with new directors were not just Felix companies,

so that’s a positive. But yeah, we specialising Franchising franchise recruitment, take her here. So anything we could do to make future recruitment over the next year easier is a plus for us on DWI found that our franchisees,

but we working we have have reported back to their franchise all about how we’ve helped them so much so that increases the efficacy of monks down with furthers as well,

Which is critical, S. O. C. That’s important. But then the other side of it is we’re gonna need to ramp up our staff pretty quickly at the end of us because the seasonality is going to be magnified.

I think I mentioned ever start, but where we’re going to see the normal seasonality times three, because we’ve got enforced downtime now that means we’re likely tack to recruit staff at the end of the year.

First, Agassi choices around outsourcing versus recruitment bows, his temps and so on. But whatever way we d’oh,

I’m sure recruitment agencies be rubbing their hands with glee because actually, it’s going to become a candidate’s market because we’re not the only ones facing the seasonality.

Every other firm is onboard. Anything we could do to put ourselves at an advantage from the recruiting expected to get the best talent is vital.

We can only slave receipts for that Now on. It will pay itself down the line. But in the rather than spending that,

say, an extra five grand on a member of staff to secure the best staff. Instead, we can secure the best staff through a little wish to work a day and onder the situation in Ireland.

Carol is a little bit different because recruiting into accountancy firms in Ireland has been impossible and it’s been virtually impossible.

So I think the market will open up a little bit. But But again, I think there’s a huge advantage for those firms who have embraced remote working and are going are going down that route.

I just haven’t gone back to your point and go back to your point about about firms and client acquisition and reduced clients.

Okay, so if we work on the assumption there’s going to be reduced businesses at the end of this.

But if you look back through all the recession’s accountants don’t go bust in general accounts, don’t go bust.

Okay, so let’s assume there’s gonna be the same number of accountants, possibly a little bit Mawr, because some of the furloughed people in late of people are going to start up.

So the same number of accountants, less businesses. So So I see an opportunity here, Carrie. Right?

So here’s leading edge here is leading edge now. Now Bleeding edge is just out a little bit further.

But here’s the leading edge firms, and then every firm needs to look at where they are on the spectrum all the way back to the people that are still working like the eighties in the nineties on,

I think, part of the approach to positioning and winning new business. To add on top of what you’re saying,

Well, let’s focus on our existing clients on really, really, really, really delivered for them. Let’s focus on our team,

make this a really good place to work on a town a staff. But there’s also an opportunity carried by moving yourself up the spectrum towards the leading edge s o.

This again goes back to your point on advisory technology, pricing, methodologies, collection methodologies and serves. The firm’s will go up here.

The firm’s closer to the forefront, are going to be more attractive. And I think there’s going to be Some firms are going to see massive clean glasses at the end of this.

Yeah, I just want todo caveat. What you’ve said, I think that this is very different. Previous recessions.

I don’t put too much of a dampener on things, but certainly for May. You know always. I was working as a employee in two thousand and one when we had September eleven from the dot com bust.

Do you know what firms in the U. K. Didn’t really feel that? To be honest, it kind of happened,

but it is very theoretical. Same goes for two thousand seven. Two thousand eight. It was a theoretical recession,

but we noticed or no numbers in two thousand ten, but it was very delayed. It were. It didn’t really impact us.

Affirm. I’m actually gonna content the accounting firms will go bust. I think that there will be casualties ofhis on guy think that that’s unfortunately a trap that some are falling into that.

They believe that they’re immune from it. I think that this is probably more, much more work if we need to change our mind set pieces in a recession.

This is a war and it just so happens that there’s a recession following on from it. And on that basis I think that what I’m saying is,

but there will be Cem sole practitioners who decide for business too much for them. You know, they particularly if they ever light on the physical work that they do for their income,

they will find that they just simply can’t make ends me on because this is the first time. Certainly in the UK,

I have known of businesses just shutting their doors on. So So, yeah, I’m not confident about the about the fact that will come out with the same if not more,

firms. I think that we will take a hit in the number of firms out, something that will be a deep.

But then I do think there will be growth in the number of firms over, Let’s say three to five years.

Okay, Yeah, it’s interesting what you say. The Irish experience of the two thousand seven two thousand eight recession and was very different for the UK It was it was much more deeper,

much more impactful. Yes, I remember dumpling House prices were sky high at the time, Weren’t May.

Yeah, there was a total a total a total property, a total property price collapse. And there’s just a couple of questions here,

Carrie, before we go into the final stage. And okay, so there’s a question here. While there’s general acceptance that fees will shrink in the short term and has said and expected twenty five percent and firm owners won’t necessarily want to volunteer and discount reduced fee to their clients.

And presently most of us are working free in charge in order to build goodwill. Should we look at building over a two three year period in order to maintain fees with some kind of growth built in?

And I think you’ve kind of answered the feed question a little bit by flipping the business model on. It’s not that we’re saying there’s not going to be discounting fees,

but there needs to be a reassessment on a client by claim basis. Absolutely. So I think now is the time on unashamedly blowing the perhaps ignition trumpets for time to get firm agreement with your client on what the fees are going forwards on.

There’s two ways of doing this. You’re varies for discounting of fees. But there is another approach, which is to offer more for the same amount of money.

So you know, very is there’s quite a value proposition of saying, Look, we really appreciate your business.

Whoever business tomb. We can’t absorb any discounting of our fees. However, what we would like to do is to extend an offer of a free of charge,

short term cash flow projection or something that helps them stay in business. That could be a A very real win win S.

O B. Two options. You can discount your fees. I’m always hesitant about out discounting because it implies that there was that legal boom in your fee anyway.

Or you can offer more services as a value add. So yeah, in terms of whether twenty five think comes from unseen,

back primarily is churned rather than discounting. Okay, okay. And there’s a couple of questions in here in relation to audit and signing of audit reports and we’re not going to go into.

We’re not going to go in to audits today. Pork and we did a financial reporting. Webinars should be in the resource centre there for you to see which dealt with the signing of a financial statements and other reports.

And we do have a dedicated one hour technical webinar and coming up later in the week, which will deal with that.

There’s even superbly for my face, but I don’t have to answer no dick question. And so so so So Carol,

your final two. Three points of wisdom. What if you’re talking to the accountancy firm owners that are on with us live now or watching the recording?

What are your two three pieces of critical advice for them right now? Okay, so my very first piece of advice is to keep a calm head to keep a level head.

Your clients are expecting you to be the trusted advisor. Now, to be a trusted advisor, you need to approach things pragmatically,

prudently but without fear, without without exaggeration on DS, with our media hype. So you need to keep a calm,

collected approach with all of your clients and to be realistic. Which men feeds me into my second advice,

which I’ve covered in more detail earlier, which is to plan for the worst but make but also have a focus on average and best case scenario.

My belief is that a firm owners were growing before continue their activity, but he should flat by, and that should be a realistic scenario over could be aimed for.

But you absolutely need to plan for the worst. What what could happen should look down, be increased,

which in turn might mean that your clients to site not to be opened the doors. What were you doing that scenario?

Carol, I’m going to I’m going to flip my next question Now. I’m going to put your other hat on and not necessarily is a firm owner and not necessarily is an adviser to accountants,

but what as a significant business influence or in the UK, a lot of people look to you and and and count on what you say and trust what you say.

What about from a business owners perspective? What are what are the three things you’re saying? The business owners are Are they the same things pretty much the same thing.

So certainly keeping become head is vital on do the planning side of things as well. You know, there are a lot of things,

but we should do day to day business anyway. It’s just that the C19 crisis has perhaps magnified the need for these good practise.

But there’s a third thing for small business owners. Which again, could it could naturally apply to accountants,

which is that they need to really take this time. There’s a lot of them bare amount of have gotten enforced holiday,

you know, accountants still working, but lot business owners actually are doing what they do day to day anymore.

Used this time to think about how your business looks in ten, twenty, thirty years time, you know,

will people still need your gardening services? Will people still need whatever it is you do? Can you look to evolve with the times?

What can you do differently? Todo stay ahead of political economical societal technological changes. How can you really in place the future?

