News and comment from HW Fisher & Company

The morality of tax - we debate the issue

Economic overview - a look at the positives and negatives

Business tax update - what the changes mean for you

and your business

InsightAutumn/Winter 2012

The morality of tax

By attempting to pay as little tax as he

could, he had committed a cardinal sin -

albeit, admittedly, a legal one.

Even the Prime Minister ventured in,

branding Carr’s decision ‘quite frankly

morally wrong’ (despite the fact, many were

quick to point out, that David Cameron’s

own father was a pioneer of such tax

avoidance schemes).

Danny Alexander, chief secretary to the

Treasury, also threw in his two-penneth,

adding that people who seek to pay as

little tax as they can are no better than

benefits cheats.

Only after a public declaration did Carr get

to put things behind him and get back to

the serious matter of making people laugh.

In hindsight, the K2 storm had been

brewing for some time. In the March

Budget, the Chancellor had announced a

15% stamp duty tax on all properties valued

at over £2m bought through a company,

as it was assumed that buying through a

company would save tax.

The message from the Government, quite simply, was that they will penalize anyone seeking to circumvent tax, even if legally.

Cash-in-hand economyNot long after Jimmy Carr’s K2 dressing-

down, tax and morality emerged once again

in the form of the ‘cash in hand’ debate

ignited by Treasury minister, David Gauke.

It is morally unacceptable, we were told, to

pay people - generally builders and general

tradesman - cash in hand.

As with schemes like K2, cash in hand

payments rob the state of the funds it is

due in order to keep our hospitals and

other public services running. HM Revenue

& Customs (HMRC) puts the ‘tax gap’ at

around £35bn annually.

Essentially, those paying - and being paid - cash in hand are getting a free ride while others are forced to pay more tax to cover the shortfall. The Government view cash-in-hand payments as effectively defrauding the state.

The spate of tax morality stories did not

stop there, either. The next victim of the

media appetite for tax avoiders was the

media itself, as it emerged that a significant

chunk of the BBC’s journalists and

presenters are paid as freelance contractors

through personal service companies.

And if any more proof were needed that

the Coalition Government is committed to

targeting the tax arrangements of the high

net worth, look at its recent ‘anti-affluence’

crackdown on homes worth £2m or more,

or the restriction on wealthy individuals

from fully utilising reliefs which were

formerly uncapped.

Most recently, the media and political

venom felt by Starbucks when it was

discovered the coffee chain has paid just

£8.3m in tax despite over £3bn in UK-

generated sales underlines more than

anything the delicate climate we are in.

Only a foolThe question at the heart of all of the above

is as follows: is it moral to pay as little tax as

you can, if it is legal to do so?

(We are, of course, aware that some readers of Insight will find it ironic that a firm of accountants is discussing the morality of tax. But as we see it, and given that tax is embedded within the very fabric of our society, it is inevitable that we, too, will have an interest in the debate.)

Having read a number of the articles that

ran over the summer, in relation to K2,

the BBC and cash-in-hand, what is clear is

that when it comes to taxation, morality

is inextricably linked - for many people

anyway - to legality.

If something is legal then it is widely construed to be moral.

Rightly or wrongly, the majority of people

will choose to pay less tax if they are in a

position to do so without breaking the law.

Stephen Pollard, a journalist at the Daily

Express, put it thus:

“Let me be blunt: only a fool would pay more tax than he has to. The Government sets the rules and the rest of us follow them. Who would choose to hand over more money than the law requires?”

WorldviewThe question Pollard ends with - “Who

would choose to hand over more money

than the law requires?” - raises a key issue

in the debate surrounding the morality of

tax avoidance.

It is that we are all different and that,

ultimately, there may be no right or wrong.

After all, some people - for political,

personal, religious or other reasons - do

indeed choose to hand over more cash than

the law requires them to do.

When Jimmy Carr ploughed a couple of million into the tax avoidance scheme, K2, he did not have a clue what was about to hit him. Before he could reel off even one of his more laconic one-liners, his morality was being questioned on the front page of every UK newspaper and breakfast TV sofa.

www.hwfisher.co.uk2 | Insight

InsightOthers, meanwhile, will do everything they

can to pay as little tax as possible, as that

fits perfectly with their own worldview.

In short, every person’s relationship to tax

and its payment is intrinsically linked to their

beliefs, their politics and their perception of

what is right and wrong.

By this logic, the morality of legal tax

avoidance is fundamentally subjective and

will never be resolved.

Arbiters of legalityTo look at it another way, surely every legal

framework is deeply political in itself, as

it is shaped and redirected by the political

parties and politicians in power at a

specific time?

Governments that bring in these laws are

widely known to be supported by high-net

worth individuals and companies that have

a vested interest in keeping the tax regime

structured in their own interest. Because of

this, many claim that the

politics of high finance are incestuously

embedded at the very heart of the legal and

tax system.

This is apparently no great secret, either.

A poll in late August by Christian Aid

showed that only 38% of us believe the

Government is genuine in its desire to

combat tax avoidance.

David Cameron’s attack on Jimmy Carr was,

most people acknowledge, for superficially

political rather than profoundly moral

reasons. After a pretty disastrous few

months for his party, he saw a vote-winner

and went for it.

Fertile backdropVery likely, given its ability to sell

newspapers, the tax avoidance versus

tax evasion story will continue to roll.

The tough economic climate is certainly

a fertile backdrop, as austerity puts state

support - therefore taxes - at the front of

everyone’s minds.

In this issue...

The morality of tax

Economic overview

Venturing into venture capital

Red flags - is your business struggling?

Who needs the banks anyway?

Get ready for gender-neutral pricing

Fraud indicators

How charities can make the most of their reserves

Calling all 50% taxpayers

Sustainable is Profitable

The business case for sustainability

In the spotlight... Mark Billingham

The labyrinth of licence agreements

Revolutionising the legal services sector

Why invest in Britain?

The taxing matter of UK residential property

Insurance for start-ups

Business tax update

HW Fisher news

Tony Bernstein, Tax Partner

T 020 7380 4977

E abernstein@hwfisher.co.uk

GAAR

GAAR - the General Anti-Abuse Rule -

dovetails with the current moral critique

surrounding tax avoidance by putting in

certain tax rules that are based on principles

rather than precise terminology. In an

attempt to reduce the £35bn ‘tax gap’ (the

difference between what taxpayers actually

pay and what HMRC thinks they should

pay), GAAR will essentially empower HMRC

to base a decision on what it feels to be the

case rather than what may be the case

on paper. GAAR will be focused on larger,

organised avoidance schemes - effectively

‘pre-packed’ products - and will not

apply to the centre ground of responsible

tax planning.

This is different from the original GAAR

which was envisaged to stop the wider tax

planning. It was called the General Anti-

Avoidance Rule but has now been heavily

watered down to the General Anti-Abuse

Rule, which allows less provocative tax

planning to continue.

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Ultimately, though, there is no answer to whether it is immoral for people to use tax legislation to minimize their tax payments. The debate is destined never to end, as the views of one will always be different to the views of another.

To quote the German philosopher

Friedrich Nietzsche:

“You have your way. I have my way. As for the right way, the correct way, and the only way, it does not exist.”

www.hwfisher.co.uk Insight | 3

Economic overview

We are not alone, of course. Autumn 2012

and the global economy remains massively

geared on debt, out of its depth and in the

midst of an unprecedented correction. The

Eurozone is still on the edge of collapse

and the mighty US economy is struggling

to get into gear - in September the Fed

printed even more money to try and

trigger growth - and even China is starting

to go off the boil.

Swiss cheeseHere at home, we went from recession

to double dip recession for much of the

year. All kinds of bodies and agencies

downgraded their growth forecasts for the

UK, not least the International Monetary

Fund. But unemployment fell steadily, and

by the third quarter the economy had shot

back into growth. Question marks still hang

over Plan A, the Chancellor’s commitment

to slash the deficit, as net borrowing - the

deficit - continues to creep up. As one wit

put it in the media, Plan A appears to have

“more holes than a piece of Swiss cheese.”

All in all, it is safe to say that the current

cycle is unlike any cycle we have ever

witnessed before. And all the time, the

credit agencies are circling the UK’s

treasured AAA credit status like vultures

round wounded prey.

The EuroAnd what of the Euro? The Euro is

irreversible, according to the European

Central Bank head, Mario Draghi. But few

believe him. Unless Germany agrees to issue

Eurobonds in order to reduce borrowing

rates for the likes of Italy and Spain, then

most agree the Euro is destined to fail -

and in the not too distant future, either.

Unfortunately, German Chancellor Angela

Merkel is not inclined towards Eurobonds

and the German people are becoming

increasingly fed-up with having to bail out

their Mediterranean counterparts.

$64m questionWhile George Osborne and Ed Balls throw

austerity and growth grenades respectively

at one another, the $64m question on

everyone else’s lips is this: When will it end?

