Monthly Archives: May 2015

FRS 102 – Derivatives And Their Consequences

It’s likely that some people who will be applying FRS 102, for the first time in their 2015 accounts are still thinking that financial instruments are nothing to do with them, but this view should be taken lightly.

FRS 102 introduces the concept of “basic” and “complex” financial instruments. Whilst some companies may be of the view that they do not engage in complex activities, there are some common pitfalls.

For example, any contracts that involve paying or receiving cash or shares are classed as financial instruments and these instruments must be reviewed. Many companies go nowhere near derivatives, but some might be using them without really knowing it, for instance if they have foreign currency forward contracts or if they have entered into an agreement with a bank to fix a loan interest rate, which actually takes the form of an interest rate swap.

Under FRS 102, these rate swap valuations must be recognised in the accounts. This means their fair value must be presented on the balance sheet and their yearly movements reflected in the profit and loss account. Derivatives can have either a positive or negative fair value, but a fixed interest rate swap instrument in the current economic climate is more likely to have a negative one.

Fair values can be volatile and this volatility will be reflected in the results and may impact on your tax liabilities, profit sharing and bonus arrangements and any banking covenants.

If you think your business may be affected by any of the changes of FRS 102, please contact Chris Johnson on 01254 679131 or click the button below to download our free FRS 102 help sheet.

Praxity Corporate Finance European Conference

Last week in Brussels the PM+M Corporate Finance team linked up with colleagues from across Europe from the Praxity alliance of accounting firms. The meeting was focused on ensuring owner managed and SME clients get the same level of coordinated international service in corporate finance as larger corporate businesses.

The discussions covered issues such as:

The changing economic climate for owner-managed businesses across each country
The appetite of clients across Europe for acquisitions and disposals and the success of their plans
The differing attitudes of banks to finance deals and expansion across different countries
How the legal frameworks across Europe differed in terms of being able to control and complete acquisitions and fundraising exercises

The event strengthened ties between the advisers in different countries and improved everyone’s understanding of corporate finance markets across Europe. Our clients and professional network will benefit from our depth of knowledge and contact base whenever they look to do a transaction involving a European business. Particularly impressive features were the depth of understanding of the renewable energy sector in our Germany colleagues and the widespread knowledge across our European firms of engineering and manufacturing business transactions.

If you are thinking of doing a deal with someone based in a different European country, please get in touch with David Gorton for a free briefing on the likely issues and differences of deals in that country on either 01254 679131 or at david.gorton@pmm.co.uk.

Business Sales From A Buyer’s Perspective

Whilst you have nurtured your business into what it is today, often outsiders may see something different. For business owners, adding value to the company is important not only if you want to sell, but also if you want to grow. But what do buyers and investors actually mean by value, and what are they looking for when they are in the market to buy a business?

Selling your business might have not even crossed your mind yet but if you do decide this may be the right option for you in the future, it’s worth thinking about ways in which you can maximise its value sooner rather than later. Selling your business can be incredibly complex and is one of the most important decisions you’ll ever make. Understanding how you can maximise your options is important for both your personal finances and the future of the business. Remember, you’ve spent a lot of time, money and passion developing it.

On Thursday 11 June, our business sales team are running an interactive seminar to unravel the complex world of understanding what is needed to attract the right buyer, increasing the company’s value and putting you in the best position possible when the time does come to sell. For more information on this seminar or to reserve a place, please click the button below or contact Faye Hughes on 01254 679131.

General Election 2015 – What It Means For Businesses

As the shock of the recent election outcome draws to a close, business owners are starting to think about what it means for them and their business.

Regardless of individual political views, the fact that we have a majority government should mean that we can expect some certainty and stability in the economy. The Government can continue with their economic plan and Britain will not have to endure the handover and settling in process that comes with a new Government coming into power.

We would expect that this would translate into increased business confidence and, in turn, into business investment. This should ensure that economic growth will continue to move in the right direction, creating opportunities for many businesses and business owners.

In the short term, the hot topics will be tax and continuing austerity measures which the Government can pursue without the former constraints imposed by coalition and minority rule.

It is widely expected that there will be a second Budget. We do not envisage this containing anything substantially damaging to businesses, but as always there may be devils in the detail as the Chancellor introduces more measures to counter tax avoidance.

