Earlier today, Chancellor Jeremy Hunt delivered his second major fiscal statement in five months. With the OBR forecasting that the UK will not enter a technical recession this year (albeit it still expects a contraction of 0.2% in the economy) and that inflation will fall below 3% by the end of 2023, the Chancellor felt justified in saying that the UK economy was on the right track.
In terms of
specific policies, as is becoming the norm, the headline announcements have
been trailed in advance over the last few days. The main focus this year was on
expanding free childcare provision – while the key announcements applied to
England, they should lead to increased funding for Northern Ireland via the
Barnett formula.
Pensions Tax Relief
The main personal
tax-related announcement in this Budget was probably the changes to the pension
annual and lifetime allowances. The annual allowance (the amount which can be
contributed to pension schemes tax-free each year) will increase from £40,000
to £60,000 from 6 April 2023. The three year carry-forward of unused annual
allowances is retained.
The lifetime
allowance charge (currently applicable to pension pots in excess of £1,073,100)
will be removed from April 2023, with the lifetime allowance being abolished
from April 2024. However, the maximum tax-free lump sum that can be taken from
pensions at commencement will be retained and frozen at its current level of
£268,275 (i.e. 25% of the current lifetime allowance).
Capital Allowances
The Chancellor
committed to making the UK tax system one of the most competitive in the world.
He introduced two major capital allowances designed to boost investment.
Full Expensing
(“FE”) will allow companies incurring expenditure on capital allowance main
rate pool assets to claim a 100% deduction for the cost of the assets from
their profits. This FE will apply from 1 April 2023 to 31 March 2026 and will
result in a tax saving of 25p per £1 spent.
In addition, the 50% First Year Allowance (FYA) which is available on plant and machinery which qualify as special rate assets has been extended until 31 March 2026. For each year following the FYA claim, the remaining expenditure will continue to be written off at 6% per annum.
The
Chancellor’s long-term commitment is to make both these reliefs permanent.
However, while the £1m Annual Investment Allowance currently remains in place
indefinitely, we consider that the new relief will be of limited benefit to
most small or medium-sized businesses.
Research & Development
In the Autumn
Statement 2022, the government announced that from 1 April 2023 the rate of the
Research & Development Expenditure Credit (RDEC) for large companies would
be increased from 13% to 20%.
At the same
time a reduction in the Enhanced Expenditure Relief for Small and Medium size
Enterprises (SMEs) was announced, with the enhanced deduction for qualifying
expenditure reduced from 130% to 86% from 1 April 2023 and the payable credit
for loss making companies cut to 10% from 14.5% from the same date.
These changes
announced in the Autumn Statement will still come into effect on 1 April 2023.
However, today the Chancellor has announced an increased rate of relief for
loss-making R&D intensive SMEs. SME companies for which qualifying R&D
expenditure constitutes at least 40% of total expenditure will be able to claim
a higher payable credit rate of 14.5% for qualifying R&D expenditure
(resulting in £27 from HMRC for every £100 of R&D expenditure.)
The
implementation of overseas expenditure restrictions has been delayed for one
year and will now come into effect on 1st April 2024. This is to allow the
government time to consider the impact of this restriction on a single merged
R&D relief. The consultation on merging the R&D Expenditure Credit
(RDEC) and SME schemes closed on 13 March and draft legislation on a merged
scheme is expected to be published this summer for technical consultation.
Other Matters
The Budget was
noticeably light on mentions of income tax, national insurance contributions
and tax-free allowances –primarily because tax thresholds and allowances have
been frozen until 2027/28.
However, one other point of note for SMEs was the announcement of a relaxation of administration rules for Enterprise Management Incentive Schemes. From April 2023, there will no longer be a requirement for option agreements to include details of share restrictions, nor for a company to declare that an employee has signed a working time declaration. From April 2024, the deadline for notification of the option grant will be changed from 92 days following grant, to the 6 July following the end of the tax year in which the grant took place.
If you would like to discuss any of the above matters (or any other tax related issues) in more detail, please contact any member of our Tax team.
In
November 2022, the Chancellor delivered what was in effect a Budget in all but
name in which he cut spending and raised taxes in an attempt to reassure
investors about the UK’s commitment to financial stability. Given that
Government typically announces significant policy changes in the autumn and
lesser changes in the spring we are left wondering what Mr. Hunt will do on 15
March 2023 when he delivers his promised “full fat” budget and OBR Forecast. Whilst we can’t be certain what the
Chancellor will do, we do not expect major changes to the following reliefs and
incentives.
Seed Enterprise Investment Scheme (SEIS)
SEIS is a small-scale venture capital scheme designed to help start-up companies obtain initial investment. Amendments to expand the scheme were announced in the “mini budget” on 23 September 2022 and were one of the few announcements to escape the Government U-turn later in the year.
The new changes come into effect from April 2023 and provide for the following:
– The maximum amount a company can raise is increased from £150,000 to £250,000
– The gross asset limit will increase from £200,000 to £350,000
– The age of the new qualifying trade will increase from 2 to 3 years and
– The annual investor limit will double to £200,000.
For the investor with a stake of less than
30% in a qualifying company, SEIS can provide income tax relief of 50% of the
amount invested up to a maximum relief of £100,000. The relief can be claimed
in the year of investment, or any unused annual relief can be carried back to
the previous tax year. In addition, any
gain arising on the disposal of shares on which the investor received SEIS
income tax relief (which has not been withdrawn) is not a chargeable gain,
where the disposal takes place more than three years after issue.
Enterprise investment Scheme (EIS)
The tax incentives offered for EIS investments are intended to encourage investment in small, young high-risk companies which have limited access to market finance. There are stringent conditions attached to both the EIS issuing company and investor in order to obtain the relief. Originally EIS was subject to a sunset clause whereby the relief was to be no longer available for subscriptions made on or after 6 April 2025. The scheme has now been extended beyond 2025.
An investor subscribing for new shares in a qualifying EIS company can benefit from a number of reliefs including income tax relief up to 30% of the permitted maximum subscription, capital gains tax exemption, loss relief against capital gains or income tax and the ability to defer capital gains. In addition, Inheritance Tax Business Property Relief may also be available.
The permitted maximum investment in a qualifying company is £1m (or £2m where the investment is in a “knowledge intensive” company). However, the tax relief attaching to the investment can reduce a tax liability to nil but cannot generate a tax repayment so care needs to be taken not to invest more than the relief that can be claimed in the current or prior year.
Enterprise Management Incentive Scheme (EMI)
The need to attract and retain quality staff has always been important for employers but even more so in a competitive market where there is a skills shortage in the labour force.
EMI, which is tax advantaged share option scheme, is a selective share scheme allowing companies to target rewards to particular employees in order to drive performance and reward loyalty. With many businesses suffering from cash flow problems against a tide of rising inflation, offering non cash incentives to key employees may make leaving an employment a bigger decision than might otherwise be the case with a salary-only package. Employee share schemes can be used to create long term incentives typically aimed to crystallise on a sale or listing of the company, or alternatively as a reward for completion of a number of years’ service.
Share options allow employees to acquire shares at a fixed date in the future or following a predetermined event. The price they will pay for their shares is determined at the start of the process and employees have nothing to pay until they exercise the option and acquire the shares. No income tax or NIC is payable when the option is granted. Similarly, the exercise of the option should not give rise to an income tax/NIC charge (provided the various conditions of the scheme are met). Companies may also be able to claim a corporation tax deduction for the difference between the market value of the shares when the options are exercised, and the amount paid by the employee to acquire them.
The employees will be subject to capital gains tax when they sell the shares they acquire via the option but shares acquired via an EMI scheme may also qualify for Business Asset Disposal Relief resulting in a 10% capital gains tax rate on the first £1m of gains. This makes an EMI reward far more attractive from a tax perspective than a cash bonus on a sale of the company which would result in a tax charge of up to 47%.
Business Asset Disposal Relief (BADR)
BADR remains an important valuable tax relief – even after the reduction of the lifetime limit from £10m to £1m in March 2020. Originally called “Entrepreneurs Relief” it can be available on the disposal of a “business” such as a trading company, a sole trade business, share of a trading partnership or assets used by a trading company or partnership.
For shares in a trading company, the shareholder must hold at least 5% of the company’s ordinary share capital, voting rights, rights to dividends and assets on winding up at least 2 years prior to the sale as well as being an officer or employee of the company for an uninterrupted period of 2 years back from the date of sale.
Where the relief is available up to £1m of
capital gains will be subject to tax at 10%.
Inheritance Tax (IHT) and wealth management
IHT, sometimes referred to as the “death tax”, is charged at 40% on the excess value of a person’s worldwide non-exempt assets or “estate” (after deducting funeral expenses and debts) over the IHT threshold. As the threshold or the nil rate band has been frozen at £325,000 since 2009 and will be kept at that level until at least 2026, more people than ever may find themselves unexpectedly caught by this tax.
There are some steps that can be taken to help minimise any IHT exposure although generally IHT planning should take place earlier rather than later due to the 7-year cumulative clock on lifetime gifts that runs back from the date of death.
There are exemptions for IHT transfers between spouses i.e., those who are legally married to each other, those who are legally registered as civil partners and those who are legally married although separated at death. Individuals who are cohabiting are not considered spouses for IHT purposes.
Business Property Relief (BPR) is a very valuable IHT relief and usually applies to shares in trading companies. However, if the shares in a trading company are sold, BPR relief is lost, and the resultant sales proceeds could be exposed to IHT. Careful pre-sale planning can help mitigate future IHT risks.
If you would like to discuss any of the above matters (or any other tax related issues) in more detail, please contact any member of our Tax team.
The word ‘unprecedented’ can be overused in the modern world, but when
it comes to looking at events of the past few months associated with changes in
UK economic and tax policy, it seems particularly appropriate. In the Autumn of
2022, major tax changes were announced (and, in many cases, withdrawn) at a
pace never seen before.
While financial markets appear to have settled somewhat since the Autumn
Statement delivered on 17 November, there might easily be some confusion as to
what the current position is with respect to those matters which were subject
of discussion.
Therefore, it is worth taking stock of where some of those key matters now stand. What follows is a brief summary of some of the main points, setting out what the current position is.
1. Capital Gains Tax (“CGT”)
The headline announcement was that the Annual Exempt Amount (“AEA”) will
be reduced from £12,300 to £6,000 in April 2023, before being further reduced
in April 2024 to £3,000. Key reliefs remain available (e.g. Business Asset Disposal
Relief and Investor Relief.) There are no indications whether the rates will increase
in the short to medium term but for now they remain unchanged and are still
relatively low:
Band
Rate
Basic Rate Band
Residential Property Gains
18%
All other gains
10%
Higher Rate Band
Residential Property Gains
28%
All other gains
20%
The current capital gains rates are still attractive compared to the
much higher income tax rates. There may also be merit in maximising the AEA by
timing smaller disposals to happen before the reductions begin in April 2023.
2.National Insurance Contributions (“NIC”)
Perhaps the source of the greatest confusion has been the increase in national insurance rates and the introduction of the Health and Social Care Levy (“HSCL”) in April 2022, followed by their withdrawal from 6th November 2022.
The amount at which an individual employee starts to pay NIC was aligned
with the Income Tax Personal Tax Allowance from 6th July 2022
(£12,570). The rate at which employers start to pay NICs is £9,100.
Details of the rates and bands applicable throughout the year are set out in the Appendix at the end of this article.
There is also a hybrid rate for Class 1A NIC for the full tax year ended
5th April 2023 in relation to expenses and benefits, and Class 1B
NIC in relation to PAYE settlement agreements – this rate is 14.53%. This is
also the rate for directors cumulative NIC calculations for 2022/23.
Dividend rates increased from 6th April 2022 in tandem with
the NIC rates, by 1.25% each. However, unlike the NIC rates, these were not
reduced in the Autumn Statement. Rates remain 8.75% for basic rate band
dividend income, 33.75% for higher rate band dividend income and 39.35% for
additional rate dividend income. The dividend allowance is to be reduced from
£2,000 to £1,000 from 6 April 2023 and then to £500 from 6 April 2024.
3. Off Payroll Working (“OPW”) Rule
Most businesses would have breathed a sigh of relief when the “Mini-Budget”
announced the reversal of the extension to the OPW rules (by abolishing the new
rules brought in from April 2017 and April 2021), returning the responsibility
for operating PAYE/ NICs to the Personal Service Company (“PSC”) itself.
Their relief was to be short-lived though, as, soon after taking office
as Chancellor, Jeremy Hunt announced that these new rules were not to be
abolished.
Under the
Off-Payroll Working Rules it is the company to which the worker or director
provides their services (i.e. the client) that has responsibility for making
the Status Determination Statement in respect of the worker, with the fee-payer
(and not the PSC itself) having responsibility for deducting the tax and
NIC liability via payroll, if the relevant employee is found to have employee
status for tax purposes. The rules apply if a worker provides their services to
a client through an intermediary but would be classed as an employee if they
were contracted directly. Initially, the
new rules only applied to public sector clients from April 2017, but from 6
April 2021 they extended to clients in the private sector that are medium or large.
Where a contractor
is working for a small client entity the OPW rules continue to apply as prior
to April 20017 in respect of potential deemed employment relationships, i.e. it
is the PSC which has any responsibility for paying PAYE/ NIC to HMRC.
4. Research & Development (“R&D”) Changes
Changes to the R&D schemes were not unexpected following the 90% increase in R&D enquiries amid HMRC’s continuing concerns over the level of error and fraud in R&D claims. It is hard to see however how the changes introduced can be used to prevent fraudulent claims. Changes to both schemes from 1st April 2023 are as follows:
SME incentive scheme:
– Additional deduction reduced from 130% to 86%
– SME tax credit reduced from 14.5% to 10%
RDEC incentive scheme:
– RDEC rate increased from 13% to 20%
Further measures to tackle fraud in R&D claims have been set out in draft legislation, intended to be introduced from April 2023, and include the requirement to name the adviser preparing the R&D report on the claim, the requirement to make advance notification of a claim and the requirement to have the claim signed off by a senior officer of the company. The requirement to name the adviser compiling the report will presumably help HMRC develop a list of trusted agents which could then expedite some claims, freeing up HMRC staff to enquire into the higher risk claims.
5. Stamp Duty Land Tax (“SDLT”)
On 23rd September, Kwasi Kwarteng announced, as part of his
Growth Plan, the doubling of the stamp duty threshold to £250,000 and increased
the threshold for first time buyers from £300,000 to £425,000 and increased the
maximum property value for first time buyers from £500,000 to £625,000.
There had been no time limit placed on these threshold extensions, however Jeremy Hunt has now confirmed in his Autumn Statement that this will be a temporary measure, ending on 31 March 2025.
6. Surviving from the Growth Plan
Between the Growth Plan Statement and the Autumn Statement many elements
of the former were quickly dropped. To try to stabilise the markets the
abolition of the additional rate band was abandoned (with the Autumn Statement
increasing the band of income which will be subject to the additional rate),
the cancellation of the increase in corporation tax was set aside, as was the
cancellation of the increase in dividend tax rates. Not all elements of The
Growth Plan were scrapped though, as set out below:
– The permanent increase of the Capital Allowances Annual Investment Allowance to £1 million remains
– The increase in the Company Share Option Plan Limit from £30k to £60k will go ahead
– The increase in the amount of SEIS investment companies can raise (from £150k to £250K) has been retained
– The Health and Social Care levy remains cancelled.
It is to be hoped that, following an Autumn of significant upheaval for the Government – in terms of both economic policy and personnel – there will be a period of relative calm which will allow businesses to adjust to the new landscape. However, there are no guarantees of this in the current climate and businesses will need to remain adaptable in the face of ongoing political and economic uncertainty.
If you would like to discuss any of the above matters (or any other tax related issues) in more detail, please contact any member of our Tax team.
Appendix – NIC rates and band applicable in 2022/23
The rates for 2022/23 are as follows:
6th April 2022 – 5th July 2022
Band
Percentage
Employee Contributions
Between £12,570 and £50,270
13.25%
Over £50,270
3.25%
Employer Contributions
Over £9,100*
15.05%
6th July 2022 – 5th November 2022
Band
Percentage
Employee Contributions
Between £12,570 and £50,270
13.25%
Over £50,270
3.25%
Employer Contributions
Over £9,100*
15.05%
6th November 2022 onwards
Band
Percentage
Employee Contributions
Between £12,570 and £50,270
12.00%
Over £50,270
2.00%
Employer Contributions
Over £9,100*
13.8%
*Disregarding the exemption for employer’s
contributions in relation to employees under 21 years of age.
Due to ongoing growth in our Business Advisory Services Practice (“BAS”), we are now looking to recruit a graduate to join the firm on a 3.5 year training contract, during which time they will undertake professional studies towards becoming a chartered accountant with Chartered Accountants Ireland. The successful candidate will report to the BAS management team and will be involved in the provision of advisory and restructuring services to a wide range of stakeholders, including banks, funds, alternative lenders and corporates. The role will include the following:
Provision of professional advice and services to a wide ranging portfolio of clients, to include:
Turnaround options advice and business restructuring;
Debt and refinancing advice;
Accelerated M&A;
Independent Business Reviews;
Corporate simplification;
Corporate insolvency;
Personal insolvency;
Forensic services, including litigation support, expert witness services and financial investigations; and
Business intelligence services.
Essential Criteria
Recent graduate with First Class or 2:1 Honours Degree (or equivalent), preferably in finance / accountancy or a business related degree, however all degree types will be considered;
Intention to pursue and obtain professional exams;
Confident with Microsoft applications including Outlook, Word, Excel and PowerPoint;
Excellent communication, presentation and interpersonal skills;
High attention to detail and accuracy;
Commercial awareness;
Strong work ethic;
Team player;
Proactive and positive approach including ability to use own initiative; and
Time management skills.
This is a full time position and will be based in our Belfast office.
Although described as a ‘mini-Budget’, the Chancellor’s Statement on The Growth Plan 2022 earlier this morning introduced a wide range of measures. In addition to attempts to deal with rising energy prices, the Government set out a range of tax cutting and other incentive proposals with the key aim of stimulating economic growth. The main tax-related measures are noted below:
Income Tax and NIC
The Basic Rate of Income Tax will be cut from 20% to 19% from April 2023.
The temporary increase in NIC of 1.25% is to be cancelled effective from 6th November 2022. The 1.25% increase in dividend rates will be cancelled from April 2023. The Health and Social Care levy, which had been proposed for introduction in April 2023 has also been cancelled.
The government will also abolish the Additional Rate of Income Tax such that, with effect from April 2023, there will be a single higher rate of Income Tax of 40 per cent, rather than an additional 45% on annual income above £150,000.
Corporation Tax
There will no longer be an increase in the headline corporation tax rate to 25%, keeping the rate at 19% after 1st April 2023.
The reduction in the level of Annual Investment Allowance is also cancelled, with the relief now available permanently on £1 million of qualifying expenditure on plant and machinery per year.
Stamp
Duty Land Tax (SDLT)
The government is reforming SDLT in England and Northern Ireland by doubling the level at which people begin paying this from £125,000 to £250,000 from today.
There are also increases in reliefs offered to first time buyers- by increasing the level first-time buyers start paying SDLT from £300,000 to £425,000, and by allowing them to access the relief when they buy a property costing less than £625,000 rather than the current £500,000.
Other Matters
With effect from April 2023 the government will repeal the off-payroll working (i.e. IR35) reforms introduced in 2017 and 2021. This will once again leave the primary responsibility for determining employment status (and also operating PAYE and NIC) with the personal service company, rather than with the client/ engager.
Company Share Option Plan limit increased from £30k to £60K from April 2023
The amount and availability of the Seed Enterprise Investment Scheme (SEIS) will be increased, with companies able to raise up to £250k of SEIS investment, increased from £150k.
The government remains supportive of the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) and sees the value of extending them in the future.
Businesses in designated “Investment Zones” will benefit from time-limited tax benefits in England, including enhanced capital allowances, structure and buildings allowances, business rates relief, Employers NIC relief and SDLT relief. The government intend to work with devolved administrations to develop similar opportunities in Northern Ireland, Scotland and Wales.
The measures outlined today went further than what had been
trailed in the press over recent days and it obviously remains to be seen
whether they will have the desired effect. However, it would be fair to say
from the outset that the desire to simplify the IR35 rules will be welcomed, as
these have been causing significant uncertainty for businesses in recent years.
HNH are delighted to welcome Connor McAnallen as a Manager into our Deal Advisory team.
An Accountancy graduate of Queens University Belfast, Connor completed his training contract within the Accounts and Business Advisory Department of RSM in Belfast before moving to the Corporate Finance team within Mid Ulster based CavanaghKelly. During this time, he has gathered experience in both M&A lead advisory work as well as the delivery of due diligence projects.
Rodney McCaughey, Transaction Services Director welcomed Connor to the team, saying, “We are delighted to welcome someone of Connor’s calibre to the deal advisory team, and we are confident that the skills and experience he brings will make a significant contribution in delivering our growth plans.”
Connor added, “I am excited to take up my new role within HNH and look forward to working with the firm’s wide variety of quality clients. I am also looking forward to working alongside a team of top tier finance professionals to build on my experience gained to date in my career.”
HNH are delighted to welcome Matthew Mitchell to our Business Advisory Services team.
A graduate from the University of Ulster, Matthew recently achieved a first-class honours in Business with Accounting and joins the BAS team as a trainee accountant.
Matthew spent a placement year with Ulster Bank in Belfast and continued to work there part-time alongside his final year studies.
James Neill, Head of BAS, said: “We are delighted that Matthew has agreed to join the team at HNH. His addition to the team, further enhances the strength and breadth of our BAS department”.
Matthew added, “I am delighted to have this brilliant opportunity as a trainee accountant at a dynamic, growing business. I am looking forward to working with experienced individuals, and a variety of people and organisations, whilst garnering expertise in a range of areas.”
“With increasing concerns around climate change and the cost of energy, it’s no surprise to see growing appetite for investments in the renewable energy sector.”