It is more than five years since over two hundred people queued outside the Golders Green branch of Northern Rock on 14 September 2007, but the UK economy - like those savers - remains in a state of panic.

David Breger, Audit Partner

T 020 7380 4943

E dbreger@hwfisher.co.uk

UK Economy: Positives and NegativesPositives

• Economy returned to growth

in the third quarter of 2012

• Unemployment falling consistently

• Inflation, despite surprise

uptick in July, much lower

than 12 months ago

• Interest rates to remain

low for some time

• AAA credit rating intact

(for the time being)

• Funding for Lending Scheme

to boost bank lending

• Launch of Government-backed

‘Business bank’ (but will it work?)

Negatives

• Public sector net debt of just over £1

trillion (2/3 GDP) as of September

• Will Plan A weaken the UK economy

rather than strengthen it?

• Exports to Eurozone very weak

• Consumers and business

lack confidence

• Banks still may not lend to

marginally higher risk people

and companies

• Inflation still ‘sticky’ and could rise

given volatile commodity markets

The answer is nobody knows. What we

do know, of course, is that it will end. It

will end when consumers, companies and

nation states have reduced their debt levels

to manageable levels. As we covered in the

last issue of Insight, the entire narrative of the

past 15 years has been one of debt - firstly

accumulating it, and then realising that we

have to somehow pay for it. But ironically it

is not all about debt. It is also about credit, or

rather the lack of it. For more than five years

now the banks - understandably - have been

cautious about lending. But this caution is

keeping the economy down, as without a

degree of credit the economy cannot grow.

Our own Nick O’Reilly, Brian Johnson and

David Birne have been banging this drum in

the media for some time. The Government

and Bank of England know this and in July

jointly announced the Funding for Lending

scheme, which is their latest attempt to get

the economy back to life (and an admission,

some say, that quantitative easing has failed).

This is about encouraging the banks to

lend to viable businesses and mortgage

borrowers where previously they may not

have. It is about getting us back to sensible

lending, because right now the banks are

too scared to even do sensible. In other

words, the banks will lend more but once

again not necessarily to the people who

need it - the first time buyers out there, and

those with smaller deposits or less equity.

At the time of writing, in October, it is still

too early to say whether the Funding for

Lending scheme will spur the economy

into life. The general consensus is that it is

unlikely to make a huge difference, as the

banks have been straitjacketed by Basel III,

which requires them to boost their capital

and liquidity base (and to do this, they need

to keep money rather than lend it out).

Companies and consumers alike remain

deeply cautious about whether it will work

(although thankfully there are a growing

number of alternative finance options for

business, see page 7).

Doubts also surround the Business Bank

announced by the Business Secretary, Vince

Cable, in the Liberal Democrats’ recent

party conference. But again, this won’t kick

in for at least 18 months and could prove

to be yet another ‘scheme’ that comes to

nothing. The long and the short of it is

that it is likely to be some time before we

have properly emerged from this crisis.

But perhaps the one silver lining to the

economic clouds hanging overhead is that

times of uncertainty always represent times

of opportunity - and trigger innovation.

The solution is to be bold - because we

have no other choice.

www.hwfisher.co.uk4 | Insight

Jamie Morrison, Tax Principal

T 020 7874 7983

E jmorrison@hwfisher.co.uk

These tax reliefs can prove very valuable to

investors and can offer them immediate

cash benefits to sit alongside their

investment. However, investors are unlikely

to be attracted purely for the sake of

accessing the tax relief; therefore any

proposition would need to be carefully

packaged and presented to potential

investors and would have to make

commercial sense.

There are two principal tax-advantaged

schemes for private investors looking to

make equity investment into SMEs - The

Enterprise Investment Scheme (EIS) and

the new Seed Enterprise Investment

Scheme (SEIS), which was introduced in

the 2012 Budget.

Below is a brief overview of the tax relief

available for such investors and a discussion

of some of the major points to consider

when looking at SEIS or EIS.

Seed Enterprise Investment Scheme (SEIS)

• Total ‘lifetime’ limit of £150,000 can

be raised by investee company

• Investee company must have

gross assets of less than £200k

prior to fundraising

• Trade must be less than 2 years old

• Investee company must have

fewer than 25 employees

• Investee company must not have raised

any other State Aid Venture Capital

• Maximum investor limit of £100,000

Enterprise Investment Scheme (EIS)

• Total limit of £5m annually

can currently be raised

• Investee company must have

gross assets of less than £15m

prior to fundraising and less

than £16m afterwards

• Investee company must have

fewer than 250 employees

• Maximum investor limit of £1m

Venturing into venture capital

Seed EIS EISIncome Tax Relief 50% 30%

Deferral Relief Yes - but 2012/13

gains exempt

Yes

CGT exemption Yes Yes

IHT Relief Yes - after 2 years Yes - after 2 years

The table below provides an overview of the available tax relief for investors:

There are a number of requirements for investors to satisfy, in order to secure the income and

capital gains tax reliefs, the main two of which are:

• The shares need to be owned for a minimum of 3 years

• The investor cannot control, either directly or indirectly, more than 30%

of the voting rights and issued share capital of the company.

For companies seeking to raise finance under these schemes, there are a number of pitfalls to be

avoided, the main ones of which are set out below:

• Funds raised under EIS need to be employed for the purposes of the trade

within 2 years. For SEIS this time limit is extended to 3 years.

• Not all trades are qualifying trades for SEIS / EIS purposes. In broad

terms, companies whose businesses consist of leasing, financial activities,

lawyers, accountants and investment activity will not qualify.

• The 2012 Budget also introduced an overarching anti-avoidance rule, called

‘the disqualifying arrangements rule’. It is designed to prevent investors from

securing tax relief where artificial structures without a commercial purpose have

been established with the sole intent of accessing the available tax relief.

• The investee company must be UK resident for tax purposes or

carry on a trade via a permanent establishment in the UK

• The company raising finance cannot be controlled by another company

• Any company looking to raise equity finance under SEIS or EIS cannot be in

‘financial difficulty.’

If a company raises funds under SEIS or EIS, it must make sure that it complies with the regulations

over a 3 year period following the issue of the shares; otherwise investors could lose the valuable

tax reliefs that incentivised them to invest in the first place. For companies wishing to attract

investors, it is possible to get pre-approval from HMRC that the proposed share issue to investors

will qualify under SEIS / EIS. In practical terms, any third party investor will want to see that the

company has its SEIS / EIS status pre-approved before committing to any investment. Once funds

have been invested, the company is required to provide HMRC with a Compliance Statement

giving details of the investors and the shares issued and HMRC will, in return, provide the

company with the certificates to provide to investors in order for them to claim their tax relief.

At HW Fisher we have significant experience in

helping companies looking to raise finance under

SEIS / EIS and ensuring that they comply with the

relevant tax requirements.

At a time where raising finance is proving a difficult task for many small and medium sized enterprises, the venture capital market can prove a happy hunting ground due to the enhanced tax reliefs available to investors subscribing for equity in qualifying trading companies.

www.hwfisher.co.uk Insight | 5

Red flags - is your business struggling?

I have dealt with hundreds of struggling

businesses over the years and there are

certain ‘red flag’ indicators that every

company should be aware of and act upon.

These red flags are basically signs saying

your company has some issues that need

to be resolved quite urgently. In all cases,

the sooner you seek to resolve the causes

of these red flags, the more likely your

company will pull through unscathed. But

if you continue to ignore them, the more

likely the underlying problem is to grow,

putting your company and the jobs of all

staff at risk.

It doesn’t matter what size or kind of

company you have either. You can be a

sole trader, in a limited company or limited

liability partnership (LLP). The biggest red

flags include:

• Difficulties covering (or failing to cover)

the monthly PAYE, corporation tax and/

or quarterly VAT bills. This is one of the

earliest warning signs and can quickly

snowball into an unmanageable level of

debt. If you are having issues covering

your tax liabilities, it’s essential that

you speak to HMRC ASAP, and even

consider a time-to-pay arrangement

• Experiencing regular cash flow

problems. So many perfectly viable

businesses fail because they do not

have the working capital to keep

themselves going, even if there is plenty

of revenue in the pipeline. Companies

need to be ruthless in ensuring they

have a sufficient cushion of working

capital, and avoid collecting client debts

too late or paying creditors too early

• Being busy but with no discernible

improvement in the financial position

of the business. The key here is to

have a clear strategy and clear goals

in place - what is going wrong, how

can you get out of this position, why

are you treading water? If you find you

are spending more time ‘fire-fighting’

than actually running your business,

you need to rectify the core problems,

not stick your head in the sand

• High incidences of customer complaints

and returns. While new business

is important, existing customers

and clients are arguably even more

important. Make sure that you

do not ignore existing clients and

customers while you seek to acquire

new ones to improve your position

• Failing to invest in new equipment,

resulting in high maintenance costs,

poor efficiency and loss of market

share to competitors. The solution

to this is to invest in your own

company, as over time it pays

dividends. Thrift can sometimes

be fatal.

