• Take The Finance Strategy Test (March 2011)
• Thrive In Turbulent Times - Growth Out Of Recession (March 2011)
• The Very Useful Financial Strategy Model (March 2011)
• The Ultimate Power of Credit Agencies - Businesses Watch Out (December 2010)
• How To Avoid Profit Flat-Lining (December 2010)
• Networking with the Cleaner - Your guide to improving your networking skills (July 2010)
• Budget – Broadly Welcome But What’s To Come? (June 2010)
• Planning and Budgeting Into Intelligence (April 2010)
• Recession Proofing: Your Relationships, your business, your reputation (January 2010)

By Clive Newell, June 23rd, 2010

Clive Newell, founder and Principal Director of Halagen Ltd, a Kent-based company providing virtual and part-time financial director services to local businesses, said: “Under difficult circumstances the Chancellor has done a reasonably good job at delivering a budget that meets the needs of businesses but there is likely to be more pain to come.

“From our work with businesses across the county, we know that the cut in Corporation Tax and the small companies’ tax rate will be welcome. The rise in VAT from 17.5% to 20% next year will be broadly neutral for those companies that mainly deal with other businesses but will obviously have an impact on those that sell goods and services to the general public. It clearly has the potential to suppress sales in the long run but on a more positive note, the six month run-in to the new rate will give businesses time to prepare. There may also be unforeseen consequences in that the increase could exacerbate cashflow problems, particularly for weaker companies that fail to budget adequately for their increased quarterly VAT return payment.

Also some organisations that are unable to fully recover VAT on supplies made to them will see an increase in their operating costs of up to 2%. These will tend to be not for profit and some publically funded entities.

“The Chancellor clearly had one eye on the City and the financial markets when saying that he aimed to balance the structural current deficit within the lifetime of this parliament. It will be a tough call and we can expect details of further cuts – or tax rises – in the autumn budget, not least some idea of how non-protected Government departments are going to cut their spending by 25% over the next four years. At that point, we could see some more adverse effects on the business community.”

“Under difficult circumstances the Chancellor has done a reasonably good job at delivering a budget that meets the needs of businesses but there is likely to be more pain to come."