This round of seminars will, as always, provide you with key updates and issues affecting FDs and business owners as shown in the programme below. We will also endeavour to include any relevant Brexit updates and will take questions from the audience.

1. B O D M I N
E S S E N T I A L 6 - M O N T H LY F I N A N C E
D I R E C T O R S ’ U P D AT E
N O V E M B E R 2 0 1 9
N AV I G AT I N G T U R B U L E N T T I M E S
M A K I N G S E N S E A M I D T H E C H A O S

2. INTRODUCTION
Duncan Leslie, Partner

3. HOUSEKEEPING
@pkfFrancisClark
#FDSeminar19

4. NAVIGATING TURBULENT TIMES

5. MAKING SENSE AMID THE CHAOS
• Risks are multiple
• Our advice has been
• Be prepared
• Be aware
• Be agile
• A good time for strong governance
• Protect what you have
• Make the most of opportunity

6. PROGRAMME
 9.20 – Property Tax Matters - John Endacott
 9.45 – Financial Reporting & Corporate Governance - Tim Lannin
 10.15 – VAT and Making Tax Digital - Julie Towers
 10.45 – Break
 11.15 – Cyber, GDPR and Brexit - Peter Lannon
 11.30 – Mitigating risks to the business - Rosalyn Shallcroft
 11.45 – Employment Tax Update - Scott Campbell
 12.00 – Corporate Finance - Richard Wadman
 12.15 – Panel Q&A session - www.sli.do (code #FD07)
 12.30 – Lunch

7. PANEL Q&A - CODE FD07
www.sli.do

8. PROPERTY TAX MATTERS
John Endacott, Partner & Head of Tax

9. “there are known knowns;…there are known
unknowns;…there are also unknown
unknowns;…it is the latter category that tend to
be the difficult ones.”
Donald Rumsfeld – February 2002
TAX RATES AND RELIEFS – NOVEMBER 2019

10. THE KNOWN KNOWNS
 Budget – 29 October 2018
 Boosted tax relief on capital expenditure
 Based around expected Brexit date of 29 March 2019
 Transitional period under Teresa May deal was to run
until 31 December 2020
 Last October there were concerns over economic
uncertainty during the Brexit transition

11. PLANT AND MACHINERY –
CURRENT POSITION
 Annual Investment Allowance = 100% tax relief
 Maximum £1m to 31 December 2020
 Writing Down Allowance
 18% main rate
 6% for long life & integral features (reduced
from 8% from April 2019)
 Limited period left to obtain First Year Allowances
(100%) for:
 energy saving (6 April 2020)
 water efficient technology (6 April 2020)
 low emission cars (6 April 2021)
 Electric charge points (5 April 2023)

12. PLANT AND MACHINERY IN
COMMERCIAL BUILDINGS
 Fixtures = plant and machinery installed/fixed
to building or land
 Integral features include cold & hot water
systems, heating, electrical systems, lighting,
air con
 Includes fitted kitchens, bathroom
equipment, fire alarms, data cabling, etc.
 Issue for both new and used commercial
buildings

13. CASE STUDY – NEW CAR
DEALERSHIP BUILDING AND
WORKSHOPS
Build costs £9,500,000
Special rate pool £412,000
Main rate pool £2,107,000
Ineligible £7,002,000
Tax value of exercise £478k (@19%)
Plant & machinery element is 26%

14. PLANT & MACHINERY FIXTURES IN BUILDINGS
Property Type P&M % of cost
Office – low to medium rise, not air conditioned 15% - 30%
Office – prestige air conditioned 30% - 45%
Industrial Unit 10% - 15%
Hotel 35% - 50%
Nursing Home 30% - 40%
Bars, pubs and restaurants 20% - 45%
Health centres/surgeries 30% - 40%

15. PURCHASE OF SECOND-HAND COMMERCIAL
BUILDINGS
 Capital allowances need to be considered & early planning is key
 Fixtures can be substantial part of property price
 CPSE responses very important & early negotiation
 If vendor has overlooked fixtures claim include contractual clause
(to require vendor to pool and pass via s198)?
 s198 elections = default position – sets price of fixtures within
building and binds both parties
 Impact if get it wrong = substantial & irreversible
 Specialist valuations may be required