• Constantly asking the bank for a

higher overdraft limit or larger loan,

or even considering remortgaging

or borrowing from friends to keep

your business going. If you are in this

position then you need to understand

that simply having more money at

your disposal is rarely the solution.

The key is to change something more

fundamental within the business

It is important to understand that not all

red flags are a sure-fire sign your business

is struggling - but they’re certainly a good

reason to take a long, hard look at it.

If a number of red flags apply to your

business then you should certainly seek

appropriate professional advice - and not

just for the sake of the business, but also

for your own personal wealth. After all,

if you are a sole trader rather than, say, a

limited company, your company’s liabilities

are deemed to be your own. This could

result in the loss of personal assets and

even, in extremis, your home. With limited

liability SME companies, directors often

provide personal guarantees and therefore

their own personal position is inextricably

linked to that of the company.

Brian Johnson, Business Recovery Partner

T 020 7380 4989

E bjohnson@hwfisher.co.uk

In such challenging economic times, it’s more important than ever to be aware of the signs that your business could be struggling.

Turning things aroundRemember that just because your business

is struggling does not mean it’s all over - as

well as carrying out formal administrations,

insolvency specialists also offer restructuring

advice. The aim of restructuring, or

‘turnaround’, experts is to work closely

with existing management teams, lenders,

creditors, stakeholders and investors to

ensure the best strategy for the recovery of

a struggling business. The type of work we

carry out includes:

• Performance reviews

Working with management to

review the financial performance

of the business and provide

an operational overview

• Recovery strategy

Working collaboratively with

the management team, lenders,

investors and other stakeholders

to develop a robust recovery

strategy that also reduces costs

• Implementation

Providing on-the-ground support

to ensure the restructuring strategy

is being implemented, possibly

by way of the introduction of

an interim manager to help the

existing management team

• Cash flow

Providing a bespoke solution to

help the management overcome

cash flow problems and secure

medium to long-term finance.

Note, too, that if your business is

experiencing difficulties, most insolvency

practitioners and turnaround specialists will

offer an initial consultation for free, so there

is no downside to inviting them in. Time is

of the essence.

www.hwfisher.co.uk6 | Insight

While we welcome this latest initiative to get

the wheels of the economy turning again, it

is by no means guaranteed to work.

Even if the banks do rediscover their

appetite to lend (and the jury is still very

much out), in many cases they won’t be

able to lend due to the 2019 arrival of

tough new standards on capital adequacy

and liquidity, known as Basel III.

Sea changeWhat is clear is that the Credit Crunch and

subsequent recessions have triggered a sea

change in the way SMEs are funded.

In the spring, we saw Tim Breedon, CEO of

Legal & General, publish a Government -

sponsored report, Boosting Finance Options

For Business. Hot on the heels of this

came the Business Finance Partnership, an

initiative focused on formalising alternative

sources of finance for SMEs.

Meanwhile, in the 2011 Autumn Statement,

Chancellor George Osborne announced the

arrival of a new tax break for investors, the

Seed Enterprise Investment Scheme (SEIS).

Essentially, SEIS enables HNWs investing up

to £100,000 per year in an individual start-

up to claim back income-tax relief equal to

50% of the amount invested.

In short, the Government and Bank of

England are acutely aware of the need to

remove businesses’ dependence on the

high street banks as a funding line or cash-

flow solution.

Adjacent, we look at two of the new

alternatives to traditional bank finance -

crowdfunding and invoice trading. One is

about raising money or securing credit, the

other is about circumventing cash

flow problems.

CrowdfundingCrowdfunding enables smaller businesses

and start-ups to raise money online through

interested investors or lenders, whether

private or institutional. It is ‘peer-to-peer’

borrowing or fundraising, rather than going

to the banks.

The money companies borrow is in the tens

or low hundreds of thousands of pounds

- rather than millions - and they could end

up borrowing it from just one investor or

lender or even hundreds of investors or

lenders at the same time - hence the idea of

funding from the ‘crowd’.

There are a number of online platforms

that offer this service, from Funding

Circle to Seedrs and Crowdcube. The

latter two are equity-based and targeted

at smaller businesses, whereas Funding

Circle is aimed at more established,

creditworthy businesses, and focused on

loans (and often requires asset security or

a personal guarantee).

Invoice tradingThis is focused on solving cash-flow

problems, which are growing all the time

as high street banks have reduced or

even cancelled many overdraft facilities.

It basically involves SMEs placing their

outstanding invoices in an online auction

and selling them individually or in bundles

to the best bidder (from institutional

investors and banks to asset-based lenders

and high net worths), thus giving them

quick access to outstanding funds. Sellers

then buy the invoice back from buyers,

generally after 30, 60 or 90 days.

The buyers get a fee for stumping up the

cash, which varies from auction to auction.

Invoice trading is different to traditional

invoice discounting and factoring, which is

usually offered under long-term, exclusive

agreements with a single bank or finance

provider. The two main invoice trading

companies are Platform Black

and MarketInvoice.

Who needs the banks anyway?

Let’s not beat around the bush. The Funding for Lending Scheme, launched by the Government and Bank of England over the summer, was an admission that Project Merlin had failed.

Crowdfunding case studyNorth London-based drinks start-up,

Kammerling’s, produces a ginseng spirit

that contains 45 natural botanicals,

offering an exciting new alternative

to the Gin, Bitters and Pimms product

range for more health-conscious

drinkers. In late 2011, Kammerling’s

successfully raised £180k from 85

investors for 23% equity in three

months (91 days) to ensure the next

stage of its expansion. Kammerling’s

needed the funding to increase

production and sales in the UK market

and to commence distribution to larger

high end stores such as Selfridges and

Harvey Nichols. Their aim is to launch in

select bars and target overseas markets

with the goal of making Kammerlings’

a global brand.

Invoice trading case studyNyman Resourcing recruits and supplies

IT experts to the banking and financial

services sector. Each month it pays a

salary to all its contractors, whether or

not its clients have paid their invoices.

So keeping on top of the business’s

cash-flow is of paramount importance.

In July 2012 the company successfully

auctioned its first invoices through

Platform Black. Nyman Resourcing’s

invoices scored highly on Platform

Black’s Experian-powered credit score,

as its clients are primarily large financial

institutions. It says the terms on which

it was advanced the money were much

more favourable than it would have

got from a bank and now plans to

use invoice trading regularly to stay in

control of its cash flow and ensure it

never misses a salary payment.

Nick O’Reilly, Business Recovery Partner

T 020 7380 4973

E noreilly@hwfisher.co.uk

www.hwfisher.co.uk Insight | 7

It is on facts - empirical foundations - like these that insurers, for

decades, have based the premiums they charge policyholders.

A 45-year old man, for example, is going to pay more for life

insurance than a 45-year old woman because statistical analysis shows

that he is more likely to pass away while the policy is still live.

It is on this basis that pension providers have also calculated the

annuities they offer - a 65-year old man, for example, will get a more

generous annuity than a 65-year old woman with an equivalent

profile as statistics show that he is unlikely to live as long.

But this is all soon to change. In March of last year, hard facts and

empirical evidence were deemed inadequate by the European Court

of Justice.

In its eyes, insurance companies should not be allowed to discriminate

by gender when calculating insurance premiums and annuities - and

as of 21 December, with the enforcement of the EU Gender Directive,

doing so is set to become unlawful.

Seismic shiftSo-called ‘gender-neutral pricing’ is set to be a seismic shift within

the insurance and pensions world and yet its imminent arrival is

completely off the radar of the vast majority of people.

For example, a survey over the summer by London & Country

Mortgages found that 80% of women are completely unaware of the

EU Gender Directive - despite the fact that it will ramp up their car and

life insurance premiums, and knock down their retirement incomes.

Whatever you think of all this - some will agree, others will consider it

the latest piece of peculiar legislation to emerge from Luxembourg - it

is happening and we all need to prepare accordingly.

Depending on your gender and the type of product you’re looking

for - whether an annuity, say, or life insurance - the cost could change

significantly if you buy before 21 December 2012, or delay until after

that date.

Clearly, cost should by no means be the sole driver of a financial

decision - any course of action must be set against a person’s broader

financial and personal situation.

For example, what if a man were to delay taking out an insurance

policy until after 21 December 2012 in order to save money, but then

died before that date?

It is worth noting, moreover, that the new rules will not apply to

existing policies or contracts, only new ones. The important factor in

all of this is to seek independent advice, and sooner rather than later.

One final thing: the new gender-neutral rules do not apply to annuities purchased with occupational pension schemes, but only to policies that are voluntary, private and separate to a person’s employment.

Understandably, this has led to allegations of a two-tier, and therefore

unfair, annuities market - the kind of thing, some argue, the EU

Gender Directive was meant to do away with.

If you believe you will be affected by the EU Gender Directive,

and would like to take steps accordingly, please contact Eos

Wealth Management:

Richard Brand, Financial Adviser

Eos Wealth Management

T 020 7874 1194

E rbrand@eoswealth.com

Get ready for gender-neutral pricing

Here is a fact: on average, women live longer than men. Here is another fact: young male drivers are far more likely to have a car accident than young female drivers.