Because I think that one thing is gonna come out of this. Is that the increasing pace of evolution?

But we’ve had in the world, you know, if we look and changes up to. Let’s save the nineteen eighties were fairly slow.

Eighties to nineties went up nineties two thousand after people mawr bang, we’re in a really rapid pace of change Now.

I believe that what’s going on now is only going to increase the pace of change. So for any business owner,

accountants included, how are you going to embrace that pace of change on how you’re going to look for where the second bounce of the ball is?

Yeah, because I suppose the we talked about changing, we talked about change in the context of accountants and external change.

Being a key driver, what the business world and how it operates has been accelerating in change for for a long time.

But like everything, this is just accelerating, it’s putting it to warp speed completely. Let me give you a case study dead.

I don’t want todo ramble on for too long. I’m conscious of every attendees time, but my local butcher previously are paying cash and he’d give me may Okay,

doing the lock down. We’ve got to a position now where he’s concerned card payments over the phone and he’s got a delivery service,

so he’s had to make some very immediate changes to his business. Now really, he’s going to make future changes as well.

You know there’s going to be stuffing who need to do to embrace for future. So it might be that people don’t want to walk around all the shops.

But there might be a collective of local independence who offer a drive thru collection service where they come to get by bio website.

You order from your butcher’s you’re bakers your farm shut your you want of a bitch. You walked from independent shuts up supermarket.

You drive through a collector. That might be the next determination, but this is the ideal time for those businesses.

Now they would be going through a severe Piver to think that actually that pivot was forced. But what further pivots can we do that will actually help our business?

Because the fear of train and should be overcome now as well? There’s a There’s a book Carol that I recommend everybody watching should read on.

Do you know this book is essentially a copy of it? It’s the book called Simplify on It’s About.

It’s about making us as business is easier to use, making us more valuable. And on Ben the experience.

Peace on guy. Just think that there’s a global change in business happening on the accountancy profession needs to need.

Tiu needs to keep up and get ahead. Absolutely. Where businesses after all. Carol, I just want to thank you very much for your time today,

and we have a couple of questions in here. We are running the free audit Webinar, specifically dealing with covert nineteen issues here at fourteen hundred tomorrow.

And so you will be able to get access to that free webinar if you’re on our list or put a comment in under today.

Carol, thank you so much for your time. Everybody who’s on with us. Thank you for your time today.

Thank you for your attention. Thank you for your interaction. And we’re here to do anything that we can during this time to get you on the best possible route on road out of this.

So stay safe. Probably see you again. Let’s get it done.

Proactive Tax Advice Spring 2020

tax advice

Proactive Tax Advice Spring 2020

This transcript about proactive tax advice in spring 2020 was created using AI and may contain some mistakes.

Hello, and welcome to this afternoon’s webinar where we’re looking at providing proactive tax advice in spring 2020 and proactive tax advice has changed because obviously Corona virus has changed so much today. I am joined by Simon Britton of quantify to look at proactive tax advice in the face of grown arts. So welcome to everybody who’s joining us here. And to those of you who are joining us on zoom.

And, but also those of you who are joining us as we stream, leave into Facebook, YouTube, LinkedIn, and Twitter. So if you’re joining us here, you’ve please. If you have questions as we go through this session, if you have questions, please ask them below in the chat box. If you’re joining us on any of the other platforms,

Simon has a very detailed, comprehensive presentation, prepared, have allowed some time for questions and answers. And if questions come in during the session, irrelevant Simon and myself, see them here. So we can have a conversation with Simon and I ask the questions for you. So if you’re elave here in the webinar with us, but if you’re any part of watching,

just put your comments, your questions into the comment box and the team are going to pick them up here. Now, the next thing is the presentation for this session and the slaves to Gord this session. So again, Jonathan is posting a link at the bottom of the page, either in the chat box or in the comments so that you can access your downloads and material.

And some of the questions we may leave to the end, but please ask the questions as they arise for you. What are the huge values of something like this is Simon is unquestionably a category of Harley Simon as a tax expert. You have somebody here as a captive audience, a captive expert. So Simon can answer your questions. When you ask a question,

everybody benefits Simon. Welcome to our webinar today. Simon, can you introduce a little bit about yourself first before we get stuck into the material and why people should listen to you? What does Simon Britton have? There’s going to be a benefit to accountants and firm owners. Yeah. Hi Daz. Uh, thanks for, thanks for having me and, uh,

hello everyone. I hope everyone’s, um, uh, not, not struggling too much with, uh, with lockdown and, uh, looking forward to getting back to work. Um, so yeah, so I’m, I’m Simon Britton and, uh, and so today I’m, um, uh, talking about tax advice and what we can do proactively to help our clients in the,

in the current environment. My background, I’m actually a, um, I’ve got a far too many qualifications that my CV reads like a sign of a waste of youth. Um, so I’m a ATT CTA solicitor as well. Um, so I’ve spent, uh, far too long specializing just in the world of tax and, um, and, uh,

in particular, in proactive planning, helping people, uh, generally or MBAs, um, look at their circumstances, look at the family or the business, and let’s, let’s make sure that we can get all of the, the various taxes that, uh, that come into play and get them all in sync. And so I’ve picked out a couple of a couple of the juiciest bits that,

uh, that I think that as a profession we can take to our clients at the moment and really be on the front foot. So Simon, you mentioned in there that you’ve also qualified as a solicitor and a very interesting combination. Did you spend long practicing as a solicitor or was another string to your tactics? Um, so yeah, I’ve, I’ve been,

uh, practicing as a, as a solicitor for, um, about 15 years of, of the last 20. So I’ve spent some, some time purely an accountancy firms sometime just in tax other times, uh, just in law firms. But, um, what I find this as a big disconnect between, um, the, the accountancy profession and lawyers.

And so I try and bridge that gap. And so when we’ve got tax tax thinking that needs to be implemented, that’s really where I come in and just make sure that, uh, that the legal work that’s done really sort of ties in with that. But then on the other hand as well, uh, I’m kind of also, uh, reinventing R and D tax services as a software driven,

uh, thing as well. So I’m doing too many things, Not at all. And it’s like the sign of the sign of an expert and an inquisitive mind. Um, and, and that’s what we want when it comes to tax advice, inquisitive minds. So folks, anybody who came in late and in the comments below are in the chat box below Jonathan has grouped the downloads for today’s session.

We’re just kicking off we’ve, we’ve just finished our introduction and we’re now moving on to the teaching space and which Simon is going to bring this show in the next 45 to 50 minutes through his material. And then we will wrap up the session. So Simon over to you, if you want to bring up your presentation and share your screen, Alright, let’s do that.

Um, so, um, uh, you know what, uh, if jr, if you’re still there, if you could enable screen-sharing, that would, that would be a big help That, that, that would be, that would be a big help. Um, so hopefully you should be able to do it there now. Yep. That’s the one excellent New features appearing every day on zoom and there’s new download.

So, so, so our standard operating procedures from yesterday are possibly redundant by today. Yeah. It seems that ties in with the government advice around, around handling with Corona virus just every day is different, but, uh, great. So, uh, so yeah, so, so we’re going to be talking to practice tax planning, uh, in,

in, in the current time. And, um, I flicked through far too many of the slides. Let’s just see if I can get back to number one. Uh, sorry. Right. Number two. Here we go. Um, brilliant. So let’s dive in. Um, so what I’ve, what I’ve done today is I’ve tried to pick up,

um, two areas that are really going to help your clients get money into their businesses. That’s gotta be the absolute top priority at the moment is how do we get money into businesses? Where, where people have had so much disruption through, uh, through the Corolla virus. Um, and, and I think overwhelmingly a lot of the businesses that I talk to say that they see the current,

the current time as a blip, they expect in six months, nine months a year for the world to sort of write itself and for it to be to an extent business as usual again. So what they need to do, uh, to, to bridge that gap is get some more money into the business and money, money that perhaps wasn’t in their forecasts,

uh, before the coronavirus yet. So we’re going to look at a couple of ways of potentially doing that. Um, what I really want to emphasize is all the Corona support that accounts are doing at the moment. It’s great. And, and definitely stick with that, do that first. Um, the, the government supports been, been very good.