16. STRUCTURES & BUILDINGS
ALLOWANCE (SBAS)
 Remember old industrial buildings allowance
and hotel allowances
 SBAs more wide ranging but at lower rate
 2% deduction over 50 year period
 All trades & professions
 Available for investors and occupiers

17. SBA – WHAT CAN BE CLAIMED?
 New or renovated commercial structures
 Where construction commences on/after 29
October 2018
 Claim for cost of physically constructing
building including:
 Costs of demolition or land alterations
necessary for construction
 Direct costs to bring building into existence
 Claim when building comes into use
 Any grant funding excluded

18. SBA – EXAMPLE
 Property cost £500,000
 Plant and machinery capital allowances £120,000
 SBA claim on £380,000 x 2% = £7,600 p.a.
Year no.0
50000
100000
150000
200000
250000
300000
350000
400000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49
SBAs claimed
SBA Cumulative SBA

19. Tax Revenue (£bn)
Income Tax 191
VAT 132
Corporation Tax 53
SDLT 12
CGT 9
IHT 5
SD 4
 SDLT and SD on shares raises
more revenue than CGT and
IHT combined!
STATISTICS – TAXES COLLECTED BY HMRC
2018-19

20. RATES – ENGLAND & NORTHERN IRELAND
Residential property – 3% surcharge rate Rate
Up to £125,000 3%
£125,001 to £250,000 5%
£250,001 to £925,000 8%
£925,001 to £1.5 million 13%
Above £1.5 million 15%
Non-residential Rate
Up to £150,000 0%
£150,001 to £250,000 2%
Above £250,000 5%

21. RESIDENTIAL PROPERTY PURCHASE BY
COMPANY
 SDLT charged at 15% on residential properties purchased for more
than £500,000 by certain corporate bodies:
 Companies
 Partnerships with corporate member
 Collective investment schemes (including a unit trust)
 Where the 15% charge applies, the 3% charge does not apply
 If relief from the 15% charge applies, 3% charge may apply

22. RESIDENTIAL PROPERTY
PURCHASE BY COMPANY
 The 15% rate does not apply to property bought by a
company that is to be used for:
 a property rental business
 property developers and trader
 property made available to the public
 financial institutions acquiring property in the course of
lending
 property occupied by employees
 Farmhouses
 Relief must be claimed via SDLT return
 Change of qualifying use within 3 years triggers
withdrawal!
 Also need to consider Annual Tax on Enveloped Dwellings
(ATED)!

23. SOME VALUABLE SDLT RELIEFS
Relief SDLT saving? 3-year clawback?
Multiple dwellings relief  
Sale and leaseback 
Pre-completion relief 
Group relief  

24. PERSONAL CAPITAL GAINS
TAX CHANGES
 Announced in 2018 Budget and draft legislation in
Finance Bill 2019
 To take effect on all disposals made from 6 April
2020:
- Final period of PPR exemption reduced from
18 months to 9 months.
- Lettings relief will only apply where an owner
is in shared occupancy with a tenant.
 Lettings relief restriction retroactive - no relief for
let periods prior to April 2020 where not shared
occupancy.
 ALSO - Post 6 April 2020, where a UK resident
make a disposal of a residential property which is
not covered fully by a relief (e.g. PPR), a return
must be made to HMRC within 30 days after
completion and payment made.

25.  Miss Wise purchased a house for
£200,000 in April 2000
 Sold for £500,000 in April 2020.
 During 20 years of ownership:
 Lived in the house as her only
residence for 15 years
 Let the entire property for last 5
years before sale.
 Gain:
 5 April £12,500
 6 April £63,750
EXAMPLE - MISS WISE

26.  Known unknowns:
 General Election – 12 December 2019
 BREXIT – 31 January 2020?
 Will Sajid Javid be the shortest serving living
Chancellor since Philip Snowden in 1924?
 When will we next have a Budget?
 And then there are the unknown unknowns?
TAX RATES AND RELIEFS – OUTLOOK

27. FINANCIAL REPORTING &
CORPORATE GOVERNANCE
Tim Lannin, Director

28. IN THIS SESSION:
 Audit – the state of the nation
 FRS 102 – the updated version
 Enhanced narrative reporting
 Business resilience
 Coming soon: Carbon Energy Reporting

29. AUDIT – THE STATE OF THE NATION
Consultations
and reviews
Brydon still to
report
Government
action
expected 2020
Response
FRC and audit
quality
Fee impact