Following the successive recent completions of the debt funded MBO of Realise Energy Services Ltd[i], and the investment into The Electric Storage Company[ii], HNH’s Head of Sustainability, Paul Gleghorne gives his thoughts on transactional activity for companies operating within the renewable energy sector.
“We have had an incredibly busy M&A market generally for
12-18 months, with a multitude of transactions across a range of sectors. The
rhetoric from institutional investors remains positive around the availability
of capital and their desire to deploy through all cycles. M&A activity and
investments will continue but with a combination of cost inflation, supply chain
issues, geopolitical uncertainty, and the remnants of COVID-19, we expect deals
to be more strategic and measured, where strong management teams and deal
structuring are likely to be key factors. Opportunities within defensive
industries, especially where regulation is driving investment, will remain
attractive.”
Paul explains that appetite for opportunities in the
renewable energy sector has remained particularly high.
“The steep rise in the cost of energy has highlighted the overreliance
on conventional energy generation. Many large energy users are now seeking to
lower their marginal cost of energy use by installing solar panels and
batteries or even opting to build their own renewable energy generation as
private wire projects. In addition, it is becoming increasingly important for
companies to demonstrate their green credentials to customers with ESG
reporting requirements. On the other side, whilst financial returns ultimately
drive decision making, investors are becoming increasingly eager to provide funding
or invest in opportunities which assist in achieving their ESG targets.”
“It’s not all asset-based investments either, there are a
host of companies providing services that facilitate the use of renewable
energy. The recent deals of Realise Energy Services, who operate and maintain over
200 wind turbines across the UK, and power engineering and technology business The
Electric Storage Company, attracted considerable interest with some interested
parties citing green credentials as a contributing factor in their decision
making.”
HNH Corporate Finance have a dedicated team with a specific
focus on transactions in the sustainability sectors, ranging from sell/buy side
M&A, raising project finance and appraising investment opportunities.
[i] The
MBO of Realise Energy Services Ltd was funded by specialist credit provider
Beach Point Capital
HNH are
delighted to welcome Lucas Batchelor as an Assistant Manager to our Deal
Advisory team.
Lucas graduated
from Queen’s University Belfast with first class honours, completing a BSc in
Economics with Finance. During his time at the university, he was awarded the
prestigious Porter Scholarship. Lucas completed his training as a chartered
accountant in KPMG’s audit team in Belfast. He is currently completing an MSc
in Data Analytics at the University of Glasgow and has recently submitted his
final dissertation, “Comparing the performance of bankruptcy prediction
methods”.
His appointment
illustrates the continuing expansion and development of the Deal Advisory team.
“Paul Gleghorne commented: “We are delighted to further bolster our team
within the Corporate Finance and Financial Modelling service lines. Whilst
2022/2023 will have more complexities for those considering embarking on
M&A, we have an exciting pipeline of work and this is a sign of continued
investment in our growing team.”
Lucas said, “I
am thrilled to begin my new role within the Deal Advisory team at HNH. I am
looking forward to working with a wide variety of quality clients and
continuing my professional development within a team of high calibre
individuals.”
HNH are delighted to welcome Caoimhe Sweeney as an Assistant
Manager into our Business Advisory Services team.
A law graduate of Queen’s University, Caoimhe then qualified
as a chartered accountant while working within Ernst & Young’s tax
department.
John Donaldson, Director within Business Advisory Services
said, “We are delighted to welcome Caoimhe into our team and believe that her
legal and tax experience will be a great addition to the existing skillset
within the department.”
Caoimhe said, “I am very excited to begin my new role within
HNH and look forward to working with businesses and individuals as they
navigate the post-COVID landscape.”
With the Chancellor’s Spring statement fast approaching, those
business owners contemplating retiring or exiting their business will no doubt
be considering the possible implications for them should the Government announce
changes to the Capital Gains Tax (‘CGT’) regime.
As the Government continues to deal with the aftermath of unprecedented
borrowing to support the economy during the pandemic, some consider that CGT
could be next on the Chancellors hit-list to raise funds. This could be
achieved through the removal of business asset disposal relief (‘BADR’) or, as
recommended by the Office of Tax Simplification, increasing the CGT tax
rate.
Business owners can mitigate their risk now by discussing a Members’
Voluntary Liquidation (‘MVL’) with an Insolvency Practitioner to explore
whether it is an option suitable for them.
An MVL is an option for solvent companies wishing to wind down their
activities and allows for assets to be distributed in a tax-efficient manner,
whilst also giving directors certainty given the finality of the liquidation
process. Subject to certain conditions, distributions made in an MVL can
qualify as capital distributions and business owners can avail of BADR with a
tax rate of 10%. At current rates, this relief can save business owners up to
£100,000 in CGT.
An MVL is only an option for solvent companies meaning that the company
must hold enough assets to be able to settle all liabilities and interest in
full, normally within 12 months. Due to the
ability under company law to hold members’ meetings at short notice, companies
can often be placed into an MVL within a couple of days.
While no-one really knows what the Chancellor’s plans are for CGT come
23rd March and beyond, business owners should always keep one
eye on their exit strategy and plan accordingly. This will ensure their
company’s activities are wound down in the most efficient possible manner.
If there has one benefit from
the past 2 years, it is undoubtedly the opportunity to spend more of those
precious moments with our kids. Whether that be the school run, homework or
generally just being around more, the pandemic has afforded people the
opportunity to reset and perhaps realign those priorities in life.
I’m sure like many, after an
excitable day, our kids like to unwind before bedtime with a book.
During a recent reading of Julia
Donaldson’s “A Squash and a Squeeze”, I’m sorry to admit, but my mind started
to wander as I was reciting the words (almost by memory now at this stage!).
With the increase in hybrid
working, I’m sure many might relate to the challenges of space being at a
premium in our households at times, however I then began to consider the
current fiscal squeeze facing many households.
Fiscal Squeeze
Whether it be rising heating bills, electricity costs, shopping bills, credit cards or fuel costs, the squeeze on household income is very much real.
Coupled with future increases in National Insurance Contributions from 6th April 2022 as well as last week’s announcement of future increases in local property rates, the financial pressure facing households continues to increase.
It was recently reported by
the Office for National Statistics (“ONS”) that 76% of people were paying more
for food, energy and petrol in the 10 days 3rd February 2022 to 13th
February 2022. This was an increase from 69% for the period 19th
January 2022 to 30 January 2022. Furthermore, consumer prices also rose by 5.5%
in the 12 months to January 2022, the highest since March 1992 (7.1%).
The challenges presented by such inflation cannot be underestimated.
Whilst the Bank of England have attempted to curb the rising levels of inflation by increasing interest rates earlier this month, this will also have an additional knock-on effect on those with tracker or variable rate mortgages, further tightening the squeeze facing many household incomes.
Not Just Households, Businesses Too
Of course, this pressure is not limited to purely households, with many businesses also facing rising costs.
Inflation, Brexit and wider
economic and political issues have resulted in increased labour, transport and
material costs. The resulting impact on margins has been considerable for many
businesses, and whilst many have publicly stated that every effort is being
made to avoid passing such cost increases on to the consumer, the above ONS
statistics unfortunately confirm the reality that such costs are already being
passed on and will likely continue to be in the months ahead.
Plan, Plan, Plan
For both consumers and businesses, the only response to such rising costs is to plan accordingly.
Households should start, or if they already have one, update, their household budget. This will not only help prioritise essential expenditure and manage outgoings, but also highlight any potential areas of concern. Once highlighted, any such problems can then be addressed at an early stage before they become too problematic.
Similarly, businesses should
review their business plan and update their financial projections accordingly.
Owners should perform extensive
sensitivity analysis under various scenarios and take time to strategise
regarding both the pressures currently being faced and the future direction of
the business as a result.
Again, early phase planning and review, will help businesses identify any funding gaps or financial pressures, which can then be discussed with stakeholders, banks, funders and / or creditors.
What is important to note
however is that no matter how big the problem may seem, there is always
professional assistance available to help work through the issues.
Advice
Seeking the assistance of
professional advisors to review and critique a household budget, or a business’
operational, financial and strategic plan, could provide the very solution to the
current pressures being faced.
There are solutions out there
that can provide a chink of light in even the bleakest of situations. What is
required is early engagement to identify and address the issue, and a focused and
tailored approach to its resolution.
Whilst the past few years have presented their challenges, we all must recognise of how far we have come and what we have all been through. Of course, there will be further challenges ahead and we are all aware that the unprecedented level of Government support during the pandemic will have come at a cost.
However, if we all face this current period with the same approach and determination that we have recently shown, people and businesses can come through this and be in a position to take advantage of future opportunities that present themselves.
HNH are delighted to welcome James McMullan to our Business
Advisory Services team.
A graduate from Queens, James has recently completed his
MBA at the University of Ulster and joins the BAS team as a trainee accountant.
James’ addition brings the overall BAS headcount to over 10
and represents yet further investment in HNH’s BAS offering.
James Neill, Head of BAS, said: “We are delighted that James
has agreed to join the team at HNH. His addition to the team, further enhances the
strength and breadth of our BAS department”.
James McMullan added: “I’m very pleased to have joined the
BAS team at HNH during this exciting period of growth and am looking forward to
working with our range of clients on a variety of advisory projects.”
HNH acted as Lead Corporate Finance Advisor for
rapidly growing eCommerce business Candle Shack in a £4.4m deal. Candle Shack,
founded by Duncan and Cheryl MacLean in 2010, supplies candle making components as well as providing contract
candle manufacture for high profile, luxury brands. The transaction includes £3
million of funding from Maven’s high net worth investment syndicate, Maven
Investor Partners, as well as a £1.4 million debt facility from HSBC.
Neal Allen, Director in the Corporate Finance team
at HNH, said: ‘One of the reasons that we established HNH in Scotland was to
advise exciting, fast growing businesses and it has been fantastic to work with
such a great example in Candle Shack. The deal is a validation of not only all
of the inspiration and perspiration that Duncan and Cheryl have put in over the
last few years, but also of the Scale Up programme and the next wave of
entrepreneurs that are helping to drive the Scottish economy forward. ‘
Candle Shack employs 105 staff and operates
from its 100,000 ft2 West Carron facility in central Scotland encompassing a fulfilment
centre, development lab and manufacturing. The Company provides everything for
an artisan manufacturer to make high quality candles, including fragrances,
waxes, wicks, glassware, and bespoke branded packaging. Making fine candles is
a technical endeavour and many of Candle Shack’s customers rely on the business
for support, training, accreditation and for the testing of their candles. In
addition, the company serves clients who require contract candle manufacturing
services where the company deploys state of the art technology and artisan
craftsmanship to produce candles for some of the world’s leading luxury
brands.
The company is regarded as the market leader in
Europe currently serving over 34,000 loyal customers and has a reputation for
high quality products and excellent customer support. Candle Shack has enjoyed
strong sales growth over recent years benefiting from its focus on the premium
and artisan segments of the market. Consumers are looking for unique, locally
produced premium products at affordable prices and this is increasingly being
met by artisan candle makers many of whom are Candle Shack customers. The
company is also working hard to offer candle ingredients that are sourced
sustainably, and this includes its best-selling own-brand, environmentally
friendly wax blend.
Maven’s support will enable management to
further scale the business, investing in new marketing and sales channels,
expanding its EU operations, financing further product development, and
improving operational efficiencies to enable Candle Shack to grow its customer
base, broaden its offering and continue to offer customers a best-in-class
service.
Duncan MacLean, CEO at Candle Shack, said: “Maven’s
investment in Candle Shack will fuel our next phase of growth, increasing our
ability to support thousands of niche home fragrance brands across Europe. We
are excited to be partnering with such an experienced investor and with Maven’s
support, are aiming to cement our position as Europe’s leading home fragrance
supplies business.”
We are delighted to announce the promotion of John Donaldson to Director within our Business Advisory Services (BAS) team.
James Neill, Head of BAS & John Donaldson
James Neill, Director and Head of BAS said, “John’s hard work and dedication has been evident from the moment he joined the firm. He is a valuable addition to the HNH Board, bringing with him over 20 years of experience working within the corporate advisory and restructuring space. This promotion continues to demonstrate HNH’s core ethos of providing our clients with experienced, director-led support”.
John added, “Having joined HNH a year and a half ago, I am extremely excited and proud to take up my new position on the Board and look forward to continuing to work with the wider team and our existing clients to further enhance HNH. With the Northern Ireland economy going through a period of constant change over the past couple of years, the experience and depth of the team within HNH, together with our diverse product offering, will put us in a strong position to help our clients deal with the ever evolving marketplace.”
John is a Fellow of the Chartered Accountants Ireland and a licenced Insolvency Practitioner.
HNH acted as Lead Corporate Finance Advisor for Powerhouse. HNH
Head of Sustainability, Paul Gleghorne, commented “HNH were delighted to act
for the company on this transaction. Powerhouse provides vital services to
facilitate renewable energy on the grid and reduce energy demands of large
consumers. The acquisition by Cool Planet Group will facilitate the growth of
the company’s services in the sector.”
Powerhouse Generation Ltd was founded in 2013 as a DSU
aggregator operating within Ireland’s electricity market. Since inception,
Powerhouse has added DS3 trading and consultancy services to its offering.
Powerhouse Energy Management Ltd was setup in 2019 and acts as an advisor and
broker in the energy sector giving Powerhouse a full suite of energy management
services.
HNH Head of Deal Advisory, Richard Moorehead, stated “this
transaction is indicative of HNH’s increased focus on working with companies in
the sustainability sectors, including renewable energy and waste management.
These sectors are key growth areas for HNH and we are continuing to grow our Sustainability
team in Belfast.”
Commenting on the acquisition, Richard Watson, Chairman of
Powerhouse, said “we are looking forward to working with Cool Planet Group and accelerating
our growth plans and expansion into new markets.”
Alan Keogh, chief executive of Crowley Carbon, says Powerhouse’s
“demand response capabilities will compliment our existing offerings of solar
PV, battery storage, electrification of heat, EV chargers and vehicle to grid,
enabling us to reduce carbon and greenhouse gas emissions in plants for a net
zero future. We can now create new offerings that combine energy efficiency,
renewable power, EV-charging and sustainability and compliance reporting to
help organisations reach their net-zero carbon goals.”
Tughans in Belfast, led by James Donnelly, acted as legal
advisors to Powerhouse.
With the publication of the latest Experian M&A League Tables, we are very pleased to report that our Deal Advisory team in Northern Ireland has maintained its position as the leading corporate finance advisor in the region, closing nine deals in the first half of the year.
Our Scottish team continued its strong start to the year, closing seven transactions throughout H1.
A Debt Advisory team, led by Bruce Walker recently advised Athru Whiskey on a £15m ABL fundraise from PNC. This is the fourth funding round we have advised on in the whisky/whiskey sector in the past 12 months and the first involving an Irish whiskey.
Of particular note is that the collateral available to the lender in this case was primarily new make spirit; hitherto, some lenders had been reluctant to fund the maturation period for new make spirit and we therefore view this as a landmark transaction, in particular for the growing Irish whiskey sector.
It gives us great pleasure to announce that Rory Moynagh, Associate Director in our Business Advisory Services (BAS) department, has successfully passed both the JIEB corporate and personal examinations and is now qualified to become a fully licensed Insolvency Practitioner (IP).
This is a fantastic
achievement especially in light of the fact that Rory was the only person in
Northern Ireland to successfully pass both exams in 2021, the extenuating
circumstances of studying during a lockdown period and a very challenging
examination with a low pass rate throughout the UK.
James Neill, Head of BAS,
commented:
“We are very proud of Rory’s
achievements and he deserves a massive congratulations for the hard work he put
in throughout 2020. As demonstrated by the final results, this was a very
difficult JIEB sitting in an extremely challenging time.”
“Rory is one of our longest serving employees, in fact he was HNH’s sixth ever employee, so it’s been a pleasure to watch Rory’s career develop over the years, and all of us at HNH are delighted at his recent success. We look forward to him becoming a fully licensed Insolvency Practitioner and further strengthening our client offering. To have 4 licensed IPs in HNH helps highlight the strength in depth we offer within the wider BAS team.”
Rory joins the firm’s existing licensed Insolvency Practitioners, James Neill, John Donaldson and Cathy McLean.
We are delighted to see the efforts of our deal advisory teams in NI and Scotland recognised by their strong showings in the Experian UK & RoI M&A League Tables for Q1 2021. Our NI team was the most active in the country, completing six transactions in the quarter, while our Scottish team narrowly missed out on top spot, closing three deals in the period.
As a result of our ongoing expansion, we are now looking
to appoint a Business Support Assistant. The successful candidate will be the
first point of contact for clients and be the face of the business. This
individual will report to the Finance Director and will support them in the
operational management of both offices. This individual will have exposure to
all operational aspects of the business and senior staff. This is a key role
for the organisation and this individual will be integral to driving
initiatives and efficiencies throughout the business.
Typical duties will include:
Front of house – greeting clients,
answering phone calls, organising meeting rooms and preparing and distributing mail.
Finance assistant – supporting the
Finance Director in maintaining financial records to include completing daily
bank reconciliations, recording supplier invoices, generating client invoices, preparing monthly payment runs, processing employee expense claims and filing documentation as required.
HR and Personnel – Co-ordinating travel,
accommodation and conference requirements for employees and visitors, supporting staff in the co-ordination of external marketing events, assisting with the onboarding of new staff and supporting the Finance Director in the monthly payroll process (to include the management of annual leave).
IT and Property – Managing and re-ordering of office stationery and office supplies, supporting staff to resolve day-to-day IT issues and building relationships with key suppliers.
The above list of duties is not exhaustive, and the
individual may be required to undertake other tasks as directed by the Finance
Director.
Essential Criteria
Minimum of 2 years’ work experience in a similar
role.
Confident with Microsoft applications including
Outlook, Word, Excel and PowerPoint.
Experience of finance-related administration.
Strong verbal and written communication skills.
Excellent planning and organisational skills to
include demonstrable experience coordinating internal and external events.
Confidence to work with and take instruction
from all stakeholder levels.
Strong attention to detail.
Ability to work independently, but also collaboratively as part of a team.
Ability to work efficiently and prioritise work
as needed.
Desirable Criteria
Experience working within a similar professional
service environment.
Experience of HR related administration to
include payroll.
Experience of marketing related administration.
Experience with Xero accounting software.
This is a full time position and will be based in our
Belfast office. Remuneration will be in the region of £18-22k per annum
depending on experience.
To apply for this position please submit a CV by email to careers@hnhgroup.co.uk by no later
than 1700 on Friday the 9th of April 2021. Where possible, you
should state any experience you have had, which shows how you meet the criteria
specified above, when you submit you CV application.
The Deal Advisory team at HNH is delighted to announce two pieces of good news:
Chris Hylands joined the team in December 2018 and, over the past two and a bit years, has worked on a wide range of transactions across NI and Scotland. In recognition of his hard work and technical development, we are very pleased to announce his promotion to manager, effective 1 April.
On the other side of the Irish Sea, we welcome Craig McGill to the Edinburgh office. Craig joins us as an assistant manager and brings the team in Scotland to five. His appointment comes at a good time with activity levels building strongly this year and continuing the trend that we started to see in the final quarter of 2020.
Earlier today the Government issued its ‘Tax Policies and
Consultations’ document. There was speculation that this would be the
opportunity for the Government to signal future tax changes (and for that, read
tax increases) that would take place in the coming years.
This document, in the form of a command paper, announced
approximately 30 Government consultations which would normally have been
published at the time of the Spring Budget. However publishing these documents
post Budget is a new approach by the Government as part of the 10 year tax
administration strategy they produced last summer. The Government’s objective
is to build a trusted, modern tax administration system to facilitate tax
policy development across a range of important tax issues covering rapid
social, economic and technological change, whilst seeking to create greater
visibility and transparency for parliamentarians, tax professionals and other
stakeholders. The Government’s hope is that increased scrutiny of tax measures
will increase the overall quality of tax policy and legislation.
So with all that now explained, was there anything of
note in the documents published today? In simple terms there were no real
headline grabbing announcements which will result in immediate tax changes.
However, there are some noteworthy proposals that have been put out for consultation
which will have a medium to longer term impact on business.
In terms of tax administration, the clear direction of
travel is towards continued digitisation. The ‘making tax digital’ process for
VAT has been regarded as a success and the Government intends to carry on with
its introduction to the income tax self-assessment system. The Government has
further committed to investing into the digitisation of the tax administration
infrastructure so that each citizen will end up with a ‘single digital account’
and a ‘single digital record’. There are also consultations on raising the
standards in the ‘UK tax advice market’, including the proposal that all tax
advisers should have professional indemnity insurance and recommendations that
the reporting of inheritance tax should be significantly simplified in respect
of estates for which no inheritance tax is due.
No Government fiscal announcement would be complete
without the ubiquitous tackling of ‘non-compliance’. There are further
consultations on clamping down on the promoters of tax avoidance and tackling disguised
remuneration, which normally takes the form of non-taxable loans being issued
to employees instead of salary or bonuses. There is the publication of some
research on the impact of the ‘off payroll working’ rules (known as IR35) which
were introduced into the public sector in 2017 and which are coming into the
private sector in April 2021 – but there is no indication of the latter reforms
being delayed. There is also a consultation on making the renewal of certain Government
licences in Northern Ireland (and Scotland) conditional on Applicants
completing checks that they confirm they are appropriately registered for tax
(this legislation already exists in England and Wales).