This is set to be a seismic shift within the insurance and pensions world

Eos Wealth Management Limited is authorised and regulated by the Financial Services Authority. Any tax reliefs or legislation mentioned are those currently

available or in force and are subject to change.

Call to actionFor example, it may be cheaper for women to:

• Take out life insurance, critical illness cover and PMI before 21 December 2012

• Wait until after 21 December 2012 before they purchase an annuity

However, it may be cheaper for men to:

• Take out life insurance after 21 December 2012

• Purchase an annuity before 21 December 2012

www.hwfisher.co.uk8 | Insight

Fraud, you see, is everywhere and the global recession is only making

things worse.

Fraud affects all areas of the economy, from the private and public

sector to charities and individuals. Increasingly, because of our reliance

on digital technologies, it is also cyber-related.

As far as businesses are concerned, the prevention and early detection of internal fraud is always more preferable to intervention after the event - the longer fraud goes on, and the more deep-rooted it becomes, the larger the financial, legal and indeed reputational ramifications.

Below are some of the ‘red flag’ fraud indicators that business owners

should be aware of.

If you spot any of these potential indicators of fraudulent activity,

there may be a reason to pay closer attention to a specific employee,

co-worker or even fellow director/partner.

Behavioural indicators• Employees who consistently work longer hours

than their colleagues for no apparent reason

• Employees who are excessively secretive in relation to their work

• Employees under apparent stress without identifiable pressure

• Employees who delay providing information or who

provide different answers to different people

• Employees who ask to defer internal audits or

inspections to ‘properly’ prepare, or who ask for

significant detail about proposed inspections

Financial indicators• Rising costs with no explanation, or that are not

proportional with an increase in revenue

• Large volume of refunds to customers

• Unusual transactions or transfers (even small amounts)

• Employees who submit inconsistent and / or unreasonable

expense claims

• Employees with unexplained sources of wealth

Procedural indicators• Employees making procedural or computer-system enquiries

inconsistent with, or not related to, their normal duties

• Customers or suppliers insisting on dealing with

just one individual in your organisation

• Key managers with too much hands-on control

• Managers who avoid using the purchasing department

• Tendering to one supplier only or always to the same suppliers

The key for business owners is to use ‘red flags’ in conjunction with

other risk management strategies. It is also important to be on top of

any changes in your company’s activities that could open up new or

potential fraud risks.

One good way to reduce the risk of fraud is to involve staff in identifying

fraud risks and how to prevent fraud within your organisation.

It is also worthwhile having a fraud response plan in place that

outlines the policies and procedures that must be followed in the

event of a fraud being detected or even suspected.

Alan Lester, Compliance Partner

T 020 7380 4979

E alester@hwfisher.co.uk

Fraud indicators

A piece of major research into fraud carried out recently by the National Fraud Authority, found that fraud is currently estimated to cost £765 for every single adult.

www.hwfisher.co.uk Insight | 9

A charity’s reserves, if you are not overly

familiar with the finances of the third sector,

are the pool of funds that it presides over.

Some of these funds are ‘restricted’ or

‘designated’ and these must be used for

pre-defined purposes, as dictated by the

donors or as a result of internal decisions by

the board of trustees.

However, all charities have what are called

‘unrestricted’ funds, which are not allocated

to a specific area but can be used for any

purpose deemed appropriate by the charity.

Unrestricted funds constitute free reserves and the charity’s buffer for a rainy day.

Trustees are required to have a policy as to

what reserves they need to hold and why,

a statement which is published in their

annual accounts.

It is fair to say that many UK charities in

the past have been too cautious about

proactively using these unrestricted reserves,

and this can be exacerbated by a lack of

understanding as to what they need to hold

and what the figure they have represents.

In the current economic climate, many have

had to dip into their unrestricted reserves to

maintain their core services, but what they

have not done historically is think through

how these reserves, used proactively, could

help further the charity’s strategic plans.

Charities need to get the basics right.

Accurate budgets and up-to-date

management accounts are crucial if

a charity is to understand its financial

position and reserves needs. Many charities,

especially the smaller ones, are simply not

on top of their management accounts.

Also, many charities keep their unrestricted

reserves at a historical round figure

regardless of whether this may be too much

or too little. For example, a charity may

keep £500,000 in reserves but have no idea

what that figure represents - is it too much

or too little?

To get an accurate picture of their reserves position, charities need to look at their finances and reserves on a real time basis, not simply once a year when it comes to filing their annual accounts.

An assessment of the predictability of

income and expenditure, for example when

it will be received or need to be paid, will

assist with forecasting and projecting the

actual cash flow - and if and when it will

be necessary to use any reserves. It is this

kind of common sense-based monitoring

that can improve the confidence of a

charity’s trustees and ease them away from

stockpiling unjustified, fixed figure reserves

- a kind of ‘comfort blanket’ - that can hold

a charity back.

Charities should also have some form of

action plan for re-building reserves, which

may involve exploring new sources of

income such as trading activities. It is not, of

course, easy to find new ways to generate

income, but the process of the Board of

Trustees looking at diversifying income is an

important measure to undertake.

During difficult times charities should

ensure they focus on what they do best and

their core activities. This may mean dipping

into reserves to invest in improvement or

enhancement - this should certainly be

the first port of call before considering

diversifying into areas where the charity

is less familiar. However, charity trustees

should also not be afraid of making bold

decisions at the moment, and a sound

understanding of reserves needs will in turn

give trustees the confidence to do so.

How charities can make the most of their reserves

In our recent poll of 800 UK charities, we found that a significant 39% of them have not strategically adjusted their reserves policies since the economic downturn began. This came as quite a surprise.

Andy Rich, Charity Partner

T 020 7380 4988

E arich@hwfisher.co.uk

Fresh thinking and a strategic fight-back,

involving looking at ways unrestricted

reserves can be used to enhance their

position rather than protect it - through

marketing, say, commercial opportunities

or regular impact assessment, will therefore

pay far greater dividends.

www.hwfisher.co.uk10 | Insight

This means that pension tax relief will also

go down.

If you are thinking of making a pension

contribution, it will pay not to delay, as right

now this means an additional 5% of relief.

Carry forwardCarry forward allows an individual

to contribute more than the annual

allowance (currently £50,000) without

incurring a tax charge.

Through carry forward, contributions that

exceed the annual allowance in one tax year

can use up unused annual allowance from

the three previous tax years.

For most individuals, tax relief can be

carried forward from the three tax years

immediately before the tax year in which

they are paying their contribution. So, for

someone wanting to make a contribution

during 2012/13 and use carry forward it is

typically possible to use up tax relief from

2009/10, 2010/11 and 2011/12.

In order to carry forward tax relief from an

earlier tax year an individual must simply

have been a member of any registered

pension scheme in that tax year and have

earnings in the current year that equal the

amount of the contribution, in order to gain

the relief.

Pension Input Periods - make the most of the rulesThe amount of the annual allowance

used by pension savers is worked out by

looking at the contributions paid in the

pension input period which ends in a

particular tax year.

Calling all 50% taxpayers - pensions tax relief at 50% - use it or lose it!

The additional rate of tax is going down to 45% with effect from 6th April 2013.

Eos Wealth Management Limited is authorised and regulated by the Financial Services Authority. Any tax reliefs or legislation mentioned are those currently

available or in force and are subject to change. Prepared using 2012/13 tax rates. The Financial Services Authority (FSA) does not regulate tax advice.

Most providers link the end date of pension input periods to the end of the tax year because it

makes it simpler for individuals to work out how much annual allowance they have used in a

given tax year. However it is possible to end your pension input period on a different date, so in

effect, it finishes in a different tax year.

This could enable you to make a contribution of up to £250,000 and receive 50% tax relief now, rather than 45% tax relief when the rate goes down in April 2013.

For example, the following case study illustrates how this could be possible: Betty has her own

interior design business and has had a great year of trading. Her anticipated earnings during

2012/13 are around £500,000. Betty is allowed to contribute £50,000 to a pension per year, as

a high earner, but hasn’t contributed to pensions for around 6 years, as this has not been high

on her list of priorities. Betty’s input period runs from 6th April 2012 to 5th April 2013. Betty

can use carry forward and pension input period rules to make the following contributions:

* It is possible for Betty to receive tax relief of 50% on this contribution by changing her input period so

that it finishes in the 2013/14 tax year.

How this works is that she makes a contribution of £200,000 now and receives allowance for

her three previous tax years and the current tax year.

She then changes her input period to 15th December 2012 and makes a further contribution of

£50,000. As this input period ends on 15th December 2013, this falls into the 2013/14 tax year. This

will give her an additional £12,500 of tax relief which she wouldn’t receive if she waited until after

April 2013. Acting now can give you an additional 5% tax relief, so speak to your financial adviser to

reap the benefits.