30. FRS 102:THE
UPDATED VERSION

31. FRS 102 (MARCH 2018)
 Periods beginning 1 January 2019
 For all entities who did not early adopt
 Key accounting changes:
 Intangibles acquired in business
combinations
 Investment property and related
clarifications
 Key management personnel compensation
 Removal of undue cost or effort
exemptions
 Disclosure changes
 New: Net Debt Reconciliation to inform
CFS
 No longer required: inventory charged as
an expense
 Restricted: financial instruments note only
for fair valued items

32. INTANGIBLES AS PART OF ACQUISITION:
NEW RECOGNITION RULES
• Separable and arising from
contractual or legal rights
Must
capitalise
• Separable
• or
• Contractual or legal rights
May
capitalise
• Policy decision per class of asset
• Apply consistently between acquisitions

33. WHICH INTANGIBLES COULD BE CAPITALISED?
Type Contractual or other
legal rights?
Separable? Capitalise*
Trademarks Yes Yes Must
Customer lists No Yes May
Customer contracts Yes If transferable Must if transferable
Construction permits Yes If transferable Must if transferable
Unpatented technology
/ software
No Yes May
* As long as probable expected future economic benefits and reliable cost/value.

34. TRANSITION REQUIREMENTS
FOR INTANGIBLES
 No retrospective restatement permitted
 Existing intangibles continue to be
recognised and amortised
 What if company failed to identify
separately last year?
 Any policy change arising from revised FRS
102 is wholly prospective
 Potentially simplifies accounting for future
acquisitions
 Any acquisitions in year?
 Advantages to identifying specific classes
of intangible for separate recognition?
Requires advance planning
 New tax considerations for business
acquisitions on or after 1/4/19

35. INTRA GROUP PROPERTY RENTAL
Accounting
impact
Revised
policy
options
Existing
treatment
Investment
property
Reclassify as
TFA
Freeze FV as
deemed cost
Reverse FV
and carry at
historic cost
Retain
classification
Fair value via
P&L

36. ACCOUNTING FOR CHANGE OF USE IN
PROPERTY
Investment
property
TFA/ Stock
Investment
property
TFA
Investment
property
Stock
Fair value at date
of transfer =
“deemed cost”
Depreciation to
date of change
Uplift to FV
Initial uplift to RR
Uplift to FV
Difference to CV
recognised in
P&L

37. COMPONENT ACCOUNTING
Assess
overall UEL
Allocate cost
Depreciate
over relative
UELs
Capitalise
replacement
components
Significant
component with
shorter life?
Estimate may
be required
Eliminate NBV
of original
component

38. ENHANCED NARRATIVE
REPORTING

39. ENHANCED NARRATIVE REPORTING:
PLANNING REQUIRED!
Average >250
employees
Large
companies
How
directors
have met
their duty
under s172
Periods
beginning on or
after 1/1/19

40. ADDITIONS TO DIRECTORS’ REPORTS
DIRECTORS’ REPORTS
Employee engagement Stakeholder engagement
• Statement which
summarises how directors:
• have engaged with
employees
• had regard to
employee interests and
impact of that regard
on principal decisions
taken in year
• Statement which
summarises how the
directors:
• Have had regard for
need to foster
business
relationships
• The effect of that
regard on principal
decisions taken in
year

41. S172 STATEMENTS: SOME POINTERS
Meaningful
and
informative
Matters of
strategic
importance
Consistent
with size and
complexity of
business
Separately
identifiable
statement
Focus on
principal
business
decisions

42. S172 STATEMENT: PRINCIPAL DECISIONS
EXPLAINED
• May cross refer to detail elsewhere in SR
• Focus on the strategically important items
Summary of
principal
decisions
• Business model and strategy, principal risks,
reputation, value creation
Impact on long
term success of
business
• How we engaged
• Impact on decisions
• Mitigating actions
Stakeholder
considerations

43. PULLING IT ALL TOGETHER….
 S172 disclosure is in
relation to strategically
important issues
 Potential for repetition:
 Consultation with
employees over material
matter
 Impact of decisions on
suppliers and customers
Unless not material matters,
in which case include in
directors’ report
Strategic
report:
s172
statement
Directors’
report:
additional
statements
Strategic
report, plus
sign post from
directors’
report?