Some of it’s been a bit clumsy and in terms of the implementation, but generally what they’re doing is, uh, absolutely should be the top priority. So, so what I’m going to talk about is what to do next, when you’ve done that, what do you, what do you do next? And it’s good to know that you’ve got a couple of things in there in the bank on the agenda to speak to clients about.

So we’re going to talk about suspensions, um, and then we’re not going to go too heavy. So it’s, don’t, don’t be too worried about that. And R and D claims, um, both of which are great ways of getting some money into businesses. Um, so yeah, Anybody that’s joining us here live on zoom folks, you can adjust your screen view options.

You can adjust your screen view options to make the slides bigger, to have Simon, to do a gallery view. So make sure I’m playing with your settings for every, or watching to get the view that you want. Great. Great. Um, yeah, so, so SASA is the first topic that we’re going to tackle. Um, this one is,

uh, it’s about business pensions, and so they’re really designed for MBS. Uh, so, so the maximum number of members that you can have in one of these is 11 members. So it’s, it’s, it’s designed for, for that smaller, uh, smaller type of business. Um, not for a fee, a huge client. Uh, there are other things that we can look at there,

but this is really good for most of the businesses that we tend to be dealing with. Um, uh, SAS, uh, just to explain with the terminology that stands for a small self-administered scheme and it’s different to a personal pension. Um, so a personal pension is, is heavily regulated, um, as it, as it should be by the financial conduct authority and all of the rules around personal pension relate to,

to the, the fact that it is an individual pension, one size has to fit all. And so, so there’s blanket regulation across, uh, across how they operate with the SAS, which is this small self-administered scheme, because that’s a business pension designed for MBS. It’s really, it’s designed to be handled by entrepreneurs. And so that, so there’s a different balance of risk and reward than you would have for,

uh, for just the one size fits all available to every member of the public type, uh, uh, personal pension. So a business pension, uh, has a couple of key features that, uh, that, that are really important for the type of planning that we’re going to talk about. Um, the first one is you can borrow 50% of your pension fund from a SAS,

and because they’re the people in this fast, the members also the trustees and they’re, so, so it’s the same person who runs the company is in charge of the pension and will benefit from the pension. Then the regulation here just allows you to sort of take, take more of a balanced risk and reward approach, and to look at your own business and think,

well, you know what, I’m going to lend half of my pension to my business because I backed myself to be able to make money using my pension fund. I’m going to make more money doing that than I am by investing in stocks and shares or whatever else. And, um, and so there were a lot of rules around what this loan has to look like.

And we’ll talk through those in a little bit more detail later on, but the other thing that you can do as well, that we’re going to touch on today is contributing a commercial property into the pension, and that’s a fantastically tax efficient thing to do. But the other thing that, uh, that’s really pushing this up, the agenda for people at the moment is that once a commercial property is outside of your company,

then in a pension it’s secured. And I cannot trust the environment if there were to be financial problems with the company in the next sort of, you know, two years, three years, however long, um, the, the property is actually safe when it’s outside of the company and then the pension it’s outside of the reach of crevice. So it’s,

that’s an important point that a lot of a lot of clients are quite reasonably concerned about just asset protection at the moment. And the SAS can help with that as well as giving it great cash boost and some tax benefits as well. So we’ll talk through, talk through those in a little bit more detail now. So, um, so I’ve put this up,

but accessing your existing pension funds, um, now accessing pension funds, this is a world away from liberation. We’re not talking about, uh, about pension liberation. We’re not trying to permanently strip money out of a pension. What we’re saying here is, is, um, that the money that’s sat in the pension, you can actually use that as work and capital in your business,

not all of it. So 50% you do have to still make sure that the pension is, uh, is well provided for, um, but, uh, uh, 50% of what’s in your pension pot, um, can, can be used in the business. And, um, excuse me, if you, if you look at, um, a typical situation might be that someone,

an owner manager might have a, have a business that’s out there. They might have squirreled away say 200,000 pound Indigo into a pension pot that sat there with the money being, uh, being managed by a financial advisor, and they’re getting a return on it. But, uh, but they’re not, they’re not using that money. And then, and typically people aren’t that excited about what whatever’s going on with their money so long as they’re going a return and the kept kind of up to speed on that.

Um, then, then yeah, then they forget about that money. But what they could be doing is accessing that. So if someone’s got that 200,000 pound, then this is way of them getting a hundred thousand pounds of it into their businesses. Working capital has to be repaired back into the pension, but, um, uh, over typically over a five year period,

but when the money goes back into the pension, the end of the they’ve lost nothing, uh, in terms of the value of the pension, but, uh, but they’ve had the benefit of that effective and very cheap money, um, in the, in the meantime and, uh, and money where they’re not having to go to the bank, they’re not having to explain their,

their business proposition and to cash flows and all that sort of thing, because they’re effectively both borrower and lender. It makes it very easy. So what I’ve sketched out Simon, does that need to be carried out by somebody independent are, if I’m the accountant to my client, is it appropriate for me to do that valuation? And those there needs to be a formal process and formal report here?

Absolutely. It’s a, the valuation, um, is that that’s something where I would actually encourage the, uh, the accountant that, uh, that’s dealing with the client here to be the one that puts that valuation together. It doesn’t have to be independent. Um, it does have to, has to have some substance to it, of course. Um,

but what we’re trying to do is, excuse me, just make sure that, uh, that the value of the, of the company’s shares typically would be the company shares that, uh, that there’s some security taken over for the, uh, for the pension, um, just at the Valley, at least exceeds the amount that that’s going to be borrowed.

So if someone, yeah, if someone in a typical scenario, I might have 200,000 pounds at a pension wanting to borrow a hundred thousand, we need to have a valuation that says that the shares are worth at least a hundred thousand. So it’s a, it’s not a, it’s not the sort of very far reaching valuation exercise that, uh, then sometimes needed.

Um, this is one that, that really, um, can be done by someone that knows the business very well and follows a sort of fairly standard methodology and putting that together. So, yeah, so, uh, but the very steps involved, um, the, the longest part is getting the stuff set up. So that’s something that the company needs to,

um, engage SASA advisor to, to, uh, to set that up typically takes three to six weeks. Um, a lot of that just depends on how complex the, uh, the applicant’s tax affairs are, but if you’ve got a fairly straightforward a tax record, then yeah, we would expect, uh, to, uh, pretty quickly at the moment the revenue doing these sort of three to four weeks,

sometimes it does stretch out a bit longer, uh, and, and odd cases sort of history, then, you know, it can take sort of a couple of months, maybe three, but that, uh, that sort of time period is, um, is what we usually say for people to budget towards. Um, so, so if you are looking to get corporation tax deduction on,

on pension contributions, um, then you need to factor in that sort of gap and they start this process a good couple of months before the year end. Um, but yeah, so, so sending assassin is reasonably straightforward, not massively expensive. Um, that’s something that, uh, that, um, uh, my business can, can help with,

um, uh, taking me through that process. And also most of the rest of the implementation of this, um, sasses are often something that it’s in that sort of dark spot where people are aware of it and probably did some of it in their exam. We’ll have read some articles on it, but actually implementing these things. Isn’t something that many of us as,

as advisors, um, do you want a day to day basis? So a really, that’s a, that’s where sort of sass floor, the, uh, one of the hats that I’m wearing today, um, the that’s the one that, um, sort of, uh, implements this everyday as, and can make this really smooth package. Um,

so once the SAS is set up, then it can get a bank account, um, that, that usually takes a week or two. So again, that’s sort of just slows the process down a little bit. Um, and then once the bank accounts set up the personal pension, so if people have got money just in a normal pension or in a sip or something like that,

um, if that’s the funds that they want to access, we can move the personal pension funds into the SAS. And at that point, you’ve got this ability to lend it into your own company and also make whatever other investment decisions you want within the bounds of the regulation. Um, but, uh, but it’s the, the owner manager themselves that would be the trustee and would be able to direct their investment strategy,

which might well be that I’m going to borrow half of the money back out in my own business. And the rest of it’s just going to get reinvested where it was. And that’s, that’s fine, um, to allow the loan to take place, there needs to be some security. Um, typically that’s sort of the shares, but it might bill for a property.