Contained in the ‘other consultations’ section is a consultation
dealing a review of aviation tax, with a potential reduction in air passenger
duty for intra UK flights (i.e. Belfast to GB) being financed by an increased air
passenger duty on longer international flights. There is a consultation on a
new tax on the largest residential property developers with a view to such tax
helping to pay for the costs of cladding remediation. There is a publication of
the review of the taxation of trusts which is indicating that no major changes
are likely ‘at this stage’ and there are consultations on the aggregates levy
and landfill tax. There is a report on the consultation in respect of the
requirement for large businesses to notify HMRC of uncertain tax treatment (this
reporting requirement is now delayed until April 2022). There are also several
reports on previous VAT consultations covering: VAT grouping (as a result of
which no changes are to be made to the current rules); VAT partial exemption
and the prevention of value shifting of VAT in respect of multicomponent goods
with different VAT rates. There are also consultations to simplify the
maintaining of transfer pricing documentation and on the options to clarify and
update the rules in respect of securitisation vehicles.
So what was not subject to a consultation in today’s
publication? Somewhat surprisingly capital gains tax was not mentioned, despite
two Office of Tax Simplification (‘OTS’) reports last year which looked at potential
major changes to the capital gains tax regime. Similarly, whilst there were
some proposed simplifications to the inheritance tax reporting regime, there
was no consultation on the determination of inheritance tax, again despite an
OTS report being published in 2019 on this topic. There was however a letter to
the OTS which indicated that “The Government will respond to the
recommendations made in the OTS inheritance tax report on simplifying the
design of inheritance tax in due course”. Whilst no potential changes were
announced today, it would appear that this issue has not gone away! So the good
news is that there should still be time for tax efficient estate planning
strategies to be implemented.
Fortus Group Holdings (‘Fortus’), the UK and Ireland’s value added B2B security distributor, has announced the acquisitions of Enterprise Security Distribution and remote CCTV monitoring specialist RE:SURE. These transactions effectively double the size of Fortus to 100m euros in revenue.
Fortus was supported in terms of financing for these transactions by AIB Corporate Banking (Dublin) led by Conor Brogan; and Rockpool Investments (London) led by Guy Ellis.
Fortus was advised by: Eversheds Sutherland led by Tony McGovern (Legals – Corporate & Banking), PKF Francis Clarke led by Sam Phillips (Financial & Tax Due Diligence – Enterprise) & HNH Partners led by Rodney McCaughey (Financial & Tax Due Diligence – Re:Sure)
Enterprise Security Distribution (‘Enterprise’):
Enterprise, founded in 1992, is a UK supplier of security products to installers. The company has nine locations – Sheffield, Birmingham, Kent, Bristol, Manchester, Nottingham, Bedford, Bramley and Norwich – and employs about 90 staff, and has a customer base of 8,000 customers. The leadership team across the nine branches will remain, and will become members of the Fortus Leadership Team.
Fortus describes the business as a great fit in terms of its customer centric culture. Through this acquisition Fortus expands its footprint through full ownership of nine branches, as well as gaining access to new products through their supplier distribution agreements.
Re:Sure Intelligence Ltd:
Re:Sure Intelligence Ltd is a specialist remote CCTV monitoring service serving clients across Ireland and the UK. The company was established in 2007 with the aim of providing a CCTV service that prevents crime rather than just recording it, in a cost-effective manner. It is and will continue to be led by John McMahon (Managing Director) and Emmet Hogan (Commercial Director) who retain a significant stake in the business. The RE:SURE management team will also remain, and the company will continue to conduct business-as-usual with its service and product offerings. The business has the main Alarm Receiving Centre in Cookstown, County Tyrone, Northern Ireland with a smaller office in Sandyford, County Dublin.
The business is fully accredited by the SSAIB, the Republic of Ireland regulator the PSA, and NSAI. The plan with Re:Sure is to endeavour to cross sell this value-add service to customers following the acquisition of Enterprise.
Brian Honan, Founder and CEO of Fortus, said: “Upon completion of both deals, Fortus will advance its strategy of becoming the largest security and fire supply chain business in the UK and Ireland giving us the ability to offer our customers unrivalled support, expertise and monitoring solutions. With our supplier offering, branch network, CCTV expertise combined with RE:SURE’s best in breed monitoring solution, our end-to-end offering will be a first within the security market. We are delighted to welcome the outstanding Enterprise and RE:SURE teams to Fortus Group.”
Mark Brophy, CFO at Fortus said: “These transactions represent a pivotal moment in the evolution of Fortus into the most cutting edge and forward thinking business in the security supply chain sector. We are proud to enjoy the continued support of Rockpool Investments and AIB Corporate Banking to allow us execute our buy & build strategy across the UK and Ireland.”
And Mark Massie, Commercial Director UK, pictured, said: “The acquisition of ESD and RE:SURE is significant news within the security and fire industry. It provides Fortus with a branch foothold across England and opens channels for us to supply our customers with additional industry leading brands, including Fire as well as offering additional services to our customers. I’m delighted to welcome the ESD and RE:SURE team to Fortus Group.”
In his second Budget, the Chancellor focused on three main areas – supporting business and people; fixing the public finances; and building the future economy. The total government support programme for the last fiscal year and this coming year, the detail of which was contained in the first part of the Budget speech, will have cost over £400 billon. The impact of this supercharged public expenditure on the national debt has been enormous and will continue to be so for decades to come. Unsurprisingly, the second part of Mr Sunak’s speech turned to the daunting task of what to do about this debt, which is soon going to peak at almost 100% of national income. Having discounted doing nothing, cutting public expenditure or raising income tax or VAT rates, the Chancellor announced that most tax reliefs and exemptions would be frozen until at least 2026 and that the corporation tax rate for large companies would rise to 25% in two years’ time. In the third and final part of his speech Mr Sunak announced incentives to encourage capital investment by businesses, continued short term stamp duty help for house buyers and a short term continuation of a reduced VAT rate for the hospitality industry. There was no mention of a further Budget later in the year but given the scale of the fiscal issues caused by the Covid 19 pandemic, it would not be surprising to see the Chancellor back on his feet with additional fiscal measures before Christmas.
Some of the key
tax-related points are set out below:
Capital Gains Tax (“CGT”) and Inheritance Tax (“IHT”) – there have been no changes to the headline rates or reliefs for either CGT or IHT. Business Asset Disposal Relief remains available for CGT purposes for total qualifying lifetime gains of up to £1m, while Business Property Relief for IHT is also unchanged. The IHT nil rate band will continue at £325,000 from 6 April 2021 until 5 April 2026.
Income tax allowances and thresholds – the personal allowance, basic rate limit and higher rate threshold will all increase with effect from 6 April 2021 as previously announced, to £12,570, £37,700 and £50,270 respectively. Thereafter, these allowances and limits will be frozen (i.e. with no further CPI increase) until 5 April 2026.
Increase in corporation tax rate – the main rate of corporation tax for will increase from 19% to 25% with effect from 1 April 2023.
Corporation tax small profits rate – a small profits rate of corporation tax of 19% will be introduced from 1 April 2023 for companies with profits of £50,000 or less. Companies with profits between £50,000 and £250,000 will be taxed at 25% but will be able to claim marginal relief. These thresholds are proportionately reduced for the number of associated companies and for short accounting periods.
Use of trading losses – companies and unincorporated businesses will be able to carry back trading losses of up to £2m per annum incurred in the years ended 31 March 2021 and 2022 for a period of three years rather than one year. This should facilitate tax refunds for formerly profitable businesses temporarily hit by the lockdown.
Capital Allowances – the Annual Investment Allowance of £1m has been extended to 31 December 2021.
Super deduction for qualifying plant and machinery – from 1 April 2021 to 31 March 2023, fixed asset investments qualifying for main rate capital allowances will be relieved by an enhanced temporary 130% first year allowance or “super deduction”. Investments in capital assets which qualify for special rate relief, will be eligible for a 50% first year allowance.
Pension Lifetime Allowance – similarly, the standard Lifetime Allowance for pensions will be frozen at £1,073,100 from 6 April 2021 to 5 April 2026.
Stamp Duty Land Tax nil rate band – the increase of the nil rate band for residential property in England and Northern Ireland to £500,000 will be extended from 31 March to 30 June 2021. It will then reduce to £250,000 from 1 July to 30 September 2021, and then to the standard amount of £125,000 from 1 October 2021.
VAT for tourism and hospitality – the temporary reduced rate of VAT (i.e. 5%) for hospitality, holiday accommodation and attractions will also be extended for 6 months to 30 September 2021. It will then increase to 12.5% from 1 October 2021 to 31 March 2022, after which it will return to the standard rate of 20%.
Research and Development (“R&D”) tax relief – for accounting periods beginning on or after 1 April 2021, the amount of SME payable R&D credit that a company can receive in any one year will be capped at £20,000 plus 3 times the company’s total PAYE and NIC contributions.
Freeports – a number of ‘Freeport’ tax sites will be created at various locations around the UK, allowing businesses in these tax sites to benefit from a number of tax reliefs. Eight Freeport sites have been announced in England, and the Government will consult with the devolved administrations on its intention to create similar sites in Northern Ireland, Scotland and Wales.
It gives us great pleasure to announce some promotions and exam successes within HNH despite continued lockdowns and a somewhat abnormal working environment.
Thomas Horner has been
promoted to Manager within our Business Advisory Services (BAS) team and Killian
Kiernan has also been promoted to Assistant Manager within the Forensic
Services department.
James Neill, Head of BAS,
commented:
“The hard work and dedication
of both Thomas and Killian has been evident from the moment they joined the
firm. Thomas has transitioned seamlessly into the BAS department and his
banking experience adds to the skillset within the team, whilst Killian has
been and continues to be instrumental to the growth of the HNH Forensic offering.
We are delighted to see them
both progress their careers in HNH and further strengthen our client offering.”
In further good news, Jamie
Callaghan, also in our BAS department, has successfully passed his Certified
Proficiency in Insolvency (CPI) exam with distinction.
It caps a strong period for
Jamie who not only became our first trainee to complete his training contract and
become a qualified Chartered accountant, but also was promoted to Assistant
Manager last March.
“Jamie’s recent successes are
a credit to him. The distinction obtained in his CPI’s is no less than he
deserves and I look forward to continuing to watch Jamie develop and grow within
the firm.
In the uncertain times that we
continue to experience, these achievements should not be overlooked and we
would like to offer our thorough congratulations to Thomas, Killian and Jamie.
After a
one-year delay due to the impact of the Covid-19 pandemic, changes to the OPW
rules (sometimes referred to as “IR35 rules”) for the private sector are
finally coming into force with effect from 6 April 2021. This will bring the
private sector substantially into line with rules which have been applied to
the public sector since 6 April 2017.
Broadly, the
OPW rules apply to situations where individual contractors or consultants (referred
to as “workers” below) provide their personal services to client organisations
(usually companies) through an intermediary (usually their own ‘personal
service companies’ or “PSCs”). The supply chain can also sometimes involve agencies.
Under current rules for the private sector, if a hypothetical contract between the
individual worker and the client would be a deemed employment relationship for
tax purposes, the PSC is required to
account for PAYE and NICs on the payments that it receives under its contract
with the client. It is currently the PSC’s responsibility to determine the
deemed employment status of the individual worker and pay over any PAYE/NICs to
HMRC. The client currently has no obligations with respect to PAYE/NICs in
respect of payments to workers via their PSC or intermediate agents.
For payments
made on or after 6 April 2021, the responsibility for determining the deemed
employment status becomes that of the client, and the responsibility for accounting
for PAYE and NICs (and, if applicable, apprenticeship levy) on payments to the
PSC will become that of the party which makes the payment to the PSC (the ‘fee
payer’). Where there are no other parties in the contractual chain between the
client and the PSC, the client will be the fee payer and will thus have
responsibility for deducting PAYE and NICs and accounting for same to HMRC.
Therefore, with effect from 6 April 2021, clients’ responsibilities will be significantly increased, and will include the following:
Carrying out a status determination
The
client must carry out a status determination in respect of any worker who
provides their services to the client through an intermediary. The client is
required to take ‘reasonable care’ when carrying out such a determination. The
determination of employment status is not straightforward and is based on a
number of different factors including control, personal service, financial risk
and mutuality of obligation.
HMRC
has developed a tool (the ‘Check Employment Status for Tax’ or ‘CEST’ tool) to
help organisations to determine employment status. It should be noted that
there are some instances where CEST will not come to a formal determination,
and indeed the Courts have, on occasion, disagreed with a CEST result (although
HMRC significantly enhanced the tool in November 2019, to provide a greater
degree of accuracy). Given that HMRC has stated that, provided the questions in
CEST are answered accurately and in accordance with HMRC guidance, they will
stand over the CEST result, it is at least a good place to start when looking
at employment status.
Delivering a Status Determination Statement (“SDS”)
The client must
deliver an SDS to the worker and also to any third party that the client
contracts with. This SDS must set out the reasons for the status determination.
There is no set format for such a statement although HMRC has stated that if
the CEST output is delivered, they will regard this as constituting a valid SDS,
provided the CEST questions have been answered accurately and in accordance
with HMRC guidance. The SDS must be delivered by the client before any payment
is made.
Establishing a disagreement process
This is to allow
workers to challenge the status determination, if they so wish. Where a worker
makes such a challenge, the client is required to respond to the worker within
45 days either with reasons why it does not agree with the challenge or to
provide a new SDS on the basis of the worker’s representations and state that
the previous SDS is withdrawn.
Accounting for PAYE and NICs
Where the client
is also the fee-payer, it must deduct and account for PAYE and NICs (and, where
appropriate, apprenticeship levy) to HMRC in respect of payments made to the
PSC.
There is an
exemption from the new OPW rules for ‘small’ client businesses, such that the responsibility
for determining status and accounting for PAYE and NICs remains with the PSC.
In order to be small, a business will need to satisfy two or more of the
following requirements:
1) It has an annual turnover not exceeding £10.2m
2) It has a balance sheet total not more than £5.1m
3) It had an average of no more than 50 employees for the company’s financial year.
There are
specific rules for businesses becoming or ceasing to be small, and also for
unincorporated businesses. Specific advice should be taken regarding whether,
and when, the ‘small’ business exemption will apply.
It should be
noted that the changes to the OPW rules do not change the criteria for
determining employment status for tax purposes, and it should also be
emphasised that deemed employment status under the OPW rules applies for tax
purposes only. Legal advice should always be taken in order to determine an
individual’s position – and an organisation’s responsibilities – for the
purposes of employment law.
If you have any
queries about how the forthcoming changes to the OPW rules will affect your
organisation, please contact Eamonn Donaghy, Mark Hood or June Barton to
discuss further.
James Neill and Cathy McLean are delighted to be presenting
to the Law Society of NI this Wednesday as part of their CPD programme.
They will be discussing the various changes we are witnessing across our advisory practice including current market trends, updates within forensic accounting, the introduction of new insolvency legislation and the widespread support available to firms.
A double helping of good news today as we announce two new additions to Deal Advisory and Transaction Services and congratulate two existing team members on their promotions.
Paul Gleghorne has been promoted to Associate Director in our Deal Advisory Team and will take the lead on engagements in the waste, energy and renewables sectors in addition to continuing his leadership role within financial modelling engagements. Peter Graham has been promoted to Senior Manager in our Deal Advisory team.
Duncan Thorburn joins our Deal Advisory team in Edinburgh as a Senior Manager from a similarly-positioned M&A boutique in Scotland, where he has been working across both corporate finance and TS for the last five years. He was previously at RBS, having joined their graduate scheme and fulfilled a number of customer facing and internal reporting roles.
Duncan arrives with strong experience and insight into the Scottish Tech sector and the wider SME funding environment, and we recently worked in conjunction with him when he undertook a buyer diligence role for Maven on Quorum Cyber, the MBO HNH advised on in June 2020.
Harry Linklater, Deal Advisory Director for Scotland, welcomed Duncan to the team, saying , “We believe that adding Duncan into the fold at HNH will be a key strategic addition to our team in Scotland, bolstering the ability we offer to provide experienced and relevant input to the technology and wider market here at HNH. Our focus has always centred on delivering best in class advice at a senior level, with an emphasis on local clients and Duncan’s addition enhances that’.
Duncan added, “I am excited to take up my new role with HNH and look forward to continuing to build on relationships I have developed with both clients and the investor market”
In 2018, we launched a Transaction Services division under the leadership of Rodney McCaughey. Since then, we have carried out FDD engagements for corporate acquirers, debt providers and private equity investors on transactions throughout the UK and Ireland. Highlights include the investment in the CRS by Renatus Capital Partners and the investment in Kingsbridge Healthcare Group by Foresight and 57 Stars.
On the back of the success of the last two years and with a strong pipeline of work, we are pleased to welcome Tom Swatman to our TS team as an Assistant Manager. Tom qualified as an accountant with Harbinson Mulholland in Belfast and prior to that gained experience working with Bank of America Merrill Lynch in London.
Congratulations to Paul and Peter on well-deserved promotions and a very warm welcome to Duncan and Tom.
Headquartered in Co. Meath, RoI, CRS provides portable refrigeration equipment including cold stores, blast freezers and cold rooms to customers throughout the UK and Ireland.
The investment from Renatus, which is the first from its new €35m fund, will be used to accelerate the business’ growth aspirations in the UK and Europe.
HNH is a multi-disciplinary financial advisory firm, combining a boutique business model with an international reach. We are based in Belfast and Edinburgh with over 25 qualified professionals serving clients throughout the UK and Ireland. We do not offer any “traditional” accountancy services and therefore have no retained clients for whom we provide audit or accounts preparation services. We therefore are able to avoid the inherent conflict of interests that can arise within a full service accountancy firm.
As a result of our ongoing expansion we are now looking to appoint a finance director who will work closely with the directors in respect of the strategic and financial matters of the business and who will oversee the operational management of the offices and accounting and compliance obligations of the business. The successful candidate must demonstrate experience of working at a senior level both independently and in a team and have strong communication and IT skills.
Candidates must have a recognised professional accounting qualification and have extensive post qualification experience. The role will require at least 3 days a week but in the initial six months could extend to 5 days a week. Remuneration will be £60k per annum on a full time basis.
To request a copy of the detailed
job specification, person specification and selection and interview
arrangements, please email careers@hnhgroup.co.uk.
To apply for this position please submit a CV by email to careers@hnhgroup.co.uk by no later
than midnight on 30 September 2020.
HMRC recently published two policy papers in relation to how they treat and support those customers with tax debts.
This insight into HMRC’s thinking is particularly relevant in light of the current economic circumstances and the impact Covid-19 has had on businesses and households alike. It provides a clearer picture of HMRC’s own view and expectation from customers as we embark on yet another journey of recovery, however this time in the “new normal”.
“We’re here to help”
From
across both papers it is certainly notable how supportive and understanding
HMRC appear to be to a customers circumstances.
Phrases
such as “we want to work with them”,
“we want to find a way to help them pay”,
“we are always ready to help”, “we do not want out customers to worry”
and “we’re not here to make things
difficult” are certainly encouraging and provide comfort to those in financial
difficulty that HMRC are willing to work with those customers and agree a
solution.
What
is clear from the policy papers, is that early engagement with HMRC regarding
any financial difficulty is vital so that they understand you are simply “unable
to pay”, rather than “unwilling to pay”. This is key to avoid further
enforcement action being taken by HMRC.
No “one size fits all” approach
Whilst
there is no individual solution to a debtor’s financial difficulties, there are
a range of solutions available which can assist a debtor, depending on whether
the issue is a short-term cashflow constraint or part of a more fundamental
solvency concern.
HMRC
have stressed that any solution should be affordable and will depend on a customer’s
specific circumstances i.e. compliance history, level of debt, level of
engagement to date, asset position, earning ability etc.
HMRC
are willing to engage with debtors in Time to Pay arrangements to address
historic liabilities over an agreed period however the term and repayment
amount will differ depending on the above factors. Such Time to Pay
arrangements can also include penalties and interest, which if left unaddressed
can add significant burden to an already difficult financial situation.
It
is undoubtedly true that engaging with HMRC (and indeed all creditors) in a
timely manner, ensuring transparency and honesty in all dealings, will
ultimately serve beneficial.
It
is also important that debtors choose the right solution that is both
affordable and addresses the overall financial / solvency issue. Whether this
be a Time to Pay arrangement, an IVA / CVA or indeed Company moratorium
(introduced under the recent Corporate Insolvency and Governance Act)
independent professional advice should be sought at any early stage.
“We
urge customers to respond to these communications as soon as possible”
HMRC have stressed that early engagement with them is vital in order to avoid debt enforcement action. The following powers are available to HMRC however they have stated that they will “only use these powers as a last resort”:
As
recognised by HMRC, each individual circumstance is different and HMRC’s action
will therefore vary accordingly.
However
what is certain is that early engagement and independent advice are key to a
successful outcome. This may be particularly relevant where HMRC are not the
only area of financial pressure. It is therefore vital that any solution
selected is therefore the most appropriate in the circumstances.
Every year the tax system gets a makeover at the time of the
Budget, when new rules and regulations are introduced to extract funds from
citizens and businesses in order to fund the running of the country and the obligations
of the public sector. Over the last decade the frequency of tax regulatory change
events has increased with the once annual Budget being replaced by a myriad of
spring, autumn and emergency announcements that have ushered in an ever more
complex and voluminous tax regime. Indeed last month the draft clauses for next
year’s Finance Bill were published the day after Royal Assent was granted to
this year’s Finance Act! It’s all rather exhausting and one could be forgiven
for thinking that we are on a never ending treadmill.
Despite this, there has been a lot of talk recently about an
‘overhaul’ of the UK tax system by both politicians and tax commentators. The COVID
19 pandemic (together with its £300 billion estimated price tag) appears only
to have accelerated and enhanced this proposed overhaul. So it was not really a
surprise that during July, the House of Commons Treasury Committee opened an
inquiry into the UK tax system called “Tax after coronavirus”. The Committee
will look at what the major long-term pressures on the UK tax system are, what
more the UK can do to protect its tax base from globalisation and technological
change, and whether such pressures should be met with tax reform. The Committee
will also seek evidence on what overall level of taxation the economy can bear
without undesirable harm to economic growth, the role of tax reliefs in
rebuilding the economy, and whether there is a role for windfall taxes in the
post-coronavirus world.