Tax year Unused Allowance Cumulative Carry Forward

2009/10 £50,000 £50,000

2010/11 £50,000 £100,000

2011/12 £50,000 £150,000

2012/13 £50,000 £200,000

2013/14* £50,000 £250,000

Russell Brooks, Financial Adviser

Eos Wealth Management

T 020 7874 1190

E rbrooks@eoswealth.com

Insight | 11 www.hwfisher.co.uk

Sustainable is Profitable

With Governmental and public bodies urging businesses to become more transparent in reporting environmental performance, and energy prices soaring, there is an ever-growing incentive for businesses to accurately measure and report their emissions.

With this in mind, and after extensive analysis of the sustainability field, we

have built a team of experts that is able to offer true best practice and best

value solutions for clients.

We believe that adopting a pro-active sustainability strategy can enable

our clients to differentiate themselves, better enable the management of

risk and significantly reduce costs and carbon emissions. Our four-strand

approach to sustainability is outlined below.

Our approach to sustainability

• Energy and carbon auditing - provides an energy

and carbon footprint for the business and is a bespoke

product focused on your business needs

• Solutions audit - focuses on the opportunities for reducing energy

consumption and opportunities for generating energy more effectively

• Additional sustainability services - this could involve

drafting Corporate Social Responsibility (CSR) policies

or helping clients integrate sustainable procurement or

to set up an Environmental Management System

• Training - educating management, employees, customers and

suppliers in the adoption phase of a sustainability strategy.

www.hwfisher.co.uk12 | Insight

The business case for sustainability

Often in our discussions, clients say that they understand the need

for change and that they are interested in environmental and social

issues - but from a practical point of view they have not got a clue

where to start.

This is where a carbon audit is helpful, as it enables an organisation

to establish a baseline in terms of how much energy is being used,

what that energy costs and what the carbon emissions are that are

associated with that consumption.

This is often as far as many organisations go, but really, it should only

be the first step - simply measuring is not enough. The audit should be

used in such a way that it leads to increased efficiency in practice.

This is where a solutions audit comes in, where we follow the

energy hierarchy model of firstly identifying opportunities for

energy reduction (removing the need) and then looking at

opportunities for generating energy more efficiently through

improvements in on-site systems and - where appropriate -

renewable energy generation systems.

Coupled with this is the all-important realm of behavioural change.

The most powerful energy saving technology, after all, is the human

finger (turning it off).

Adjacent are two case studies of clients that have gone through this

process. They highlight the business case for energy reduction and

turning what is often viewed as an uncontrollable cost into something

that can be managed and improved upon.

Energy costs affect the bottom line of any business.

If savings of £50,000 are able to be delivered in a business with a

payback period of under four years, then that same business won’t

have to sell as many products or services to earn that profit.

Alternatively, a client of ours is interested in selling their business in

2-3 years. Every £50,000 of profitability in that business can be worth

on average 4.5-10 times that amount in the capital value of the

business. As such, that £50,000 of utility savings can translate into

£225,000-£500,000 of additional value in the business.

It is not a decision between being sustainable or being profitable.

Sustainable business is just about business common sense.

It can be hard for people to get their heads around the idea of sustainability within business, as huge issues like climate change, on the surface at least, have little to do with the day-to-day running of companies.

Jae Mather, Sustainability Director

T 020 7874 7985

E jmather@hwfisher.co.uk

Energy Saving and

Energy Production

Measures

Estimated

Saving /

Income p.a.

Estimated

Cost

Payback

(Years)

Return on

Investment

Driver Solution 1 £18,376 £700 for 35

Drivers

‹1 month 2625%

Driver Solution 2 £15,000 £700 for 35

Drivers

‹1 month 2143%

Vehicle Solution 1 £25,400 £11,275 for

35 Vehicles

5.3 months 225%

Vehicle Solution 2 £20,000 £3,250 for 10

Vehicles

2 months 615%

Totals £78,776 £15,925 ‹ 3 months 494%

Energy Saving and

Energy Production

Measures

Estimated

Saving /

Income

p.a.

Estimated

Cost

Payback

(Yrs)

Return on

Investment

Tonnes

of CO2

Savings

Switching Solution £537 £994 1.9 54.0% 2.8

Cooling Solution 1 £4,914 £9,992 2.0 49.2% 27.4

Boiler Solution £1,469 £5,700 3.9 25.8% 12.4

Cooling Solution 2 £838 £9,992 2.0 34.9% 4.5

Voltage Solution 1 £3,747 £17,422 4.6 21.5% 19.6

Heating Solution £424 £2,055 4.8 20.6% 2.2

Voltage Solution 2 £1,290 £7,708 6.0 16.7% 6.7

Lighting Solution £794 £7,106 8.9 11.2% 3.2

Totals £16,413 £58,879 3.59 27.9% 78.8 or

16% of

total

emissions

Transport Based Company

Energy reduction case studies

Medium Scale Office Based Company

Insight | 13 www.hwfisher.co.uk

As a fellow comedian, what’s your take on the Jimmy Carr K2 tax saga? Well, I’m sure a lot of people have been doing much the same thing,

but he is a high-profile comic, so it all made good copy. It also gave a

lot of other comedians plenty of material!

Talking of tax and money, is George Osborne right to stick with his ‘Plan A’, namely austerity?I’m no big fan of Mr Osborne, though I DID once go to a reception

at his house and the nibbles were top of the range! His plan certainly

seems to have lost the backing of a good many financial experts. It

clearly fits into a right-wing agenda and I’m personally not in favour

of curbing welfare spending or ‘shrinking the state’.

Where do you get inspiration from for your novels and stand-up acts? Ideas come from anywhere. If you let people know you’re a comedian

they always want to tell you jokes, but now people know I’m a crime

writer they’re keen to tell me all manner of beastly stories; from nasty

goings on among their neighbours to the best way to dispose of a

body. All material is gratefully received and tucked away.

What would you say is your biggest professional success? Definitely the books. I was thrilled that my last three novels went to

number one on the bestseller list. Obviously my kids see that and

immediately expect an increase in pocket money. When that happens,

I strictly enforce my own austerity package...

Who is your favourite author and stand-up comedian?Lots of favourites. Among the classic mystery authors, I love Dashiell

Hammett and Arthur Conan-Doyle and of the contemporary crowd I

would urge anyone who hasn’t already read such writers as George

Pelecanos or John Connolly to rush out and buy their books. I love the

sixties stand-up of Woody Allen and, of the current crop, I’m a huge

admirer of Louis CK. There’s great stand-up to be found almost every

night on the London circuit which is still the best in the world.

What do you expect from your accountants? Well, it sounds obvious but I expect sound advice based on an

understanding of how I make my money and what my attitude is to

spending it. I expect that the price I pay for this will be money well

spent, considering how much I get in return and how much better off

I will be in the long term.

What’s your biggest ever indulgence financially? I was going to say property, but I’m not sure that IS an indulgence.

It still seems like a pretty sound investment to me, however iffy the

housing market might be at the moment. So, probably my car, which

will only ever go down in value, but which makes me feel very happy

every time I get into it.

What’s the best piece of advice you’ve ever been given? If it’s going badly, get off. If it’s going well... get off!

In the spotlight... Mark Billingham

Our client, Mark Billingham, is a stand-up comedian and an award-winning crime novelist.

www.hwfisher.co.uk14 | Insight

For example, not so long ago Microsoft

was ruled to have abused its dominant

market position when it demanded a

royalty on each computer sold by a supplier

of its operating systems, irrespective of

whether or not the computer contained

Windows software.

Now this will seem frankly quite ludicrous but it underlines the brute commercialism of some licensors - and the need for licensees to stand their ground and understand their rights.

Likewise, a global semi-conductor company

tried to impose anti-competitive practices

on a UK software reseller, whereby the

latter could only sell in France at a price

higher than was the case in other territories.

The UK software reseller countered with

Article 102 of the Treaty of the Functioning

of the European Union (TFEU), which states

it is illegal for companies ‘to directly or

indirectly impose unfair purchase or selling

prices or any other trading conditions’.

Licensee libertiesBut it is not always licensors that are at

fault. I have dealt with countless cases

where licensees have gone outside the rules

of the agreement with the licensor.

For example, it is not uncommon for

licensees to sell licensed products outside

their designated territory, which can cause

licensors, who have relationships with

multiple licensees, a major headache.

One argument licensees often give when

breaking agreements in this way is that the

sales outside their designated territory were

‘unsolicited sales’, which, under current EU

law, are legal.

In reality, what can happen from time to

time is that the licensee actively seeks the

sales outside its territory - thus breaking the

agreement with the licensor - and, when

it is found out, argues that the company

it sold to outside its designated territory

approached it, rather than vice versa.

Sometimes, to muddy the waters, the

licensee may attempt to be especially clever

and sell to a company within its designated

territory who then passes on the product to

a buyer outside the territory.