Um, so there needs to be valuation exercise done on that just to satisfy the, the trustees that, uh, that they, uh, that the security has the valuation, uh, enough of a valuation that covered the, the extent of the loan, uh, that exercise is normally overlapped with setting up the sauce as, as it’s, um, drafting up their,

um, the pension, um, uh, loan agreement, um, which, uh, which is on fairly standard terms or the interest rate can be, can be set, um, either high or low, depending what you want to do. Typically we would suggest, um, putting it up the, the upper end of the sort of bracket of reasonable,

um, rates up because the company is going to get a tax deduction on the, on the interest and the pension’s not going to pay any tax when it receives the interest, the company grants security over chairs, which again, that’s a process that we take care of that that’s overlapped as soon as they, the loaner send it into, uh, that paperwork’s ready to go.

And that, and that can be executed at the same time. And then 50% of the pension value is transferred into the business. Um, so as soon as the money is available and the paperwork signed that bank transfer can happen same day. So actually this is pretty good, pretty quick way of getting money that into the business that, you know, you’ve,

you’ve gotten a background that’s not, not otherwise being employed in pops as, as good a way as you could. If you had it, You said something that’s really critical a few minutes ago, and it’s about, I would describe it as sticking to the knitting and sticking to what we’re good at. Um, so I accountants have core competencies. Some people are different competencies,

but knowing what our boundaries and our limits are, Yeah. Doing something like this, what are the risks? Where does this go wrong for somebody like me, who’s not an expert in SAS and hasn’t been through the process, maybe only has an academic knowledge, what are the mistakes that people make and what are the horror stories that you’ve seen? So there’s,

um, sauces are sort of fairly tightly regulated. There’s only certain types of investment that you can do with them. And, uh, and you have to make sure that, uh, they’re there that you’re sticking within the regulations. Um, if, if something goes wrong, then yeah, the penalties are Savage. Um, so, you know, there’s no,

no point pretending otherwise, um, this, this isn’t something to, to try yourself. Um, so, uh, so there, there, there, there are advisors out there myself included that can, uh, that can, uh, steer people through this. Uh, w probably the principles are great, um, but actually getting the implementation, right.

Um, that’s the, that’s sort of the best way you’re going to save yourself from ending up in hot water. Um, the w one of the, one of the, uh, areas that people fall down on a lot is with this type of arrangement where, where a is being made from the, from the pension into the company, you actually have to repair that long.

Um, it has to be done with, with an interest rate. The interest has to be paid as well. You’ve got to make at least on your repayments on that couple of, in interest to get it back. So you can’t just lift the money out of the pantry. I forget about it, uh, that it has to be, has to work through properly.

There’s lots of, of, uh, as you’d expect, uh, returns and the regulation that there needs to be met. But, um, but yeah, working with someone who does this as their day to day job, um, someone who really knows the rules inside and out, and it’s got their finger on the pulse, that’s, that’s where you stop yourself from going wrong.

Um, so say, I think it’s a case of, uh, just, you know, pulling in the right people for the right, for the right roles. And this is one of those things that if it’s not something you’re doing every day, then give it to someone who is doing it every day. Um, I think typically the way that I see,

um, um, the accountants performing best when they’re doing, um, tax planning, they involve something slightly off the beaten path. It’s really be aware of the opportunity. And then to have that relationship with the client, to be able to say, I think this could work for you. And then it brings someone in who can implement it, but to work together,

to make sure that, that, uh, that we’re not just implementing something standard, we’re implementing something that’s really just tailored to, to meet the exact needs of that client. Um, so, so, yeah, just to finish off on this slide company has to repair that loan plus interest, and that’s typically done over five years. So this one would run through an example of work example if this,

um, which, um, uh, on one take very long to, to run it through. But, um, but I think it’s useful to kind of bring it to life and illustrate a bit. So David, um, had, uh, 200,000 pounds in a personal pension, uh, in a sip. Um, and so not money, um,

sorry. Uh, his company has 75,000 pound borrowing on a machine and he’s paying 8% interest on that. Um, so that’s a pretty typical scenario. Um, so to, to tackle this, what he does is sets up the SAS moves the money from the pension and the SAS, and then lens, um, half of it there. So a hundred thousand comes from the SAS into the company,

and that’s at a 10% interest rate, which you could, it could have been higher or lower, but we could pick 10% of there just to get some money back into the SAS. So they’ve reaped, sorry. Dave’s company repays the borrowing on the machine. So that’s 75,000 pounds repaid. It’s effectively replaced the barn, the external borrowing with borrowing from his pension.

Um, so it’s that hidden trust. It’s no longer leakage that interest is now going into his pension and it’s there for the future. Um, and then he also, uh, paid himself a bonus of 25,000 pound. Um, so he’s personally, um, quite, quite happy as well. That’s taxable obviously. Um, but he can’t fund a pension contribution with that if we wanted it to.

Um, but, um, yeah, so something like this congest, uh, where, where there’s an obvious benefit for the, for the individual involved, you know, the business is going to be better off, but also, you know, if he manages to get a little bit out of it himself along the way, um, then that’s something that clients really do value in difficult times.

Um, and that, that quite often is something that could just be long back into the business to clear an overdrawn director’s loan account, or just to create a credit on a director’s loan. Um, the longest three paid over five years. So there’s 10,000 pounds worth of interest that’s paid into the, into the SAS that’s received tax free. So the sauces got that 10 grand that gets invested for the future as well.

So, so Dave’s pension cause now looking, um, has as healthy, if not more healthy than it was before the business is better off than, than he’s personally, um, had that bonus as well. So it’s a nice little love come there for everyone. And that’s something that can be, uh, set up an implement it pretty straightforwardly. Um,

When we go back to your previous slide, you’re talking about in total, in total, you’re looking at, from start to finish, you can probably get this done in 12 to 15 weeks. Yeah. I’d say the quickest that I’ve seen this particular variant implemented was probably about five weeks. Um, but then yeah. Um, Oh, the other ones,

if the revenue is slow setting up the scheme and then if the people that are the current pension provider, if they’re slow, um, allowing the transfer of money across then yeah. You can’t be looking at something like probably 15 weeks. Um, Is it beyond the scope of today’s presentation Simon to toggle it? The restrictions on the SAS in terms of general,

you said are quite tightly regulated and there’s only certain things you can invest in certain things you can do. Am I opening up a can of worms by asking that question? No, no, no. It’s um, well, yes, but so we’ll answer it briefly, but I want to give people sort of the awareness, there is an awful of,

uh, of, of, uh, subtlety and nuance to the, to the rules. But, uh, but broadly what we’re looking at is it’s gotta be a proper investment. So, um, so you, I mean, you can’t spend the money on cars and holiday homes. It’s gotta be something where it’s generating an investment return. That’s really designed to,

you know, the, the, the investment has to be something that’s designed to, uh, to provide you with a pot of money in retirement. Uh, commercial property is brilliant and we’ll talk about commercial property and the pension, uh, on the next few slides. But, um, but yeah, commercial property is a cracking investment to have in this kind of SAS.

You can’t have residential property. Um, and then, uh, the, the, the other thing that people do a lot with it, so loans to third parties. Um, so you might say you might see a third party, that’s offering an attractive interest rate. Um, and again, that’s something pretty common on property developments. Uh, stepping in with a bit of finance can often be short,

um, and generate good returns. So that’s something that, uh, that people doing a lot with this lending money in your own business. That’s fine. You are allowed to do that with the sauce. You’d never be allowed to do that with this sip, um, and some, and then investing in stocks and shares and the, in the usual way,

uh, that that’s allowed to. So yeah, it’s gotta be, gotta be a proper investment and, um, and yeah, no, no residential property in there. So it’s not by to that. Um, if you ask about the student property, that’s where we get into a kind of arms kind of area civil, we’ll leave that one for another time.