The Committee Chair argued it was the right time for such an
inquiry for three reasons: it was a long time since there had been any
fundamental reform in the UK tax system; the pandemic was going to leave the
country with significantly elevated debt levels which would have to be dealt
with, and tax would have to play a major part, in his view; and the pandemic
had affected groups such as the young and the low paid in particular, and how
the tax system dealt with that needed to be considered.
In particular, the Committee Chair was concerned about the
taxation of digital companies and the differences in taxation between the
employed and the self-employed. He was also very aware of how there was an
increasing accumulation of wealth in the hands of a relatively dwindling number
of individuals. He further noted that the effectiveness of tax reliefs needed
to be reviewed; although some were in place for good reasons, collectively they
cost the Exchequer a great deal.
Unpicking the terms of reference and the Committee Chairman’s
own views, the following are areas which appear to be high up on the agenda for
an overhaul
The Three Person tax
issue
There has been a quiet revolution in the jobs market over
the last decade, with the arrival of the ‘gig’ economy. In the past,
individuals were either taxed as employees working for someone else or
self-employed working for themselves. Now the lines are blurred in that a
person can be regarded as a ‘worker’ which is somewhere between a self-employed
person and an employee. From a tax perspective, the key differences between
someone who is an employee and someone is not comes down to whether employer’s
National Insurance is payable (at 13.8%) and whether tax needs to be deducted
at source under PAYE. Clearly, from a tax generating perspective, the
Government want as many individuals to be employees as possible. However the
line between employee and self-employed is not always clear and the use of personal
service companies [‘PSC’s’] to provide the ‘work’ services of their
shareholders to ‘providers of work’ has made the distinction even harder to discern.
HMRC introduced the IR35 regime over 20 years ago as a means of collecting
PAYE/NIC from PSC’s that were used to employ individuals who in effect worked solely
for one customer. Recent high profile tax cases involving media celebrities who
used PSC’s have proved how difficult it is to determine the tax status of the
individual and their PSC. In response the Government changed the rules in 2018
for public sector employers and put the onus back to the large employer to
operate PAYE/NIC rather than the PSC. These rules are now to be extended to
include private sector employers from next April. Even with this change, there
is still a concern that it is becoming ever more difficult to determine the tax
status of many individual’s. There is a lot of tax at stake and it is clear the
Government and indeed opposition MP’s want to amend the rules to treat many
more individuals as employees for tax purposes. No doubt this will involve making
the employers the gate keepers of this decision and of course the rules will look
to penalise them if they get it wrong.
Reform of Inheritance
Tax?
There has been recent discussion about making significant
changes to inheritance tax [IHT] so as to make it apply to more people and thus
generate more tax for the government. However this is an unpopular tax and
politicians are unlikely to risk the ire of voters by extending the reach of
IHT too far.
Nevertheless, a cross-party group of MPs have called for significant
changes to IHT, including a reduction in the current 40% rate that applies on
death to 10% on taxable amounts up to £2m and 20% on the balance of the estate.
The rate reduction would be balanced against the abolition of a series of
reliefs, including the seven-year rule on lifetime gifts (which removes IHT
liability from assets if gifted seven years before death), gifts out of income
and the important business and agricultural property exemptions. The abolition
of business property relief would be of big concern to business owners and to
address the issue of taxing business assets on death, the report recommends
that where tax arises on business assets, there is an option for the tax to be
paid in instalments over 10 years. While the instalment option would make it
less likely that beneficiaries will need to sell the business to pay the tax
due, the abolition of the current reliefs would have significant implications
for business owners.
The report further advocates that the small annual gift
exemptions are abolished and replaced with one simple annual exemption of
£30,000. Once the annual allowance is exceeded, a lifetime tax at 10% would be
applied.
One additional significant recommendation is that when IHT
interacts with capital gains tax [‘CGT’] on the death of an individual, that,
instead of beneficiaries inheriting assets at their probate value (i.e. the
value at the owner’s death), they should inherit the deceased’s original
acquisition cost for tax purposes. The impact of this would be that CGT would more
likely arise if a beneficiary sells the inherited asset, as the base cost of
the asset would no longer be the value at the date of death.
If some or all of these changes were to be introduced,
significant revisions to IHT planning would have to be considered, even for
those with well thought out existing strategies.
Is a Wealth tax on
the way?
One of the significant sources of tax for many countries
around the world is a wealth tax, which in simple terms is an annual tax that
is payable based on the value of assets that are owned by individuals. For
example, a wealth tax could be imposed in the UK by applying a rate of tax on
the market value of all property and other tangible assets owned by an
individual. It would be a sure fire way to raise taxes but would be deeply
unpopular with voters. It would also require a significant amount of detail and
specific exemptions and reliefs for certain classes of assets. There would
almost certainly have to be a de-minimis amount of value owned by an individual
before the tax would apply and there would also likely be a sliding scale of
rates that increases as the value of a person’s estate rises. On top of this,
special consideration would have to be given to assets held by trusts and
offshore entities. Indeed it is probably for the above mentioned reasons that
it is unlikely that a Conservative-led government would introduce such a tax.
However, in the ‘post coronavirus’ world, where the UK economy is not going to
be in great shape, one should not entirely rule out a move to some form of
wealth tax.
Tax on Globalisation
To a certain extent the horse has already bolted on this
issue, as in April this year the UK introduced the Digital Services Tax, aimed
at large (mainly US) ‘on line’ vendors. The tax was introduced in advance of a
globally agreed system to apply to such organisations, the introduction of
which may be several years away. Whist this has not gone down well in the USA,
it will be the first step towards a more joined up global system to make large
corporates liable to taxation in countries where they make sales but don’t
necessarily have a physical footprint (which is a key requirement in order to
be taxed in a country under existing laws). The Treasury Committee will no
doubt want to ensure that the UK tax system is appropriately structured to
enable the UK to get its fair share of tax from the global internet giants who
sell to UK customers.
Removal of tax
reliefs
There are a myriad of tax reliefs and exemptions included in
the UK tax code. A recent report highlighted that many of these were poorly
targeted and unjustifiable in terms of lost tax. This report may give the Government
cover to remove certain reliefs. Some high profile reliefs which have been signalled
for the chop include:
1) Removing or reducing the Private Residence Relief, which normally exempts or significantly reduces the capital gains tax that arises when an individual sells the home they live in. Whilst removal of the relief entirely is unlikely, there is the possibility that, unlike the complete exemption that currently applies, the amount of the relief will be limited to a maximum cap, with capital gains tax arising on gains in excess of that amount.
2) The last budget saw a significant reduction in the value of Entrepreneurs’ Relief, as a result of limiting the 10% tax rate to gains of £1m or less from the previous limit of £10m. There is still the possibility that the relief could be reduced further or even abolished.
3) Prior to 1985, the Government taxed non trading income of privately owned companies that was not paid out as dividends to its shareholders. This was called the close company surcharge. Whilst the removal of the surcharge was technically not a relief, its re-imposition would be an unwelcome tax charge, although it would have the potentially beneficial effect of encouraging companies to commence trading, thus limiting their investment income.
There are a lot of ways that the Government can look to
raise taxes. There could, of course, be increases in tax rates on income both
for individuals and companies. However the current Government is less likely to
do this than a future potential Labour Government. Having said that, there is a
prospect that the CGT rate could rise as the current main rate of 20% looks
light compared to the top income tax rate of 45% – but again such a rate
increase would go against the grain of a Tory Government. As we will eventually
say goodbye to the EU at the start of next year, there could be changes to the
VAT regime, but at 20%, the main VAT rate is already quite toppy and it would
be surprising to see it rise.
Predictions on future tax changes is somewhat akin to
picking a winner at the races – but without the enjoyment of a day out! Whilst
some, all or none of the points raised in this article may come to pass, one
thing is for certain, there will be significant changes to the tax code over
the next year and it is unlikely that many of those will result in less tax
being paid!
Perhaps a new era and form of collaboration/consolidation?
An already precarious business outlook for many small breweries across the UK, who had just about boxed and weaved their way through the impact of Covid 19 were dealt a potentially fatal blow from the proposed change in the Small Brewers Duty regime in late July, with the added uncertainly of an increasingly likely ‘no deal’ Brexit also looming.
The news released on 21st July that the UK Government had decided to reduce the threshold at which Small Brewers Duty Relief ‘SBDR’ starts from 5,000hl to 2,100hl had in once sense been anticipated for a while due to the lobbying of the Small Brewers Duty Reform Coalition ‘SBDRC’ who sought amendment to current SBDR arrangements. To say that the news was met with anxiety and consternation by some of the smaller brewers in the sector (typically falling into the cohort under 5,000hl p.a), and who would broadly be recognised under the Society of Independent Brewers ‘SIBA’ would be no understatement.
The graph below shows the current so called ‘cliff edge’ of Duty relief clawback (which starts at 50% and recedes to 0% duty relief at 60,000hl) that awaits brewers moving beyond the 5,000hl p.a. threshold, a task that has led many to effectively place a ceiling on their ambitions limited to the duty relief threshold level
Source: BeerNouveau.co.uk
The counterpoint has been that for many there has been no great incentive to breach the 5,000hl threshold, despite there having been an acknowledged need for overall change and better smoothing of the cliff edge to what is felt to be a more attainable level – ultimately the duty/tax take from HMRC also needs factored in (the latest proposal is mooted to be neutral to HMRC, but no further detail provided as of yet).
A sentiment, although not one you will find someone pinning their name directly to, was that the current regime meant that larger breweries saw the SBDR allow such a significant discount that it unfairly (in their eyes) opened up access to the pub fonts of smaller local brewers, who would otherwise not been able to compete with other stronger operators.
The beneficiary of the changes are likely to be the medium sized regional breweries already somewhere between 5,000hl and 60,000hl or indeed well beyond that point and who wish to see the relief extend up to 200,000hl, with the smaller players, who tend to not supply outwith a 30 mile localised radius, likely to feel the greatest impact of these changes.
Covid-19 impacts on the brewery sector
The immediate and most blunt impact of Covid 19 lockdowns were the near overnight shutting down of the ‘on trade’ market across all brewers. A common complaint, even before the impact of the proposed Duty changes were aired, was that depending on which part of the UK you were based, your brewery would have missed out on Covid 19 Grant payments of £25,000 (where retail and bars benefitted), and they will also have not been eligible for a waiver of business rates. It is also likely that your brewery will have been exempted from business interruption insurance and, in time as lockdown transition measures were introduced, you may not be seeing any direct benefits from measures such as the 5% VAT being related to food (alcohol also excluded from the Eat Out to Help Out scheme).
In the Scottish market there is also the added factor of the 2022 introduction of the Deposit Return Scheme which will charge a returnable deposit per single use container (bottle or can) on each unit sold, potentially also impacting the perception of added cost to end customers as well.
One could therefore wholly understand a slumping of the shoulders when the news of the Duty change then dropped last week…
There are however, as ever, some positive signs if you chose to look closely during this period. For example, research for IRi below to end May 20 shows that beyond Ambient, Beer Wines & Spirits ‘BWS’ performed best year to date 2020 in retailer sales versus prior years
Whilst a positive move, and partial mitigation for bar closures, typically <5,000hl brewers don’t (or at best struggle to wrestle with pricing on) supply to major retailers, and a clear trend which has been observed within lockdown has been the shift from many of the smaller craft brewers towards a Direct to Consumer pathway.
This trend also has knock on implications for wholesalers, who may have spent a period of time in lockdown seeing the on-trade volume, to which they are reliant on to derive income, stalled. In the meantime, the ‘at home drinker’ has either been purchasing from their supermarket retailer, from an online aggregator or if wishing to support their preferred small brewery, buying cans or small pack directly from them. As lockdown eased, certain bars also opened up for ‘takeaway sales’ allowing some of the keg stocks that were left on the shelf back in March to be sold and to restart production for smaller brewers.
Whilst direct supply has a clear margin benefit for brewers, the picking and packing, as well as fulfilment requirements to cover modern e-commerce needs are a new and different skillset for some to accommodate, added to which come issues such as viability of minimum pack sizes to as well as requirements around stock holdings which also present their own challenges.
Where matters stand now – some unscientific market sentiment
As part of the process of writing this note we spoke to a variety of clients and contacts within the Brewing and related sectors to get a sense of their outlook in mid summer 2020 in light of these impacts. We sought responses on topics such as the direct and indirect impacts of the proposed SBDR changes, asked what feedback respondents would give towards the proposed ‘Technical consultation’ process, as well as commentary on direct to consumer supply, and trends that can be foreseen in the next 12 months if it is assumed that the proposed changes get ratified in due course.
Key themes of the feedback we received, but the main themes we derived were as follows:
• The devil will be in the detail in terms of exact impact. What can be noted is that views on the proposed changes were markedly divided between those who were already embarked upon the ascent of or beyond the relief ‘cliff edge’ and those who were content to remain at a lower level of production and operation;
• Keener eyes have also picked up on the proposal to change the duty to a fixed financial amount as opposed to a %, which could also be a means of reducing the relief as a whole versus inflationary effects;
• The proposed changes are felt likely to push a ‘point of change’ decision onto brewers who are at or anticipating falling into the volume band of 2,000 – 5,000hl, where the option to just stay put, as you are, feels difficult;
• The noted risk to around 150 breweries who would loose maximum relief feels inconsistent with the intention that “no brewery should loose out” with the proposed changes;
• The smallest brewers also proportionally employ a greater staff per hectolitre produced, and so will therefore have potentially the largest staffing impacts;
• Whatever happens with the detail on tapering of the relief, direct to consumer is a clear trend (surpassing on trade from 2017) and exacerbated further by the Covid crisis, with smarter centralised and collaborative fulfilment likely to be a key trend as this shift continues;
• A consequence may be failure for some brewers, a need for consolidation and realisation of efforts to date for others that can sell, or for the more ambitious to answer the call this prompts to seek to grow and potentially create new craft brewing models to address the new market position; and
• A review of social media posts to compare sentiment with the above shows a concerted effort from smaller brewers and industry commentators to influence governmental review (e.g. letter templates to send to MP’s) and the recognition from now larger brewers such as James Watt at Brewdog, where he noted that “SBDR was essential in their own early years of growth….the reduction of SBDR is a hammer blow to thousands of small brewers when they need it least”.
Sentiment towards Craft Beer and its impact on M&A and funding
The more sceptical end of observers of the Beer, Wines and Spirits sector have held the belief that the Craft Beer market, which has seen numerous notable acquisitions from larger mainstream operators in the past, as a ‘trend’ which will ultimately pass much like other fashions in the sector.
The model of building a brewery ‘brand’ to the 5,000hl threshold and then seeking a ‘big brother’ relationship or ownership to propel you up and beyond the duty escalator has certainly more recently become a more difficult sale than was perhaps hitherto the case. Consolidators within this space are more scarce (some notable high value acquisitions having failed to really hit the spot with some onward sales at a heavy loss in the US), and will likely prove more demanding in their requirements of target businesses, whether that be identifiable and leverageable brand and beers or on simple financial metrics.
Mainstream investor appetite within the sector is likely be focussed on those parties that have reached a certain level of scale and market penetration as they present a lower initial investment risk. In the context of relative industry scale, this could see smaller regional players take on board investor support, and to then enable and target further growth and addition of complimentary brands and smaller breweries mastheads. Gaps within existing portfolios and geographic expansion may be drivers of these initiatives.
A bold and alternative business growth thesis, which could yield a higher return to investment might also be to use the current circumstances and seek to build a model where the better branded and ambitious local breweries build a series of geographic clusters in key urban areas where Craft Beer has a stronger foothold (maintaining their 30 mile radius recognition and brand strength), under a shared ownership (potentially with investor support).
This type of approach may even tilt further towards a ‘collective/co-operative’ approach (moving beyond just making a beer together), where the focus on coming together could be towards areas such as enhanced buying power in procurement of malt and other supplies, sharing of certain key back office functions and on the market facing side, combining to lighten the load on e-commerce, D2C fulfilment and distribution, and extending market penetration and spread to fellow collective group members.
Any growth plan is of course easier to suggest than to implement, but the opportunity potentially exists for a consumer research driven approach, identification of the brands best placed in the eyes of consumers for growth. Models which apply data driven research and lower risks will be best placed to succeed in securing support to grow.
Conclusion – What Next then?
There are a number of potential reactions to the proposed changes, and with a likely implementation date of 2022 for the SBDR there is also a bit of time to observe and reflect on matters.
Reform is not yet quantified, nor adoption cut and dried – There has been a concerted effort from smaller brewers to push back on the proposals. Firstly, it is important to recognise that the announcement on 21st July was merely an initial conclusion. It is estimated by SIBA that around 150 breweries in the UK will be impacted by the proposed changes, seeing their duty levels rise.
Immediate market difficulties are likely to remain priorities, but opportunities will arise – With On trade anticipated for the meantime to be running at as low as c.15-25% of previous volumes depending on lockdown release, it would be a bold move to dare to predict the timeline and path of return and therefore embark now on a distinct growth strategy in that context. There is likely therefore to be a period of observation and consideration on plans across the board, though inevitably there will also be parties that have a clear path ahead and who seize the undoubted chances that the current flux presents.
D2C a growing focus – whilst D2C has offered a positive aspect to many in lockdown, the wider online delivery sector has itself started to attract watchful glances by the treasury, and therefore may be about to encounter its own challenges in taxation. There are a number of notable beer to consumer platforms who may see the current market position as a further opportunity and who are clearly keen to support the smaller brewers who lack their reach and capabilities, if they can fit within their model, with their key ongoing challenge being to give the consumer what they want within pricing and convenience levels. Anyone without a direct to consumer strategy either quickly needs to develop one or accept that they are losing a key foothold into the future market.
Moving collaboration beyond the brewing process – beer product collaborations are a well recognised and familiar theme, however given the wider trends noted above, there may perhaps become a more focus towards attention toward more operational collaboration – for instance in areas such as supply procurement, back office and admin functions, distribution/fulfilment routes, and bar install etc. may all need to be considered to allow competitive positioning versus better financed competitors.
The role of the Industry Umbrella body – the mix of factors at play might also prompt a move for umbrella bodies to more boldly shift from being seen as lobby routes for membership towards a more involved and active commercial and shared support structure for their membership.
Acquisition and investment plans – this will, as ever, be slightly in the eye of the beholder, and dependent on any perceived gaps in their ‘where to play’ strategy. Near all observers expect consolidation to happen, and indeed HMRC envisage providing some merger support mechanisms within the reform agenda.
So in summary, it feels like we are entering a time of some close monitoring of status, keeping a watchful eye on a number of competing factors (some very much outwith all of our control). It has always been the case, but perhaps more than ever for participants in the brewing sector right now, the option to stand still and hold your position whilst all of the above takes place is probably not an option anymore.
HNH’s Scottish team uses its expertise to support Edinburgh cyber security company
Despite challenging economic conditions, boutique corporate finance specialists HNH have helped Quorum Cyber Security Limited secure growth capital investment to scale its business internationally.
Led by HNH director Neal Allen, the Scottish arm of the Belfast-based multi-disciplinary financial advisory firm secured the £2.7m investment from Maven Capital Partners through its VCTs, alongside the Scottish Investment Bank, which will allow the Edinburgh-headquartered cyber security and data confidence services company to scale up.
In a sign of the resilience of the Scottish tech sector and the appetite for investment in ambitious Scottish businesses, the growth capital deal was instigated by Quorum Cyber’s managing director Federico Charosky, who has a 40% stake in the business.
With
a turnover of £2.7m and a team of 25 operating from Edinburgh, Quorum Cyber
provides a professional and managed security services for UK and international
clients including a fully managed detect and response capability via the
company’s Microsoft Azure Sentinel Security Operations Centre (SOC). Charosky
will use the growth capital to further scale the business, investing in sales
and marketing resource, as well as product innovation to ensure clients can
confidentially operate within an increasingly hostile cybersecurity
environment.
Allen
and the HNH team, which specialises in advising SMEs and entrepreneurs on
M&A and growth capital activity, spent several months working with Quorum
Cyber to secure the most appropriate investment solution. Having identified
several potential investors among its extensive network, HNH secured the
investment from Maven Capital, one of the UK’s most active private equity houses.
Allen,
director – deal advisory at HNH, said: “While Covid-19 and Brexit have created
a challenging financial climate, this growth capital investment demonstrates
that there is appetite for growth and investment in Scottish business. It was very encouraging that there was a lot of interest
among Scottish based private equity/venture capital funds and we’re
delighted to have facilitated this for Quorum Cyber. The team at Maven Capital
Partners led by David Millroy were very receptive from the start and we know
that Maven is the right home for this business as it continues to grow its
client base around the world.”
Charosky
said: “Working with HNH and Maven to create the deal has been a fantastic
experience. This deal will enable Quorum Cyber to continue growing in a
sustainable way, ensuring we continue to exceed customer expectations, while
protecting the amazing culture we’ve created.”
Millroy,
a partner at Maven Capital Partners, said: “We are delighted to be leading the
investment in Quorum Cyber and look forward to being part of its growth in the
years to come. The senior team have
already created a strong business and there is significant opportunity to scale
operations globally, with further expansion already underway in the Middle
East, Australia, South Korea, and North America.”
The Edinburgh office of HNH opened in April 2019. In March this year, HNH’s Edinburgh team secured a £30 million asset-based lending package for The GlenAllachie Distillers Co from Clydesdale Bank. Other clients have been drawn from food and drink, manufacturing, building products, business services and transport sectors.
Yesterday the Chancellor made a statement to the House of
Commons and unveiled his ‘Plan for Jobs’, as the second phase of the
Government’s response to the COVID-19 pandemic. He announced a number of
measures designed to support, protect and create jobs, with a particular focus
on the hospitality and accommodation sectors and in a bid to get the property
market moving.
