Midlands perspective

Our Social Innovation Pioneers programme, initially launched in May 2012, is coming to the end of its first year. During this time we have supported 30 socially innovative businesses across the UK by providing a package of advice, combined with access to our business and client network, to help these businesses to grow and become investment ready. We’re now looking for our second group of pioneers.

Having had the pleasure of being involved in the Social Innovation Pioneers scheme over the last 12 months I’m personally very excited about the possibility of welcoming new social enterprises, from a range of sectors, into the programme. The deadline for applications is 21 April and I would strongly urge any interested organisations to apply.

My role has been to lead Deloitte’s involvement with My Time, one of the participants based in the West Midlands.  My Time is an organisation located in Small Heath, in inner city Birmingham, which delivers award-winning inter-cultural and multi-lingual counselling and support services.  The business has an extremely impressive management team led by Michael Lilley (Chief Executive Officer) and Amra Dautovic (Managing Director) and its innovative approach in the services it provides has achieved fantastic outcomes for its users.

We have worked with My Time on various projects, including pro bono support from our Business Modelling Group to develop a financial forecast model, property advice from our Real Estate experts, supporting the recruitment of a business manager and jointly hosting marketing events.  My Time has also benefitted from marketing advice from Matter & Co, one of our programme partners.

I have certainly enjoyed lending my support to the business, as I know how important social enterprises are to the local economy. Having spoken to Michael, I know that the My Time management team feel that their involvement in our Social Innovation Pioneers scheme has been invaluable to the growth and future prospects of the business.  I’m confident that successful applicants in next year’s programme would see similar benefits.

For details on how to apply, please go to http://www.deloitte.com/view/en_GB/uk/about/community-investment/social-innovation/index.htm.  And good luck!

Richard Hadley

Richard is a Director in Corporate Finance, specialising in providing financial due diligence support to private equity and corporate clients on a range of buy-side and sell-side transactions.

As a member of the marketing team at Deloitte in Birmingham I was privileged  to have been involved in this year’s Deloitte Ladies Charity Lunch to celebrate International Women’s Day.

Held at the Hyatt, the event – which grows every year – supports the Deloitte Disability Sport charity; the largest programme of its kind in the UK.

This year our guest speaker  was TV presenter and multi-award winning journalist Miriam O’Reilly, who greatly inspired me with the story of her legal battle against what many regard as the UK’s most influential broadcaster. Her case, widely reported in 2009, was the first to be won on the grounds of age discrimination and marked a major turning point in the treatment – and inclusion of – older women on television.

What surprised and shocked me most about her story was not the response of her male colleagues, but the lack of support from other female presenters, who avoided being seen with her in public for fear of being associated with her and in doing so, risking their own jobs and careers.

Miriam’s speech was a stark reminder – to me and I understand to other attendees that I spoke with after the event -  that women in business, whatever their role, need to support one another. We should provide encouragement and help each other to achieve success and fulfilment at work, whether that is a seat on the board or learning a new skill.

With that in mind I certainly feel proud to have been part of an event that not only raised a great deal of money for a wonderful cause - £4,500 no less - but also provided women in Birmingham and across the West Midlands with a chance to be inspired, and to meet new contacts that might, one day be instrumental in helping them achieve success.

Polly Brookes, Marketing Executive at Deloitte in Birmingham

Harvey Smith, Director in Deloitte’s Birmingham Tax practice, warns companies against ignoring the pending deadline.

As of 6^th April of this year, HMRC will introduce Real Time Information (RTI) reporting of PAYE, which will require employers to submit details to HMRC every time they pay an employee, at the time they pay them.  It will also require that they submit this information electronically as part of their routine payroll process. Whilst this forthcoming regime has been public knowledge for a number of years, the reality is that many employers and those responsible for payroll are still underprepared for its introduction.