Um, but yeah, if anyone wants to sort of, you know, explore particular, um, you know, can this be invested in, cannot be invested in very happy to do that separately or afterwards? So, yeah, we’ve been through, through the examples. So the next one that I want to do to look at this is moving a commercial property into a pension.

And the aim of this, uh, is both the security aspect that I touched on earlier, um, to, to make sure that the commercial property is safe from creditors, if anything was to happen in the future in terms of the financial stability of the company, but also the, the tax relief that you can get on moving a commercial property into a pension is massive.

So, uh, so this is something that’s often awful luck. Um, if a, company’s got a commercial property in, on this balance sheet and the company, uh, then yeah, w if we move it into the, the pension, then I’m going to talk through how we, how we do that and how we get a corporation tax deduction on the value of that property.

So, again, just to start off, the company has to set up a suspension. So you’re looking at the three to six weeks, they’re going a valuation of the property that can be overlapped with that. Typically it takes two or three weeks to get, to get a valuation done. If anyone knows the value of they can do a valuation quicker than two or three weeks,

then please give them my number of valuations. D D tenants seem to take longer than necessary. Um, the, the pension makes it, uh, sorry. Uh, the company makes a pension contribution. Um, that’s equal to the property of the Valley. Now this is, this is something that, um, that there’s a prescribed methodology for making this type of,

of pension contribution, where we’re going to move the property into the pension. This is the process. So you have to do a pension pledge that’s for an amount of money equal to the property value or going above or below. But, um, but, but broadly equal to the property value. So if you’ve got, say 500,000 pounds a property, we’re going to do a 500,000 pound pledge of,

of, of money to the, to the pension. Um, but then shortly after that, the, the trust of the trustees would accept an offer of the property to satisfy that cash debt. And, uh, and so we’re not, we’re not contributing the property directly. We’re not saying that the pension, please take this property. I’m saying, please take this property to satisfy that cash debt that we owe you.

And that’s a, that’s a methodology that, uh, that, uh, is different to what’s called an in specie contribution. Um, if you, if you’ve looked at pensions over the last two or three years, you’ll have seen that in specie contributions as something that the revenue is uncomfortable with because of the valuation issues. So, uh, so the revenue has actually set out this way of doing things where we can,

uh, can transfer property into pension using using this approach. Um, and, and this says, this is, um, something that you readily accept and, and have, uh, given clearance on there that this is an appropriate method of doing it. So when you’ve done that, you’ve made a pension contribution of say 500,000 pounds. So you would then get your corporation tax deduction on that pension,

your contribution, but, um, pension contribution tax deduction is absolutely standards, nothing controversial about it at all. Um, there, there are some rules about the timing of the pension contribution, uh, sorry, the timing of the deduction that you guys, um, depending on whether you’ve made contributions to a pension over the last year, um, and depending on how,

how big it is broadly, if it’s a contribution up to the value of 500,000 pounds, then you can get all of that deduction in one year. If it exceeds that, then you might have to spread it over two or three years. If it’s a contribution of over a couple of million pounds, then yeah, you’re going to have to spread that out over three years,

but, uh, but you do get the full value of, of that, um, of that tax deduction. So, uh, typically what we find with most businesses that we do this with is the, actually the, the property, uh, Valley, um, is more, um, usually more than double the profits of the business, uh,

for the type of family managed businesses that are there, that they would turn it to deal with on this. So that means that, um, the, when the punching of contributions being made, when you get to the year end, the tax liability for the current year is going to be completely wiped out. And then you can actually carry the tax loss back in the last year and recover some tax that was paid last year.

So that will get repaired by the, by the revenue, to the company and the usual way, so that can have serious cash difference to the, to the company. And again, I, I’m sorry to come in here with the negative questions again, Simon, I do, you know, I am an accountant. I am an actual real life accountant.

So I tend to look at things from all sides. And I look okay, upside. This all sounds really positive. What’s the risks here. Like I am actually seeing a double positive here that it’s, it’s protecting. So there’s a tax saving. It’s protecting an asset in the company that may be coming into a period of distress. What is the downside that I’m not seeing?

Obviously there’s obviously there’s implications of moving a property owned by a limited company into a pension form. I’m sure there’s more restrictions on getting it out and liquidating us well, what are the other risks and what are those sites? No, yeah, you’re right. Uh, so, so they, when the property is in the pension, then, then yeah,

it’s, it’s in, it’s in a different place doing different things. Uh, the, the, the downside that you, that you’ve then got, um, is that, um, the, the company is going to have to lease that, uh, that, that property. So it wasn’t previously paying rent on the property, but it is going to have to pay market rent to the pension.

So, so you have a little bit of extra cash. It’s going to have to keep going out, but that’s cash. That’s coming out with a company and a tax deductible form and ending up in the pension where you’re not paying tax on it. So it’s, uh, I bought it. So, So, so, so, so it’s a downside,

and now we have this cash outgoing every single month, but on the upside it’s cash, that’s ultimately coming to us longterm, tax-free building the nest thing for the future. Absolutely. Absolutely. So, I mean, the, the, the other downside, the one that, uh, that we’ll need to sort of flag up, um, is the effect on the balance sheet.

You know, if you bounce sheets got a commercial property on that, then, then that’s, you know, that’s, that’s, that’s great. It’s going to boost your balance sheet. If you take that off and put it in the pension then yeah. Normal, normal scenario is that’s going to reduce your balance sheet, uh, significantly. Um, and also in the year that you make the pension contribution,

um, that, that, that gets set off against your profits, which is where the tax saving comes from. Um, but if, if in one year you’ve hit the balance sheet in a major way, and you’ve wiped out your profits, and it looks as if you’ve made a significant loss, then yeah. Cosmetically, that’s something that, uh,

that, that, you know, uh, businesses might need to, uh, to, to bear in mind how that, how that looks, uh, I mean, obviously we are just taking, uh, taking that asset and moving it from one place to another. It’s all still in the control. And so, uh, so, so commercially,

we’re not sort of significantly changing, uh, the, the position, but, um, but in terms of how the accounts look, the client needs to be really, uh, aware that, uh, that it’s gonna, it’s gonna look like they’ve had a bad year when actually what they’ve done is provided, um, provided that, um, security for the future and,

uh, and, and, uh, bought themselves a big tax benefit as well. But, so, yeah. Should we just run through an example of a little quick one just to, to, uh, sort of bring it to life a bit? So, uh, so yeah, Jeff, uh, Jeff co, um, and you can probably guess the owner of Jeff because Jeff,

uh, Jeff co owns the industrial unit that it operates from, and it’s got a current value of half a million pounds there. Um, so it starts to set up and using that methodology that I talked through earlier, uh, the, uh, pension, uh, takes the ownership of the, of the unit there. Um, and then Elise’s put in place,

um, so that the company can carry on using it. The company gets a tax deduction of half a million pound in the current year, which is on that pension contribution. Um, so his profits, um, the company’s profits will say 250,000 pound. So yeah, um, the, the current, uh, profits are completely wiped out, um,

by the, by the size of that pension contribution. So he’s going to save the, uh, the tax that he would have otherwise had to pay on that. And then he’s also got another 250,000 pounds worth of profit, sorry, tax deduction that he could carry back in the last year recover last year as tax that was paid. So not only is he not going to pay a 50,000 pounds in tax for this year,

his profits, um, it’s also getting back 50,000 pounds that he paid in tax last year. Um, and so, yeah, so, so, so that’s a really nice position to, to end up in, but, uh, but what’s even better is this next example. So a lot of, um, a lot of people, um, have been advised by their accountants,

um, and very rightly in a lot of cases, not to have the commercial property in the company, because if, if something goes wrong with the company, then the property is theoretically at risk there. So a lot of people have got the commercial property that the business trades from they’ve got that health personally. And, um, and yeah, and,

and, and that’s, it’s not, it’s not an amazingly tax efficient position to be in because if the company’s paying rent, then you’re paying income tax typically at a higher rate on the rent that you receive than the tax deduction that the company is claiming on it. So, so, but that’s usually not a big figure that, uh, that, that,

that, uh, that we worry about that, but we’ve got an opportunity in that scenario where the, whether shareholder director shareholder owns the property personally, outside the company, what we can do is actually move it into the company, then move it onto the pension. And by, by bouncing it in the company on the weight of the pension, um,

then we got w we got even more tax relief. So it, it gives us the chance to create some income tax savings, as well as that corporation tax deduction, which is the same as we just run through. In the last example of do this again, I get set up the property, valuation gets carried out. The company buys the property from the owner.