In all cases like this, the onus is upon

the licensor to prove otherwise, which

can be extremely time-consuming

but, depending on the scope of the

agreement, extremely worthwhile.

Abuse backfiresLicensees have to be careful, though, as

abusing the terms of an agreement can

seriously backfire. For example, when they

enter into an agreement, licensees will

generally pay a minimum guarantee, or

advance royalty, to the licensor.

Now, whenever the licensee sells products

according to the rules of the agreement,

those sales can be offset on their statement

against the advance royalty. But if the sales

are to non-designated territories, then they

cannot be offset against that royalty.

We have seen so many cases where

unsolicited out-of-territory sales have

been set against the minimum guarantee

payment by the licensee and we have

successfully challenged this, meaning the

licensee has to pay over additional royalties

on these sales, even if the minimum

guarantee has not yet been recouped.

Example:Licensee pays a minimum guarantee of £25k

on sales of branded T-shirts.

Licensee subsequently sells £300k of those

branded T-shirts, declaring a 10% royalty of

£30k and pays over just the additional £5k.

Through the audit, the licensor discovers that

£100k of the T-shirt sales were unsolicited

sales outside of the authorized territory.

Conclusion: only £20k of royalties

(£200k@10%) can be offset against the

minimum guarantee, requiring an ‘overage’

payment of £10k, not £5k.

Having the SSNIP

Returning to licensors and anti-competitive

rules under EU law. All licensors must

beware that they do not impose anti-

competitive conditions on their licensees.

For example, if say, the licensor wants

to dump inventory into the market or

aggressively target a competitor’s products

(and send it out of business), it cannot force

a licensee to charge a minimal price.

Alternatively, it cannot abuse its market

dominant position and demand that a

licensee charges too much for its product,

or slowly force the licensee to raise its prices

(thus influencing market price).

In the latter case, if the licensor fails the

SSNIP (Small but Significant and Non-

transitory Increase in Price) test and also

controls more than 40% of the market,

then it could be fined a phenomenal 10%

of its global turnover.

Regular reviewsIn summary, and as stated at the very

beginning, licensing agreements can

throw up all kinds of challenges and it

is important that both parties regularly

review the agreement.

Whatever the law and whatever the rules within an agreement, it is important to bear in mind that these will always be looked at against a backdrop of commercial reality.

The moral of the tale is this: whether you

are a licensor or a licensee, don’t take

anything for granted and always seek

professional advice.

Stuart Burns, IP and Royalties Partner

T 020 7380 4964

E sburns@hwfisher.co.uk

The labyrinth of licence agreements

One area that is especially prone to smoke and mirrors is the law regarding anti-competitive practice.

www.hwfisher.co.uk Insight | 15

We don’t need to drill down into the numerous intricacies of the ABS

here today, but the main thing to understand is that, for the first time,

they enable legal firms to be owned by, or take external investment

from, non-legal firms.

Or put another way, the advent of ABSs is enabling existing suppliers

of consumer services to branch into legal services, giving them the

moniker ‘Tesco Law’ (although ironically, of the supermarkets only the

Co-op, and not Tesco, has registered an ABS thus far, Co-operative

Legal Services Limited).

Legal watchdog, the Solicitors’ Regulation Authority, confirmed the

first three applications from non-legal firms at the end of March and

at the time of writing in October around 30 non-legal companies have

successfully applied to enter the sector. August was a particularly busy

month, seeing 13 new ABSs approved. Things are heating up.

Many existing law firms have also applied, and been approved, for

ABS status, as it enables them to seek external investment. Examples

include Parabis and Irwin Mitchell. So there is plenty of activity not

just from outside the sector, but also from within.

Traditional law firms, as you would imagine, are facing a major

challenge here, especially those focused on more commoditised

legal sectors, such as: Wills and Probate, Conveyancing, Family Law,

Personal Injury and Employment Law (all the sectors the Co-op is

focusing on, in fact).

Insolvency trade body, R3, is very wary of the threat ABSs represent to

traditional high street law firms and believes up to 2000 small firms

are at risk of failure over the next year.

It expects many of them to be overwhelmed by the arrival of new,

financially stronger firms, which will be far more competitive on

price and also much slicker in terms of their brand, marketing and

IT systems.

Lee Manning, R3 President, commented that: “Law firms are

operating in a challenging environment and the marketplace seems to

be getting tougher and tougher.” He is not wrong.

So what developments are likely in the months ahead? Could a

household name within financial services snap up a big UK firm of

solicitors and launch into the sector aggressively?

Might we also see an increased level of merger activity, whether

an accountancy firm teaming up with a law firm to create a multi-

disciplinary practice or even a law firm jumping into bed with a big

estate agency firm to offer an end-to-end property solution?

Whatever happens, I don’t expect we will be waiting too much longer

for a Big Bang event.

HW Fisher & Company surveys law firms on ABSs

Alternative Business Structures (ABSs), came into being in the Legal Services Act 2007. If they sound lacklustre and uneventful, they are quite the opposite. In fact, it is fair to say that they have the potential to revolutionise the legal services sector in the months and years ahead.

Nauzer Siganporia, Professional Practices PartnerT 020 7380 4965E nsiganporia@hwfisher.co.uk

Paul Beber,Professional Practices PartnerT 020 7380 4961E pbeber@hwfisher.co.uk

Revolutionising the legal services sector

What is clear is that, in the current fast-changing environment,

capital raising initiatives, M&A opportunities and, most importantly

perhaps, exit strategies, must be at the very top of a law firm’s

priorities if it is to survive and thrive in the years ahead.

If you would like to receive a copy of our SME Legal Practices

Survey 2012, please email info@hwfisher.co.uk

To discuss capital raising initiatives, M&A

opportunities and the most appropriate exit

strategies for your firm, please contact:

With corporate giants like Co-op already in the legal services arena,

you would think SME law firms would be doing everything they can

to prepare for the potentially life-or-death battle ahead.

But as yet, according to our survey of SME law firms that we carried

out earlier this year, over half (52%) of SME law firms think the

Legal Services Act (LSA) will not even affect them over the next 12

months, while just 15% believe they will lose business. Are they

being overly optimistic? R3, see above, certainly thinks so.

Encouragingly, 22% of respondents to our survey believe the LSA

will help them gain more business over the next 12 months, due

to merger plans or other opportunities created by a broader legal

services market - while 26% are now seriously considering seeking external investment (up from 11% last year).

www.hwfisher.co.uk16 | Insight

The overseas money keeps pouring in because Britain is seen as a deeply stable place to invest.

According to UK Trade & Investment (UKTI), Foreign Direct Investment

(FDI) in the UK created or safeguarded 112,659 jobs from 1,406

projects in the financial year ending 31 March 2012, confirming its

role as a vital driver of the UK economy.

Indeed, UKTI confirms that the number of jobs attributed to FDI

increased by 19% last year on the previous year, while the number of

FDI projects remained stable, despite the recent economic difficulties

in Europe.

Also, companies from 58 countries invested in the UK in the latest

financial year, up from 54 the previous year. Despite the economic

downturn, things are on the up.

UKTI’s figures are confirmed by other organisations, not least the

Financial Times. In its fDi Intelligence Report 2012, the FT ranks the

UK as the primary FDI location in Europe.

So why is the UK such a popular place for international firms to invest

and set up base? Some of the major reasons given by UKTI and

HW Fisher & Company (one of its partners) are outlined below.

• Perfect Euro beachhead - The UK economy is one of the

largest and most sophisticated in the world and a proven

gateway to the US$17 trillion European Union market. And

being outside the Eurozone, the UK provides the perfect

beachhead: easy access to the EU market but at the same time

insulated to some degree from volatility in the single economy.

• Not lost in translation - As an English-speaking country,

the UK has an advantage over many of its continental rivals.

Investors in Britain can feel confident that everyone in the

country speaks the international business language, English.

• Unrivalled business environment - The UK is the best major

location for ‘ease of doing business’ in Europe according to an

independent assessment by the World Bank that considered

a range of key commercial operating factors (such as setting

up and running a business, labour regulations and obtaining

finance). UK employment laws and red tape are frequently

less onerous than those of our European neighbours.

• Competitive tax environment - In March, the Chancellor made

Britain an even cheaper place to do business, announcing a

larger than expected cut in the main rate of corporation tax from

24% to 22% by 2014 and a reduction in the top rate of income

tax. Innovative companies will also be able to benefit from an

additional reduction in corporation tax through the upcoming

‘Patent Box’ initiative and through recent enhancements to the

UK’s generous research and development (R&D) tax credit scheme.

• Future-proof skills base - The wealth of skills for international

companies to draw from will remain secure for the future -

over half a million full-time and part-time students graduate

each year from the UK’s 170 universities and higher education

institutes, the highest graduate output in Europe.

• Europe’s R&D head - Companies operating in the UK

benefit from being in the strongest R&D environment in

Europe, with direct access to a range of world-class research

institutes and eight of Europe’s top nine universities.