At Deloitte’s recent Employment Tax School workshop, less than 10 per cent of attendees said they were “confident that they had done all the necessary preparation in readiness for RTI”. While this is understandable – employers have a considerable amount of responsibility to ensure the new system works effectively – HMRC is unlikely to be sympathetic to those organisations that have not made every effort to comply.

Among the key areas for employers to concern themselves with are: the integrity of the data they’re submitting; the capacity of their IT systems to cope with the expanded reporting requirements; the necessary communications to their employee base of the changes taking place, and the possibility of requests for additional personal information; data protection issues; and both the physical and financial management of the new requirements.

For organisations, especially SMEs, who anticipate that they simply won’t be prepared in time, it may be advisable to open a dialogue with HMRC as soon as possible on the specific issues and invite HMRC’s feedback on the points of concern.  Resource and focus, at this stage, is likely to be best diverted to the integrity and accuracy of the data in time for the first Full Payment Submission (FPS), so that necessary adjustments can be implemented for subsequent reporting periods.

The process is likely to represent a learning curve for all concerned, at least for the first year or so.  With this in mind, the hope will be that tough penalties are not enforced by HMRC until later years, but only by facing the forthcoming changes head-on, whether that is achieved via good preparation, seeking help, or opening a dialogue with HMRC, will they ensure that they avoid any unnecessary, and potentially costly, impacts.

Harvey Smith, Director in Deloitte’s Birmingham Tax practice

In my last blog, I looked at the prospects for the UK’s automotive industry in the post-Olympic era which had left us with a glow of positivity.

Now, a couple of months down the track I’m thinking about the retail sector and again, will start with an Olympic reference.

As we entered 2012 there was much anticipation for what the London Games would deliver above and beyond pageantry and sporting success. Amongst the retail community there were high expectations that the Games would drive a boost in sales figures with Deloitte research revealing in January that 84% of retailers were expecting a positive upturn. The ONS retail sales figures released in September,however, indicated that the boost hadn’t been as strong as anticipated. Indeed, a second piece of Deloitte research conducted during the Olympic Games found that only 59% of retailers experienced an increase in demand.

We’re now in what is widely referred to as the ‘Golden Quarter’ – that is the all-important run up to Christmas when trading figures find themselves in ‘make or break’ territory. And yet we’re faced on an almost daily basis with seemingly contradictory data and retail experience.

So what is the reality facing retailers here in the Midlands and beyond?

From my perspective it isn’t all doom and gloom. Yes, certainly we are still seeing major retailers experiencing difficult trading conditions and even failure, yet at the same time certain retailers are enjoying growth and even profit. There is no democracy here – one retailer in a certain sector will flourish, whilst another in the same sector will flounder. Those who are doing well are demonstrating a commitment to customer service and presenting a distinctive offering that allows them to take business from less robust competitors and capture market share.

And there is still much to be positive about.

ONS figures released in mid-October showed that retail sales figures had grown in Q3, and at the fastest rate for two years. Deloitte figures released at around the same time showed that retail administrations were down 15% on the same period in 2011. Add to this that household spending has shown modest growth this year and new car sales have increased it becomes clear that there is some cautious consumer confidence returning.

Having worked through the VAT rise to 20%, lower inflation has reduced the squeeze on real incomes we saw at the beginning of the downturn and the UK’s labour market is showing a certain resilience keeping unemployment below the peaks that previous recessions have experienced. Indeed, there are still retailers demonstrating there are good times to be enjoyed with news of rises in sales figures and record profits still being announced on a weekly basis.

We’re not completely out of the woods yet – whilst we anticipate 2013 being brighter and consumers having more to spend, there are still challenges such as rises in fuel, utility and food bills, which mean retailers need to keep on their toes and plan a strategy that will see them through the Christmas trading period, and beyond.

At the heart of getting this strategy right are a number of factors. Importantly amongst these is getting the balance between store, online and mobile strategies right. It is an inescapable fact that mobile is growing in influence in the retail space and those who use this to their advantage should experience positive customer growth and market share. It is believed that almost half of smartphone users have used their device to research product information before or during a shopping trip – that is 6% of in-store sales being influenced by mobile use which in turn is equivalent to £15bn of sales in this year alone.

