Archive for October, 2018

Did Philip Hammond save the High Street?

Wednesday, October 31st, 2018

In his Autumn Budget delivered 29 October 2018, Philip Hammond made a number of promises. One of these was measures to improve the lack-lustre retail sector in our city centre areas.

There is no doubt that the major online retailers, Amazon and the like, have caused a major shift in the way we shop. As faster broadband has become more commonplace, and the use of computers a regular home fixture, then this drift away from viewing and buying goods on the shelf to viewing pictures and click and buy on the internet, will likely continue.

Which is fine if you have established a thriving internet retail business, but not so good if you have committed to the use of expensive retail premises in city centre locations.

At present, online retailers have a massive competitive advantage over their High Street competitors. They don’t have to pay:

  • business rates or rent for shop front property or
  • salaries to sales staff.

And in the case of the mega online retailers, who can afford to exploit the use of tax havens to shelter their trading profits, they do not pay comparable tax on their trading profits.

Did Philip Hammond save these failing, High Street retail outlets when he delivered his budget speech on the 29th October?

Well, he made a start…

He offered a one-third reduction in business rates for retailers with shop premises with a rateable value below £51,000. Although this reduction is for a limited period, two years from April 2019.

He has committed what seems to be a modest sum, £675m, to rejuvenating city centre areas. This will support the cost of:

  • improving traffic flows to shopping areas,
  • the renovation of empty retail premises to provide residential accommodation, and
  • the repurposing of older or historical property.

City centre shops depend on foot-fall, if shoppers don’t pass by, then it’s unlikely they will become customers. In this respect, the above investment should encourage an increase in foot-fall.

Mr Hammond also committed to start the process of increasing the UK tax take from online retailers, social media outlets and search engines, who sell goods and services to UK users. A new digital services tax will commence April 2020 and will levy a charge of 2% on the revenues generated by these concerns to customers in the UK.

Did Philip Hammond save the High Street? The above changes will have some impact, but whether this will slow or stop the movement away from window shopping to browsing the internet, remains to be seen.

Source: New feed

Autumn Budget 2018

Tuesday, October 30th, 2018

Personal Tax and miscellaneous matters

 

Personal Tax allowance

The personal Income Tax allowance for 2019-20 will be increased to £12,500 (2018-19 £11,850). It will remain at this increased level for two years.

Changes to personal tax allowances will apply to the whole of the UK.

 

Income Tax bands, rates and the dividend allowance

 

The Income Tax bands for 2019-20 have been increased. They are:

  • Basic rate band increased to £37,500 (2018-19 £34,500)
  • Higher rate band £37,501 to £150,000 (2018-19 £34,501 to £150,000)
  • Additional rate, no change, applies to income of more than £150,000.

 

As a result, the higher rate threshold will increase to £50,000 from April 2019. There is no change in Income Tax rates, and the tax rates applied to dividend income.

Changes to these Income Tax bands apply to England, Wales and Northern Ireland. The Scottish parliament now set their own Income Tax bandings.

 

Earlier payments of Capital Gains Tax (CGT)

UK residents will be required to make a payment on account for CGT due on a residential property sale. The new regulations will also affect disposals by non-UK residents.

The changes will apply from April 2019 for non-UK residents and April 2020 for UK residents.

 

Capital Gains Tax Private Residence Relief changes

From April 2020, the government intends to make two changes to the private residence relief:

  1. The final exempt period will be reduced from 18 months to 9 months, with no change to the 36 months available for those who are disabled or in care homes, and
  2. Lettings relief will be reformed so that it only applies in certain circumstances where the property owner is in shared occupancy with the tenant.

 

CGT Entrepreneurs’ relief

Two changes are coming into effect:

  1. Claimants must have a 5% interest in the distributable profits and the net assets of the company to qualify, and separately
  2. That the minimum period during which certain conditions must be met to qualify for the relief is being increased from one to two years.

The first measure will have effect for disposals on or after 29 October 2018.

The second measure will have effect for disposals on or after 6 April 2019, unless a business ceased before 29 October 2018.

 

Inheritance Tax: changes to the nil-rate band

From 29 October 2018, amendments to the residence nil-rate band will provide certainty as to when a person is treated as “inheriting” property and clarify the “downsizing” rules.

 

Rent-a-room relief change cancelled

The expected change to require shared occupancy to qualify for rent-a-room relief is not to be introduced.