Certainty as to the future of the capital allowances Annual Investment Allowance would be welcomed sooner rather than later. As it stands, the current £500,000 allowance, which gives up front tax relief for capital expenditure, is set to reduce to £25,000 on 1 January 2016. In his last Budget speech the Chancellor indicated that he would not allow it to reduce to that level, but would not commit to what the new amount would be. Prolonging this uncertainty is likely to be damaging to business capital investment plans, so the sooner it is fixed, the better.

It will also be interesting to see how the Conservative proposals for a new inheritance tax allowance for houses passed down the family evolve. The initial proposals were complex, but potentially of great benefit to many families.

In the longer term, the prospect of a referendum in 2017 to determine the UK’s ongoing membership of the EU is likely to cause major uncertainty for British businesses.

For more information on tax measures or if you would like any advice, please get in touch with the tax team on 01254 679131 or email tax@pmm.co.uk.

Should I Be Thinking About Long Term Care And Inheritance Tax?

None of us know what the future holds, but we can plan for situations that are likely to arise in later life.

Long Term Care and Inheritance Tax are two major concerns for those wishing to retain wealth that has been built up over a lifetime, and who wish to pass it down to the next generation of their family.

Inheritance Tax is payable by those who receive the assets and not by the deceased. When you pass away, your total estate is valued, and once all debts and liabilities are repaid, the amount of your estate above the ‘Nil Rate Band Allowance’ of £325,000 may be subject to Inheritance Tax at 40%, thus reducing the amount your loved ones will receive. It should be noted that whilst £325,000 may sound a lot, the value of the family home can currently in itself utilise much, if not all, of the band.

Long Term Care by contrast is a financial issue that can have a significant effect on your finances prior to death. Recent changes to the funding of long term care whilst welcome, could still mean that you face large costs that must be met out of your capital or income.

Planning for these events may seem difficult, but obtaining the right advice will make things easier for both you and your family.

On Tuesday 19 May, we are running a seminar to discuss Long Term Care and Inheritance Tax Planning and how to minimise the tax take amongst other useful planning tips. For more information on this seminar and to reserve a place, please click the button below or contact Daniel Hill on 01254 679131.

A Second Successful Year For Blackburn Beer Festival

Jane Parry, Managing Partner of PM+M (left), Stephen Anderson, Corporate Services Partner at PM+M (right).

Over the bank holiday weekend, PM+M were proud to be the headline sponsors of the second Blackburn Beer Festival, held at Blackburn Rugby Club.

In aid of Blackburn Youth Zone, the beer festival attracted over 1,100 people over the 3 days for a weekend of sport, live music and most importantly, beer! On top of being headline sponsors, PM+M took control of the bar on the Sunday afternoon, serving (and sampling) beers to droves of amateurs and fanatics.

It was also a historic weekend for Thwaites Brewery, who kindly donated the last ever barrels of Blackburn brewed Wainwrights. It should come as no surprise that it sold out within hours!

The festival raised over £30,000 for Blackburn Youth Zone. David Gorton, Senior Partner at PM+M and Chairman of the beer festival, said: “The Blackburn Beer Festival has quickly become a major entry in the calendar. An event which has 1000 happy customers, 300 delighted guests and raises £30,000 is fantastic for the town and for the Youth Zone. As chair of the organising committee I have been amazed at the depth of support and goodwill from the business community in arranging this and I am deeply grateful for the donations in kind, the attendance and particularly the funds raised. Special thanks are due to Thwaites for their help in set up and to BRUFC for being great hosts.”

Thanks also go to Daniel Hill, Marketing Assistant, for his help on the organising committee, staffing the bar on Sunday and for running the Blackburn Beer Festival Facebook page.

For more information about the beer festival and to see photos from this year’s event, visit www.blackburnbeerfestival.com or follow @BburnBeerFest on Twitter.

VIDEO – Supporting Our Community With Blackburn College

Blackburn College, founded in 1888, provides higher education for young people in Blackburn with Darwen. PM+M have been working closely on various projects with Blackburn College since 2009.

Richard Ainscough, Corporate Services Partner at PM+M, and with other members of the PM+M team, work with the college to help develop the Business and Accounting courses, embedding practical accounting skills into the curriculum. We also work on wide variety of projects, actively getting involved with the college to develop and provide opportunities for young people in the area.

In our latest video testimonial, Nick Hall talks about his experience with PM+M:

For more video testimonials, please visit our YouTube page.