Add to that the phenomena of voucher-led discounts and flash sales. Gone are the days of just bi annual summer and Boxing Day sales. Now it is the norm for retailers to offer their customers (often via an online relationship) discounts for a limited time, or to stage flash sales aimed at driving footfall over a given timeframe. Whilst these undoubtedly work for many retailers, there is a need to employ such tactics in a strategic way to ensure you’re neither too far ahead, or indeed behind, the competition and don’t damage profit margins. These tactics need to have an overall beneficial impact after all.

Sadly I am not a fortune teller. I can’t say who will and who won’t survive. What is for sure, however, is that retailers need to seize the signs of better times ahead and recognise that in doing so, they may need to re-evaluate how they run their businesses and stay close to what their customers want.

 Vijay Thakrar

Vijay is a Partner with Deloitte and provides commercial and tax advice to various manufacturing clients

This time last week I put aside my usual to-do list and became a schoolgirl again, as part of our annual Deloitte Community Day.

Each year, people from our firm - not just here in Nottingham but across the UK - join local schools, community groups and other important initiatives to provide a helping hand. Our hope is that we  lighten the load, albeit it temporarily, whilst also raising awareness of the amazing work that these people and organisations do.

This year myself and some colleagues joined Huntingdon School in Nottingham. This is actually my third year at the school, and I was delighted to return. The children – which come from a variety of backgrounds - are a real joy. They are always so happy to share their day with us and they, and the staff, always welcome us with open arms.

Our day began with the Head calling our very own ‘Register’. Once we were all present and correct we joined the nursery assembly. The topic was “Everyone was a baby once” and the children had brought in photographs of themselves as babies – as had the teachers. They all took turns in trying to guess who was who. This was followed by a short performance, with them all singing and dancing along with the teacher. It was a lovely start to the day, looking at the 30 children before us  – some smiling, some nervous -  but all desperate to give us a memorable performance, which it was.

After this we joined Year 5 and helped the class with their reading. The ability of the class ranged dramatically - from Bigg and Chip to Enid Blyton to history books. The children pick their own books, and it’s great to see how passionate some of them can be about them. For others, like one boy who had joined the school in September not knowing any English, it’s a much greater journey.

Our day is such a small thing, and yet I am genuinely proud to be part of this initiative. What people forget is how much you get in return from giving – whether that’s a few hours, a donation, or more. I returned to work  humbled yet happy and dedicated to do more.

Pauline Nicholls

Pauline Nicholls is Marketing Manager for the Nottingham office of Deloitte

As a Manager in the Midlands Risk and Regulatory team, the topic of financial services regulatory reform is something which is affecting all of my clients and is a topic which is impacting all financial services firms.

At present, no single institution has the responsibility, authority and tools to monitor the financial system as a whole, and respond accordingly. That power will now be given to the Bank of England. The Government has created a new Financial Policy Committee (“FPC”) within the Bank, which will look at the wider economic and financial risks to the stability of the system. The reforms will also introduce greater judgement and focus to regulation of financial firms.

It is expected that from 1 April 2013, the Financial Services Authority (“FSA”) will cease to exist in its current form, with the Government creating two new focussed financial regulators; a new Prudential Regulation Authority (“PRA”) responsible for the regulation of all deposit-taking institutions, insurers and investment banks - and an independent conduct of business regulator, the Financial Conduct Authority (“FCA”) responsible for regulations including conduct in retail, wholesale, financial markets. Earlier this month, the FSA published a consultation paper on the proposed approach of the FCA to its role under the new regulatory regime, which can be found by clicking here.