 

ISAs

For 2019-20, the ISA limit will remain at £20,000. The limit for Junior ISAs and the Child Trust Fund is to be increased to £4,368.

 

Limit on pensions’ savings to be increased

The life time limit on pension savings is to be increased in line with inflation to £1,055,000 for the 2019-20 tax year.

 

Stamp duty first time buyers’ relief in England

This relief is being extended to cover the purchase of qualifying shared ownership property and will be effective for transactions on or after 29 October 2018 and will be backdated to 22 November 2017.

The first £300,000 of an initial share purchased will not be liable to SDLT based on the market value of the property. The remainder of the value over £300,000 will be charged at 5%. No SDLT will be chargeable on the associated lease. Relief is not extended to further shares purchased and will not apply to purchases of property valued at over £500,000.

 

Tobacco duty increases confirmed

The rates for duty for all tobacco products increased by inflation plus 2% from 6pm, 29 October 2018.

Hand-rolling tobacco also rose by an additional 1% above this increase, to 3% above the RPI from the same date.

 

Vehicle excise duty

The VED rates for cars, vans and motorcycles is due to increase by reference to the RPI from 1 April 2019.

 

Duties on beer, wine and spirits

There are to be no increases to the duty charged on beers, spirits or cider, except for certain ciders treated as high strength for duty purposes.

Wines and high strength sparkling cider drinks will see duty increased in line with inflation from 1 February 2019.

 

Fuel duty increase frozen

Duty increase is frozen for the ninth consecutive year.

 

Air passenger duty (APD) increases

Travellers should note that APD will increase in line with inflation for long-haul flight passengers only. The new rates will apply from 1 April 2020.

 

Business Tax changes

 

Corporation Tax

Corporation Tax rates to remain at 19% for the financial year beginning 1 April 2019.

 

Employment Allowance reform

From 2020, the government is to legislate to restrict access to the £3,000 NIC Employment Allowance, to employers with employer NIC liabilities of under £100,000 in the previous tax year. Connected employers will have their contributions aggregated for this purpose.

 

Annual Investment Allowance increased

The Annual Investment Allowance (AIA) is to be increased from the present £200,000 to £1m from 1 January 2019 to 31 December 2020. It is then presumed that this will return to the £200,000 limit. This should provide a welcome boost to business investment during the Brexit transition period.

Please note that not all capital purchases qualify for this relief. Please call for clarification of what is covered if you are considering a significant acquisition.

 

R&D tax credit claims to be restricted

From 1 April 2020, the amount of payable tax credit that can be claimed under the R&D SME tax relief scheme will be limited to three times the company’s total PAYE and NIC payments for the period. Any loss that cannot be surrendered can be carried forward and used against future profits.

The government will consult with interested parties on this issue.

 

IR35 changes

The changes recently made to IR35 arrangements in the public sector are to be rolled out to the private sector. The changes will come into effect from April 2020 and small firms will be exempt. Firms that have concerns that they may be affected should contact us for more details.

 

Car and van fuel benefit charge increases

For 2019-20, these will increase by reference to the September 2018 retail prices index.

 

A new 2% digital services tax

From April 2020, the major social media, search engine and online retailers will be subject to a 2% tax on revenues generated from UK users of their services. The Chancellor did indicate that if an internationally recognised levy was introduced, that the UK may fall into line in place of this 2% UK tax.

 

At last, rates relief for High Street retailers

In a much anticipated announcement, smaller retailers in England, occupying shop premises with rateable values under £51,000, should benefit from a cut of one-third in their business rates bills for 2 years from April 2019.

They should also benefit from £675m to be spent on improvements by councils to help transform high streets, the redevelopment of empty shops as homes and offices and the repurposing of old and historic buildings.

In a humorous exchange, the Chancellor also announced 100% business rates relief for public lavatories.

 

Plastics tax

For those readers who are concerned about the environment they will be pleased to note that the government is to consider introducing a tax on the production and importing of plastic packaging from April 2022.

The charge will apply to plastic packaging that does not contain at least 30% recycled plastic.

 

Changes to the apprentices’ levy

From April, larger employers will be able to invest up to 25% of their apprenticeship levy to support apprentices in their supply chain. Additionally, some smaller employers will pay half what they currently pay for apprenticeship training: a reduction from 10% to 5%. The government will fund the remaining 95%.