44. RESPECTIVE RESPONSIBILITIES
The
board
Plan and
agree
content
Impact on
governance
processes?
The
auditors
Report on
compliance
with the law
Consistent
with audit
knowledge

45. BUSINESS
RESILIENCE

46. BUSINESS AS USUAL?
Impact
on stress
testing?
Brexit
Technology Regulation
Climate
change

47. BREXIT IN YOUR ACCOUNTS
PRUs
Impact on
projections
Going
concern
PBSEs

48. CLIMATE CHANGE:
IN YOUR BUSINESS PLAN?
Physical
risks
Direct
Indirect
Transition
risks
Policy
Market

49. REMINDER: CARBON ENERGY REPORTING
WILL YOU BE READY TO REPORT?
Large entities, periods beginning 1/4/19
UK energy use, tCO2e
Intensity ratio
Energy efficiency measures

50. VAT
Julie Towers, VAT Partner

51. AGENDA
• Brexit – where are we?
• Customs duty
• Key updates

52. BREXIT - WHERE ARE WE?

54. BREXIT – WHERE ARE WE?
31/10/19
No deal
does not
happen
31/01/20
UK leaves
EU customs
union
Transitional period – UK
abides by EU rules
31/12/20
End of
transitional
period
UK no longer treated as part of
EU for VAT and customs duty
Technically there could still be a no deal, but unlikely

55.  Whole of the UK leaves the customs union
 Legally there is a border between Northern
Ireland and the Republic but no checks will
be made at the border
 Checks will be made at the point of entry
into Northern Ireland
 VAT and duty will be paid at point of entry
into Northern Ireland on ‘at risk’ goods
which could be transported to the Republic
 Goods stay in Northern Ireland – refund
 Goods move on to the Republic – no
refund
 EU law on VAT will apply in Northern
Ireland for goods
BREXIT – WHERE ARE WE?
IRISH BORDER PROBLEM

56. BREXIT – WHERE ARE WE?
GOODS
Goods sent
from UK to
EU
countries -
exports
Goods sent
to UK from
EU –
imports
No more EC
Sales Lists
and
Intrastats
Distance
sales

57. BREXIT – WHERE ARE WE?
SERVICES
Services supplied to customers outside UK – most
outside scope of UK VAT
Services purchased from non-UK suppliers – reverse
charge applies to most
Mini One Stop Shop (MOSS) – new non-Union
registration will be required

58. BREXIT – WHERE ARE WE?
TRADING IN EU COUNTRIES
Goods
held in
EU
Fiscal rep
required?
Apply
for EU
EORI
Exporter
of record

59. BREXIT – WHERE ARE WE?
NO DEAL
Postponed import VAT accounting and no deal tariff
Transitional
Simplified Procedure
(TSP)
No deal deferment
account
Changes to VAT
return

60.  If you currently only trade with EU
countries check you have an EORI
 If you incur VAT on expenditure in other
EU countries check when claims
should be submitted
 Ensure your accounting software is
updated for the changes
 Check existing contracts with your
customers and suppliers
 Are your suppliers and customers
ready?
 If you hold goods in the EU apply for an
EU EORI after Brexit
 Do you need to appoint fiscal reps in
any EU countries?
 If you sell goods B2C do you need to
register in multiple EU countries?
BREXIT – WHERE ARE WE?
TIPS/CHECKLIST

61. CUSTOMS DUTY

62. CUSTOMS DUTY
BACKGROUND
 Customs duty is payable on goods imported
into the UK from non EU countries
 Rates 0% to 20+%
 Irrecoverable cost for businesses
 Brexit will mean additional customs duty cost
for UK business

63. CUSTOMS DUTY
RELIEFS AVAILABLE
Reliefs
Inward processing
Outward processing
Temporary import
End use relief
Warehouses

64. CUSTOMS DUTY
OTHER CONSIDERATIONS
Classification support – choosing the correct classification determines the
rate of duty
Valuation
HMRC visits increased over the last 2 years as more resource devoted to
customs duty
Export Licence issues
Grants are available for Brexit customs training

65. EXAMPLE
CLASSIFICATION
 Company had been importing under 0% wood
code
 Wood/Plastic Composite decking found to be
Plastic in EU 2013 Regulation (6.5%)
 Assessment raised for unpaid duty in past 3
years - £60,000+
 Potential for penalty

66. EXAMPLE
BORDER FORCE SEIZURE
 Border Force Seizure of goods –
Company bought products in the UK
and sold to an African country
 40 years of trading and no previous
queries from HMRC
 Goods subject to licences
 20% Penalty on Value of Goods
 Licencing issue leads to compliance
audit

67. KEY UPDATES

68. KEY UPDATES
INVESTMENT PROPERTIES
REMINDER! Don’t forget about VAT when purchasing
or letting investment properties
 Less than 3 years old?
 Has vendor opted to tax?
 Status of entity purchasing
 Could purchase be a TOGC?