The Midlands Risk & Regulatory practice is holding its regular breakfast forum on 30 October in Birmingham and 1 November in Nottingham, which will discuss the new regime and other key conduct risk topics. This popular event brings together a cross sector group of risk and compliance officers or equivalent from across the Midlands to provide an excellent opportunity for attendees to network, share knowledge and experiences with peers, whilst hearing the views of Deloitte experts in a roundtable discussion. If this is something you would be interesting in attending, please don’t hesitate to contact via rephillips@deloitte.co.uk.

Rebecca Phillips

Rebecca is a Manager within the Midlands Risk and Regulatory team and provides advice and assurance to clients on compliance and regulatory risk

A little over two weeks ago the question was asked whether London could deliver an Olympic Games that the UK could be proud of; an event that would make the world sit up and take notice and put the ‘Great’ back in Great Britain.  How would the public transport infrastructure cope?  Would our typical British Summer cause a problem?   With the Games now concluded I don’t think there is any doubt that we more than delivered and London 2012 has been a resounding success.  We won more medals than ever anticipated, and put on a show both before, during and after, that has left the country with a positivity that needs to be harnessed as we continue to face economic uncertainty.

I believe there is an analogy here with the UK’s automotive sector, and the associated industries that support and benefit from it.  For so long we were viewed, and indeed viewed ourselves, as the ‘has-been’ of the automotive world.  We went through some tough times and it’s often easier to remember those than to accept the current reality.  That reality is that the sector here in the Midlands has been resilient through a focus on innovation, efficiency and customer service, and automotive is now again regarded as a bright spot in the UK and Midlands economy. 

Indeed, the more I speak with clients in manufacturing here in the Midlands, the more I get a sense that the UK, despite all the doom and gloom that the media pumps at us, is more innovative and efficient than we give ourselves credit for. This is allowing us to win market share, but we need to keep our eye on the ball to ensure this continues.

A US-headquartered manufacturing client of mine just two weeks ago voluntarily stated that they saw the UK as a great place to do business:  they most notably cited a sensible regulation environment and an attractive tax regime.  News just last week that the SMMT is launching a new forum to discuss the future prospects for the UK-based automotive supply chain is also welcomed.

What we must not do is rest on our laurels. Yes, the media and industry are once again singing the praises of our automotive credentials – in fact barely a day goes by when we don’t hear further good news from JLR and its effect on the supply chain in this region. This good news however can only be sustained long term if we ensure an adequate supply of skilled engineering specialists.

So in the same way we’re now debating how best to capitalise upon the Olympics legacy, I’d like to call upon those in education, parents of students considering future careers, and industry leaders to ensure that we work together to make manufacturing an attractive career choice for young people.  In recent years the sector has brushed itself down, picked itself up and is once again doing well and feeling positive – let’s make sure that lasts beyond the next few years.

Vijay Thakrar
Vijay is a Partner with Deloitte and provides commercial and tax advice to various manufacturing clients.

As the newly appointed lead for the UK entrepreneurial business practice at Deloitte, it may come as little surprise that I’ve decided to post a blog on our annual report, “Entrepreneurship UK” which is now well under way for 2012.

The report, now in its fifth year, provides us with an in-depth, authoritative view of the attitudes, performance and objectives of UK-based entrepreneurs and their businesses – from those that run multi-billion pound established companies, through to newer, high growth ventures.

Having the historical data provides us with the ability to really assess the trends and challenges being faced by the UK’s entrepreneurial community.  I am particularly looking forward to seeing how this year’s respondents feel about predicted revenue growth given that last year over 90% anticipated growth in 2012.  Will the continued Eurozone crisis, Jubilee or Olympics have had an impact on this optimism? Or will entrepreneurial businesses in the UK, as we hope, have pushed forward with growth in uncertain times, focusing on the opportunities that this type of environment creates?

I am passionate about supporting and strengthening entrepreneurialism, even in the toughest of economic climates. We have seen time and time again that with the right support, small owner-backed organisations can quickly turn into national – and even international – forces.  This support can only be tailored and provided, however, once the needs and challenges are clearly understood, not only by advisory businesses such as Deloitte, but also by the government and of course the banks and others in the funding community.