 

Charities small trading exemption increase

he limits that exempt small scale trading by charities from UK tax are to be increased from the current £5,000 – where turnover is under £20,000 – and £50,000 where turnover exceeds £200,000. These £5,000 and £50,000 exemptions are to be increased to £8,000 and £80,000 respectively.

The changes will apply from 6 April 2019 for unincorporated charities and from 1 April 2019 for incorporated charities.

 

A new structures and buildings allowance (SBA)

This will provide tax relief for qualifying capital expenditure on new non-residential buildings where all contracts for the physical construction works are entered into on or after 29 October 2018.

Relief will not include the cost of land or dwellings.

 

Tax relief for electric charge points to be extended

The present first year allowances available for the installation of electric charge points is to be extended for four years, until the end of the financial year 2022-23.

 

Reduction in tax writing down allowance

The special rate of writing down allowance is being reduced from 8% to 6% from April 2019.

Supposedly, this is intended to closer align tax depreciation with commercial depreciation rates.

 

Anti-avoidance measures

The Finance Bill will contain a number of measures that will continue to improve HMRC’s campaigns to reduce the impact of tax avoidance schemes.

 

Tax to be protected in insolvency

From 6 April 2020, the government will change the insolvency rules so that taxes collected on behalf of employees and customers, primarily employees PAYE and NIC and customers VAT, will be treated as a preferential creditor on winding up rather than distributed to other creditors.

 

Company loss relief loop-holes to be closed

Most of the changes will apply from April 2019 and will prevent relief for carried forward losses being claimed in excess of that intended by legislation.

The changes will include:

  • the definition of “relevant profit”,
  • the computation of life assurance and annuity business profits,
  • the deductions allowance in group situations,
  • the calculation of terminal relief,
  • the cap on profits against which certain losses may be allowed,
  • and other minor considerations.

 

VAT: reverse charge process to be extended to construction services

This change, to extend the reverse charge process to the building and construction industry is due to come into effect from 1 October 2019.

This will place the onus for dealing with the VAT charge due on subcontractors’ bills to the main contractor.

This will cause accounting rather than cash flow issues for main contractors as they will add entries to their VAT returns to pay the subcontractors VAT, but then deduct the same amount as input VAT on the same return.

The aim is to stop subcontractors adding VAT to their bills and then disappearing without remitting the VAT to HMRC.

 

VAT registration threshold – no change

The present VAT registration limit (£85,000) and deregistration limit (£83,000) will continue to apply for a further two years; until 31 March 2022.

Source: New feed

Taxing dividends

Thursday, October 25th, 2018

To reduce National Insurance costs, shareholders of small privately owned companies, who are also working directors of the company, can presently restructure their remuneration package to reduce their salary and make up the difference as dividend payments.

Unless this strategy is affected by the Budget at the end of this month, this remains one of the most useful ways for owner directors of small companies to reduce their overall tax and NIC costs.

Dividends are not considered to be a business cost. They don’t reduce the amount of profit assessable to corporation tax. Rather, dividends are a distribution of profits after corporation tax has been deducted. Presently, company reserves available for distribution in this way have already suffered a potential 19% corporation tax charge. Accordingly, only 81% remains. This can be retained to finance future investment or accumulated as a rainy-day fund to see you through more difficult trading periods. Alternatively, it is available to distribute to shareholders as dividends.

Consequently, the withdrawal of dividends creates no tax consequences for the company, but it can create income tax bills at one of three hybrid rates for shareholders.

For 2018-19, the following rules apply. Shareholders will pay:

  • No tax on the first £2,000 of dividends received from all sources.
  • 7.5% tax on any dividends that form part of their basic rate band.
  • 32.5% tax on any dividends that form part of their higher rate band, and
  • 38.1% tax on any dividends that form part of their additional rate band.

As you will appreciate, as long as the dividends you take do not push your income after allowances above the basic rate tax band, then tax payable at 7.5% is modest. When dividends start to form your higher rate or additional rate tax band then the combined tax charge is much higher.

The arguments in favour of the low salary high dividend approach for owner directors of small companies is well known and, in most cases, an appropriate, and acceptable, tax planning strategy. Unfortunately, every person’s tax affairs are unique, and whilst the generalisations made above hold good for most shareholder directors, what is less clear – and should not be generalised – is the best-fit strategy to suit your particular circumstances.