69. VAT – KEY UPDATES
MAKING TAX DIGITAL
 Deferred taxpayers have to comply from 1
October 2019
 March/June/Sept/Dec –December quarter
 Deadline Friday 7th February or Friday 31
January if payments on account
 Online set-ups have encountered glitches
 1 year extension for digital links

70. KEY UPDATES
VAT GROUPS
Sole trader/
Partnership
Co 1
Co 3 Co 4
Co 2
Co 5

71. AND FINALLY

72. AND FINALLY

73. BREAK

74. PANEL Q&A - CODE FD07
www.sli.do

75. CYBER, GDPR & BREXIT
Peter Lannon, Cyber Protection Adviser

76. CURRENT THREATS IN CYBER
SECURITY
• Business email compromise
• Ransomware
• Data breaches caused by external threats
• Data breaches caused by employees
What are the current threats?
Does this affect me?
• Do you use email to communicate?
• Do you have critical systems or data on a computer network?
• Do your employees use your computer network?
• Educate everyone
• Implement proven controls
• Have robust response and continuity plans
What do I need to do?

77. DEMONSTRATION

78. DATA PROTECTION UPDATE
• Brexit (apparently)
What is happening?
Key points
• GDPR will be written into UK law as part of the
withdrawal agreement.
• The transition period will see us still treated as an
EU member state so there will be no change during
this time.
• We will seek ‘adequacy’ during this period.

79. PREVENTION IS BETTER THAN CURE

80. MITIGATING RISKS TO THE
BUSINESS
Rosalyn Shallcroft, Financial Planner

81. AGENDA
• Why is the absence of a key person a risk?
(we’re talking about death, illness, injury)
• Types of Risk
• Mitigating the risk(s)
• Trigger Points for review

82. WHY IS THE ABSENCE OF A KEY PERSON A RISK? –
CASE STUDY

83.  A successful business: brothers Angus, Alistair and Allan
started the business with dad Alexander in 1993
 Equal shareholding: 25% each
 Sold coffee at railway stations across UK
 Business expanded quickly and was profitable and
successful
 Angus died of cancer, in 2006, aged just 45.
 His shares were held by his estate
 No proper structure in place
WHY IS THE ABSENCE OF A KEY PERSON A RISK? –
CASE STUDY

84. WHY IS THE ABSENCE OF A KEY PERSON A RISK?
Consequences:
No plan for what happens next
Angus’ spouse lost control and influence of the business – but had no
recourse to cash-in shares
The surviving brothers scuppered a business sale
And ran up huge directors loan accounts
And paid themselves excessive wages without proper shareholder approval
And failed to pay dividends (deprived estate of funds)

85. WHY IS THE ABSENCE OF A
KEY PERSON A RISK?
The Daily Mail headlines:
 Widow of AMT coffee tycoon wins
settlement from his business partner
brothers
 The brothers 'used the firm like a piggy
bank'
 When Angus died of cancer, brothers’
partnership collapsed into ‘squabbling’
 Alistair branded sister-in-law a ‘gold
digger’ but court has ruled in her favour

86. HOW BIG WAS THE
SETTLEMENT?
A)£75,000
B)£700,000
C)£750,000
D)£7m

87. TYPES OF RISK
Risks that are taken as a given:
 Fire
 Property dilapidation
 Break-in/Theft
 Machine/Vehicle Breakdown
 Public Indemnity
 Fraud
 Cyber Security
 Disruptive Technology
 Tax/Legislation change
What about people?
What about the MD?

