Yes, I am ANGRY.
Why?
Because today a good entrepreneurial friend of mine has told me that he is putting his company into a CVA (Company's Voluntary Arrangement).
Is this because his business is loss making?
No.
It's actually a great British manufacturing company, which turns over getting on for £500k and is profit making every year.
The reason is that the business has fallen behind with their VAT. But instead of HMRCE being willing to negotiate terms, they are forcing the company into the action because of continued threats to send in the balliffs.
OK, OK I realise everyone has to pay their VAT, and if people don't it's not fair on all the rest.
BUT at a time when literally BILLIONS of pounds are currently being pumped in to try to make Britain a more enterprising culture, and encouraging people to go into business, WHY OH WHY are we condemning successful existing businesses to death in this way?
(Only about 5% of companies which set up in the UK go on to become profitable companies like my friend's)
Gordon Brown, Peter Mandelson, PLEASE - you guys need to sort out a more supportive solution for companies that get into trouble rather than just condemn them to death.
Call off the dogs and give these entrepreneurs some help in their time of need - so they can survive and be part of this country's future - not thrown on the scrapheap as another insolvency statistic.
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35 comments:
Question, if he is making a profit why is he behind with VAT.
Why doesn't he just pay the VAT and that would be that surely, he has obviously charged and collected the VAT.
N
Rachel,
Do you not believe that the plan is now very much global? Regardless of whichever country the decisions makers come from?
Geography doesn't count now. If it can be made cheaper and more profitable elsewhere, then that's the way the cookie crumbles. There is no strategy anymore that says we should position a certain percentage of resources/skills etc on these shores.
I have recently been asked to advise on offshoring security strategy. This is to do advising on the vulnerabilities that will exist where projects are managed across different groups in different countries.
This would never have happened before. I told them to get stuffed because i can see what is happening.
These guys are obsessed with moving everything and anything offshore.
I'd say that business people should start planning around this fact.
I am sorry to hear about your friend and his workforce.
N
You obviously haven't experienced the juggle that is entrepreneurship.
Stephen
My worry is that all our basics are lost overseas - food, energy, manufacturing.
We are so vulnerable, and it is so unnecessary.
R
Yes, i see this Rachel.
I cannot believe that this has been done unwittingly.
Perhaps a big piece of the meteor - or whatever it is, is going to drop on the UK.
Perhaps the new world order will be run from Beijing.
If this were a battlefield, we would definitely be positioned - for the taking.
Presumably, he is leveraged to the eyeballs already and cannot borrow to cover this? Has he tried the friends and family route?
Does he have a single major supplier or customer? If so, it might be worth approaching them to help.
Will his asset value cover the outstanding liabilities? If not it might be worth pointing this out to his creditors and ask for more funds to cover the VAT. It's commercial blackmail but when I worked in the bank a few firms did it to us quite successfully although we took equity as a a result.
I'm sure you've been through this stuff already so apologies if I am teaching you to suck eggs.
I agree with you on the HMRC front by the way. They have no interest or even understanding of enterprise.
C
Rachel,
With respect to your comment on how it is a juggle to be an entrepreneur, i am very sorry but if you are charging VAT you should pay it...
Not keep it, therefore in my mind the juggle isnt a question where VAT is concerned..You should pay it the reason a business charges it is so it goes straight to the goverment..
VAT isnt for the profit of the business.
So all of your books you have sold lately, do you keep the VAT? NO you dont..
Yea right anonymous,
We're just bailing out all the banks with public money for screwing up, but we should not bail out the good old British tax paying business.
Yes, we know only too well that tax must be paid. The government spend millions on advertising to remind us that it is our responsibility to pay every penny.
But we never thought our contribution would ever be used to bail out commercial enterprise.
Times are changing and it is only too right that businesses that need help, should get it. If it is good enough for Northern Rock it should be good enough for smallco Ltd.
And i don't buy the argument that bail outs were all the government could do. They should have repossessed all assets owned by the fat cats who were charged with the responsibility for managing the financial systems.
The public should not be asked to pay for their mistakes.
ps. i'd like to see a few more traders, stockbrokers and bank managers jumping out of windows.
It is the only honorable thing.
If they want 1929, they should be prepared to act out the role.