The tax regime for dividends looks to be hardening in future years, so if you haven’t discussed your options recently, a conversation is probably overdue; and of course, we can help.

Source: New feed

Exporting goods to the EU with a no-deal Brexit

Thursday, October 18th, 2018

Last week we considered the effects of importing goods from the EU if a no-deal Brexit occurred. This week we are considering matters that government has published for exporters to the EU. A summary of the comments made in recent announcements is reproduced below.

After the UK leaves the EU, in the event of a ‘no deal’ scenario, businesses exporting goods to the EU will be required to follow customs procedures in the same way that they currently do when exporting goods to a non-EU country.

Before exporting goods to the EU, a business will need to:

  • register for an UK EORI number. You do not need to act now, but you will want to familiarise yourself with this process
  • ensure their contracts and International Terms and Conditions of Service (INCOTERMS) reflect that they are now an exporter
  • consider how they will submit export declarations, including whether to engage a customs broker, freight forwarder or logistics provider (businesses that want to do this themselves will need to acquire the appropriate software and secure the necessary authorisations from HMRC). Engaging a customs broker or acquiring the appropriate software and authorisations from HMRC will come at a cost.

When exporting goods to the EU, a business will need to:

  • have a valid EORI number
  • submit an export declaration to HMRC using their software or on-line, or get their customs broker, freight forwarder, or logistics provider to do this for them. The export declaration may need to be lodged in advance so that permission to export is granted before the goods leave the UK (the export declaration also counts as an Exit Summary Declaration – see section 3)
  • businesses may also need to apply for an export licence or provide supporting documentation to export specific types of goods from the UK, or to meet the conditions of the relevant customs export procedure.

Mitigations businesses may consider in a March 2019 ‘no deal’ scenario

Businesses should now consider the impacts on them in a ‘no deal’ scenario, which would mean a requirement to apply the same customs and excise rules to goods traded with the EU that apply for goods traded outside of the EU, including the requirement to submit customs declarations. Businesses should consider whether it is appropriate for them to acquire software and/or engage a customs broker, freight forwarder or logistics provider to support them with these new requirements.

Businesses may want to consider whether using customs procedures would be beneficial. These allow businesses to delay or relieve the payment of customs duty for goods they import into the EU until goods are ready to be released into free circulation. A customs broker, freight forwarder or logistics provider can advise in the event of a ‘no deal’ scenario whether one of these procedures would be suitable for your business. Customs procedures include the following:

  • customs warehousing: this allows businesses to store goods with duty or import VAT payments suspended. Once goods leave the warehouse, duty must be paid unless the business is re-exporting, or moving goods to another customs procedure. The warehouse must be authorised by HMRC
  • inward processing: this allows businesses to import goods from non-EU countries for work or modification in the EU. Once this has been completed, any customs duty and VAT due must be paid, unless goods are re-exported or moved to another customs procedure, or released to free circulation
  • temporary admission: this allows business to temporarily import and or/export goods such as samples, professional equipment or items for auction, exhibition or demonstration into the UK or EU. As long as the goods are not modified or altered while they are within the EU, the business will not have to pay duty or import VAT
  • authorised use: this allows a reduced or zero rate of customs duty on some goods when used for specific purposes and within a set time period.

For excise duty purposes, goods are not regarded as imported if they are immediately placed under one of these customs procedures. Businesses need to pay excise duty when these goods are released for free circulation, unless they are immediately placed in excise duty suspension.

As we are fast approaching the exit deadline affected businesses should be planning their options now.

Source: New feed

Is this a good time to invest

Tuesday, October 16th, 2018

This article considers the question: should businesses invest in new equipment or other long-term capital acquisitions at this time?

In truth, no one knows what the impact of the Brexit will be? Brexiteers believe that the floodgates will open, and the rest of the world will rush to buy our goods and services whereas Remainers, expect recession to return when the EU drawbridge is lifted.

No doubt the reality will sit somewhere between these two extreme points of view.

With these uncertainties nonetheless present, is this a good time to consider investment in new plant and equipment or that new commercial building you have your eye on?

As always, a considered response to this question is: maybe, maybe not.

Most equipment purchases will qualify for a tax break of up to £200,000 a year – as long as the purchase fits the criteria for the Annual Investment Allowance – for example, cars do not generally qualify, but commercial vehicles and other plant and equipment will. Accordingly, as the economic outlook is unclear, making purchases to take advantage of tax reliefs may not be the most prudent course of action.

