As scores of superpowered FDs, CFOs and finance heroes descended on our Sky View office for our Spring FD Seminar, the stage was set for a morning packed with new connections, fresh perspectives and lightbulb ideas for our latest finance update.
Donning their most flattering supersuits, our trusty speakers delivered just that, swooping down on the latest Budget updates and sharing their advice with the bustling room.
Predictably, we learnt a lot. And if you didn’t make it on the day – or want a refresher – we’d hate for you to miss out. So, take a look at some of the highlights from our finance update compiled by our host with the most, Danny Parker below:
UK ECONOMIC UPDATE
In a brilliant, entertaining talk, Mark Berrisford-Smith summarised that markets have settled after the government-induced disruption last Autumn and there’s lots to be optimistic about. We haven’t gone into recession and energy prices have settled back down. They are, however, at risk from China’s increasing demand as they emerge from their Covid lockdown, as well as increasing usage from all of us as we see the cheaper prices and turn the thermostat back up.
Overall, though, the UK’s school report would read “doing OK, but could be doing a lot better.” Our growth rate is low, as is the case for all major economies, but people are feeling more optimistic than a year ago. The main issue in the UK will be inflation – it will certainly drop this year as energy prices fall, but getting the rate back down to the 2% target will be a real challenge due to supply-side constraints which will be difficult to overcome.
INNOVATIONS & HMRC UPDATE
Chris Knott, explained how there’s been a lot of turmoil in the world of R&D recently, with changes in effective dates, rates of relief and delayed legislation, as well as HMRC continuing their clamp-down on R&D’s ‘rogue traders’.
There are a few changes coming into effect in the near future, such as the rate changes (good news for RDEC companies, not-so-good news for small companies) and a new category of R&D claimant – the ‘R&D intensive companies’ who spend >40% of their total expenditure on R&D activities.
Others will come in later, such as the potential merging of the small company and large company/RDEC schemes and restrictions on overseas R&D expenditure. But, the biggest change is the admin. R&D is definitely not an area where the government are trying to reduce the red tape for small businesses. Far from it. Every claim must now have a completed “Additional Information Form” which includes lots of detail. So, be prepared for more admin to get your R&D tax relief but rest assured our CP Innovation team are here to help.
CORPORATE TAX UPDATE
After the ‘Liz & Kwasi show’ last Autumn we were all quite pleased that the Spring Budget was a bit boring. Everyone except our Tax team, that is, who love to get their teeth into tax changes.
That said, there were a few highlights which Adele Raiment, Director here at CP, talked us all through.
There are 12 new investment zones to be announced (watch this space), the pensions lifetime allowance will be abolished and there have been further changes to the Capital Allowances regime.
Although a number of relatively niche areas of tax will be simplified, such as low-income trusts and estates, SIP and SAYE employee share schemes and customs declarations, the red tape around Capital Allowances is increasing and assets will need to be individually tracked from now on in order to maximise the CA relief. So, in terms of admin, what’s given with one hand is taken away with the other. As always, the CP Tax team are here to help you make sense of the changes and how they apply to your business.
CORPORATE FINANCE UPDATE
Andy Parker, spoke about how the M&A market recovered well after the impact of Covid and EBITDA multiples in 2021 were at their highest level for more than 12 years, possibly because business owners chose to de-risk their positions after the understandable scare of the pandemic.
Then, 2022 happened and a combination of the Russian attack on Ukraine and the short spell of ‘Trussonomics’ spooked the markets and overall transaction activity. EBITDA multiples dropped, although interestingly the average deal value rose significantly.
Andy then talked everyone through the major sectors where activity is strong, including Business & Financial Services, Technology, Energy and Healthcare.
He also reminded us that there are plenty of reasons to be cheerful. There is lots of PE money out there that needs to be invested, and lots of cash sat on corporate balance sheets ready to be invested in M&A strategies. Banks and other debt funds also have the appetite to lend and there are several strong sectors in the UK which are showing strong resilience after a tough 2022 in the markets. If you’re interested in knowing more about fully or partially selling your business, or want to discuss your M&A strategy with one of our Corporate Finance Partners, give Andy a shout.
WEALTH MANAGEMENT UPDATE
Taking over from Andy, Ewan Rosie, one of our Wealth Partners, talked through what business owners should be thinking about as they approach the time that they look to sell their business.
Most business owners start planning their exit strategy 18 months to 3 years out from when they actually sell, and Ewan reminded business owners that, as well as working hard on getting their business in good shape, finding the right buyer and getting the best multiple, they should also start thinking about what they’re going to do once the sale happens.
That includes what to do with the money, getting their tax affairs in order, thinking about inheritance matters, etc. Too often, this thinking happens only once the deal happens, but the earlier a business owner can go through this thinking, the better. If you’d like to talk through how to go about this, give the team a call.
TECHNICAL ACCOUNTING UPDATE
Last, but certainly not least, was Audit Partner Cat Kelly with her technical accounting update. Cat told everyone about the two major changes in FRS 102 coming down the line: revenue recognition and leases, both of which are seeking to bring UK GAAP in line with IFRS; as well as several other changes in areas such as going concern disclosures, the use of fair values and financial instruments.
Anyone who’s seen Cat present at our FD Seminars before will know she has a soft spot for IFRS 16 (there’s no-one who knows more about this standard than Cat) and she talked us all through an example of how the upcoming changes will impact the accounting for operating leases.
Cat also explained how the changes to revenue recognition will work, before moving onto some more changes in the pipeline regarding Companies House and the information they will be asking for, including the removal of filleted / abridged / abbreviated accounts. Yes, in the near future, all businesses will have to file their full accounts. Gulp.
As if that wasn’t enough, Cat also fed back the key findings from the latest FRC Annual Review (watch out for your cash flow statements and financial instruments) as well as some amendments to FRS 100. And she did all that in 20 minutes, which was probably the most impressive achievement of the whole seminar. If any of these issues affect you, drop Cat a line and she’ll be able to help.
