Twitter Flotation Sees 73% Rise On First Day Of Trading

Twitter launched its flotation this week in the biggest technology IPO since Facebook. Twitter follows a line of successful IPO’s in 2013 and recorded an incredible 73% rise in its share price on the first day of trading.  Other successful IPO’s this year include Foxtons which is up 34%, Stock Spirits (6%) and the Royal Mail which is up 71% since its flotation in October.

Benefits Of Setting Up Shared Service Centres

The squeeze on consumer spending means that businesses are finding it increasingly difficult to grow their top line. Emphasis has therefore turned to streamlining operations and reducing overheads. Since 2009, CFO’s have increasingly been looking to set up shared service centres. In fact a number of shared services have moved to low cost regions such as India and Poland over recent years.

A companies attitude towards outsourcing and shared service centres can be affected by cultural differences. German companies for example require 100% accuracy and will be resistant to outsourcing unless they have confidence that the quality will be maintained. US companies prefer to adopt an 80:20 approach with 80% of the business processes being outsourced. The UK on the other hand has a just do it attitude and tends to migrate the whole lot -100%.

There can be strong business cases for transforming the finance function in order to reduce overheads. Successful change management can create the necessary savings. However, the business needs to ensure that it retains the capability to review and assess the output received from the shared service centre. Change management can be an enormous challenge.

Whilst the use of shared service centres has been successful in reducing a businesses overhead base they have given rise to a number of issues. First there is a risk of a decline in quality. Expenses for example may not be adequately reviewed before they are input onto the system. This can be a common issue as employees do not often speak English. Similarly, the language barrier can prohibit the challenging of information being submitted to the shared service centre.

The key behind successful change management is to obtain buy in from the divisional units. This is especially important for large corporate groups as the business units must acknowledge that there is a problem in the first place. The Finance team can often be seen as a barrier and must make the case for change. In order to obtain buy in from the divisions the project must be seen as value add and a form of business partnering. Successful change will require strong leadership and clear direction. Quite often, the CEO must be interested in the project in order to for the business to deliver change. You will need to deliver a consistent message to sell the benefits of change.

The reduction in quality can also give rise to system issues such as those encountered at RBS who outsourced their IT systems to India prior to the much publicised systems failure where customer could not access their bank accounts for several days.

Shared service centres have not been as successful as originally anticipated and a number of companies are considering bringing the functions back in house, particularly in the US. Alternate solutions are also available. Businesses can explore the possibility of setting up in enterprise zones. Tax reliefs may also be available, for example in the computer software industry.

Save up to £50,000 with the Regional Employer NICs Holiday for New Businesses Scheme

On the 22 June 2010, the Chancellor Exchequer George Osborne unveiled plans in the Emergency Budget to introduce a Regional Employer National Insurance Contributions (NICs) Holiday for new businesses. It is hoped to encourage new businesses to start up in areas of the country that have relied heavily on public sector employment. This scheme will end on 5 September 2013. A more detailed explanation of the scheme now follows.

What is the scheme?         

The Regional Employer NICs Holiday scheme provides new businesses in certain areas of the country with a break from paying employer NICs in respect of the first 10 employees that they take on in the first year of business. In other words, the scheme is designed to help new businesses with the cost of taking on employees in the first trading year. The scheme began on 6 September 2010 and will run until 5 September 2013.

Who is eligible for the scheme?

-A sole trader, partnership or company must start a new business in the period from  22  June 2010 to 5 September 2013 inclusive;

-The principal location at which the new business is carried out at when it is started must be located within the following regions of the UK: Northern Ireland, Scotland, or Wales; or, if in England: the East Midlands, North East, North West, South West, West Midlands, Yorkshire or Humber (Greater London, the East and South East of England are excluded);

-Qualifying employees are employed for the purposes of the new business.

Potential savings

The scheme relieves employers of the need to pay employer NICs in respect of the first ten qualifying employees employed during the first year of the business. New businesses may qualify for a reduction of up to £5,000 for each of these first ten employees they take on. This means a potential saving up to £50,000 for the business. The more qualifying employees you apply for, the more of a saving you will make.

How to apply

The scheme is not applied to automatically so new businesses wishing to take part must apply to do so. An application form is available on the HM Revenue and Customs’ (HMRC) website. The claim can be backdated if the business has already started to employ people.

How to operate the scheme

Employers operating the Regional Employer NICs Holiday scheme will need to withhold the employer NICs that they would normally pay to HMRC in respect of the first 10 qualifying employees. The holiday period for each employee runs from the date on which the employee was taken on (which must be within the first year of business), and runs for 12 months or, if earlier, until the end of the scheme (5 September 2013). At the end of each month or quarter, the amount that the employer pays over to HMRC is the  amount calculated in accordance with the normal rules, less the amount of employer NICs  benefiting from the holiday. HMRC provides a record keeping form on its website and may inspect the records kept by the employer.

For further information please contact Belsize Accountancy on 0207 043 0052 or info@belsizeaccountancy.co.uk. We can advise you how to apply for the scheme and consider strategies to help minimise your NICs liability.