On the back of the scandals at the likes of Carillion and Patisserie Valerie, the new Business Secretary Kwasi Kwarteng will soon publish long-awaited proposals to reform the audit industry and improve the quality of company accounts.
While the report might be welcome news for insomniacs, entrepreneurs need to be awake to the fact it’s expected to include a plan to impose fines and bans on directors for inaccuracies in their companies’ accounts.
The Government needs to tread carefully here. The majority of business owners don’t properly understand business accounts, and boards of directors aren’t supposed to be a group of risk-averse accountants, but a diverse group of individuals with varied skills and talents.
If directors are personally on the hook for financial failings, only the most financially competent and (ironically) most risky individuals will want to serve on boards. In addition, this heavily diluted pool of talent will expect to be paid more to account for their personal risk.
The suggested rules would shift risk away from accountants and auditors, putting off many people who don’t know their way round a balance sheet from ever getting involved in running a business.
As Matthew Lesh argues in the Telegraph: “Changing the law would not suddenly make directors omnipresent. Rather, it would make them liable for behaviour they did not direct, condone or even know about.“
Every little bit unhelpful
You could be forgiven for thinking that in the upcoming Budget Rishi will announce more tax rises than any Chancellor in history. After all, the media has reported that he is considering raising pretty much every major tax we have.
While some taxes will no doubt go up, much of this is the Government testing the water to see the reaction from the media, lobby groups and the public. With the help of Tesco’s CEO Ken Murphy, one idea that is apparently back on the table is an online sales tax. He isn’t the first Tesco CEO to suggest it, and I doubt he will be the last.
In his latest Substack, Research Director Sam Dumitriu sets out why an online sales tax would be bad for British businesses: “An online sales tax would tilt the scales against e-commerce. Consumers would be worse off, forced either to pay more, switch to more expensive high street retailers, or put off purchases altogether.”
And while the tax, as proposed by Murphy, would only hit businesses selling more than £1m worth of goods each year, experience tells us that a platform like Amazon will just pass the cost onto SMEs, as they did with the Digital Services Tax.
Sam suggests one area where the playing field needs levelling though: congestion. Congestion charges fail to account for the cost of peak-time deliveries. The Resolution Foundation has suggested a home delivery congestion charge, while Sam prefers a proper system of road pricing.
The future of the high street is a legitimate concern and saving it is a matter close to many people’s hearts (and wallets). But it needs joined-up thinking. I would like to see a proper move towards densification – the more people who live within walking distance from a high street, the more people who will want to visit it – but there are other things, like pedestrianisation that can breathe new life into high streets without a need to hamper e-commerce.
Too grand
If you export to the EU, have under 500 employees, and no more than £100 million annual turnover, you can apply for the £20 million SME Brexit Support Fund. This fund offers up to up to £2,000 to pay for practical support, including training and professional advice to ensure you can continue to trade effectively with the EU. Find out more here and here.
Another Fine Mess