Um, and, uh, and so to do that, typically the, the company is not going to be stuck with all that money, just sat there. Um, so a director’s loan account was created where just the purchase price is left outstanding. Um, the company then follows very much the same steps as in the last example where the pension contribution has made that pledge is satisfied by the transfer of the property.

The company claims it’s big corporation tax deduction, but, uh, but then this is the sort of extra bit there there’s like downside on this route is that the owners then left with a couple of gains tax liability on the property sale. And, uh, and obviously if the, if the property is worth a lot, and there’s a big gain there,

then that can be quite a sizeable, uh, capital gains tax bill. So that would be June 31st, January in the year following the tax year in which this happens. Um, but the owner is that left with the director’s loan account. Um, they can draw on when the cash is available in the company. Um, and that’s, that’s taxed money in effect the capital gains tax that’s paid,

um, on the, on the sale of the property from the person to the company that, uh, that means that that DLA has in effect is being taxed and then loaned back to the company. So you can take it Once you, once you have, once you have the adequate cash reserves in the company to pay the capital gains tax labor, there’s the,

by the time of the applicant’s tax liability, your director’s own account then becomes a draw, but asset tax free in the hands of the directors. Yeah, yeah, absolutely. And if you, if you’re otherwise going to be taking salary or dividends, uh, from the, from the company, um, then if you, if you can replace that,

um, withdrawing on the CLA, then that actually get you paying complicates tax at a much lower rate than you otherwise would be on pulling money out of you, your company. So this works really well for companies where it’s got a, you know, small family shareholding group. Um, if you have got, if you’ve got multiple, um, shareholders,

uh, there that aren’t necessarily connected in that way, then this needs a bit more structuring, but if it is a, you know, fun family business, family group, um, shareholders, then this works really. And the other thing is the property is really just moving true live with the company because it’s amazing. It’s, it’s moving from personal ownership into,

but then it’s immediate thing of yonder the pension. So it is protected, but obviously we’re back to the same issue. It’s well, in my own name, I’ve got much more flexibility as to what I do with that property. Whereas once it’s put in the pension fund, I have limited freedom And, and less flexibility. Yeah. Um, yeah.

Well, if you wanted to do something with that, probably when it’s in the pension, then you need to make sure that you’re not sort of stripping any value out of the pension. So you could buy the property back, Alan’s a pension, but then you need to have the cash to be able to do that. Um, so see when the property’s in the pension it’s,

um, yeah, you have meant that contribution on value is locked away in the pension. And, uh, and, and you are in a more restricted environment there. One thing strikes me, Simon, as you speak, is this, I’m like, this is absolutely fabulous in terms of opportunities. It’s, you know, it’s creating options. It’s giving us opportunities that’s relevant to right now,

but it also does strike me that whatever you’re doing here really does need to be part of a bigger strategy, a bigger wealth plan. And that you’re, you’re looking at not just this move, which you’re looking at the next move of possibly to move after it, to assess the implications of the longer term plan as in the 10 50, 20 year plan.

Absolutely. And, uh, and suspensions are very good for inheritance tax planning as well. Um, so, you know, if you think very, very long term, uh, we do usually say, you know, if you can draw on your pension last, because when money’s in your pension, it’s, it’s, uh, outside of your estate for inheritance tax,

if you start pulling on your pension, you’re pulling cash into, into your estate. That’s potentially, I didn’t, I didn’t verbally that straight out because I’m not an expert in this area, Simon, but that was actually where my thought process was going. If we have a property here, and then we put it through the company creating a director’s loan accounts,

but then it goes into the pension fund. And like, obviously, no, nobody is planning their ultimate expiration, but how many, like how many years does it need to be in the pension fund before it can be passed on, like, is this something that maybe somebody who’s, who has of ill health, who kind of, they have a definitive timeframe?

Is this, is this a, another opportunity? Is this an opportunity far effective tax planning into the pension into these days? Yes. Yeah, it is. Um, if someone’s in that position, then it, it does need to be, uh, does need to be dealt with, um, you know, fairly carefully, any, any kind of,

um, know like death bed or fairly short run and planning in those sorts of circumstances needs to be dealt with really, really carefully. Um, and one of the things that we need to do is just understand the circumstance of that person and the family what’s the next generation can have kind of a need in terms of access to cash, uh, in terms of protection for the future.

So I wouldn’t say that this is necessarily the GoTo solution there. That could be all sorts of things that we need to take into account, but yeah, if you’re in that scenario, this is something that’s worth considering. And in some cases absolutely will be the right thing to do. Um, the, one of the things that I wanted to touch on with,

with S is a lot of people will have questions around the, uh, the, the personal, um, the personal pension contribution limit to 40,000 pounds per person per year is the maximum that we can put in. And then there’s also, um, a lifetime, uh, maximum amount that can go into a personal pension, which is the 1,055,000. Um,

it was don’t apply to, uh, to a SAS pension. Those are personal limits. And as I mentioned before, this is a business pension. So, um, so business pension, where it’s got more than one member, uh, can have something called a general fund. And that allows us to, to make contributions from the company into the pension,

which are held almost in a suspense account when the pension contribution has been made by the company, the corporation tax rules that allow that deduction, that tax deduction to be claimed the actual allocation of that money from the pension, um, sort of suspense account into people’s individual personal, um, allocations, that’s governed by this 40,000 pound a year car and the million pounds lifetime allowance,

but the pension itself can receive, um, a huge amount of money. And, uh, and then it can have, uh, it can have that money sat in that suspense account potentially indefinitely. Um, the, the earmarking of the fund into people’s individual accounts is capped at about 40,000 a year. So when we do this, we, we have to,

we have to bear in mind, you know, we need to make those allocations over a number of years to make sure that when people have retirement, they’ve got, they’ve got the maximum they can possibly have, uh, in the, in that pension fund. But yeah, if people are concerned about some that these limits are going to, how can you contribute a commercial property into a pension,

if you, if you’ve got that 40,000 limit, um, that limit, again, it doesn’t apply here a totally different set of rules, but, um, yeah, let’s, uh, let’s, let’s run through this example just to sort of bring that to, to excuse me, to bring that to life a little bit more. So, uh,

Vicky, either you can tell I’ve been using my imagination when I’ve named these, these companies for the example, uh, Vicky’s got a company called Vaco. And so, so she personally owns that unit. The company trades from it is 250,000 annual rent tends to be 10% of the, of the value of the property. So 25 pound annual rent. And then because she’s a high rate tax patient,

she’s paying 10,000 pound a year tax on that 10 grand a year leakage. And we’re going to try and stop that. Uh, so a company has regular profits of South hundred thousand pound a year. Um, she sets up a SAS, acquires the property transfers. Uh, the company acquires the property transfers into the SAS. Um, and that leaves her with in this,

in this example, it’s a a hundred thousand pound gain. So she’s got a 20,000 pound CGT liability. That’s the equivalent of two years, um, tax liability on the, on the rent that she’s been receiving. Um, so, so in the scheme of things, 20,000 pound tax liability, but it’s not, not that big compared to, to the tax that she has been paying on the rent.

Anyway, the company claims that at 250,000 pounds corporation tax deduction, so that reduces the current year tax liability to zero. And then she’s going to get 20,000 pounds, um, reclaim, uh, from last year. She’s also still got 10,000 pounds of tax savings next year, too. So total tax saving 15,000 pounds, the SAS then receives that market rent.

So that’s 25,000 pound, um, rent. That’s going to go into the SAS. So every year she was receiving that, and now the SAS is receiving that. So, so we need to do something to, to readdress that balance, to make sure that she’s not personally out of pocket through this, um, while building the pension pot. So what she’s going to do there is replaced the lost rental income by drawing on her director’s loan account tax free 15,000 pounds a year that lasted for the next 16 years.