Then, there is investment in equipment that will allow you to develop a new income stream for your business. More than likely, this would be a speculative investment, with higher expected returns, but higher risks. This type of investment may be best left until the immediate effects of Brexit can be ascertained and fact6ored into your business development planning.

Finally, there are investments that will make your existing business more efficient and possibly more profitable. For example, new IT and software or replacing other worn-out business assets with up-to-date alternatives.

This final area may be a plausible investment opportunity and one that will position you nicely whatever the Brexit outcome may be.

What we would suggest is a careful consideration of your options based on a combination of tax benefits, payback periods and returns on your investment. As a downturn in economic activity is possible, this is probably not the time to throw caution to winds and make unconsidered investments.

Please call if you would like our help when making these judgements for your business.

Source: New feed

Exclusivity and tax relief

Thursday, October 11th, 2018

In order to qualify as a deduction for tax purposes we have to demonstrate that the expenditure was incurred “wholly and exclusively” for the purposes of our business or employment.

We will also need to consider a further criterion: where the expenditure has a duality of purpose.

In a 1980’s case, a barrister claimed for the cost of business suits which she insisted were only used for business purposes. To her delight, the lower courts agreed, but HMRC were having none of it and pursued their case to the House of Lords where the taxpayer’s claim and appeal was dismissed.

The barrister failed to secure her claim as she could not escape the conclusion that although she may have purchased the required “subdued” clothing for her practice, the clothes purchased could have been worn on a private occasion, even though she may have chosen not to do so.

As always this and other related cases, open the door to speculation: when does expenditure meet these stringent rules?

For example, if the barrister’s suits had carried a visible label – the name of her practice – would this have tipped the balance as she could argue the suit was a uniform and not appropriate to wear on private occasions?

Removing any private advantage may be more difficult than it would appear.

Unfortunately, we are required by legislation to comply with the “wholly and exclusively” rule and if there is a whiff of private advantage to the expenditure, then it will likely be disallowed. HMRC in their instructions to staff say:

 

You should disallow expenditure on ordinary clothing worn by a trader during the course of their trade. This remains so even where particular standards of dress are required by, for example, the rules of a professional body.

Source: New feed

Importing goods from outside the EU

Tuesday, October 9th, 2018

Although the Brexit issue is not yet decided it may be salutary for businesses to consider the changes they will need to face if we depart with a no-deal Brexit. We have touched on these issues in past articles posted on this blog, but today we have reproduced the present regulations you will need to consider if you import from outside the EU – with a no-deal Brexit these, or similar processes, will need to be applied to imports from the EU.

Within the EU most goods:

  • are in free circulation,
  • can be imported with minimal customs control,
  • have no import duty or VAT to pay.

Imports from outside the EU are treated differently. You:

  • must make an import declaration to customs,
  • generally, have to pay import duty and import VAT (plus VAT on import duty).

Authorised Economic Operator (AEO)

If you’re already involved in international trade and have an Economic Operator Registration and Identification Number (EORI), you can register with HMRC as an Authorised Economic Operator (AEO).

The scheme isn’t compulsory, but companies that meet the requirements can take advantage of simplified customs procedures for the security and safety of their imported goods in transit.

Import declarations

You have to send a declaration to HMRC when you import goods into the UK from outside the EU. This is usually done using the Single Administrative Document (SAD), also known as form C88.

SADs can be submitted either electronically using the Customs Handling of Import and Export Freight (CHIEF) system, or manually (although manual submissions may take longer to process).

You need to include the:

  • customs classification
  • commodity code
  • import value of your goods
  • customs procedure code explaining what is being done with the goods, for example import to free circulation.

We could continue sketching these regulations in more detail. Sufficient to say that if you presently import, or indeed export, goods from or to the EU you should research the changes you will need to make to ensure your supply chains are maintained after March 2019.

We will be keeping a close eye on negotiations and will report again as and when the news breaks.

In the meantime, if you have concerns about possible disruptions to your supply chains post Brexit, please call for more information.

Source: New feed

Did your goat eat your accounts?

Thursday, October 4th, 2018

Companies House have published a list of bizarre excuses for the late filing of their statutory accounts. They include:

  • “goats ate my accounts”
  • “I found my wife in the bath with my accountant”
  • “pirates stole my accounts”
  • “we delivered the accounts to the betting office next door to Companies House”
  • “a volcano erupted and prevented me from filing”
  • “slugs ate my accounts”
  • “it was Valentine’s Day”
  • “my company was more successful than I thought it would be, so I was too busy to file”

As you would expect, Companies House issued late filing penalties and any appeals were swiftly quashed.

