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~STRATEGY~


Simon Loopuit, VoxGen


The worst thing you can do is start a business with the wrong structure. To my knowledge, the support that exists at that critical juncture is limited – I would like to see more,’ he adds.


R&D CREDITS


Loopuit recognises the benefits to businesses of the R&D tax credit scheme, which allows a company, if it’s loss-making, ‘to convert some of those tax losses into tax credits – cash that you can bring back into the business’. Cheney’s business qualifies for the


government-run R&D tax credit scheme. He says that although it is a ‘fundamentally good’ scheme, like EIS, it could be simplified. ‘There are a lot of hoops to jump through in order to qualify and paperwork to fill in,’ he points out. ‘We apply for it because we get a good amount of money


back. Along with EIS, R&D tax credits are an effective vehicle for SMEs to launch and be successful.’


IN THE ZONE In July, the government announced the locations of four new enterprise zones in Birmingham, Bristol, Leeds and Sheffield, which it hopes will help create over 24,000 new jobs. Altogether, there are plans for around 22 zones that will benefit from discounts on business rates, superior broadband speeds, lower levels of planning control and the potential to use enhanced capital allowances. Mellor believes that the re-introduction of


enterprise zones, last seen in the 1980s, completes a whole raft of measures encouraging start-ups in the UK. ‘I could see a certain type of business doing well in the


revival of the economy. It would certainly be high-tech, quite niche and involve some form of R&D,’ he observes. ‘I can understand why the government


wants to encourage growth and innovation in certain communities,’ says Cheney. ‘I think the zones will work for certain industries but it’s difficult to see how start-ups can create skills in a given region if those skills don’t already exist.’ He acknowledges that SMEs are the


backbone of UK business and that supporting them is key to emerging from the downturn in ‘good shape’. ‘I don’t think you can build a successful business on the back of tax credits and government schemes alone. But I think being cognisant of the investment and tax benefits that exist can give a company a better chance of success.’ n


GOVERNMENT INCENTIVES FOR UK BUSINESSES


VENTURE CAPITAL TRUSTS (VCTS) • Listed on the London Stock Exchange • VCTs allow high-net-worth individuals to invest in small but high-risk unlisted trading companies • From April 2012, businesses with up to 250 employees and gross assets up to £15 million will qualify, and the annual investment limit for qualifying companies will increase to £10 million (also applies to EIS) • Exempt from corporation tax on any gains arising from a disposal


ENTERPRISE INVESTMENT SCHEME (EIS) • Helps small, high-risk companies to raise finance by offering tax reliefs to investors


who purchase new shares • Since the 2011 Budget, the rate of income tax relief under EIS is 30 per cent, up from 20 per cent


• Companies can raise no more than £2 million in a 12-month period to be eligible for EIS or VCTs


R&D TAX CREDIT • A corporation tax relief that may reduce an organisation’s tax bill by more than its expenditure on research and development (R&D) costs • For R&D projects that seek to achieve an advance in overall knowledge or capability in a field of science or technology


• The relief is only available to companies that spend £10,000 or more a year on R&D (the limit will be removed from 1 April 2012)


ENTERPRISE ZONES • Plans for 22 new enterprise zones, creating over 30,000 new jobs by 2015, with 11 locations already announced • 100 per cent business rate discount worth up to £275,000 over five years within the zones • Enhanced capital allowances for investment in plant and machinery • Superior broadband speeds backed by government funding


Source: HM Revenue & Customs


24 BUSINESS XL


David Mellor, Crowe Clark Whitehill


John Cheney, Workbooks


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