88. TYPES OF RISK
Three key areas to consider with the absence of a person
Key Person
Loan Protection
Shareholder Protection

89. TYPES OF RISK KEY PERSON
 Develop business plans, budgets and strategies
 Implement them
 Ensure the organisation’s operations and business are within the
parameters set by the board
 Identify and manage operational and corporate risks for the organisation
 Formulate strategies for managing and mitigating those risks
 Manage the organisation’s financial and other reporting mechanisms, and
control and monitoring systems
 Ensuring that the board is provided with sufficient accurate information on
a timely basis in regard to the organisation
 Provide management oversight and responsibility across the organisation
 Ensure the effective and efficient functioning of the organisation
MDs – (some) key responsibilities

90. TYPES OF RISK; KEY PERSON
 Some people’s skills are irreplaceable.
 In your business think of the most important/most skilled person
 In their absence would you have confidence in others performing
their role?
 When was the last time you reviewed the responsibilities of senior
people in your organisation?
 In their absence would you have confidence in others performing
their role, properly?

91. TYPES OF RISK; DEBT
• Debt
• Loans must be repaid immediately?
• How will debt be serviced?
• Other Creditors?

92. TYPES OF RISK; BUSINESS OWNERS
• What happens to the business ownership on
death?
• What do the owners want to happen?
• What happens to the business ownership on
illness?
• What do the owners want to happen?

93. MITIGATING THE RISK
• If you haven't got a successor lined up for a key
person…
• The business needs funds to ‘buy in’ skills
• And provide financial confidence
Identify:
• Who are the key people?
• What do they do?
• What are their skills worth to the business?
• Are you claiming tax relief (where available)?

94. MITIGATING THE RISK
Structure of Key Person protection
 Ensure tax relief is claimed on premiums at outset, if applicable.
(Anderson Principles apply)
 Pay-out may be taxable – because it’s to cover lost profits
 Get the sum assured correct – and review it!
 If Anderson Principles are not met ensure your accountants are
aware of the purpose of the cover

95. MITIGATING THE RISK
Structure of Key Person protection:
Anderson Principles
1. Insurance taken out by Employer on life of
Employee
2. ‘Sole Relationship’ (5% rule)
3. For Loss of profits
4. “Short Term”…
“Short Term is anything that isn't Long term”
Term of the policy should be justifiable – how long is
someone expected to be key?

96. MITIGATING THE RISK
Structure of Loan Protection
• …Should mirror the terms of the loan
• And should be reviewed as borrowings change

97. MITIGATING THE RISK
Structure of Shareholder protection
 Get the valuation right!
 Decide on structure;
 Share buy back
 Trust and Option
 Life of Another
 Automatic Accrual (Partnerships)
 Articles of Association
 Shareholders Agreement
 Does it facilitate the correct valuation?
 And transaction? (cross-option)

98. TRIGGER POINTS FOR REVIEW
• Retirement
• New Appointment
• New Role/Department
• Company re-structure
• M&A
• Qualification/Ascension
• Increased (or decreased) debt
• Increase (or decrease) in Business Value
• Marriage
• Increased (or decreased) debt
Business Protection is NOT a one-time-only
consideration!

99. EMPLOYMENT TAX UPDATE
Scott Campbell, Tax Senior Manager

100. EMPLOYMENT TAX UPDATE
 Off payroll working – the future of
employment status
 Termination payments – not just taxing.
 Salary sacrifice – are you missing an
opportunity to save money?

101. OFF PAYROLL
WORKING
The future of employment status

102. OFF PAYROLL WORKING – THE FUTURE OF
EMPLOYMENT STATUS
• IR35/Off payroll/Status
• update on where we are ahead of April 2020 and
• recent reaction by large employers for example Barclay’s Bank
• Recent BBC cases and what we can learn
• Office Holders and Petrol Services Ltd Tax Case

103. OFF PAYROLL WORKING – THE FUTURE OF
EMPLOYMENT STATUS
• Organisations affected by the reforms should act sooner rather than
later to prepare for the April 2020 changes.
• Organisations need to identify and review their current
engagements with intermediaries, including PSCs and agencies that
supply labour to them
• Put in place comprehensive, joined-up processes (assess roles
from a procurement, HR, tax and line management perspective) to
get consistent decisions about the employment status of the people
they engage
• Review internal systems, such as payroll software, process maps,
HR and on-boarding policies to see if they need changes.