The most high profile announcement was the confirmation that
the Coronavirus Job Retention Scheme (i.e. the ‘furlough’ scheme) will cease at
the end of October. Instead, and in a bid to encourage employers to retain
employees, a Job Retention Bonus will be paid to employers, being a payment of
£1,000 for every furloughed employee who remains continuously employed to the
end of January 2021. It remains to be confirmed whether this bonus will be paid
in respect of employees who had been ‘furloughed’ at any time since the
beginning of the scheme in March, or will be restricted to employees who are
only brought back to work after a certain date. Further detail about how the
scheme will operate will be published by the end of July. Additional
announcements included a wide range of new policies to fund various training,
apprenticeship and job support schemes over the coming months.
To boost the hospitality and tourist industries, one of the more eye-catching announcements was the ‘Eat Out to Help Out’ scheme, which will apply for the month of August across the UK. Under the scheme, participating restaurants, cafes, pubs and other food service establishments can offer a 50% discount to every diner, of up to £10 per head, on any eat-in meal, with such discount being reimbursed by the government. The scheme only applies from a Monday to Wednesday each week.
From a tax perspective, the only changes were in the areas
of VAT and Stamp Duty Land Tax (“SDLT”).
VAT has been reduced from 20% to 5% for the period from 15 July 2020 to 12 January 2021 in respect of the following:
supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafes and similar premises across the UK (in order to support businesses and jobs in the hospitality sector), and
supplies of accommodation and admission to
attractions across the UK (in order to support the tourist industry).
Regarding SDLT, it was announced that the Nil Rate Band of
Residential SDLT in England and Northern Ireland would increase from £125,000
to £500,000 for the period from 8 July 2020 to 31 March 2021. This temporary
reduction is designed to support the housing market, and it is estimated that
this will mean that nearly nine out of ten people getting on or moving up the
property ladder will pay no SDLT at all. It is to be confirmed whether this applies
to all residential property transactions, or only those for a person’s ‘main’
residence.
The Chancellor stated that he would “never accept
unemployment as an inevitable outcome” of the pandemic. It is to be fervently
hoped that all of the measures announced yesterday will yield a positive impact
for employers and employees as the economy begins to recover from the effects
of the pandemic.
The impact of the Coronavirus pandemic has been
unprecedented, certainly for anyone born after the Second World War, and it
would be fair to argue that the Government’s financial response to that impact
has been just as unprecedented.
It is understandable that the tax implications of the measures which have been introduced have not been at the forefront of anyone’s mind in the last four months, but nevertheless it is worth reminding ourselves of some key points which will be of increasing relevance in the months ahead.
Coronavirus Job Retention Scheme
Probably the most high-profile of all of the measures introduced in recent
months is the Coronavirus Job Retention Scheme (“CJRS”), which has been
available to employers as a grant to cover up to 80% of their employees’ wages
(up to a maximum of £2,500 per month), plus relevant employer’s National
Insurance Contributions (“NICs”) and auto-enrolment pension contributions. The
CJRS will be amended over the course of the next few months (to allow the
employer to bring back employees on a part-time basis, and to reduce the
percentage of wages covered by the scheme on a phased basis), and is currently
scheduled to end on 31 October 2020.
From an employer’s perspective, the tax treatment of any CJRS grant
received is quite straightforward – it will be taxable income, subject to
income tax or corporation tax as appropriate. The payments made to employees
(for which the grants have been claimed) should continue to be deductible as a
business expense.
Grants made under the Self Employed Income Support Scheme are similarly subject to income tax and self-employed NICs, and should be reported on an individual’s self-assessment tax return.
Tax Deferrals
One of the first measures to be introduced to assist individuals and
businesses was a deferral of VAT and income tax payments, as follows:
VAT – any VAT payments due between 20 March and
30 June 2020 could be deferred until 31 March 2021. Effectively, this allowed a
business to defer one quarter’s VAT payments. However, any VAT payments due on
or after 1 July 2020 remain payable by the normal due date.
Income tax – the second payment on account for
the 2019/20 tax year, which would otherwise be due on 31 July 2020, can be
deferred until 31 January 2021. There is no requirement to tell HMRC about any
intention to defer, and interest and penalties will not arise provided payment
is made by 31 January 2021.
While both of these measures look attractive and from the perspective of immediate business requirements, it should be emphasised that they are deferral measures only, and not a write-off by HMRC of a tax liability. They will therefore lead to (potentially significantly) higher tax payments required in the first quarter of 2021, and should thus be properly factored into future cash flow planning.
Utilisation of losses
The economic downturn brought about by COVID-19 will undoubtedly lead to
some businesses incurring trading losses in the current period. Such losses can
be used to shelter other profits and gains arising in the same period, and can
then be carried back to set against income and gains (subject to certain
restrictions) arising in the immediately prior year, thus leading to repayments
of income or corporation tax.
In the worst case scenario, a business might be forced into a cessation of trade by current economic conditions. In those circumstances, trading losses can be carried back up to three years before the period of cessation (as opposed to the one year carry-back for ‘standard’ trading loss relief claims), thus potentially giving rise additional tax repayments.
Company wind-up – Members’ Voluntary Liquidation
Where a company’s trade ceases and there is no likelihood of it starting
up another business in the short to medium term, the shareholders might also
decide that the company itself should be wound up. In such a case, where there
are still reserves that might be returned to shareholders, the most
tax-efficient method of extraction is likely to be a Members’ Voluntary
Liquidation (“MVL”). The funds distributed to shareholders should be subject to
capital gains tax rather than income tax and, where Business Asset Disposal Relief
(formerly known as Entrepreneur’s Relief) is also available, the tax rate would
be reduced from 20% to 10% (subject to a lifetime limit of £1m of gains).
It
should be borne in mind that there are certain anti-avoidance provisions which
can apply when carrying out an MVL, particularly around the area of
‘phoenixism’. This is the situation whereby an individual receiving the
liquidation distribution continues to carry on, or be involved with, the same
trade or a trade similar to that of the wound up company at any time within two
years of the date of distribution. If the legislation applies, it can give rise
to the distribution being taxed as income at up to 38% rather than capital
being taxed at 10%. Specialist advice should always be sought before any MVL
process is commenced.
Finally, it is worth reminding ourselves that nothing about
the future is certain and it is very possible – even very likely – that the
Government will introduce further changes to extend and bolster the relief
available to individuals and businesses alike, whether this be by extending the
time period for existing schemes and programmes, or introducing brand new
measures. With that in mind, the Chancellor’s financial statement, due to be
delivered on Wednesday 8 July, is being keenly anticipated, and we will
summarise the key measures following their announcement.
On the flip side, the Government is likely to introduce new
tax-raising measures to start to pay the Coronavirus bill. It will be very
important to pay heed to the tax consequences of these measures, even if the
‘cash’ tax impact may not arise for some time to come.
Deal Advisory director Neal Allen recently gave a presentation to ICAEW members in Scotland on the implications of COVID-19 on the outlook for fundraising and M&A activity. A copy of the presentation is available to download via the following link
The past months have had a deep
and lasting impact for all of us. In February, the terms social distancing,
furloughing and COVID-19 were almost unheard of and now they are part of our
everyday ‘virtual’ lexicon. The world has tilted on its axis and life for all
of us has changed. Indeed for many the enforced extra down time will have
provided an opportunity for some strategic thinking and planning for the future;
entrepreneurs and business owners may well have turned their thoughts to the
possibility of selling up, cashing in or moving in a different direction. For
those who are contemplating such a move (even if they don’t want to admit it!)
the next question is how might they go about it?
When a decision has been made to
sell/exit a company, one needs to consider the options, select the most
suitable one, prepare a comprehensive plan and implement the plan accordingly.
While most business owners will recognise this process as being part of their everyday
business makeup, when it comes to actually selling your company/business, the
big difference is that most people only do this once or by exception a couple
of times in their lifetime and thus it is not a process that they are entirely
familiar with. So what are the key
factors to consider?
If the decision has been taken to sell, then the first key factor is to work out who is going to buy the business. In an article last year we discussed the various exit routes that are typically open to shareholders. For many businesses, taking them to market via a trade sale process is the preferred option, in that, more often than not, it results in the highest valuation being achieved.
However, as we embark on what
will likely be a lengthy recovery period post-COVID, it may be that for some
businesses a trade sale is no longer the best direction. Prospective buyers may
be preoccupied with their own internal issues, or may approach M&A activity
with an opportunistic mindset unlikely to lead to an acceptable valuation for
the seller.
In these circumstances, it is
therefore more important than ever to weigh up the alternative options. Four that
we will examine in more detail are: the Management Buy-out; the Management Buy-in;
the Employee Buy-out and the Members Voluntary Liquidation.
The Management Buy-Out (MBO)
In its simplest form an MBO, is a
deal in which members of the company’s incumbent management team acquire all of
or a controlling stake in the business from the existing shareholders.
Typically, this involves the creation of a new company (Newco), which is used to
acquire the shares (or in some cases the trade and assets) of the trading
company.
Typically, the MBO team will not
have access to sufficient personal resources to complete the deal with a full
cash consideration. Depending on the nature of the business, the long-term
growth strategy and how much the team can commit personally, it may be possible
to bridge the gap by bringing in external funders such as a PE fund, debt fund,
or bank. Equally, it may be possible for the vendor(s) to part-finance the deal
via deferral of a proportion of the consideration or via loan notes in Newco.
There are quite a few tax
considerations in an MBO, not only for the existing owner but also for the
management team and the buyout company. The vendors will want to ensure that
they qualify for capital gains tax treatment in respect of the proceeds they
receive and also maximise their entitlement to Business Asset Disposal Relief
(‘BADR’, previously known as Entrepreneurs’ Relief). This is now only available
for gains of up to £1m but still saves £100,000 in tax per qualifying
shareholder. If they are going to retain a minority interest in the company or
help finance it via loan notes then the share for share/loan note exchange
rules can come into play and a pre-transaction clearance from HMRC is strongly
advised to ensure that the anti-avoidance rules will not be applied so as to
treat the transaction as being subject to income tax. On top of this there may
be a need to elect to dis-apply the share for share/loan note rules in certain
circumstances if this could lead to a loss of entitlement to BADR. The MBO team will also need to be mindful of
the tax legislation that applies to employment related shares and they may also
need to consider making certain elections to avoid future exposure to income
tax arising on the ultimate sale of their shares in the buyout company. It
would therefore be important to have all of these matters considered and
planned for prior to completing the MBO.
The
Management Buy-In (MBI)
An MBI can be viewed as a hybrid
of an MBO and a trade sale in that an external team acquires the business from
the existing shareholders. To all intents and purposes the structure of an MBI
is the same as for an MBO: a Newco will be established as the acquisition vehicle,
it will raise the necessary finance to execute the deal and ultimately acquire
the business.
The funding options for an MBI
are the same as for an MBO in that the team will typically need to augment what
they can bring to the table with some third party funding. That said, it can be
more difficult to raise finance for an MBI as, by definition, it involves an
external team taking over the business and funders are often concerned that a
lack of familiarity with the business, or cultural clashes with staff can
increase the risk of post-completion setbacks.
The tax considerations for the
vendors will be similar to those noted above in respect of the management
buyout in that the sellers will want to ensure that they qualify for capital
gains tax treatment in respect of the proceeds they receive and also maximise
their entitlement to BADR. Once again, if they are going to retain a minority
interest in the company or help finance it via loan notes then a pre-transaction
clearance from HMRC is strongly advised in respect of any share for share/loan
note exchange. Also the vendors may wish to elect to dis-apply the share for
share/loan note rules in certain circumstances if this could lead to a loss of
entitlement to BADR. As the MBI team (which
may include some of the existing management) will become employees, they will need
to take account of the employment related share rules, which may entail making an
election to avoid future exposure to income tax arising on the ultimate sale of
their shares in the company. Once again some pre-transaction tax planning is
highly recommended.
Employee Buy-Out (EBO)
An option that is growing in popularity, but still somewhat under the
radar, is the EBO. Under this option,
rather than a small group of managers acquiring the business (an MBO), the
entire workforce participates in the deal, either directly or indirectly. Indirect participation in the EBO is
generally via an employee ownership trust that acquires shares on behalf of the
beneficiaries.
While the EBO is a relatively uncommon option, there are some high
profile examples of employee-owned businesses, with John Lewis/Waitrose
probably the most well-known. With employee engagement an increasingly hot
topic and retiring shareholders keen to protect their legacies, an EBO can be
an exit route that is worth exploring.
From a tax perspective a sale of
the shares in a trading company (or trading group) by existing shareholders to
an employee ownership trust will be deemed for tax purposes to be for a
consideration that gives rise to neither a capital gain nor a capital loss – in
effect the transfer will be deemed to be tax free. There are several criteria
which need to be met including that the trust must be solely for the benefit of
all eligible employees of the company on the same terms. An eligible employee
excludes any current shareholder with a holding in excess of 5% (taking into
account holdings of anyone who is connected with the shareholder). After the
share transfer, the trust must control more than half of the shares, votes,
profits available for distribution and assets available on a winding up of the
company. There are several other criteria that must also be met for the
favourable tax treatment to apply in respect of disposals to an employee
ownership trust. It is therefore imperative that careful consideration is given
to the detailed rules in advance of shareholders disposing of their shares to
such a vehicle and being entitled to claim the capital gains tax relief. If the
requisite rules can’t be met then any disposal to such an employee trust should
be within the charge to capital gains tax, at a rate of 10% if the conditions
for BADR are met (and 20% on gains in excess of £1m or where the conditions for
BADR are not met).
Members’ Voluntary liquidation
Sometimes there may be little of the original business to carry on once the main shareholders decide to call it a day (especially if the service provided by the company is dependent on the shareholders’ skill sets). In such cases, where there has been a build-up of undistributed cash and assets, it is possible for the business to cease and the company to enter into a members’ voluntary (solvent) liquidation.
This is a formal insolvency
process in which a licensed insolvency practitioner is appointed to take control
of the company, liquidate all of its assets and, after paying off all creditors,
distribute the remaining assets and cash of the company to the shareholders and
then wind up the company. Whilst the process is formal and requires strict
compliance with the insolvency rules and company law, it is a well-trodden path
for experienced insolvency advisors who under the right circumstances can
distribute a significant majority of the company assets to the shareholders
shortly after they have been appointed, with the remainder of the assets being
distributed after the formal requirements of the liquidation process have all
been completed.
For tax purposes the main benefit
of a members voluntary liquidation is that the distributions should be treated
as capital distributions for tax purposes and thus subject to capital gains tax
treatment at a rate of 10% if the conditions for BADR are met (and 20% on gains
in excess of £1m or where the conditions for BADR are not met). This provides a
big advantage over normal income distributions/distributions which are subject
to income tax at up to 38.1%.
However, there is a nasty tax trap
that can arise for those who go down this route and then decide to start up
again in the same or similar business under a different vehicle within a two
year period following the liquidation of the original company. If a shareholder
either sets up a new company or even starts up
a similar business by himself/herself or in partnership with someone
else, HMRC may apply the ‘anti phoenixism’ rules which enables them to treat the liquidation distribution as being
subject to income tax and not capital
gains tax. Falling into this trap could result in an additional tax charge of
almost 30%. Once again careful planning and consideration is required.
So if you are thinking that it might be time to ‘cash in your chips’, there are various ways that you might be able to do so, even if a third party purchaser is not on the horizon.
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Within the construction
industry, ‘smash and grab’ is the term used to describe an adjudication that
seeks to recover funds due to a contractor. The contractor will claim payment
for an amount stated in an interim application process, regardless of whether
the sum represents the ‘true value’ of the works. This may arise out of
technical argument based on the failure of the payer to serve a valid
‘withholding’ or ‘payless’ notice in the required timeframe.
Accordingly, a payer losing a smash and grab adjudication must pay the contractor the awarded sum, however they may attempt to hold off until the ‘true value’ is confirmed. Payers may have concerns around the recovery of such amounts if it later transpires that the ‘true value’ is less than the amounts claimed.
Stay of
Execution
The payer may seek a stay of execution with regards to
payment and it is during this part of the process that financial analysis may
play a key role in the argument surrounding the need for a delay.
HNH has been instructed to
provide financial analysis or advice in one form or another as part of an
increasing number of ‘smash and grab’ adjudications in the last 12 months. On
most occasions, it has been our role to provide an independent view on the financial
standing of the contractor.
Test of
Insolvency
The
tests of insolvency outlined in the Insolvency (Northern Ireland) Order 1989 or
Insolvency Act 1986 (England and Wales) are typically the first ‘go-to’ when
considering the financial position of a company.
The
Order / Act outlines the various tests that are referred to as the ‘Cash Flow
Test’. It is stated that a company is insolvent if it is otherwise proved to
the satisfaction of the High Court that the company is unable to pay its debts
as they fall due.
The
Order / Act also states that a company is insolvent if it is proved to the
satisfaction of the High Court that the value of the company’s assets is less
than the amount of its liabilities, taking into account contingent and
prospective liabilities. This is often referred to as the ‘Balance Sheet Test’.
Commercial
Approach
The
Tests of Insolvency outlined in statute are often considered black and white,
however it is useful to remain mindful of key case law on this matter. In the
matter RE: BNY Corporate Trustee Services Ltd v Eurosail (2013), the Court
ruled that the balance sheet test should adopt a commercial position and
consider when prospective and contingent liabilities were likely to fall
due.
Instead
of a mechanical exercise of comparing the value of a company’s assets against
the value of its liabilities, a more sophisticated test should be adopted,
requiring a judgment as to whether the present assets of a company will
reasonably enable the company’s present and future liabilities to be met.
Ratio Analysis
The
Tests of Insolvency are limited to considering whether a company may or may not
be insolvent at a point in time. For those companies that are teetering on the
edge due to cash flow pressures, further analysis may be undertaken to outline
potential concerns.
Additional
analytical tools which are useful to measure financial health are various ratio
calculations, particularly the financial gearing ratio of the company. Financial
gearing refers to the relationship, or ratio, of a company’s debt to
equity. When there is a high proportion of debt to equity, a business is
said to be highly geared.
Banking
covenants are most represented in terms of financial ratios which highlights
the significance of these calculations. A borrowing company may agree to
maintain a financial ratio, such as the debt of equity ratio or others
such as interest coverage ratio or the ‘current’ ratio which measures the
capability of a busines to meet its short-term obligations. Each of these ratios
are regularly monitored to evaluate the risk of failure of a business.
Recent Judgement of the High Court in Northern Ireland
James Neill of HNH was instructed in a recent case heard by the High Court in Northern Ireland during the Covid-19 lockdown, which was decided solely on the papers. The case centred around the enforcement of an adjudicator’s award following a smash and grab adjudication. The written evidence put forward analysed the financial position of the contractor by reference to the Tests of Insolvency and the debt to equity ratio.
The judgement noted that whilst the contractor was not insolvent the company appeared to be facing cash flow pressures and relatively high gearing. The Judge decided that, whilst the contractor had a right to rely on the smash and grab adjudication, there was a risk that the company would struggle to pay back the full amounts if ordered to do so. A stay of execution for 14 days was granted to allow sufficient time for the ‘true value’ adjudications to be concluded.
Insolvency
Advice
Outside of the forensic analysis and provision of expert
opinion with respect to the position of the contractor, those facing smash and
grab adjudications may find themselves having to make payments of amounts not
previously anticipated.
It is useful to understand the various scenarios which may
unfold if adjudications are successful and upheld. How will the payer’s cashflow
be impacted? Will the payment of smash and grab adjudications place the payer
in a risk of insolvency?
Key to a successful financing strategy is to address the
issues head on, make a focussed plan for a sustainable recovery and seek professional
advice as soon as possible. Early advice and acting quickly is often integral
to the implementation of an effective turnaround.
HNH are pleased to welcome John Donaldson as an Associate Director into our Business Advisory Services division. John, a Licensed Insolvency Practitioner with over 18 years’ recovery experience, joins from PWC and has worked on some of NI’s largest and most complex restructures. John specialises in providing strategic advice to companies, lenders and various stakeholder groups.
James Neill, Head of Business Advisory Services, said, “We are delighted to welcome John to our team and, in doing so, bolster the strength in depth we offer at HNH. Our focus has always centred on delivering Director-led advice, with an emphasis on local clients and John’s addition enhances that’.
John added, “I am excited to take up my new role with HNH and look forward to continuing to work with local companies and their stakeholders, helping them navigate through the challenging times ahead”
For any of our clients or contacts who are unsure of what support packages are available to help them navigate these uncertain times, or how to avail of them, we have prepared a downloadable summary of the situation as it currently stands.
There is no doubt that business owners and directors are in panic mode. This is totally understandable as this type of crisis is unprecedented – there is no tried and tested toolbox of previous experience on which to rely. There are so many questions right now and, honestly, as advisers we are often no better informed.
However, we will get through this and we must use this time wisely to make sure we make informed strategic decisions out the other side. What is certain is that it’s very much a level playing field post COVID-19 and we must all plan for life as a ‘start-up’ regardless of how many years a business has been in existence.
So what does life as a ‘start-up’ look like, what funding is required, where is that funding coming from, why is liquidity key and why is ‘wait and see’ not an option?
Strategies for life post – COVID-19:
Build an integrated financial model – Key business decisions are often made on ‘hunches’, ‘gut feels’, ‘split second opportunities’ and some of the very best businesses have been founded on those decisions. However, in uncertain times, good business decisions must be made on an objective, rational basis and fundamentally, upon sound financial reasoning. For too long, recovery has been based on ‘gut feels’, but with multiple stakeholders involved in recovery, the objective of getting all stakeholders to the same ‘feeling’ is often unachievable. Yes, financial models are based on assumptions but if the assumptions are fair and honest then the numbers don’t lie.
Stress test your P&L and liquidity – It’s imperative to run sensitivities against your financial model. This might be uncomfortable but you need to know your boundaries for failure and survival. Understand the pinch points and get ready to manage them. You will be surprised how far your historic relationships with customers and suppliers will get you – they often need you as much as you need them!
Look after your staff – Fear and panic are debilitating to both business owners and employees and that’s understandable as each have their own worries and personal circumstances to consider but both need each other. Strong leadership and emotional intelligence at this time will drive loyalty and commitment from staff long after COVID-19 has left us.