So over that time, a lot of money goes into the pension and, uh, and we ended up in a really, really nice tax efficient possession. So CA if someone, if someone’s in that position where they can do this, this is a cracking Bev of planning for them. And in terms of fees, this is, this is not high watering in terms of fees either.

So, um, what I wanted to touch on next, um, is R and D claims and lockdown. Um, and, uh, I’m conscious, we’ve not got a huge amount of time. Um, so, so I’m going to hit this sort of fairly fast, and then hopefully we can deal with some questions around the, the pensions and the R and D.

Um, if anyone’s got any questions, we’ll be able to turn to those then, and sort of five, 10 minutes. Um, but yeah, so, uh, I’m sure everyone’s familiar with, uh, research and development tax relief claims. Um, they are a great source of money for innovative businesses. Um, the, the, the way it works is you identify,

uh, some, uh, scientific or technological uncertainties that our company’s been tackling as part of its business. And then we can claim a tax relief on part the cost. So in effect, it’s a, it’s a way of getting by part of those research and development costs. And it’s administered through the tax regime. The claim was actually put in on the CT 600,

which means that, although typically this might be something that you’d expect to see as, as a, as grant funding opportunity, but it’s something that as accountants, we, uh, we administer through the, through the tax regime. Um, it’s not something that I, um, I don’t actually handle people’s tax returns for that. I always think that’s best done,

um, by them, by the accountant, that’s dealing with the rest of their, of their, uh, company’s, uh, affairs. And, um, and so, yeah, just want to kind of run through a few, few points around this. Uh, there’s been quite a, quite a bit of, uh, of charts on the forums and in groups,

uh, about R and D claims being a lot harder, um, and locked down, um, because a lot of discussion of, well, you need to go and visit the client. You need to really get to know the, the, the business to be able to do one of these properly. I just want to dispel a few myths here,

um, because there’s a, a culture has been built up around R and D toxifies that, uh, that makes it seem more difficult than it, than it has to be. Um, the, the, the most important point that I want to get across to you is, um, that the quality of your records is key in the same as for any other,

um, aspect of, of tax advice or accountancy work. Um, the quality of records absolutely essential. Um, there are far too many assumptions that are made in R and D tax relief claims and, uh, and the revenue really cracking down on that. So, uh, so we want to see some really nicely presented, um, records that just establish that evidence based that,

that, that explains the claim so that, uh, so that if someone looks at the claim and in due course, then we can point back at these records and said, that’s why the claim was that, that specific figure there. And, uh, and the quality of those records is really important. The, the service that I’m going to talk about briefly as a,

as a software platform that, uh, that, uh, that I’ve built, um, while my developers have built. And, um, and that’s designed to, to get those records, um, in place really, really well. And it’s something that, uh, it’s a software as a service product. So it’s actually designed for the client to be in the driving seat of doing all that,

um, putting the data in there and, uh, making sure that we’ve got, uh, got the right records. One of the most important things would that the revenue asks about when they do a mega inquiries, is this start and end dates of you projects. So then they like to see that the companies have got a few different projects going on rather than just saying,

well, it’s 10% of everybody’s role in the business is to do some sort of, uh, that’s, that’s not good enough, never has been. Um, and, uh, and that, that sort of percentage basis that, that people use when they’re making R and D claims, it’s, uh, it’s, it’s going to come to an end.

Um, instead it’s gotta be a defined project with a start date and an end date. And if you can describe those as well, and explain why you’ve picked those dates, then that’ll go a long way to satisfying the revenue that you understand the rules and that, uh, that you’ve actually applied the proper thinking in terms of how these projects, uh,

uh, described. And the other thing, uh, that, uh, that that’s really important to explain here, as well as the revenue and looking for one or two page narratives that not looking for 20, 30, 40 pages of, of jargon and technical language that, uh, that they don’t understand, um, you know, clients don’t want to explain,

you know, the, the, the intimacies of all of their, uh, of, of all of that sort of technical knowhow to, to anyone let alone to a tax inspector through the form of this kind of report. And it’s really not necessary the revenues a view on this. Cause they’ve got a pretty simple checklist. It’s got a few things need to be text four questions on there.

And if you can’t explain why a project, much as those requirements in, in one or two pages, then that’s actually something that brings the alarm bells for the inspectors. When they’re looking at it going, what you’re trying to hide here, why have you given me 20 pages of, of stuff on this? Um, so, so yeah, if,

if you’re looking at, you know, how can we do a claim and lockdown if you think, well, I need to get one or two pages of narrative per project, then that actually that’s a lot more achievable. That means that it’s something that you can do. Um, sensitively, if you’re asking the right questions and you’re getting the right information from the client,

it’s something that can be done remotely. And, uh, and again, uh, the, the software that, uh, that, uh, I’ll talk about, that’s something that allows the client to actually input a lot of that data for you. So that the conversation that you’re having, isn’t a fishing expedition with the client, and you’re actually talking about,

you know, can, can we describe this differently? Can you give me a bit more information about that? You’re hitting the ground running in terms of that conversation, you can go back to yours. If you haven’t done an R and D claim for a client, you can go back two years and, uh, and then that can give the client really good cash boost,

uh, typical values that were there. We’re looking at 40,000 pound a year for, uh, for, for a company. If it’s companies making repeat claims, you look at more at an average of about 70,000 pound a year of, uh, of value coming back into the company. Um, if the company is profit making, then they’ll save that tax.

Um, if it’s, if it’s not a profit Meghan company, then the revenue will actually pay, uh, an, an amount across to the company. They’ll write them a check, do bank transfer, and then you’ve got, it’s not, not quite the equivalent value, but, um, but you do get an awful lot of, of, of,

of the value that you would have had if you’re a profit making business. And so, and so, yeah, if you’re talking to, to businesses about R and D claims, um, and create starting points at the moment is to say, you know, how’s your business responding to all the disruption of the Corona virus? Have you had to change your products,

your processes, uh, it’s, it’s, you know, it shows that you’re interested in what the client is going through at the moment. And, uh, and also there are a lot of people out there having to, having to be innovative in the way that they do things having to respond to while we can’t get access to this material anymore. So we’re having to look at different materials that we can use,

and we’re doing things in different ways. So we need to make this safer, we need to do that differently. So it’s a great starting point for that conversation. Um, yeah. So a quick sort of run it through some lessons from the front line of R and D. I’ve been doing R and D for 20 years now, and I’ve been sort of,

you know, um, uh, doing an awful lot of it, um, over the last five years. Um, there’ve been very, very few inquiries into R and D claims. And I think, uh, you know, universally people say that that they’ve had very little experience of dealing with, uh, revenue inquiries because of their, the position I’ve got.

Um, do you end up handling quite quite a lot of revenue inquiries from accountants that have made a claim themselves, and then they’ve got sort of a juicy inquiry, so they pass it across state to be dealt with. So I’ve got some really strong experiences. And so there’s been a big change. Uh, inquiries are no longer sort of asking about the innovation in general.