104. TERMINATION
PAYMENTS
Not just taxing

105. TERMINATION PAYMENTS – NOT JUST TAXING
Pre 6 April 2018
 Contractual or Expectation for Payment in Lieu of Notice (PILON) liable to tax
and NI
 Potential for £30,000 tax and NI free
 Excess over £30,000 taxable but not liable to NI
Post 6 April 2018
 New Post Employment Notice Pay (PENP) legislation results in all PILON
payments, both contractual and non-contractual, liable to tax and NI
 See worked example
Post 6 April 2020
 Class 1A NI due on termination (compensation) payments over £30,000
 NI could be in real time via the payroll

106. SALARY SACRIFICE
Are you missing an opportunity to save money?

107. SALARY SACRIFICE – ARE YOU MISSING AN
OPPORTUNITY TO SAVE MONEY?
Opportunities for savings
 Savings for both the employee and employer
 Salary Sacrifice still available on:
 employer provided pensions and pension advice;
 cycle to work schemes; and
 ultra-low emissions cars, with emissions not exceeding 75g CO2 per
kilometre.
Pension Contribution 50 x £600 = £30,000 50 x £1,500 = £75,000
Employer NI Saving at
13.8%
£4,140 £10,350
Employee NI Saving at
12%
£72 £180

108. CORPORATE FINANCE
Richard Wadman, Corporate Finance Director

109. AGENDA
Funding markets
Trends in debt/equity markets
Importance of strategy in business planning
Market trends:
- Transactions, Funding Structures, Pricing

110. FUNDING MARKETS

111. EVOLUTION OF DEBT MARKET CONTINUES
• Significant change by many of the traditional debt funders
• Challenger Banks refocusing their strategy
• New Debt funds and Mezzanine offerings now in the OMB/SME
marketplace

112. GROWING SIGNIFICANCE – VENTURE DEBT AND
PEER TO PEER
 Funding for fast growing companies
 Normally alongside private equity (high growth)
 Large players picky about who they will invest with
Venture debt
Peer to Peer
 Strong growth, £4.5b, doubled 2018 vs 2016
 Default rates edging up
 Care over PGs

113. DEBT MARKET RESILIENCE
“The UK financial system is resilient to the wide
range of risks it could face, including Brexit.”
Source: BoE, Nov 18
Stress test:
 GDP down 4.7%,
 Unemployment 9.5%,
 33% fall in property prices
 27% fall in sterling
 Base rate 4%

114. PRIVATE EQUITY: END OF A CYCLE?
 Looking to counter cyclical businesses
 Recruitment sector (no equity investments 2019)
 Good time to invest?
 BGF and few others look at cheques below £5m if non VCT qualifying
 HNWI difficult to access
 Debt vs equity risk often misunderstood

115. IMPORTANCE OF CLARITY
Improving your desired outcome

116. Go to new
funders
Consider
reasons for
rejection
Funders’
review
Produce
forecasts
Write business
plan
Funding
requirement
identified
FUNDING PROCESS
 Rejected by funder
 Difficult to return to same funder
 Forecasts don’t match business plan

117. Write business
plan
Produce
forecasts
Funders’
review
Strategy
review
Consider debt
or equity risk
Identify
preferred
funders
FUNDING PROCESS
Funding offer
Funding
requirement
identified

118.  Is incremental changes creating a sustainable proposition?
 What assumptions have you made and are they valid?
 Look at other businesses and any ideas (in other markets) that have
been game changers
 Digital Disruption will radically affect and change many markets
 Vision, value and culture alignment - purpose
CHALLENGE THE ASSUMPTIONS –
HORIZON PLANNING

119.  Independent facilitator / third party view of experienced market
 Look at all relevant material – benchmark and analysis of current
position
 Tie back to numbers and document in a form which can easily be
revisited
 Document inputs and outputs in forming the strategic priorities
 Measurement and challenge on progression against the strategy;
revisit assumptions
STRATEGY SESSIONS

120. MARKET TRENDS
Transactions, funding structures, pricing

121. SOUTH WEST DEALS (2010 -2019)
Source: Experian
20% fall
268
337

122. M&A DEAL STRUCTURE TRENDS
 Multiples holding up for good quality businesses
 Increasing focus on:
 Earn outs when growth is key to value
 Retention of vendors for consultancy / handover period
 Overseas buyers
 Impact of exchange rates – lower cost of UK assets
 Confidence in the UK economy; almost despite Brexit

123. M & A D E A L S T R U C T U R E T R E N D S
Alignment of ‘financial planets’
Funding availability
Pricing
Multiples
Entrepreneur’s Relief …but for how long??