Prepare to succeed – Plan for changes in consumer behaviour and identify new world opportunities.
Right size your business – Your business does not need to look the same post COVID-19 as it did pre. It can get back to its original position in time but that does not need to be immediate. I will anger some by saying this but ‘pride and ego’ is not an option right now.
Customers – Review your customer segments for liquidity and repayment risk. Yes repairing revenue streams will be important but not at all costs. There will inevitably be failures in the new business environment.
Suppliers – Consider de-risking and shortening the supply chain. Your supply chain may be in a location that continues with COVID-19 restrictions when you do not. Use this time to communicate with key suppliers or new potential suppliers to understand their challenges, timescales, credit issues, shipping issues etc.
Funding partners – Whether they be debt or equity, communication and support is key. It is a challenging time for all parties given the uncertainty but clear communication of a well thought out financial plan highlighting the impact of COVID-19; the steps taken to date; and the rebuild plan post COVID-19 is the only way to navigate funding structures.
Life as a ‘start-up’ – CBILS, liquidity and other forms of funding
Bank and lenders are currently dealing with a colossal number of requests for moratoriums, CBILS support and any other form of support available. The general feedback from all lenders is that they desperately want to help but despite an 80% guarantee from the government, CBILS still have a number of key criteria that must be met and the lending decision must still make commercial sense. Add to this the sheer volume of requests and remote working and it’s understandable to see why it’s hard for all involved.
Whilst I appreciate there are immediate cash requirements for many businesses, it strikes me that the reality of knowing what quantum of support is required is some time away. There are still too many unknowns and without careful consideration of what the ‘new world’ looks like, it’s nearly impossible to know what support is required.
In essence, lender support in this environment has three key facets. Firstly, to support immediate requirements; secondly, to support the inevitable working capital required in the post COVID-19 workout; and thirdly, the Bank must take reasonable steps to protect its capital.
In panic mode, it’s understandable why borrowers focus on the near term but it’s the medium term that will define business recovery.
We are all essentially ‘starting again’ so how does this affect the normal working capital cycle and why might tools like CBILS be key to helping restart business? In essence, what do we need to consider in funding the working capital of a ‘start-up’ economy?
Employees
Employees are the one certain cost that must be paid.
The JRS has been welcomed with open arms but how does it end? When does it end? Will it be tapered off? Will it end immediately? The reality is we don’t know but we can make assumptions and model accordingly.
Customers
Customers will no doubt push for extended credit terms.
What will consumer spending patterns be and how will this affect turnover? Many will have suffered income losses or job losses which could significantly reduce normal spending patterns.
Credit insurance may become more challenging in the market and those that use invoice discounting to fund working capital may have issues with old debts, credit risk and insurance that could impact upon funding or bring new risks to your balance sheet beyond this shock.
Suppliers
Will supply need to come from a local source and with a new relationship will there come constrained credit terms?
Do you need to hold stock in case of a second wave of COVID-19 and what are the working capital and cash implications for attempting to mitigate this risk?
Suppliers will want paid up front as they manage their own cash positions and bad debt risk.
Logistics/shipping times could continue to be interrupted or delayed depending on the geography of sourcing of your materials and how that location is coming out of lockdown.
Capital Expenditure / R&D
Is there a requirement to integrate e-commerce / supplier or customer microsites
Is IT infrastructure spend required to plan for a second phase of remote working or indeed as a longer term plan for the business?
Non-core divestments
Do you have non-core assets or businesses in your group that it may be worth considering disposing of to generate cash?
Market valuations are likely to be low for assets like this in the immediate term but could planning for this be a method to get a cash injection in the future to focus on core strategic activities?
Business interruption claims
How long will a claim take? Will the insurer pay out or will litigation be required? How is litigation to be funded?
I’m not sure any of us actually know the answers to each of the questions above. The exact work out will likely become clearer as time progresses but despite these unknowns we must start considering them now and modelling what our own ‘start-ups’ looks like. It’s often said that models aren’t worth the paper they are written on as something always changes. I think in this instance that has in many ways never been truer but without key financial information or scenario analysis how can a business owner ever make an informed decision?
The GlenAllachie Distillers Co. Limited has secured a £30 million asset-based lending package from Clydesdale Bank, thanks to support from the new Scottish arm of Belfast-based finance specialists HNH.
The award-winning whisky company appointed Bruce Walker, director of HNH’s Edinburgh team, to lead the refinancing exercise. The Scottish office of HNH was established last year to advise SMEs and family-owned firms during mergers & acquisitions, debt and transaction services.
HNH advised GlenAllachie on securing an inventory only asset-based debt facility on a committed basis for a four-year period on significantly improved terms. Clydesdale Bank Plc was selected to provide the facility on a bilateral basis following a competitive tendering process, which was developed and manged by HNH.
GlenAllachie, winners of the Distillery of the Year Award at The Scottish Whisky Awards, will use the facility to fund working capital and capital expenditure as it continues to develop its brand around the world.
The GlenAllachie distillery, which is located near Aberlour in the heart of the world-renowned Speyside region, and a significant volume of mature whisky was bought from Chivas by Billy Walker and his team in 2017.
The business has quickly earned a reputation as a producer of premium single malt whisky. Its award-winning current products include GlenAllachie’s core range of aged single malts and the richly peated blended malt, MacNair’s Lum Reek. The White Heather brand is also owned by GlenAllachie, and will be relaunched in May of this year.
Billy Walker, the managing director of GlenAllachie, said: “This new debt facility will enable us to continue our journey at the pace we want and further develop GlenAllachie as a premium single malt brand around the world.”
Bruce Walker from HNH, added: “This deal is a great result for GlenAllachie, and the outcome of a competitive process led locally by the HNH team. We were delighted to work with such a high-quality asset with an outstanding management team with a crystal clear strategic vision. It was also good to work again with Clydesdale Bank Plc who were able to deliver a compelling proposal based on their clear understanding of the sector and strong existing relationship with the GlenAllachie team. Appetite for the credit was strong reflecting the strength of both the business and the whisky market more widely.”
Alan Gilchrist, the finance director of GlenAllachie, said: “HNH’s clear understanding of the debt markets, ABL product and current lender appetite was key in securing our new facilities in the required timeframe. We were very pleased with the way Bruce and Fiona King of HNH managed the process and left us to continue running the business. The input we received from HNH was invaluable in securing our deal. Asset-based lending is ideal for us as it provides highly flexible funds secured against our appreciating whisky stocks.
“Clydesdale Bank Plc demonstrated an assured and mature approach to the deal process. They maintained momentum to ensure delivery to timetable and a deep knowledge of the Scotch whisky sector to create a straightforward solution from a clear requirement.”
David Hunter, director, asset based lending with Clydesdale Bank Plc, Glasgow, commented: “We are looking forward to working with the management team at GlenAllachie and are delighted to be able support them through such an exciting stage of their business.”
Three senior professionals from Scotland’s leading accountancy practices have come together to help drive HNH’s expansion into the GB market. The new office will provide SMEs with access to some of Scotland’s most senior corporate finance professionals, offering tier one advice and experience, but tailored to the needs of smaller and family-owned firms.
Based in Edinburgh’s Charlotte Square, the new team consists of Neal Allen, Harry Linklater and Bruce Walker. Prior to joining HNH, Neal was head of M&A for KPMG Scotland, Harry was a partner in French Duncan LLP and Bruce led KPMG Scotland’s debt advisory team.
The new team, which will initially focus on providing M&A, debt and transaction services, has already completed an advisory role for foodservice firm R&W Scott as well as a significant funding role in the distilling sector. Other clients have been drawn from financial services, manufacturing, building products and transport sectors.
Director Neal Allen said: “We’re all excited to join HNH and build the business in Scotland by offering SMEs a new approach to corporate advice. While some business owners are rightly cautious because of Brexit and global economic concerns, many of our contacts, particularly in food services, are telling us they want to execute growth plans. By providing senior-level advice, which was previously viewed as the preserve of larger firms, we can help SMEs grow through potential headwinds by securing the right funding options, partners and acquisition targets.”
Harry Linklater, Director. added: “Having developed client relationships over time with a focus on the Scottish SME sector, I’m keen to continue working with long-established contacts within a progressive advisory focused firm. As we build our presence in Scotland as HNH, we will leverage the firm’s relationships with equity and debt funders across various locations, to offer the Scottish market something new and different.”
Bruce Walker, who joins as a director at HNH after 25 years with KPMG, said: “The boutique business model at HNH allows us to react to clients’ requirements quickly and to adapt accordingly. The entrepreneurial nature of the firm, investing in growth and expanding into new markets will, we believe, give us a natural affinity with the SMEs which make up a major part of the Scottish economy. Over the past eight years, HNH has built a strong reputation as a leading corporate finance practice in Northern Ireland. We are excited about building upon that in Scotland, where the mix of SME advisory opportunities fits well with the team’s past experience and outlook.”
HNH is a well-established, independent Northern Ireland-based company which works extensively with the directors and shareholders of entrepreneurial companies throughout the UK and Ireland. The company was ranked at the top of Experian’s H1 Deal Activity Report, both in terms of deals completed and deal value in Northern Ireland.
Scottish clients will have access to its expertise in corporate finance, transaction services, business restructuring, taxation, forensic accounting and human capital. The new office represents a significant investment by the firm in establishing its first office outside Northern Ireland.
HNH recently advised Belfast-based IT support business CMI in its acquisition of London-based IT firm BTA. Funded by Panoramic Growth Equity in Glasgow the deal takes CMI’s turnover to in excess of £11m. HNH expects the new Scottish office will help identify opportunities for more deals spanning the Irish Sea.
Craig Holmes, Managing Director of HNH, said: “This is an exciting move for HNH as we build on great foundations in Northern Ireland to extend our offering to Scotland. Assembling a team as strong as this demonstrates how confident we are in the Scottish economy. While initially focusing on M&A, HNH in Scotland will also have access to our business restructuring, tax advisory, forensic and human capital teams.
“The opportunity to hire three of the best networked corporate advisors in Scotland, with unsurpassed market knowledge and deal experience, and be the first to offer such senior expertise to the country’s ambitious SMEs, is an innovative approach. By providing SMEs with access to a team of director-level experts with a hands-on ethos, we believe we can help our clients achieve and expand their goals.”
Eamonn Donaghy, June Barton and Mark Hood, HNH Tax
Where does a year go?
HNH Tax opened for business in September 2018 and since then has been involved in some of the key mergers and acquisitions (M&A) transactions which the firm has advised on. This includes the disposal of Foodco (NI) to Henderson Foodservice, the capital investment by 57 Stars and Foresight Group into the 3fivetwo Group, and the disposal of SSAS Solutions to Mattioli Woods.
It has also complemented the newly-formed Transaction Services department, enabling HNH to offer a comprehensive Financial and Tax Due Diligence Service, while also providing a broad range of tax advisory and compliance services to individuals and corporates, including advice on group reorganisations, debt refinancing, MBOs, estate planning and obtaining settlements in cases of HMRC disputes.
Starting with Eamonn Donaghy and Mark Hood in September 2018, the team was strengthened by the addition of June Barton in February 2019. Together, they offer more than 60 years of tax advisory experience.
Commenting on the first anniversary, HNH Managing Director Craig Holmes said, “We are delighted at how well the new Tax team fitted into the HNH Group, and we’ve already seen significant benefits for our client base arising from this new service line.”
Year two promises to be no less busy than year one, particularly with the recent opening of HNH’s new Edinburgh office.
For further information about how HNH Tax might be able to help you, feel free to contact Eamonn, Mark or June.
Whilst the political and economic landscape in 2019 has continued to be dominated by uncertainty, one option for company directors to manage any uncertainty in the wind down of a company’s affairs is via a Members’ Voluntary Liquidation.
A Members’ Voluntary Liquidation (or “MVL” as it is commonly known) is an option for solvent companies wishing to wind down their activities and allows for assets to be distributed in a tax-efficient manner, whilst also giving directors certainty given the finality of the liquidation process.
An MVL is only an option for solvent companies meaning that the company must hold enough assets to be able to settle all liabilities and interest in full, normally within 12 months. The reference to interest is an important one, given HMRC’s request for 8% statutory interest on all outstanding tax liabilities from the date of liquidation until payment is received.
Why used?
Directors often pursue an MVL for one (or a combination) of the following reasons:
Process
Pre – Appointment
A director-led process, an MVL involves the Board resolving to place the company into solvent liquidation and the swearing of an asset and liability statement (known as a “Declaration of Solvency”) for the company confirming that the entity is indeed solvent, and has the ability to satisfy all creditor liabilities plus statutory interest, within 12 months. This is then ratified at a members meeting of the company, following which the entity will formally be placed into liquidation and a liquidator(s) appointed.
Post – Appointment
Once appointed, the liquidator will wind down the company’s affairs, including the realisation of all company assets, distribution of a dividend to all creditor claims (if any) and dissolution of the entity following receipt of appropriate tax clearance. Whilst a company may be registered in one jurisdiction, it may be tax resident in an alternative jurisdiction, and therefore the resolution of its tax affairs and receipt of appropriate clearance is vital in any MVL.
The winding up of an entity’s affairs by an insolvency practitioner in this manner gives directors and shareholders comfort that the company’s assets and tax affairs have been dealt with appropriately. Statutory notices and public advertisement offers stakeholders a protection mechanism against any future request by creditors to have the entity restored to the company’s register following dissolution.
Tax considerations
Capital Gains v Income Tax
Upon closure of a company by way of an MVL all retained profits are treated as capital rather than income. This means the funds distributed to shareholders should be subject to Capital Gains Tax (“CGT”) rather than income tax.
The headline CGT rate is 20%, however this is reduced to 10% if Entrepreneur’s Relief (“ER”) is available. It should be noted that each distribution in a winding up (e.g. where there is an initial distribution, followed by a final distribution upon completion of the liquidation) is a separate CGT event and therefore the ER conditions will need to be assessed on each separate occasion.
Anti – Avoidance
In recent years, HMRC have been extending the reach of tax anti-avoidance legislation, including the treatment of distributions arising on a winding up. The ‘Transactions In Securities’ (“TIS”) rules have been amended to include such distributions, although there is a mechanism to seek advance clearance from HMRC that they will not apply a TIS counteraction to a given transaction.
Furthermore, a Targeted Anti-Avoidance Rule’ (“TAAR”) was brought in with effect from 6 April 2016 to prevent ‘phoenixism’. The TAAR applies where (in addition to other conditions) the individual receiving the distribution continues to carry on, or be involved with, the same trade or a trade similar to that of the wound up company at any time within two years from the date of the distribution. Unlike the TIS rules, there is no clearance procedure in respect of the anti-phoenixism TAAR.
While the MVL route still offers a return on capital which is subject to relatively low CGT rates, care should be taken with the winding up itself and any other transactions taking place which are (or could be) connected with it under the anti-avoidance legislation.
Alternative
The alternative to winding down a solvent entity’s affairs is via an application to have the company “struck off” the company’s register. Whilst the “striking off” process is straightforward it does not provide the company directors and shareholders with the same level of protection as the above MVL process. Furthermore, if the distribution in respect of share capital on a striking off exceeds £25,000, for tax purposes the full amount of the distribution will be subject to income tax rather than CGT.
When considering how best to wind down an entity’s affairs, the professional advice of an insolvency practitioner should always be sought.
Contact us
Mark Hood
Director – M&A Taxation
Email: mark@hnhgroup.co.uk
Telephone: 02890 278100
We are delighted to announce the opening of an office in Edinburgh.
Announcing the opening, Craig Holmes said “We can now build on the great foundation we have established in Belfast since our opening in 2011 and extend our offering and influence to Scotland. We have made this move with the full support and encouragement of our existing clients and business partners who all welcome this geographic extension of our services”.
Two experienced deal advisory Directors have now joined us in Scotland – Harry Linklater and Bruce Walker. Both have operated exclusively in the Scottish deals market for the past twenty years and bring with them a depth of experience and relevant networks.
Two further Directors have been recruited and they will join Harry and Bruce in Scotland when they are permitted to do so under their transitional arrangements.
Harry Linklater said of the opportunity “Having developed client relationships over time with a focus on the Scottish SME sector, the opportunity to continue working with long established contacts within a progressive advisory focused firm such as HNH is greatly anticipated. As we build our presence in Scotland as HNH, we will aim to leverage the firm’s proven activity levels with equity and debt funders across various locations, which we hope offers the Scottish market something new and different”.
Bruce Walker who joins after 25 years with KPMG says “I am extremely excited to be joining the HNH Group and getting in at the start of building their business in Scotland and beyond. HNH has a strong reputation in Northern Ireland and a long list of completed M&A transactions. I look forward to working with the award-winning Belfast team and building a sustainable business in Scotland. My focus will be M&A and Debt Advisory”.
Initially HNH Scotland will focus on M&A, Debt and Transaction Services where they will work very closely with the existing HNH teams.
HNH Scotland will also have access to the Business Restructuring, Tax Advisory, Forensic and Human Capital teams that operate from Belfast.
SSAS is a Belfast-based firm specialising in offering business owners tailored retirement schemes. Established in 2009 and now employing 12 staff, it provides pension administration and trustee services to more than 350 small self-administered scheme (SSAS) clients, with approximately £380m of assets under administration.
Director-owner Allison Chambers of SSAS expressed her appreciation of the role HNH played in the deal.
“We were delighted to work with the HNH team, who supported and guided us throughout the process. Their wealth of experience and negotiating skills were paramount in terms of the successful outcome,” she said.
This is the latest deal announcement in a sector for which consolidation has been a key recent theme. A trend that HNH believe will continue throughout 2019 and beyond.
“In recent months, we’ve seen Davy acquiring the former Danske wealth management business, 1825 acquiring BDO’s wealth management business and now Mattioli Woods acquiring SSAS Solutions,” said HNH Directors Richard Moorehead and Wayne Horwood.
“We were honoured to act as lead advisor to Allison and Michael and would be interested to speak with any other business owners in the sector who may be considering their options.”
Mattioli Woods said it will be business as usual for the SSAS Solutions team while it will also be looking to enhance the team as it expands its operations into the region, including the creation of a new administration hub for the group and the development of the existing client offering to include SIPPs (self-invested personal pensions).
“Being part of the Mattioli Woods group provides us with an additional resource and group support to enable the business to grow while still maintaining our strong client values, which also mirror those of Mattioli Woods,” said Allison Chambers and Michael Galway, director-owners of SSAS Solutions.
Mattioli Woods’ group managing director Murray Smith added: “We are thrilled to welcome the SSAS Solutions team into the Mattioli Woods family. A great opportunity to build on the success of an established business in Northern Ireland – where we already have a number of clients – we’ve known Michael and Allison for a number of years and have huge respect for the technical expertise their team offers.
“Their well-regarded skills and knowledge will be a valuable addition to our growing business, serving to further strengthen our services to clients and customers throughout Northern Ireland. We look forward to welcoming them to our expanding team.”
A Debt Covenant is simply an agreement made with your funder to adhere to certain financial and operational measures until the debt is repaid. They allow your funder to monitor its investment in your business and are set out in your funding agreement.
In understanding funding covenants, it is important that business owners know what to look out for in order to assess what impact they may have.
The implications of triggering a funding covenant can range from an uncomfortable conversation with your funder, a fee becoming payable or a renegotiation of terms in full or part. At HNH, our debt funding experts work with clients and funders to ensure that covenants strike the balance of allowing the funder to monitor its investment whilst not restricting the ability of the management team to run the business effectively.
Debt covenants typically fall into 3 categories:
Financial
Your funder is focused here on the ability of the business to continue to service debt. As such, covenants are designed to give an early warning indicator that a business may struggle to service debt in the future.
Financial covenants tend to measure key metrics such as cash generation available for debt reduction (sometimes called EBITDA – Earnings before Interest Tax and Depreciation, adjusted for business specific items such as promoter drawings and working capital).
What to look out for:
Ensure the covenant has sufficient headroom to allow normal fluctuations in activity;
Timing of measurement – especially if you have a cyclical or seasonal business.
Information provision
This usually relates to the provision of financial information, typically audited financial statements and management accounts but can also include business specific items such as debtors’ ledgers or stock information.
What to look out for:
Format, frequency and deadline for submission – Do you prepare the information requested as a matter of course or will you have to employ someone to do it (and hence incur a fee)? If you outsource the preparation, will it be available within the covenanted 30 / 60 / 90 days after period end?
Restrictive
This category contains covenants that are designed to protect your funder from a change in the risk profile of the business, unexpected calls on cash or diminution of assets.
Restrictive covenants typically relate to: dividends, drawings, capital expenditure, changes in shareholding, raising additional debt, providing security to another funder, making loans to third parties or directors’ remuneration.
What to look out for:
Restrictive covenants should not prevent the normal running of the business. It is therefore critical at the outset that provision is made within the funding covenants to for example, pay a certain level of dividend or permit capital expenditure, if that is what the business needs to do to continue its normal operation.
Restrictive covenants should also not penalise or discourage out-performance. For example, if covenants include a directors’ remuneration cap and the business wishes to reward employees for out-performance, it is important that provision is made within the funding documentation to permit this.
When selecting the most appropriate debt funding partner, it is therefore imperative that covenants and specifically the extent to which they impact upon your business is given equal priority to pricing.
HNH are pleased to announce that Singapore Aerospace Manufacturing Pte Ltd (SAM) has completed its acquisition of JW Kane Precision Limited (JW Kane).
As lead advisor to the seller, HNH Director Wayne Horwood believes SAM’s foreign investment in Northern Ireland is another positive boost for the region.
“We’re delighted that SAM are investing in Northern Ireland and the future of JW Kane,” Horwood said.
“One of the benefits of SAM’s investment is to allow JW Kane to continue their good charity work throughout Northern Ireland.”
What is JW Kane?
JW Kane is a provider of supply chain solutions to the global Aerostructures industry.
