In response to the Chancellor's Autumn Statement announcement, Jonathan Riley, Head of Tax, at business and financial adviser Grant Thornton UK LLP, comments on the implications for mid-sized business (MSB).
"Based on independent third party research together with the polling of our client base, we have long been making the case to Government for the introduction of measures specifically aimed at helping the 34,000 or so mid-sized businesses, the real engine room of GDP growth in the UK economy. The Treasury listened, and have acted"
"While our analysis shows that MSBs have continued to drive the UK economic recovery and are set to contribute £294bn to UK GDP in 2014, more could be done to help unlock their potential. We recognised that in order to speed up their growth, MSBs needed help in four key areas. Firstly, they wanted to boost their productivity and that means having a workforce well equipped with relevant skills. So the relief from the tax on jobs – employer's National Insurance contributions – where a company takes on an apprentice under the age of 25 is well targeted.
"In order to grow sales and help rebalance the deficit, MSBs need to trade more actively globally, especially with the higher-growth, non-traditional market. The announcement of £45m of help for those exporting to regions outside of the traditional Eurozone and North America is a step in the right direction and is a positive sign. We would however, have liked to see the Chancellor go further and introduce an R&D like tax credit for the early stage costs of exploring new markets so there is still more to be done".
"Turning to innovation, the introduction of enhanced reliefs for small and medium-sized businesses is also welcome. Backing the innovative nature of many companies in the UK continues to make the UK a very attractive place for business to operate in.
"Access to finance was also picked up by the Chancellor with the Treasury pledging an additional £400m to extend the Enterprise Capital Fund programme and to provide guarantees to support another £500m of bank lending. This is welcome in principle, however these measures only add to support already available and generally not taken up by businesses seeking growth and development funding. We would have liked to see the re-introduction of the Corporate Venturing Scheme so as to unlock access to cash currently held on the balance sheets of large corporates by MSBs. The absence of long term stable capital, plus the learning and mentoring that often comes with corporate venturing is an omission.
"Topping all this off, and a welcome development that wasn't overtly mentioned by Osborne, I am delighted that HMRC will launch a new approach to supporting mid-size businesses in 2015, providing a gateway to specialist tax help, including temporary access to a named individual for MSBs transitioning through a key business change with significant tax implications. MSBs have consistently called for better directed help from HMRC and this is a positive step.
"Overall a good day for MSBs and growth orientated business on the whole but the challenges they face, and our determination to give voice to those will not go away."