124. SUMMARY
Duncan Leslie, Partner

125. SNAPSHOT
Session Topic Takeaway
Tax Property taxes Bigger and more complicated
Financial reporting Audit market is changing
FRS102 revised
Enhanced reporting
Costs are increasing from regulatory pressure
Acquisitions need thought
Not a boilerplate exercise – takes time
VAT Uncertainty
More customs visits
MTD
Know the rules when they are known
Be prepared for challenge
Takes time to work
Cyber Attacks and consequences
happen
Becoming more of an
element of due diligence,
bank funding decisions and
procurement generally
Do some basic penetration testing
It could happen to you, consequences are severe

126. SNAPSHOT
Session Topic Takeaway
Business risk Shareholder protection Have you reviewed cover
Employment tax Off payroll workers
Termination payments
Salary sacrifice
Rules are changing, its complicated – review your
arrangements
Rules are changing, its complicated – review your
arrangements
Good opportunities here
Corporate finance Funding landscape is changing
Deals are down
Planets are aligned
Know where to look
Is it Brexit or more fundamental?
For how long?
Take advice where you need to!

127. PANEL Q&A - CODE FD07
www.sli.do

128. Francis Clark LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other
individual member firm or firms.
01392 667000
Exeter
01722 337661
Salisbury
01823 275925
Taunton
01803 320100
Torquay
01872 276477
Truro
01752 301010
Plymouth
01202 663600
Poole
Bristol
0117 403 9800

129. © copyright PKF Francis Clark, 2019
You shall not copy, make available, retransmit, reproduce, sell, disseminate, separate, licence, distribute, store electronically, publish, broadcast or
otherwise circulate either within your business or for public or commercial purposes any of (or any part of) these materials and / or any services provided
by PKF Francis Clark in any format whatsoever unless you have obtained prior written consent from PKF Francis Clark to do so and entered into a licence.
To the maximum extent permitted by applicable law PKF Francis Clark excludes all representations, warranties and conditions (including, without
limitation, the conditions implied by law) in respect of these materials and /or any services provided by PKF Francis Clark.
These materials and /or any services provided by PKF Francis Clark are designed solely for the benefit of delegates of PKF Francis Clark.
The content of these materials and / or any services provided by PKF Francis Clark does not constitute advice and whilst PKF Francis Clark endeavours
to ensure that the materials and / or any services provided by PKF Francis Clark are correct, we do not warrant the completeness or accuracy of the
materials and /or any services provided by PKF Francis Clark; nor do we commit to ensuring that these materials and / or any services provided by PKF
Francis Clark are up-to-date or error or omission-free.
Where indicated, these materials are subject to Crown copyright protection. Re-use of any such Crown copyright-protected material is subject to current
law and related regulations on the re-use of Crown copyright extracts in England and Wales.
These materials and / or any services provided by PKF Francis Clark are subject to our terms and conditions of business as amended from time to time, a
copy of which is available on request.
Our liability is limited and to the maximum extent permitted under applicable law PKF Francis Clark will not be liable for any direct, indirect or consequential
loss or damage arising in connection with these materials and / or any services provided by PKF Francis Clark, whether arising in tort, contract, or
otherwise, including, without limitation, any loss of profit, contracts, business, goodwill, data, income or revenue. Please note however, that our liability for
fraud, for death or personal injury caused by our negligence, or for any other liability is not excluded or limited.
PKF Francis Clark is a trading name of Francis Clark LLP. Francis Clark LLP is a limited liability partnership, registered in England and Wales with
registered number OC349116. The registered office is Sigma House, Oak View Close, Edginswell Park, Torquay TQ2 7FF where a list of members is
available for inspection and at www.pkf-francisclark.co.uk. The term ‘Partner’ is used to refer to a member of Francis Clark LLP or to an employee.
Registered to carry on audit work in the UK and Ireland, regulated for a range of investment business activities and licensed to carry out reserved legal
activity of non-contentious probate in England and Wales by the Institute of Chartered Accountants in England and Wales. Partners acting as insolvency
practitioners are licensed in the UK by the Institute of Chartered Accountants in England and Wales. A partner appointed as Administrator or Administrative
Receiver acts only as agent of the insolvent entity and without personal liability. Francis Clark LLP is a member firm of the PKF International Limited
network of legally independent firms and does not accept responsibility or liability for the actions or inactions on the part of any other individual member
firm or firms.