Founded in 1984 by Mr James Walker Kane MBE and located in Northern Ireland, JW Kane utilise high speed machining technologies coupled with engineering know-how.
What is Singapore Aerospace Manufacturing?
SAM is a company incorporated and domiciled in the Republic of Singapore, providing precision engineering and equipment integration serving the global aerospace and industrial equipment arena.
The SAM Group of Companies have established operations in Singapore, Malaysia, Thailand, China and Germany.
Joining the family
“We are very excited to become part of the SAM family,” said Damian McArdle, JW Kane MD.
“Throughout the acquisition process, we could feel the synergy, vibe and energy working between our teams and it was a beautiful representation of the desired ‘beyond expectations’ performance that customers can anticipate from the new organisation,” he said.
“Never are we more certain of our capability to support customer demand and execute on our strategic growth objectives as part of the larger SAM group.”
“JW Kane is a terrific fit for SAM’s aggressive global growth strategy,” said Jeffrey Goh, SAM CEO and President.
With our plan to grow the capabilities and capacities in JW Kane, we will be able to offer more value added solutions to our customers in United Kingdom, Europe and the rest of the world.”
HNH Director Wayne Horwood
Wayne Horwood
Director
Email: wayne@hnhgroup.co.uk
Telephone: 02890 316931
HNH Group are delighted to announce that our Forensic Services Senior Manager Cathy McLean has successfully gained a distinction in the Diploma in Forensic Accounting qualification provided by Chartered Accountants Ireland.
This course is designed to provide qualified accountants with the skills and knowledge required to undertake forensic accounting assignments and to act as expert witnesses. As such, Cathy will be able to build upon her extensive forensic accounting experience gained to date and her qualification further strengthens the Forensic Services team in HNH.
This offering is particularly relevant given the need for qualified accountants to investigate, document and prepare reports suitable for use in Court. Recent directions from the Northern Irish Courts introduced a requirement for all experts giving evidence in Northern Ireland to undertake appropriate training and to seek accreditation.
The HNH Forensic team is led by James Neill, an accredited expert witness, and if you would like more details on HNH Group’s forensic accounting services, please see contact details below.
James Neill
Head of Forensic Services
Email: james@hnhgroup.co.uk
Telephone: 02890 316934
We have been shortlisted in the Corporate Finance Team of the Year category. Craig Holmes features in the Dealmaker of the Year list. While, we were involved in a number of deals which have also gained prominence – the sale of fscom’s KYC Pro product to PWC, funding for ISL Waste Management Ltd (both feature in Deal of the Year – below £2.5m) and the acquisition of Alumasc Facades by Kilwaughter (Deal of the Year £2.5 – £10m).
“2018 was a fantastic year for HNH’s CF team, which nearly doubled in size from five to nine team members over the course of the year. As well as giving us crucial extra bandwidth, our targeted recruitment has added expertise in financial modelling, transaction services and debt advisory,” he said.
“We completed 15 transactions during 2018, covering a wide range of sectors and transaction types. Having three of our deals (Kilwaughter, FSCom and ISL) shortlisted for deal of the year is testament to the strength of our team and their hard work and dedication.
“2019 has continued in the same vein as 2018. At the end of last month, we completed the sale of the leading independent foodservice business, Foodco, to Henderson Foodservice and have another four or five deals scheduled to complete before the end of this quarter. ”
The annual NI Dealmakers Awards aim to recognise the high quality professional advisory firms and funders in Northern Ireland and some of the best deals in which they have been involved in over the previous calendar year. All winners will be revealed at the gala dinner event set to take place at the Stormont Hotel in Belfast on 14 March 2019.
The forthcoming Christmas break is, for many business people, the one time of year they can enjoy a proper break, away from the constant interruptions of emails and deadlines, and spend some quality time with friends and family, reflecting on the year just passed and the challenges that lie ahead.
This period of reflection is often the catalyst for change and we frequently find ourselves spending much of January meeting prospective clients who have expressed a desire to sell their business.
There are a number of valid reasons why someone may come to this decision including:
I have taken the business as far as I can.
My attitude to risk has changed.
The economy/competition/technology is a threat to me.
My team doesn’t have the ability to develop the business.
Multiples are strong in my sector and I want to get out at or near the top of the market.
I had an approach it has got me thinking.
I can’t work with my co-shareholders anymore and we need to go our separate ways.
Personal reasons such as a health scare or simply a desire to spend more time with family.
A key part of our process is to look beyond the headline reason for the decision and understand the underlying motivation.
We have bad days, or weeks, when work isn’t going well, the pressure is building and it just isn’t enjoyable.
However, for most business owners the decision to sell is a once or twice in a lifetime moment, so it is crucially important that proper consideration is given to the following thoughts:
Why now? What has changed in the business or personal circumstances?
What position is the business in? Does it need investment, new people, new systems, etc.?
What are the alternatives? Can something be changed that would take the pressure off and make work enjoyable again?
What could someone else do with the business? Are you selling an opportunity or a risk?
What will you do next? Even if the sale of a business yields a life changing amount of money, many sellers soon find themselves bored and seeking a new challenge.
It may sound counter-intuitive coming from a firm that ultimately gets paid when people sell their business, but we would much rather potential clients wait and sell for the right reasons, at the right time, rather than rush into a process which can be time-consuming, emotionally draining and indeed costly.
There is a high correlation between poor planning and aborted transactions; a failed process can linger over a business for years, putting doubt in the minds of employees, investors and potential acquirers.
Once the underlying reasons for wanting to sell are understood, only then should you look at the options, which may include:
A trade sale i.e. to another company.
A partial exit, achieved through selling a stake in the business to an investor, which would be a private equity fund, HNWI, family office, etc.
MBO, MBI or BIMBO.
Putting in place an exit readiness plan for a sale in the medium-term.
HNH Group are thrilled to announce that we’re partnering with Inspire as our charity of choice.
We are completely on board with Inspire CEO Peter McBride’s philosophy of bringing your whole self to the office every day. So, it’s a natural fit to partner with an organisation who does such great work in this area.
Back in February this year, HNH Human Capital Director Sarah Orange was invited along to an Institute of Directors event where Peter spoke and it struck a chord.
“My experience of corporate environments is that the idea of bringing your whole self to the office each day is inhibited by rigid structures and stale expectations,” she said.
“It would be a boring place if we were all the same.
“Embracing diversity is healthy and makes for a more productive working environment as well.
“Therefore, it’s our responsibility as an employer to encourage our staff to thrive.
“It’s an environment we’ve always tried to embrace here at HNH, where an open door policy and shared ambition isn’t stifled by hierarchy.”
There are plenty of opportunities to collaborate with Inspire in 2019, so stay tuned for some fun activities and content on our social media channels.
Today the Chancellor announced that the “Era of austerity is finally coming to an end”. History will be the judge of that statement but for business, this Budget had several interesting and important announcements. Below we have summarised the ones most relevant to entrepreneurs and business owners.
1.Entrepreneurs Relief – the period for which the 5% minimum shareholding requirement must be met has been increased from 1 to 2 years, for share disposals after 6th April 2019. Also for disposals from today, the minimum shareholding of 5% will apply not only to the amount of share capital held and the voting rights but also to the entitlement to distributable profits and net assets of the company.
2.Corporation Tax Rate – the Chancellor confirmed that the corporation tax rate will remain at 19% for the year to 31 March 2020 and will then fall to 17% thereafter.
3.Capital Allowances for buildings- a new allowance will be available for expenditure incurred on contracts for physical construction works on new non residential structures and buildings entered into on or after today. The rate of allowances will be 2% on a straight line basis. This allowance will be paid for by reducing the allowance on the plant and machinery special rate pool from 8% to 6%.
4.Annual Investment Allowances – there will be a two year increase in the annual investment allowance from £200,000 to £1,000,000 from 1 January 2019.
5.R&D Tax Relief for SME’s – there will be a restriction on the amount of payable R&D tax credits for SMEs, which will cap the amount payable to 3 times the company’s PAYE & NIC liability for the year. This will take effect from 1 April 2020 and is aimed at tackling fraudulent claims.
6.Intangible fixed asset regime – two changes for the price of one here. Firstly the government will introduce tax relief for the purchase of goodwill in the acquisition of businesses with eligible intellectual property (which partly reverses the denial of relief for goodwill introduced in July 2015). Secondly, there will be a reform to the de-grouping rules for intangibles so that they will be better aligned to the de-grouping rules for capital gains purposes. This should make the demerger of groups with several trades easier to achieve.
7.HMRC to become a preferred creditor – From 6th April 2020, HMRC will be a preferred creditor in respect of taxes collected by businesses on behalf of other tax payers, including PAYE, employees national insurance and VAT. HMRC will remain an un-preferred creditor in respect of taxes owed by the insolvent business such as corporation tax and employers national insurance.
8.Corporate Capital Loss Restriction – from 1 April 2020, companies will only be able to relieve 50% of their capital gains with brought forward capital losses. There will be a £5m de-minimis level that will apply in respect of all brought forward losses (capital and income) before the restriction will apply.
9.VAT Grouping extension – during 2019, certain non corporate entities (e.g. partnerships or individuals) will be permitted to join VAT groups with body corporate subsidiaries if they control all the members in the VAT group.
10.Off payroll working in the private sector – from April 2020 there will be changes to the IR35 rules that deal with ‘off payroll workers’ (similar to the changes introduced last year to the public sector), which will put the responsibility for operating PAYE/NIC on the paying organisation rather than on the worker or their company.
11.Employment allowance changes – from April 2020 the Employment Allowance of £3,000 will be restricted to employers with an employer NIC liability of less than £100,000 in the previous tax year.
There were several other measures of note such as; the increased personal allowance to £12,500 and the higher rate threshold to £50,000; the introduction of a new Digital Services Tax (which will be of limited interest to NI companies as the group global revenue threshold is to be set at £500m!); the increase in the SDLT exemption for first time buyers of shared ownership property to £500k; and a reduction on the capital gains private residence relief final period of ownership exemption to 9 months.
The Chancellor did caveat his statement that in the event of a ‘no deal’ Brexit, he may have to come back to Parliament with a further Budget in the Spring. Whether he does or not or indeed whether it is Mr Hammond who delivers such a Budget statement, we can only wait and see how events turn out over the forthcoming months.
In the wake of the liquidation of Carillion, the administration of House of Fraser and a number of high profile CVAs, the Government has announced a number of proposed reforms to the current corporate insolvency and corporate governance frameworks which contain the most significant changes since the 2002 Enterprise Act.
The aim of the reforms is to ensure that companies are given every possible opportunity to be restructured while also ensuring that, where a company is not viable, those in charge of the company act properly and fully discharge their responsibilities. The rights of the distressed company must be adequately balanced against the rights of its creditors and other stakeholders.
The proposed reforms include the introduction of a 28 day moratorium giving viable but financially distressed companies ‘breathing space’ and allowing them to instigate restructuring measures or seek new investment. The company’s directors would remain in control with the support of a supervising Monitor, likely to be an Insolvency Practitioner.
During the period in which the moratorium is in operation, creditors will be prevented from taking action against the company. Crucially, secured creditors may feel the greatest impact as, not only would they be unable to take enforcement action during this period, but in many cases, the costs incurred during the moratorium will be met by assets that would otherwise fall within the scope of their security. The proposed benefit for all creditors, however, is that early intervention is likely to enhance the prospects of meaningful recovery, leaving the company in a better financial state than would be the case without a moratorium.
Also of note for struggling companies and their suppliers, is the proposal that the termination clauses in contracts for supply of goods and services on the grounds triggered by the company’s entry into an insolvency process, will become unenforceable. This may have a significant impact on companies within certain industries and may ultimately increase the restructuring options available.
Other proposed reforms include the introduction of measures to strengthen transparency requirements around group structures and shareholder stewardship, and increased powers of insolvency practitioners in relation to the challenge of schemes designed to extract value from financially distressed companies at the expense of its creditors. Additionally the introduction of the power of the Insolvency Service to investigate directors of dissolved companies in a similar manner to the investigations into the conduct of directors of insolvent entities currently in place have also been proposed.
While the proposed reforms will undoubtedly have an effect on struggling companies and their directors, they are ultimately intended to strengthen the business environment, increase confidence and maintain the reputation of the UK as a fair, transparent and dependable place to do business.
For further information on the proposed reforms, please contact Rachel Foster or James Neill.
The Treasury has announced that the 2018 Budget will be delivered on Monday 29 October, a few weeks earlier than the November date which would ordinarily have been expected. Interestingly, this will be the first Budget delivered on a Monday since 1962, and the first delivered in October since 1945. Officially, the Treasury has said that this timing gives Parliament more time for debate before it rises for recess on 6 November – whether it also has anything to do with falling between two key Brexit summits in mid-October and mid-November is a matter for conjecture.
In accordance with the new Budget timetable the 2018 Budget will make the final announcement on measures to be introduced in Finance Bill 2018-19 and an initial announcement about measures which are being considered for Finance Bill 2019-20. A large part of the draft legislation for Finance Bill 2018-19 was published in July 2018 (and that after a period of consultation), so we have a good idea of what to expect. Some of the key changes are expected to be:
• An extension of the availability of Entrepreneur’s Relief to cases where an individual’s shareholding has been reduced below the 5% de minimis limit as a result of a dilution of his/her shareholding. This change is being implemented to avoid entrepreneurs being placed in a position where they are unwilling to seek additional capital for their businesses if this would jeopardise their Entrepreneur’s Relief position. The new rules will operate by way of two elections (the first being for a deemed disposal and reacquisition of the shares at market value immediately prior to dilution, and second for a deferral of the gain arising until an actual disposal), with the intention that the gain arising in the period up to dilution should qualify for Entrepreneur’s Relief. Following consultation, HMRC have confirmed that the market value required for the purposes of the first election will not have to take account of a minority discount (which would otherwise potentially disadvantage taxpayers). [Effective from 6 April 2019]
• The implementation of changes to bring UK property income of non-resident companies within the scope of UK corporation tax rather than income tax. Although the corporation tax rate applicable to such income is expected to be lower than the basic rate of income tax which is currently applicable (17% v 20%) and there will be provisions to allow existing income tax losses to be carried forward against corporation tax profits, this change will bring such companies within UK corporation tax rules for loan relationships (including corporate interest restriction and the anti-hybrids rules) which they hitherto would not have been required to consider. [Effective from 6 April 2020]
• Similarly, all non-UK resident persons will be taxable on gains on disposals of interests in any type of UK land, whether residential or non-residential – currently, such gains are only taxable (with some exceptions) for residential properties. The new rules will also give rise to a tax charge on indirect disposals of UK land, i.e. where a person makes a disposal of an entity that derives 75% or more of its gross asset value from UK land. There will be an exemption from this ‘indirect disposal’ rule for investors in such entities who hold an interest of less than 25%. [Effective from 6 April 2019]
• The disposal of a residential property by a UK resident will need to be reported in a return to HMRC, together with any applicable payment on account, within a ‘payment window’ of 30 days following the completion of the disposal. Certain non-UK residents are already required to make such returns and payments – the range of persons to whom these rules apply will be expanded. [Effective 6 April 2019 and 6 April 2020]
• The filing deadline for a Stamp Duty Land Tax (“SDLT”) return (and payment of related SDLT) will be reduced from 30 days to 14 days. [Effective 1 March 2019]
For further information or to discuss how the potential changes may impact you or your business, please contact Mark Hood, Director – M&A Taxation
In the wake of the liquidation of Carillion, the administration of House of Fraser and a number of high profile CVAs, the Government have announced a number of proposed reforms to the current corporate insolvency and corporate governance frameworks which contain the most significant changes since the 2002 Enterprise Act.
The aim of the reforms is to ensure that companies are given every possible opportunity to be restructured while also ensuring that, where a company is not viable, those in charge of the company act properly and fully discharge their responsibilities. The rights of the distressed company must be adequately balanced against the rights of its creditors and other stakeholders.
The proposed reforms include the introduction of a 28 day moratorium giving viable but financially distressed companies ‘breathing space’ and allowing them to instigate restructuring measures or seek new investment. The company’s directors would remain in control with the support of a supervising Monitor, likely to be an Insolvency Practitioner.
During the period in which the moratorium is in operation, creditors will be prevented from taking action against the company. Crucially secured creditors may feel the greatest impact as, not only would they be unable to take enforcement action during this period, but in many cases, the costs incurred during the moratorium will be met by assets that would otherwise fall within the scope of their security. The proposed benefit for all creditors, however, is that early intervention is likely to enhance the prospects of meaningful recovery, leaving the company in a better financial state than would be the case without a moratorium.
Also of note for struggling companies and their suppliers, is the proposal that the termination clauses in contracts for supply of goods and services on the grounds triggered by the company’s entry into an insolvency process, will become unenforceable. This may have a significant impact on companies within certain industries and may ultimately increase the restructuring options available.
Other proposed reforms include the introduction of measures to strengthen transparency requirements around group structures and shareholder stewardship, and increased powers of insolvency practitioners in relation to the challenge of schemes designed to extract value from financially distressed companies at the expense of its creditors. Additionally the introduction of the power of the Insolvency Service to investigate directors of dissolved companies in a similar manner to the investigations into the conduct of directors of insolvent entities currently in place have also been proposed.
While the proposed reforms will undoubtedly have an effect on struggling companies and their directors, they are ultimately intended to strengthen the business environment, increase confidence and maintain the reputation of the UK as a fair, transparent and dependable place to do business.
We are delighted to announce a number of promotions within HNH Group.
Rachel Foster and Rory Moynagh are being promoted to Associate Director roles, while Fiona Elwood is also joining the management team at manager level.
James Neill, HNH Director, commented:
”The promotions are very much a recognition of each of their hard work and dedication to the practice over the past number of years. We are delighted to see them each individually embrace and develop their careers at HNH. It’s incredibly important to us to see our team develop and we are all very proud of their achievements.”
“Rachel for instance is a now a licensed Insolvency Practitioner having passed the JIEB exams, widely accepted as being the hardest set of professional exams. In doing so Rachel attained the award for highest mark in the UK for a student from a smaller practice.”
“Rory has been fundamental in growing our restructuring practice (he was our first employee) to the 8 person team it is now. Rory has also expanded his technical expertise to follow market need and is now also qualified to act as a personal insolvency practitioner in the Republic of Ireland.”
“Fiona manages our personal insolvency and debt advisory team and has over 12 years experience in dealing with personal debt. She has an exceptional ability to empathise with people who are often facing one of the most stressful periods of their lives.”
“Significantly each plays a vital role in the development of HNH and we look forward to Rory, Rachel and Fiona further advancing their careers in HNH in the years ahead.”
There is no doubt that the effects of the liquidation of Carillion, the UK’s second largest construction company, are being felt by many other businesses in its supply chain throughout the sector in the UK and Ireland.
The current pressures felt in the industry have left many subcontractors and suppliers with short-term cash flow issues. Whilst in many cases the underlying business is profitable, working capital constraints divert management attention away from the general operations of the business and key strategic tendering opportunities.
While it may seem that the industry is facing a period of uncertainty, the changes that the sector is experiencing present the opportunity for businesses to review their existing financing arrangements and to explore other options. Those businesses who can successfully navigate the challenging market conditions will undoubtedly emerge as stronger players with leaner and more efficient cost structures.
In welcome news for the sector, the Government have announced support to businesses through the Enterprise Finance Guarantee. The British Business Bank have recently announced that an extra £100million has been made available to specifically help businesses affected by the liquidation of Carillion.
Rachel Foster, Senior Manager HNH Group
The overarching provisions of the scheme are that it is aimed at small and medium businesses, which may not have the security needed for conventional bank lending, and the Government guarantee 75% of the lending which is provided by over 40 accredited lenders.
The guarantees can be used to support overdraft borrowing and refinancing of existing debt.
There are also other options available to companies and individuals including:
• Agreeing a ‘Time to Pay’ arrangement with HMRC for VAT and PAYE
• Informal and formal arrangements with creditors
• Asset finance
• Traditional bank lending
• Alternative finance providers
Key to a successful financing strategy is to address the issues head on, make a focussed plan for a sustainable recovery and seek professional advice as soon as possible. Early advice and acting quickly is often integral to the implementation of an effective turnaround.
HNH Group are specialist advisors to personal and business clients of all sizes and would be happy to discuss any of the above on a confidential basis.
HNH Group Senior Manager Rory Moynagh has successfully completed the Diploma in Personal Insolvency and attained a Certificate in Personal Insolvency Practice.
This course is recognised by the Insolvency Service of Ireland in accordance with the Personal Insolvency Act 2012 and the Personal Insolvency Practitioner qualification.
As such, Rory will be able to assist debtors based in the Republic of Ireland with regards to their personal insolvency matters, including Debt Settlement Arrangements and Personal Insolvency Arrangements.
This offering is particularly relevant given the evolving landscape on the island of Ireland and the challenges presenting in a post-Brexit economy.
If you would like more details on HNH Group’s debt solutions, or to receive financial advice from a personal insolvency practitioner, please get in touch for a confidential conversation with an experienced member of our team.
HNH Group are proud to announce that we are sponsoring this year’s BVCA Belfast Business Breakfast.
As part of the British Private Equity and Venture Capital Association’s (BVCA) National Breakfast Series, we will be bringing together local private equity and venture capital communities from across Northern Ireland to share knowledge, forge new connections and network with fellow members.
Jointly sponsored by local law firm Tughans, the invitation only event will be held in the Merchant Hotel, 12th April 2018 and is exclusive to LP & GPs at BVCA member firms.
The business breakfast will run from 8-9.30am and will provide opportunities to explore the latest industry trends, economic developments and the work of the BVCA.
For availability and other enquiries please contact events@bvca.co.uk
HNH Group is pleased to confirm the sale of Bio-Kinetic Healthcare Limited to Kingsbridge Private Hospital, Belfast.