Personally i think the whole thing is BS. Someone decided that in 2008 the s*** was going to hit the fan - and so it did. Amazing coincidence.
Credit Crunch.
Main Street vs. Wall Street....
convenient labels.
Yes yes yes stephen,
Banks this and banks that, they are in trouble.
But i don't see the excuse her for the VAT issue, it could have been avoided easily??
Kepp with the matter in hand..
Mind you Mrs Angry from Bakewell, if you are that bothered why don't you pay his VAT?
Yes i agree
Mrs Millionaire???
£1 a second, why not???
I am the other Anonymous by the way....
I am lets say James Bond
And I am Miss Moneypenny!!, but I still aint gonna pay his VAT
A hahahahahaha, Excellent.
Hahahahahaha,
I love it.....
"BUT at a time when literally BILLIONS of pounds are currently being pumped in to try to make Britain a more enterprising culture, and encouraging people to go into business, WHY OH WHY are we condemning successful existing businesses to death in this way?"
Im not in the least bit surpriced. What youve found is one example of the counterintuitive good governments claim theyre doing. /Bo
Three sad facts.
(a) Manufacturing of any sort is the toughest kind of business to run - the margins are thin. The cashflowswings are wild, the ratio of profit to assets is low. The life is tough, and when the economy sneezes, manufacturing catches pneumonia.
(b) This country is obsessed with service industries who create nothing and yet siphon off a massive proportion of the wealth. It is not justifiable that glorified paper pushers like accountants and solictors and bankers are paid disproportionately to create nothing
(c) It is people in safe jobs in (b) that sit in judgement on those in (a). and they have not a clue how tough it really is.
I have a solution.
Which is tell blair to repay the money he stole by taking a £300K mortgage on a £150K home in durham courtsey the tax payer, ditto the other MPs with snouts in the trough buying new kitchens for second homes at the taxpayers expense and use that money to help this company.
Three sad facts.
(a) Manufacturing of any sort is the toughest kind of business to run - the margins are thin. The cashflowswings are wild, the ratio of profit to assets is low. The life is tough, and when the economy sneezes, manufacturing catches pneumonia.
(b) This country is obsessed with service industries who create nothing and yet siphon off a massive proportion of the wealth. It is not justifiable that glorified paper pushers like accountants and solictors and bankers are paid disproportionately to create nothing
(c) It is people in safe jobs in (b) that sit in judgement on those in (a). and they have not a clue how tough it really is.
I have a solution.
Which is tell blair to repay the money he stole by taking a £300K mortgage on a £150K home in durham courtsey the tax payer, ditto the other MPs with snouts in the trough buying new kitchens for second homes at the taxpayers expense and use that money to help this company.
Now, I am not in any way a financial expert, and have to admit I do not really know that much about financial role in a company, but, it appears to me that there is a cashflow problem with the afformentioned company, now assuming that this man is waiting for his money and that is why he is behind with his VAT, then surely the VAT man should be looking to retrieve the VAT from the one who owes the above company, in other words why should that company with the problem be penalised because someone else has not paid?
And in reply to the last anonymous, not all in the banking world are safe, there will be redundancies there to, and there have been redundancies already, it seems that the only ones who are truly safe are the Government!
DLOG
Like someone said. See if someone can't help him out. Maybe take a percentage of equity in return for a small investment too tied him over.
Problem there is that you never know when the powers that be will stop their scaremongering exercise which is destroying confidence in every corner of the market.
How can anyone invest in anything when they are rocking the boat like this?
They are on a mission to self-destruct and are likely to take most everyone else down with them.
I will always think it was an act of self-sabotage. Unforgivable.
I have a manufacturing business and a service business both of which export outside the EU.
Both do well in the international market because they both have highly skilled people. The manufacturing business is not protected by patents and could be replicated in China or India. However, we still make good margins because we have an established brand and make a virtue of the fact that we are British. Ironically, one of our export markets is now China.
It is not all doom and gloom in manufacturing but you need to choose how you compete. Some businesses are simply not viable in the UK anymore, but plenty are.
Also, don't forget that as China and India etc. get richer and energy costs (and thus transport) increase, the UK will become more competitive in some sectors.
C
PS. DLOG - you really should know your numbers in business. Get yourself on a course if you don't!