The results are clear - the UK has a long and prestigious

track record of developing and launching market-leading

innovations across all key business sectors, from life sciences

and advanced engineering to environmental technologies.

• Quality of life - As one of the most cosmopolitan countries

in the world, Britain provides a welcoming environment for

international business executives and their families. With

its mature property market, first-class health service and

world-renowned education system, international executives

relocating to the UK enjoy a superb quality of life.

• Long-term ROI - Many thousands of international companies

have already made the UK their preferred choice for their

business investments. Each year, hundreds of these companies

also make repeat investments in the UK by adding new

facilities and recruiting more employees - the strongest possible

commercial endorsement of the UK’s business environment.

With its unfamiliar laws and regulations, opening a business in a foreign country - even one as stable and internationally recognised as Britain - can be intimidating, but it needn’t be overwhelming.

It goes without saying that it should not be attempted without first

doing some detailed research and seeking expert advice, which, at

HW Fisher & Company, we are more than happy to provide.

Michael Davis, Managing Partner

T 020 7380 4963

E mdavis@hwfisher.co.uk

Why invest in Britain?

Nobody can deny that the British economy is bruised, battered and on the back foot. Despite this, Britain remains a key market for international companies, rising above the vagaries of the economic cycle.

www.hwfisher.co.uk Insight | 17

Here we take a top-level look at the main

taxes that enter the equation when buying

or selling residential property in this country

for both UK and non-UK residents.

They are: Income Tax, Capital Gains Tax,

Inheritance Tax and Stamp Duty Land Tax.

Given the complexity of these taxes, and

to ensure you pay no more tax than you

should, it is important to seek advice

sooner rather than later.

Clearly, the specific level of tax you

pay in each of these categories can vary

considerably according to your

specific circumstances.

UK Residents• Income Tax - if you rent out a property,

Income Tax of up to the highest tax

rate of 50% (this year) is due on the

net rent after all available deductions.

Income Tax at the appropriate rate

also applies to the profits on sale of

certain development property, e.g.

where that property was developed/

refurbished for immediate sale, and

also if you are a trader of properties.

• Capital Gains Tax (CGT) - only applies

to second homes (that is not your

main home) or investment properties.

When sold or gifted, these properties

will generally incur CGT of up to 28%

on the gain. There are some situations

where gains can be taxed at a lower

rate of 10%, e.g. the sale or gift of

a short-term holiday let. Non-UK

domiciled individuals can sometimes

avoid CGT altogether through the use

of offshore trusts.

• Inheritance Tax (IHT) - levied, on

death, at 40% of the net value of a

property (after the deduction of any

outstanding mortgage debt). There is

currently a Nil Rate Band on property

of £325,000, so if the net value does

not exceed that, no tax is payable.

Properties gifted between spouses or

civil partners are often exempt from

IHT. Non-UK domiciled individuals

can sometimes avoid IHT if they

own a property through a non-UK

company, although there may well be

changes in this respect from 2013.

Non-UK Residents• Income Tax - non-UK residents owning

a UK rental property will have to pay

Income Tax on the net rent of up to the

top Income Tax rates. However, only

basic rate tax is payable if the property

is owned through an offshore company.

Income Tax - rather than CGT - still

applies at the appropriate rate to the

profits if the UK Revenue consider you

are a trader. (However, if the property is

owned by an offshore company and the

owner is non-UK resident, only the basic

rate of tax is payable on such trading

profits.) If you are developing property,

then this will bring the offshore

company into the UK Corporation

Tax regime, with a maximum 24%

liability on any UK profits.

• Capital Gains Tax (CGT) - currently,

no CGT is payable on the gain from

the sale or gift of a UK residential

property personally held by non-UK

residents. But beware: from next

year, owning residential properties

valued at £2m or above through a

non-UK company could incur CGT

and also a potential annual payment

(‘Annual Charge’) of up to £140,000.

• Inheritance Tax (IHT) - as with UK

residents, IHT is levied, on death,

at 40% on the net value of the UK

property (reduced by outstanding

loans). Again the Nil Rate Band,

currently £325,000, is available so if

the person’s net value does not exceed

that, no tax is payable. Properties gifted

between same domiciled spouses or

civil partners are often exempt from

IHT. Non-UK domiciled individuals

can sometimes avoid IHT on their UK

assets if they own them through a

non-UK company, however given the

proposed changes from April 2013

affecting properties valued at greater

than £2m (mentioned earlier), this

will require careful consideration and

advice should always be sought.

Stamp Duty Land Tax (SDLT)SDLT is payable upon purchase of any UK

residential property (wherever the owner is

situated) at the following rates:

Nb: Properties valued above £2m owned

through a ‘non-natural’ entity, such as a

company (whether that company is UK

based or offshore), will be liable for SDLT

at 15%.

If you would like advice on any tax issues

relating to the purchase or sale of UK

residential property, please contact:

For most people, buying or selling UK property can be a daunting event - all the more so if they are not based in the UK or are not UK resident for tax purposes.

Alan Lester, Property Partner

T 020 7380 4979

E alester@hwfisher.co.uk

The taxing matter of UK residential property

Purchase Price

<£125,000 0%

£125,001-£250,000 1%

£250,001-£500,000 3%

£500,001-£1,000,000 4%

£1,000,001-£2,000,000 5%

£2,000,001+ 7%

www.hwfisher.co.uk18 | Insight

This is not necessarily wise. The moment new businesses, however

small, have staff, premises, hardware, software and engage with

external companies or clients, they are exposed to numerous risks -

many of which could cause them serious financial harm.

Including insurance as a cost in the business plan prevents any surprises further down the line. After all, the balance of cover and price is crucial when you are setting up.

Most people think of some of the obvious insurances such as the

premises and contents cover. However, there are many types of

insurance that start-up companies should consider - they vary from

business to business, of course, and some cover is compulsory, so it is

vital to seek appropriate professional advice. Here are a few examples:

Professional Indemnity InsuranceProfessional Indemnity (PI) insurance is generally taken out by

companies providing advice or professional skills. It protects their

businesses against claims for loss or damage made by a client or third

party if they are deemed to have been negligent, or to have made

mistakes during the course of their day-to-day activities. Usefully, PI

insurance also covers the potentially sizeable legal costs that can arise

during a dispute. Many professions e.g. solicitors, mortgage brokers,

financial advisers, PR agencies and accountants have to have this

cover by law. Many though, who are not required to take out this

cover compulsorily, would be wise to consider it in order to protect

their business from financially damaging litigation.

Directors and Officers’ LiabilityThe directors and officers within any business have numerous duties

and responsibilities relating to their position. They will generally be

held responsible for a number of areas, including; health and safety;

fraud; negligence; data protection; and maintaining satisfactory

accounts. Directors’ and Officers’ (D&O) liability insurance protects

the directors and officers of a company from any claims against them

in these areas. If a director or officer is found to have accidentally

acted outside their terms of reference and this results in a claim,

compensation and legal fees will be covered by the D&O policy. If,

however, the act was deliberate, then it may not be covered.

Being properly insured from the outset can minimise business risk and for a relatively small outlay, companies can protect themselves against these risks and then concentrate on growing their business with renewed peace of mind.

Employers’ Liability Insurance

If you employ staff, you are required by law to have a minimum of £5 million cover for Employers Liability.

Employers’ Liability insurance helps businesses cover the costs of

damages and legal fees when employees are injured, or become ill

at work, due to the negligence of the employer (note that ‘illness’

can include stress, depression or being overworked). It is a legal

requirement for employers to have this insurance and to be covered

for a minimum of £5m, but most insurers tend to provide cover

of £10m anyway. In some cases, employees injured due to an

employer’s negligence can seek compensation even if the business

goes into liquidation.

Public Liability InsuranceCompanies need public liability insurance if members of the public,

clients or customers visit their premises. This type of insurance also

covers any damages awarded to a 3rd party as a result of an injury,

or damage caused to their property, by a company member. As a rule

of thumb, this will cover all expenses, legal fees, costs and hospital

treatment. Premiums can vary quite considerably depending on the

type of business, e.g. hotels and restaurants, with their large footfall,

will generally be required to pay more for their insurance.

When businesses launch, for the first year or two they are primarily focused on growing market share, building their client or customer base, driving up sales, developing products and establishing themselves financially. What most start-ups do not pay a thought to is insurance. In fact, it is fair to say that insurance is often the last thing on their minds.

James Agnew

Stackhouse Fisher

T 01483 407454

E jamesagnew@stackhouse.co.uk

Insurance for start-ups

We also provide the following corporate insurance services to established businesses:

• Professional Indemnity

• Office packages

• Directors’ and Officers’ Liability

• Commercial combined cover

• Fleet insurance

www.hwfisher.co.uk Insight | 19

Here, we look at some of the areas of

business tax that have proved particularly

eventful or interesting in recent months.

What’s been happening, what is set to

happen in the near future and, above all,

how could it affect you and your business?

Real Time InformationReal Time Information (RTI), if you have

not come across it before, is set to

fundamentally change the way employers

provide HMRC with information relating to

PAYE payments.