We have ambitious targets for this year’s survey: a doubling of respondents.  From the 500 that completed it last year, we’re working hard to ensure that this year we receive input from over 1000 - so please take a few minutes to take part and to forward information on to other relevant contacts.

Yes, this is a national survey, but it will only be a true representation if we ensure we have input from the wealth of entrepreneurs that can be found across the whole of the United Kingdom, and that includes all of you across the Midlands. 

I promise it really does only take 10 minutes to complete and we’ll make sure you receive a full copy of the report when it is published later this year.

To take part visit: www.entrepreneurshipuk.com 

Mark Doleman

Mark Doleman
Mark recently took up the national role of Head of Private Companies across the UK after having been Nottingham Office Senior Partner for seven years.
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Businesses must help government formulate strategy to achieve sustained recovery, says Sir Roger Carr at West Midlands event

The CBI president, Sir Roger Carr, has called on the government to take a “fresh look” at its approach to industrial policy.

A clear vision of how the UK should position itself is critical to economic growth, Sir Roger told an audience of businesspeople at the Deloitte-sponsored CBI West Midlands Annual Dinner on Monday.

“We need a fresh look at industrial policy,” he said. “We need to stimulate long-term investment in the UK’s productive capacity and future capabilities.

“And we need to recognise where we sit within the global economy and set out where we want to be in the year ahead. A clear and thoughtful plan.”

Sir Roger, also Centrica chairman, added that business must be called on to help to shape industrial policy – a key project for the CBI in 2012 and beyond.

He said: “We know that a policy will work best if it is in tune with – and shaped by – business. We know that the strategy will only work if it is adopted across government and that the culture and practices of different departments are aligned to become mutually supportive.”

Also speaking at the dinner at Edgbaston cricket ground in Birmingham was scientist and TV presenter Lord Robert Winston.

This article appeared on the CBI website

If you are a regular to this blog then you will have previously read of our take on the implementation of various government initiatives encouraging businesses to invest in the UK – the reduction to the main rate of corporation tax, changes to R&D tax credit relief and changes to the Controlled Foreign Company rules to name a few.   In this blog we are addressing a new tax initiative - the Patent Box regime. 

In its simplest form, the regime will save companies tax, potentially on an annuity basis and is expected to cost the UK government £1bn per annum.  From April 2013, a reduced rate of corporation tax will apply to companies that earn income from processes, products or services that are patented or have parts that are patented, effectively reducing corporation tax to 10% on the related profits.

So who will benefit? Broadly, any company!  The regime can even apply where the product, process or service does not have a registered patent yet.  There are certainly aspects of the rules which make the regime almost too good to be true.  For example, the entire income from a product may be subject to a reduced corporation tax rate, even if the patented component is very small.  Take the manufacturing industry, for example, and the production of a car.  Perhaps it is only the brakes that are patented, but they form part of the whole product – even spares and consumables attached to the product can qualify.  

There were concerns surrounding the limitations of the regime as being sector specific, but Emma Cooper of our Patent Box team comments: “the regime has generated significant interest across a wide range of industries, including software companies, engineering firms, manufacturers and financial services companies so it is definitely not restricted to the pharmaceutical sector as many perceived it to be”. The regime is indeed generating a lot of interest from major international and listed companies through to start up businesses – an indication that it will have a wide application and a positive impact on business.  

The Midlands Patent Box team is currently working with a number of companies to make these complex rules simple and help them to assess the potential benefit of the Patent Box regime as well as how this can be maximised.  The team comprises specialists from our Research & Development and Transfer Pricing teams as well as IP and Patent consultants, so we are well placed to ensure that the full breadth of the new regime is explored and that our clients can benefit as a result.

Peter Gallimore
Peter has worked for Deloitte in Birmingham for the last 17 years. He is the Midlands’ Manufacturing Leader and a partner specialising in Audit and Corporate Treasury. 
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