The level of the penalties charged depends on how late the accounts reach Companies House and is shown in the following table.

Length of period (measured from the date the accounts are due)

Private company penalty

Public company penalty

Not more than 1 month

£150

£750

More than 1 month but not more than 3 months

£375

£1,500

More than 3 months but not more than 6 months

£750

£3,000

More than 6 months

£1,500

£7,500

A private company’s set of acceptable accounts for the accounting period ending 30 September 2009 would need to be delivered by 30 June 2010 to avoid a late filing penalty. If they were not delivered to Companies House until 15 July 2010 the company will incur a late filing penalty of £150.

The penalties will be doubled if a company files its accounts late in 2 successive financial years beginning on or after 6 April 2008. This means that if a private company, has an accounting reference date of 30 September and the accounts for the period ending 30 September 2009 were delivered late and you delivered accounts for the subsequent period ending 30 September 2010 late, then you would incur a £300 late filing penalty.

Source: New feed

Passport issues if a no-deal Brexit

Tuesday, October 2nd, 2018

Guidance on the use of a British passport to travel abroad after 29 March 2019, if there is a “no-deal” Brexit, was issued by government last month. The pertinent facts are reproduced below:

After 29 March 2019, if you’re a British passport holder (including passports issued by the Crown Dependencies and Gibraltar), you’ll be considered a third country national and under the EU Schengen Border Code you will need to comply with different rules to enter and travel around the Schengen area. Third-country nationals are citizens of countries (like Australia, Canada and the USA) which do not belong to the EU or the European Economic Area.

According to the Schengen Border Code, third country passports must:

  • have been issued within the last 10 years on the date of arrival in a Schengen country, and
  • have at least 3 months’ validity remaining on the date of intended departure from the last country visited in the Schengen area. Because third country nationals can remain in the Schengen area for 90 days (approximately 3 months), the actual check carried out could be that the passport has at least 6 months validity remaining on the date of arrival.

If you plan to travel to the Schengen area after 29 March 2019, to avoid any possibility of your adult British passport not complying with the Schengen Border Code we suggest that you check the issue date and make sure your passport is no older than 9 years and 6 months on the day of travel.

For example, if you’re planning to travel to the Schengen area on 30 March 2019, your passport should have an issue date on or after 1 October 2009.

If you are a parent or guardian:

  • For 5-year child passports issued to under-16s, check the expiry date and make sure there will be at least 6 months validity remaining on the date of travel.
  • For example, a child planning to travel to the Schengen area on 30 March 2019 should have a passport with an expiry date on or after 1 October 2019.
  • If a child’s passport does not meet these criteria, they may be denied entry to any of the Schengen area countries, and you should renew their passport before travel.

For countries that are in the EU but not in the Schengen area, you’ll need to check the entry requirements for the country you’re travelling to before you travel.

The Schengen Area is an area comprising twenty-six European states that have officially abolished passport and all other types of border control at their mutual borders. The area mostly functions as a single jurisdiction for international travel purposes, with a common visa policy. The area is named after the Schengen Agreement. States in the Schengen Area have strengthened border controls with non-Schengen countries.

Source: New feed

Invoice discounting with larger customers

Tuesday, October 2nd, 2018

Suppliers who sell goods and services to larger concerns often find that the terms of their supply, limits or bans the process of factoring the debts to release funds into cash flow.

Cynically, this could be seen as a method these larger customers have used to control options available to their smaller suppliers.

Unfortunately, suppliers who sell predominately to major buyers find themselves in a cleft stick: they generally have to wait for longer periods to be paid and as a result are constantly short of cash.

Invoice factoring or discounting allows say 80% of a sales invoice value to be received when the invoice is issued and accepted by the customer; a specialist finance company or bank steps in to provide the discounting service.

The good news is that there is to be a change in the law to ban these restrictive practices and allow smaller companies to gain access to the funds locked up in their trade debtors.

Under the new proposed laws, any such contractual restrictions entered into after 31 December 2018, with certain exceptions, would have no effect and could be disregarded by small businesses and finance providers, which will help stop larger businesses from abusing their market position.

Source: New feed

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