C, thanks for your advice, with all due respect, let me enlighten you if I may.
We are a family business, I am production, so to speak, and my brotther is accounts, it works well, it is a matter of trust on both counts, as without the accounts being in order and up to date I would not be to produce effeciently as I would not be able to procure supplies. And likewise, without my production skills we would not be able to produce work thereby not get any money in.
The strange thing is I have just been nominated Treasurer of our Charity, so perhaps I will have to learn more about accountancy, luckily for me though one of our members is an accountant, so I have taken him onboard as my 'teacher' until such a time as I can do it on my own, another learning curve! I did not really want the job, as I had been Secretary for some time and found the workload to much what with running my business also, so must admit I was quite astonished to be nominated Treasurer, they obviously have a lot of faith in me!!
DLOG
Well C, I hope all goes well for you. Perspective is a strange animal.
Perhaps i have been let down by my own.
I guess time will tell.
all the best,
Just heard an interview on the BBC with someone called "Professor West" - a "recession psychologist".
Apparently all that is required to improve the confidence in the markets is something called LEADERSHIP.
The BBC commenter was interested in this new concept and wanted to know more.
The Professor went on to say that the apocalyptic imagery generated by the media was a big part of the downturn in the markets along with the fact that our leaders (with a small l) don't understand how to lead.
The presenter went on to say that a big part of the problem was the uncertainty that politicians had to deal with.
The professor quoted Winston Churchill as someone who managed to overcome adversity.
The report finished with the BBC switching to more doom and gloom about the markets.
More LEADERSHIP please, less anxiety generating MEDIA PORNOGRAPHY.
Lehman Bros head took home $300m
The head of failed US investment bank Lehman Brothers has told Congress that he took home about $300m in pay and bonuses over the past eight years.
http://news.bbc.co.uk/2/hi
/americas/7655178.stm
It's funny no-one mentioned whether Rachel's chum's business uses Cash Accounting (details at http://snipurl.com/46i2p).
If he is using it AND is profitable then he has taken his eye off the cashflow ball. Under these circumstances HMRC may negotiate repayment terms. If he is not using Cash Accounting then....er....he should be.
What is cash accounting?
I doubt the accounting methodology is really the issue here. If he is owed money (incl. VAT) from customers he could use factoring to get a significant proportion of that value in order to pay HMRC.
If he's defaulted on his VAT, which he must have done if they are threatening action, then he cannot change scheme anyway.
As I have said before cash is king. It's amazing how many profitable businesses fail because they don't manage their cashflow well. Hence why financial discipline is crucial (even if your brother does it DLOG!).
C
What you will find is that the media onslaught, along with the corruption in the markets, will take its toll on the will of the small business man.
I have seen CEO's desert their post in spirit, whilst they were still there in body.
I have seen the "executive spirit" walk right out the door years before they were ever physically marched out the door.
These people build models of integrity, only to find that their business can be crushed under foot in a matter of seconds.
Not because they failed. But because they woke up to the fact that they can only survive if they forgo their integrity.
Love to meet/talk with you C, although we don't always agree I must admit you do intrigue me somewhat!!
DLOG
Stephen
I agree with you wholeheartedly on this one. Too many owners and CEOs wholly derive their self esteem from business performance. It shouldn't define who you are.
At the end of the day you can only control the levers within your grasp. There are numerous other levers controlled by others all of which can impact on your business performance. Its about doing the best you can but recognising that you are not in complete control and learning to accept that.
C
DLOG
I think you should get yourself on a course on accouting if you don't fully understand it. I appreciate your brother may be the expert but he probably deserves a holiday now and again without having to worry about the stuff. Who knows he might learn about production and then you can have a holiday too. Also, two minds are better than one so you could probably both help each other more.
C
C, obviously the answer to my last statement is NO, but, if it wasn't for her in doors, or the girls, I myself would not have a holiday.
I like to work, I would work 24/7 if the work was there!!
DLOG
DLOG
Everyone needs a break. Working constantly is not good for you, your family or ironically your business.
As for meeting up, you have described yourself as a nutter elsewhere on this blog, hardly an inspiring introduction!
C
Fear not C, I am quite safe, just do nutty things from time to time.
DLOG
PS C, the comment about being a nutter was just to wind up Mr A Dragon,
DLOG
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