Following the appointment of James Neill and Rachel Foster as Joint Administrators to Bio Kinetic Europe Limited in October 2017, Bio-Kinetic Healthcare – a fully owned subsidiary – has continued to trade under the control of the Joint Administrators offering a Bupa health screening facility in Great Victoria Street. As reported in the Irish News, we can now confirm the sale of this subsidiary to Kingsbridge Private Hospital, which is part of the 352 Healthcare Group, which will operate the clinic from its own site on the Lisburn Road, Belfast.
James Neill of HNH Group, commented ‘We are delighted to have been able to preserve what is a viable entity in its own right and to have secured the transfer of a number of roles’
Alan Cole, head of partnership centres at Bupa Health Clinics, said: “We’re really excited to have moved to this larger, world class location, and are looking forward to welcoming both existing and new clients through its doors.”
Bupa has stated that the relocation to the South Belfast medical facility could significantly increase capacity and lead to the number of patients being treated doubling over the next twelve months.
HNH Group has been shortlisted in three categories at Insider’s Northern Ireland Dealmakers Awards 2018.
Yesterday, Insider Media published their final list of firms, banks, deals and individuals nominated ahead of March’s awards ceremony, which will be held in Belfast Waterfront.
The awards recognise NI’s top corporate finance professionals, funders and lawyers. An independent panel will judge the four deals, young dealmaker and dealmaker categories, while the other awards will be decided based on votes cast by business professionals.
Gavin Early – HNH Associate Director
Belfast based HNH Group has again been shortlisted for the Corporate Finance Advisory Firm of the Year category, having won the award in five out of the past six years. Associate Director Gavin Early is up for Young Dealmaker of the Year, while Director Richard Moorehead is nominated on the Dealmaker of the Year list.
HNH’s Corporate Finance team is trusted by a wide range of clients, including company shareholders, private equity funds and plcs, to provide strategic advice on business sales and acquisitions, management buy outs and raising equity or debt finance.
News of the shortlist comes during a period of continued growth for the HNH Group. Last month the company was confirmed as the leading corporate finance adviser in the Northern Ireland market, in Experian UK and RoI’s M&A Review 2017.
HNH has been confirmed as the leading corporate finance adviser in the Northern Ireland market. They advised on 18 successful transactions during 2017, 15 of which met Experian’s criteria for inclusion in the published league tables. (Experian UK and RoI M&A Review 2017).
In 2016 we reported what was then a record performance of 14 completed deals and, subsequently, were named Corporate Finance Team of the Year at the Insider Dealmakers Awards. Indeed, 2016 in general was a bumper year for M&A in Northern Ireland with 235 deals in total – the highest on record.
Moving into 2017, many column inches were dedicated to the potential impact of Brexit and the Stormont impasse. The general sentiment was that 2017 was going to be a difficult year for Northern Irish businesses. Our experience and indeed the overall state of the M&A market in NI, suggests that this pessimism was misplaced. We have had a busier year than ever, advising on a wide range of transactions from company sales to private equity investments. With a strong pipeline of deals heading into 2018, we have invested further in our Corporate Finance team, taking the total headcount to seven lead advisory professionals.
We would like to take this opportunity to thank all of our clients for their continued support.
Multi-disciplinary advisory firm HNH Group has recorded the strongest year to date in its corporate finance department by completing 14 deals in 2016.
The independent Belfast-based company works with the directors and shareholders of entrepreneurial companies throughout Northern Ireland, Ireland and the UK providing expertise in corporate finance, business restructuring, forensic accounting, human capital and digital strategy.
In 2016 the corporate finance team advised on three acquisitions, two company sales, three management buy outs, two refinancing agreements and four growth capital backings.
The work included acting for Independent News & Media plc (Belfast Telegraph) on the acquisition of numerous titles from Greer Publications, including Ulster Business magazine.
HNH were particularly active in the healthcare sector, guiding the sale of Northern MRI to Affidea, a Dublin-based healthcare business. HNH also advised Keys Healthcare on a range of corporate activities during 2016 and Your Doctor Medical Services on the acquisition of clinics in the Republic of Ireland.
The company was instrumental in securing growth funding for a number of local companies, including Tascomi and Saliis. Funding was secured from the Growth Loan Fund to support renewable energy services provider Saliis in its rapid expansion plans. The funds will create up to 15 new jobs and enable Saliis to target overseas growth.
The momentum from 2016 has continued into 2017, with the advisory firm completing investment deals for Click Energy in Derry and PE Services in Cavan already this year.
Craig Holmes, managing director of HNH Group, said: “Last year was a very strong year for us, with our position in the market boosted by a steady upturn of the market for M&A and healthy levels of fundraising activity. It is encouraging to see different types of transactions taking place and activity spanning industries as diverse as engineering, healthcare, technology and hospitality, not to mention a range of active companies including PLCs, privately owned large companies and early stage businesses.
HNH’s growth in recent years is also down to the holistic approach we take with our clients, helping growing companies not only with their finance options, but also with essential services including identifying the right people for their workforce and helping them establish the right digital presence
HNH’s corporate finance team has consistently been at the top end of the Experian Northern Ireland deals data, and the firm retained the Insider NI Corporate Finance Firm of the Year in 2017, the fifth time it has won this award in the six years of HNH’s existence.
Commenting on the wider market Mr Holmes added: “In the local economy it is positive to see that banks are lending again and prepared to work alongside other funders. To date our business hasn’t felt any negative effects from macro-economic factors. In fact, a shift in exchange rates has made conditions favourable for Irish companies who wish to purchase UK based businesses and in turn UK companies are also identifying opportunities in Ireland to set up a Euro presence before the UK exit from the EU. We anticipate that these trends will continue throughout 2017.”
Wayne Horwood, managing director of HNH Group, said: “As a young organisation we are delighted that our dynamic client base is growing in Northern Ireland and beyond. We are seeing a wide range of transactions which gives our business an exciting pipeline for the coming months and years ahead. We anticipate that there will be further recruitment in 2017 to respond to the increasing demand levels.”
HNH Group was again named ‘Corporate Finance Advisory Team of the Year’ at the annual Insider Northern Ireland Dealmakers Awards in front of an audience of over 300 at the La Mon Hotel & Country Club in Belfast last night.
For a fourth year, HNH, which celebrates only its fifth anniversary this year, beat strong and
long-established competition to win the award which recognises the achievements of those individuals and firms whose skill, creativity and sheer determination have stood out over the past year.
Led by Directors Craig Holmes and Wayne Horwood, HNH’s Corporate Finance team provides long-term financial strategies for private companies, private equity funds and financial institutions. The company advises on all aspects of corporate finance including mergers and acquisitions (M&A) and company sales through to management buy-outs (MBOs) and fundraising.
HNH was singled out for their work on numerous deals in the region in the last year, including advising on the sale of Nelson Hydraulics to Flowtech Fluidpower plc, refinancing for Keys Group and the high profile acquisitions of Boojum and four titles from Greer Publications by Independent News & Media.
Craig Holmes says: “To receive this award for four out of the five years we have been in business is a great honour. It recognises the achievements and excellent work done by the team over the last year. It’s also testament to the drive and ambition of the clients with whom we work and we’re very pleased to be singled out for helping them to achieve their goals.”
The award comes at a time of continued growth for HNH Group which, in addition to corporate finance, provides business restructuring, forensics, digital consultancy and human capital services. In 2015, the company welcomed Gerry McGinn, previously Managing Director of First Trust Bank and Chief Executive of Irish Nationwide and Bank of Ireland, as Chairman.
News has begun to surface in recent days that the Bankruptcy term in the Republic of Ireland (ROI) may be reduced from three years to one year, to bring Irish bankruptcy law into line with legislation in the UK.
The move for this legislative change is being pioneered by Labour Longford – Westmeath TD, Willie Penrose who has been a long standing critic of current Irish bankruptcy law.
Mr Penrose is reported as stating “This is critical, the current situation where it is three years bankruptcy here and one year north of the Border is rather silly and impractical”.
The less onerous duration in Northern Ireland has led to ‘Bankruptcy Tourism’ in recent years – referring to the practice of ROI residents travelling North to avail of the 12 month UK bankruptcy regime.
Although supported by the Labour party, the Dáil’s Department of Finance has previously opposed any such change, and failed to raise the issue in the Government’s mortgage arrears package earlier in the year.
The Minister for Justice, Frances Fitzgerald may be bringing the proposed legislation change to the Cabinet in the next number of weeks.
James Neill, Managing Director of HNH Group and a Licenced Insolvency Practioner, commented on the proposed change; “This is a potentially ground breaking development in bankruptcy law with a far-reaching impact across both the island of Ireland and UK. It is particularly pertinent when you consider the current stage of our recovering economies, both north and south of the border and has the potential to further stimulate recovery in Ireland”.
With the upcoming Irish general election in the spring of 2016 it will be interesting to see whether this potential legislation change will become a bi-partisan issue supported across the isle or whether it will become an election sticking point that parties will bump heads over.
HNH have regained the CF Team of the Year award at the Annual Insider Dealmaker Awards in Belfast. Having previously won in 2012 and 2013, this means HNH has triumphed in 3 of the 4 years that the company has existed.
In accepting the award, Craig Holmes (Director of HNH) stated “It has been another good year for the Corporate Finance team within HNH and for the Group generally. We are seeing increasing activity in the economy and are pleased to have been heavily involved in some of the landmark deals in Northern Ireland in the past year. This included significant transactions involving Lowe Refrigeration in Lisburn and Maydown Precision Engineering in Derry/Londonderry.”
“We would like to thank our clients for their continued support of our business and look forward to 2015 being another year in which HNH works with some of the best companies and management teams in Northern Ireland.”
HNH are delighted to announce that both Rachel Foster and Rory Moynagh have recently passed the Certificate of Proficiency in Insolvency (CPI) exam. Both Rachel and Rory have also been promoted to Managers within the Business Restructuring department as the department continues to grow. James Neill (HNH Restructuring Partner) commented, “I am delighted that the hard work of both Rachel and Rory has paid off and that their ongoing professional development continues to strengthen the HNH Restructuring team”.
The event kicked off at 8.00pm on Wednesday 12th November, with over 1500 runners lined up at the entrance of Stormont Estate. The event was organised by the Mark Pollock Trust, a fantastic cause who believe that the cure for spinal cord injuries simply requires enough of the right people having the will to make it happen.
This is the second year HNH have taken part in Run in the Dark Belfast, and we’re looking forward to submitting another team in 2015.
MML Capital has strengthened its position in Ireland by investing in Lisburn-based global refrigeration rental company Lowe Refrigeration. As part of its investment, MML will take a 55% stake in the company, in partnership with the existing Lowe management team led by CEO Rodney Lowry.
Craig Holmes from HNH originated the deal and acted for the Company. Holmes stated “It is great to see another Northern Ireland company attract a quality Private Equity investor such as MML to help realise its growth ambitions. Lowe has a global blue-chip customer-base, which can be further enhanced following this investment. HNH are working with companies in different sectors to attract Private Equity for growth or realisation, and that bodes well for the Northern Ireland economy.”
Lowe Refrigeration is the world’s leading short term refrigeration rental company providing temporary cold solutions, in addition to hot equipment, to large food exhibitions, retailers, major sporting events and festivals internationally. The company services events such as the Singapore GP, Wimbledon, Glastonbury and the US Open Golf from nine locations throughout Europe, the USA, Middle East and Far East. The company has doubled in size since Rodney Lowry led the acquisition of the business from the founding Lowe family in 2008. Lowe Refrigeration expects to post revenue of circa €20 million for 2014.
Rodney Lowry stated: “We are delighted to receive this investment from MML. They rapidly grasped the future potential of the business and, importantly, the management team felt very comfortable working with them from the start of the process. MML has a strong track record of partnering with thriving businesses and supporting their growth ambitions. Therefore, I am very confident that we can now accelerate our development into new regions and new rental markets globally”.
The MML investment has been made through MML Growth Capital Partners Ireland, a €125 million fund dedicated to backing small and medium sized private businesses located on the island of Ireland.
Rory Quirke, who led the deal on behalf of MML commented; “We are delighted to be making our inaugural investment in Lowe. This represents an ideal transaction for us, backing a strong and ambitious team led by Rodney Lowry with the capital to continue to grow and build their business”.
MML Ireland’s Rory Quirke and Neil McGowan will both join the Lowe Refrigeration board, alongside Rodney Lowry and CFO Paul Lavery. The company is also pleased to appoint Mervyn McCall as Chairman of the board. Mervyn is a former director of the Mivan Group and the business will benefit from the experience and expertise Mervyn brings to the board.
Bank financing for the deal was provided by Bank of Ireland led by John Mathers in Belfast. Tughans acted as legal advisers to MML while Carson McDowell acted for Lowe Refrigeration.
The Mourne Observer, the largest selling weekly newspaper in County Down, has been sold for an undisclosed sum to the Spectator Group, owners of the Bangor Spectator and Newtownards Chronicle.
Founded in the late 1940s, the Mourne Observer remained a family-owned business for more than 60 years, with David Hawthorne taking up the reins as editor during the 1980s. Having decided that he would like to retire, David made the decision to put the business up for sale.
HNH provided advice to the shareholders throughout the process; partner Wayne Horwood commented “as with the Mourne Observer, the Spectator Group is also a family-run business, with a similar ethos to that fostered by the Hawthorne family. The transaction, as well as facilitating the retirement of David and Carole Hawthorne, will allow for a smooth transition to the new owners and provide job security for the staff”
A new initiative, recently launched by Invest Northern Ireland, will make it easier for local small and medium-sized businesses to get the help they require to access funding.
Under the Finance Voucher scheme, businesses that meet the eligibility criteria (follow the link for full details), can apply for funding of up to 49% of the cost of preparing a funding proposal or business plan, up to a maximum of £4,000.
Details of how to apply for a voucher can be found here.
The team at HNH would be keen to hear from any business that is interested in using the Finance Voucher scheme to access debt or equity finance. With a deadline of 30 April for the initial round of applications, time is of the essence.
An excellent year for Horwood Neill Holmes was recognised at the recent Insider Northern Ireland Dealmakers’ Awards ceremony, with the firm picking up two awards.
For the second year in a row, the firm was presented with the coveted Corporate Finance Advisory Team of the Year award and also scooped the Deal of the Year award for its role as lead advisor on the investment in Seven Technologies by YFM Equity Partners.
Craig Holmes, partner at HNH, commented “to win the Team of the Year award two years running is a tremendous honour and provides a testament both to the quality of our clients, without whom such accolades could not be achieved and to the hard work and dedication of the whole team at HNH. Winning the Deal of the Year award is the icing on the cake and the success of the deal in question clearly demonstrates that there is funding available for ambitious local businesses”.
At the weekend the Northern Knights squad completed their final training session before their first match in the RSA Inter-Provincial series, a one day match in the ‘RSA Inter-Provincial Cup’ (IP50) against Leinster Lightning on the 6th May at The Hills Cricket Club, Dublin.
Following the selection of the final Northern Knights squad, the Knights unveiled another fine addition to their squad, new key sponsor, Horwood Neill Holmes.
Horwood Neill Holmes will be the main sponsor for the Northern Knights during the series and Wayne Horwood said: “It’s great to see the RSA Inter-Provincial series across the three formats of the game. They are a key stepping stone for players into the full Ireland squad. HNH are delighted to sponsor the Northern Knights and I look forward to a good summer of competitive cricket and hopefully a few new international players selected on the back of their performances in the RSA Inter-Provincial series.”
Northern Knights selector, Kyle McCallan said about the squad: “I’m delighted with the make up of the Northern Knights squad with all players showing good early season form. An away tie versus Leinster Lightning will be a tough start to the series, but I’m confident that this squad has the ability to get a win at the Hills CC on Bank Holiday Monday.”
Looking forward to the first match, Head Coach Eugene Moleon said: “The squad has been announced for the first game and everyone is looking forward to the challenge. Guys have shown good form early on. We have a good blend of senior players and youth. I am glad to say from players, to coaching staff to admin officer, we will be giving it our all for the Northern Knights. Please support us in this series.“
The RSA Inter-Provincial series will see the Northern Knights, Leinster Lightning and the North West Warriors play three day cricket for the RSA Inter-Provincial Championship, in one day competition in the RSA Inter-Provincial Cup and in a T20 competition, the RSA Inter-Provincial Trophy. For the full Northern Knights fixtures please check the NCU website: www.northerncricketunion.org
Reflecting on the first squad selected, NCU Chairman, Brian Walsh, said: I would like to wish Andrew, Eugene, Gavin and the team all the best for the match at the Hills and indeed for the season. I would also thank Wayne and Alan Waite for their valued sponsorship.”
The Northern Cricket Union looks forward to seeing cricketing fans from across the Union come together to support the Northern Knights. Congratulations to those selected and Good Luck to the team!
The number of deals in Northern Ireland increased by more than a third while there was a moderate dip in the number of transactions in the Republic of Ireland last year, according to research from Experian.
The information services company has also revealed the most active advisers in both Northern Ireland and the Republic in 2012. In 2012 there were 52 deals in Northern Ireland according to Experian’s league tables of M&As. This is an increase of 36.7 per cent from 2011 and the highest number of deals since 2008.
The value of deals in NI more than doubled in 2012 to £1.1bn from £384m last year. Experian says Northern Ireland experienced a “boom year” as the area of the UK with the highest increase in both volume and value of deals. A fifth of the deals completed in NI took place within the information technology sector.
In contrast in the Republic of Ireland the number of deals completed fell by 4.2 per cent from 307 transactions in 2011 to 294. However the volume of deals increased from €28.3bn in 2011 to €28.6bn. The most active sector in the Republic was materials and equipment wholesale with just over a fifth of all transactions.
In Northern Ireland, the most active legal adviser was A&L Goodbody while Kirkland & Ellis topped the table in terms of value. Horwood & Holmes was named as the most active financial adviser with Barclays, Goldman Sachs and Guggenheim Securities jointly taking the top spot in terms of value.
A&L Goodbody also reach the top spot for most active legal adviser in the Republic of Ireland – both in terms of volume of deals and the value.
Davy Corporate Finance was the most active financial adviser based on the number of deals worked on and Goldman Sachs was the most active by value.
Following the selection of the Northern Knights Cricket squad, the Knights unveiled another fine addition to their squad, new key sponsor, HNH.
HNH will be the main sponsor for the Northern Knights during the series and Wayne Horwood said: “It’s great to see the RSA Inter-Provincial series across the three formats of the game. They are a key stepping stone for players into the full Ireland squad. HNH are delighted to sponsor the Northern Knights and I look forward to a good summer of competitive cricket and hopefully a few new international players selected on the back of their performances in the RSA Inter-Provincial series.”
Northern Knights selector, Kyle McCallan said about the squad: “I’m delighted with the make up of the Northern Knights squad with all players showing good early season form. An away tie versus Leinster Lightning will be a tough start to the series, but I’m confident that this squad has the ability to get a win at the Hills CC on Bank Holiday Monday.”
Looking forward to the first match, Head Coach Eugene Moleon said: “The squad has been announced for the first game and everyone is looking forward to the challenge. Guys have shown good form early on. We have a good blend of senior players and youth. I am glad to say from players, to coaching staff to admin officer, we will be giving it our all for the Northern Knights. Please support us in this series.“
The RSA Inter-Provincial series will see the Northern Knights, Leinster Lightning and the North West Warriors play three day cricket for the RSA Inter-Provincial Championship, in one day competition in the RSA Inter-Provincial Cup and in a T20 competition, the RSA Inter-Provincial Trophy. For the full Northern Knights fixtures please check the NCU website: www.northerncricketunion.org
Reflecting on the first squad selected, NCU Chairman, Brian Walsh, said: I would like to wish Andrew, Eugene, Gavin and the team all the best for the match at the Hills and indeed for the season. I would also thank Wayne and Alan Waite for their valued sponsorship.”
The Northern Cricket Union looks forward to seeing cricketing fans from across the Union come together to support the Northern Knights. Congratulations to those selected and Good Luck to the team!
Seven Technologies has received investment from YFM Equity Partners, a GB-based Private Equity Fund of £6.6m. Seven is a Northern Irish engineering business that specialises in developing and manufacturing bespoke electronics and communications applications for operation in inhospitable environments for a wide range of international clients. As part of the deal, YFM Equity Partners has introduced a Chairman to the business, Richard Moon, an experienced non-executive director in a number of sectors including communications and electronics.
Seven Technologies was advised by HNH’s Corporate Finance team.
“Seven Technologies has demonstrated a strong track record of market penetration and profitable growth over the last few years to many international clients,” said HNH partner Wayne Horwood.
“The growth has been built on the strength of the management team and understanding of their market and customer requirements. “YFMEP’s investment in Seven provides the platform for future growth in international markets and it is excellent to see quality NI companies attract interest from GB based private equity houses.”
Founded in 2005, Seven Technologies is headquartered in Lisburn, Co. Antrim and employs 42 staff. Gavin Williamson joined the business as CEO in May 2011, bringing significant hi-tech business development experience from multinational electronics manufacturing and integration organisations. The company has a range of advanced products, such as electro-optic equipment and rugged computers, that it packages together to create bespoke solutions for particular requirements, typically involving use in harsh conditions prone to extremely high or low temperatures.
Seven Technologies prides itself in forming mutually beneficial partnerships with key organisations on a number of collaborative projects and shared research objectives. One such partnership is with two centres at Queens University – the Centre for Secure Information Technologies and the Institute of Electronics, Communications and Information Technology.
YFM Equity Partners invested £6.6m in an all equity deal through three of its funds: Chandos Fund and its two British Smaller Companies VCT.
Commenting, Paul Cannings (pictured) said: “The Seven Technologies team has a strong track record of growing their business, a loyal customer base and a clear path to future success. We believe that our funding and advice can help continue Seven Technologies’ development into a leading provider of highly sophisticated flexible technology solutions that are in high demand.”
Gavin Williamson, CEO, Seven Technologies adds: “YFM Equity Partners is a great funding partner for our business, as they understand our sector and have a strong track record of growing small British businesses. This funding will support our continued rapid growth and further investment in our highly regarded operational support teams.”