You know, you genuinely doing something innovative. The inquiries are very, very much more detailed and it’s from inspectors that actually know what they’re talking about. Um, particularly in the software, uh, environment, the revenues. Now I’ve got some, uh, software experts and they’ve told the tax rules to rather than, as it was couple years ago, tax,

uh, tax inspectors that they’ve, um, tried to shoe on into looking at a software claims. And the revenue is aware that people have been pulling the wool over their eyes in terms of what’s innovative and what’s not in the world of digital and software for years. And so they’re cracking down pretty hard on that at the moment. Um, and, uh,

and the app. So the revenue target then specific sectors are getting looked at, uh, digital is, is an area that that’s going to look to our lot, uh, engineering and manufacturing as well. We’re seeing much, much more detailed, um, inquiries. They’re lots of, much into the innovation around the, uh, the client’s understanding of the rules and also into the,

the records that are being kept. Um, I’ve put on there, the death of percentage fees. Now, this is, this is something that’s, um, I can kind of separately bang on about for hours, but, um, but we’ve seen it across every other, um, every other aspect of professional services where there’s a, whether it’s a perceived risk that clients,

uh, uh, taking on too much risk, because they’re overly influenced by the percentage fees that advisors are charging, then, uh, then the regulation steps in and kills off the ability to, to charge a percentage fee or cap said we’ve seen percentage fees and R and D claims anywhere from 5%. Uh, they’re sort of very low end up to sort of,

well, 20% fairly standard, 25 30 in some cases, 35% and a half on occasion seeing, uh, seeing people charging 50% of the client’s tax refund as a, as a fee. Um, and that is that it’s just staggering. And there’s been a shift, um, in the, in the revenue and the treasury and the, with the political environment around this is now very definitely saying that,

uh, that there’s tax relief that’s meant to sustain the economy and help the economy grow. They don’t really want to be seeing on fires. There’s creaming off 30% of, of that, uh, for what should be relatively easy bit of work. Um, the there’s been an acknowledgement that actually the R and D uh, rules are poorly designed, but,

um, but the, the revenue have to work with what’s there at the moment. Um, and, uh, and really this sort of perception of percentage fees are skewing. The market is something that I think we’ll, we’ll see, um, regulators step in and start to, uh, apply some restrictions around that before too long. Um, you fix fees,

uh, really the way that, uh, that I think we should be going on R and D claims, particularly if it’s someone that’s into sort of a repeat claim scenario, if they’ve been making claims for three or four years, it’s very difficult to, to, uh, to justify to a client that, uh, that there needs to be this percentage fee to balance risk and reward.

You know, if they know that their claims going to go through, cause they’ve seen it go through three or four times before, um, then there’s this concept of a success risk-based fee is really sort of out of kilter with client expectations these days. So I thing, um, fixed fees is where we’re at, uh, on, on that going forward,

the revenue, um, always now ask about the client’s understanding of the best guidelines they wanted to speak to clients. And then they want to, to ask the client, you know, what do you understand of the base guidelines, even though they’re not actually called the biz guidelines anymore, the revenue always uses that terminology, excuse me. And if the client says like,

never heard of them, then, then you’re in bother. So, uh, so it’s a, it’s one of these things that, you know, we do try and make sure that the clients have got plenty access to, to help and guidance around that. And then there’s certain advisors that are, that are in the spotlight, um, ones that are known to base their claims on benchmarks and sort of Megan claims 10 or 10 or 15% up or down on,

on the, the benchmarks that they’ve got of revenue or aware of, of people doing that now. And, uh, and so they wanted to see, no, we’re not interested in, in assumptions of benchmarks. We want to see proper records, you know, who did, who did what work or what timeframe linking it in with the start and end date of project.

And they’re not expecting time sheets as such, but, uh, but the software that they developed does allow individual staff members to tank their time against these projects. And that is something that the revenue are now saying, given the, given that the technology is there available and easy to use, um, someone who comes along and says, well, I’ve just taken 20% of his time,

50% of hers, 35% of that person. They’re saying, look, that’s, that’s not good enough. And to be fair, it never has been good enough to, to make, um, bold assumptions like that. Um, and then also, yeah, the revenue are aware of people that, uh, that try and blind them with science, you know,

producing very thick reports, generally written by retired academics or, uh, or retired engineers. And these reports are lovely long flowing things, but don’t actually, um, don’t, don’t actually link in with the numbers. The revenue are aware of that. We’re conscious that they’re, that they want to see where the link is between the figures that go into the claim and the narrative.

And, and again, that’s something that the software really helps with. So I just want to give you a couple of really quick examples here. I’m sure everyone’s kind of aware of the benefits of R and D claims, but just to quickly illustrate this, a typical example might be someone who’s got 25 staff average salary, 25,000 pound a year said 10% of their staff time to spend on proof of concept work.

People seem to have to demonstrate their ability to solve problems to win work these days. And so if you’ve spent a hundred thousand pounds on materials on that kind of work over the year, then putting your salaries and materials together, 160,000 of qualifying costs, that’s going to give you an extra corporation tax deduction of 211,000 fair. So that translates into a 40,000 pound tax saving 160,000 pounds spent 40,000 pounds of tax saved.

So that’s an absolutely bulk standard examples that I think everyone will be familiar with. Um, what I want to do in this example is just to illustrate a slightly different angle on it. So let’s assume same scenario, but actually the company has been paid by a large company. So that’s one, that’s got more than 500 large turnover, a large balance sheet.

Um, and so that this large company has paid, um, Phil’s fabrication company to carry out some, uh, some, some work on, uh, on an RMD project for a large company. So again, I’ve kept the figures, the same hundred thousand pounds of materials, 10% of all the stuff time, uh, that’s on there. And,

and although I said, don’t use blanket assumptions, I’m using one for purposes of the example, um, in, in coming up with that 10%. Um, but yeah, putting your salaries and materials together, it’s the same quantifying cost as in the last example, but th the SME company can claim, uh, as if it was a large company.

So it’s going to claim the ARDEC tax credit rather than the, the, the, um, R and D tax relief, uh, enhanced expenditure. So that’s the above the line, um, credit, which would be 21,000 pounds in this case, that’s a taxable benefit though, taxable credit. So the net benefit is going to be 17,000 pounds. So this is,

this is one of the, a lot of people mess, which is why I wanted to highlight it. If the company has been paid to carry out that work, but it’s been paid by large company. And so long as the work was part of the large companies, R D project, your launch company can’t claim anything that it’s subcontracts out to SMEs,

but the SME can make this claim, even though it’s been paid, you can get another 17,000 pounds of benefit there by putting through a claim as though it was a large company for this. And, um, yeah, so, so that’s, that’s one that hopefully people will find useful. Um, Uh, both of them, both of them were,

were used. Um, well, I’ve taken lots of notes. Anyway, Simon, I found both parts of your session, extremely beneficial. And in terms of your subtle folk, where do, where do people contact you, or where do people find you? And if today has been of significant interest from our has rang a bell, Um, so they,

yeah, best place to get me for the, for anything to do with, um, your suspensions, um, SAS, hyphen, um, and my email address, Simon dot Britt nuts. I saved from Um, that’s the, that’s the, the best way of getting ahold of me there. I work with, um, uh,

SAS, administrators, SAS trustees. What I do is the implementation. They set the SAS up. Um, I handled the implementation and the work with advisors around making sure that they’re, that the planning is, is right, and then that the implementation is right. Um, so, so if I ever wants to kick ideas around about how could we use a sauce for this client,

um, than, than yet, give me a shout. We’re very happy to, to work through examples that, and, uh, and, and develop some planet on the R and D side of things, is, uh, that’s, that’s where you’ll find details of the, uh, the software platform, um, that, uh, that,

that helps clients put together, um, the, the R and D clam. And, uh, and also, yeah, you can contact me. They’re more than happy day to get involved with, um, any sort of technical queries people have got around R and D. Um, and to, uh, to, uh, we, we’ve got sort of a tailored service.

If it’s a client that’s comfortable with R and D and, and wants to, uh, to manage their, their fees a bit better, um, that they can use the software themselves. Um, we, can we go from there all the way up to sort of, you know, reviewing their claims for them or giving them complete handholding consultation service for someone that’s never done a claim before.

Um, but it’s, um, but yeah, so I, either of those would be a good place to, to catch me. Um, and, um, yeah, thanks. Thanks very much for, uh, joining us Well, Simon, thank you very much. And thank you. All of those who have joined us across the various platforms where you’re plugging in.

And obviously if you found some of your benefit and what Simon has covered today, you have Steiner’s contact details there, and we’re going to continue running these webinars stroke COVID-19 and we have a full schedule of free webinars for UK accountants. So please, if you found this of benefit, pass it onto your friends, pass on the lakes link, the next email that you get,

and we’ve got to shed you where we’re developing a schedule. We’ve got some excellent speakers coming up in the month of may and beyond. So on behalf of Omnipro and our entire team, and on behalf of myself and Simon, thank you very much. Let’s stick together. I meant to get a donut.