Starting for most businesses in April 2013

and for all businesses in October of next

year, RTI will require companies to inform

HMRC about PAYE, NIC and Student

Loan payments at the exact time that they

are made, if not earlier - in ‘real time’ -

rather than monthly, quarterly or annually

in arrears.

The idea is to bring the PAYE system into

the 21st Century, and there is no doubt

that it represents one of the biggest

changes in this area since PAYE was first

introduced in 1944.

RTI, unsurprisingly perhaps, has attracted a

lot of criticism. Due to practical difficulties,

HMRC have relaxed the rules so that some

payments can be reported shortly after they

are made.

Even with these relaxations, you have to

question the practicalities of the new

RTI regime and the burden they place

on employers.

A number of professional bodies are

currently lobbying HMRC, urging it to give

employers time to adapt to the RTI regime

- and to adopt a ‘light touch’ approach to

penalties in the initial years. In fact, the

changes are deemed to be that radical, they

are seeking to get HMRC to agree to no

penalties at all in Year 1.

Non-compliance may be a real issue,

particularly for those within the

Construction Industry Scheme (CIS).

Even those small employers currently

allowed to use ‘simplified’ payrolls and who

are exempted from the mandatory online

returns, will be pulled into the new system

in due course.

Unless you have confidence in HMRC’s

charitable nature to waive the penalties,

what is important is that companies start

making preparations now for RTI. How

will it affect payroll and broader business

processes? What happens if businesses do

not comply?

If you have any questions about this then

by all means speak to your usual point

of contact in the firm. It is an area that is

evolving fast but we are more than happy

to keep clients up-to-speed with the

latest developments.

Avoidance or evasion?An article ran recently in economia

magazine, the official publication of the

ICAEW (Institute of Chartered Accountants

in England and Wales), looking at the

difference between tax avoidance and tax

evasion within business.

It sought the views of experts in the industry

and asked them the following question: Is

tax planning a means for companies to get

out of paying what they owe, or simply the

most efficient interpretation of the rules?

Our corporate tax partner, Brian Lindsey,

was one of the experts on the panel and

here is what he had to say:

“Just because companies pay taxes at a different rate doesn’t mean they are arranging their taxes in a particular manner to reduce their tax liability. We wouldn’t countenance any form of evasion but clients would like us to ensure they are paying the correct amount of tax, based on what the legislation says, so we will always advise on what allowances are available.”

In the article, Brian admitted that in the

current climate there is a far greater

emphasis on what is perceived as fair, and

clients increasingly have to factor this into

any decisions they make (see our cover

feature, ‘The morality of tax’, on page 2).

Brian also noted that the introduction of

the GAAR (General Anti-Abuse Rule) should

provide a greater degree of certainty in the

long run, although in the short term there is

still the potential for greater confusion:

“All parties would prefer a simpler system but every time there is a new Budget the legislation gets more complex. A system with fewer rates of tax where everyone knows where they’re heading with their tax position would be helpful.”

It would be helpful, certainly, but previous

‘simplification’ measures have not lived up

to their billing.

Some will argue to the contrary but as we see it there is never a dull moment in tax. The rules are constantly changing, it is always in the news and, one way or another, it affects each and every one of us.

Business tax update - what the changes mean for you and your business

www.hwfisher.co.uk20 | Insight

Patent BoxAfter almost three years of consultations,

the ‘Patent Box’ rules have now been

passed as law. The Patent Box, which we

have covered in previous issues of Insight, provides a 10% tax rate for profits from

patents within the regime - although this

preferential rate is being phased in over

four years.

It is important to understand that the 10%

rate will only apply to patent profits within

the regime, but this applies from April 2013

- next year - with the benefits being tapered

in until fully operational after April 2017.

So it is important to start planning as soon

as possible.

This is especially the case as not all patent

profits will qualify. There will be a deemed

profit from activities other than from

patents; for example, a notional profit is

attributed to the ‘brand’ which will be

outside the “box”. Transfer Pricing issues

will also require consideration.

It is not just UK patents that can be put into

the box. Patents granted by the EU Patent

Office and a number of other EU countries

can also be included. In order to qualify, the

company (or a member of its group) must

either own or have an exclusive licence to

the product and whatever the ownership

rights, must have developed the IP or a

product that uses them.

The rules surrounding the Patent Box are

extremely complex and the calculations of

applicable profits really quite convoluted,

but the possible application of a 10% tax

rate to profits may well make use of Patent

Box very attractive to many UK and overseas

owned companies within the charge to UK

Corporation Tax.

As ever, we are happy to advise any

companies on whether the Patent Box could

benefit them.

SEIS and Shelf CompaniesThe Chartered Institute of Taxation (CIOT)

has publicly criticised the Government’s

decision to exclude ‘shelf companies’ from

the new Seed Enterprise Investment Scheme

(SEIS - see page 5 for a closer look at SEIS

schemes and how they work).

The CIOT has basically said that it

is concerned that people setting up

companies, or investing in them, may

not be aware that by purchasing a shelf

company from a corporate provider -

common practice among those establishing

new companies - entrepreneurs may

unwittingly exclude themselves from access

to the SEIS.

John Barnett, Chairman of the CIOT’s

Capital Gains Tax and Investment Income

Sub-Committee, said that “denying SEIS

relief for shelf companies seems bizarre and

illogical. EIS companies are not subject to

the same requirement, so why deny relief

to SEIS companies? SEIS companies will, by

definition, be smaller start-ups, which are

likely to use a shelf company in this way.”

Barnett continued as follows: “Of course,

those that are able to take advice will avoid

this pothole by setting up the company

from scratch rather than buying a shelf

company, but I fear that many may be

caught unawares. This is, unfortunately,

one of many nit-picking points that bedevil

venture capital reliefs. The Government

has introduced these reliefs to help

entrepreneurial companies, but HMRC then

seems to hedge the relief about with so

many conditions.”

We couldn’t have put it better ourselves.

More on this issue as it develops.

CHANGEAHEAD

Tim Walford-Fitzgerald,

Senior Tax Manager

T 020 7380 4927

E twfitzgerald@hwfisher.co.uk

www.hwfisher.co.uk Insight | 21

Providing efficiencies for our clients FisherE@se is an online accounting service that essentially becomes your company’s back-office.

HW Fisher news

Personal considerations• How to maximise pension allowances

• Pension tax relief and retirement planning

• Investment ideas

Partnership considerations• Partnership protection

• Succession planning

• ABS impact for lawyers - and similar

considerations for other professions

Date: Thursday 29 November 2012Time: 8.00amRSVP: Juan Muguerman (jmuguerman@hwfisher.co.uk)

Navin Thaker, Partner

T 020 7874 7958

E nthaker@hwfisher.co.uk

Upcoming seminarsSmart planning for legal professionals

This breakfast session is aimed at lawyers, solicitors and professional

partners generally that want to move their personal finance up the

agenda as well as discuss ideas for the partnership as a whole.

Key benefits: • Smaller businesses can access a team of dedicated back-office specialists that

would otherwise be unaffordable

• No need for investment in expensive software and training

• Larger organisations can make savings by allowing us to provide the back-office

support that is normally an expensive overhead

• Review records or check progress online at any time

• All clients have their own user name and password, so information is kept secure

and confidential.

Our services include: • Regular bookkeeping assignments

• Monthly management accounts

• VAT return preparation

• Payroll services

• Accounts receivable

• Accounts payable

• Bank account reconciliations

• Ad hoc assistance with SAGE 50

and Quickbooks

• Routine large volume transaction processing

The seminar will cover:• How to create a seamless supporter

journey across your website

• How to be a social charity, encouraging

participation and cultivating communities

• How to measure and monitor success

• VAT and tax updates

Speakers:Tom Latchford, CEO of Raising IT - keynote speaker

HW Fisher & Company experts - tax and VAT advice

Date: Thursday 29 November 2012Time: 3.30pmRSVP: Juan Muguerman (jmuguerman@hwfisher.co.uk)

Reduce costs and increase income using digital media

This seminar focuses on one of the most important issues facing all

charities today - how to reduce your costs and increase your funding.

www.hwfisher.co.uk22 | Insight

HW Fisher news

Award recognitionWe are delighted to have been announced as a finalist at The British Accountancy Awards

2012 in the ‘Mid-tier firm of the year’ category. It is the second year in a row that HW Fisher

have been shortlisted for an award at this prestigious event. The shortlist selection was based

on criteria such as; profitability/growth; professionalism; measurable success; innovation;

people; and corporate social responsibility. We look forward to the ceremony on Wednesday 21

November 2012.

Specialist pensions audit and advisory servicesHW Fisher & Company has a specialist Pensions Group acting for approximately 80 pension schemes located throughout

the country and ranging from SSAS’s to multi-employer and defined benefit schemes with assets up to £350m. We offer

a specialist audit and advisor service to pension schemes and we are ideally placed to be able to assist and advise you

in respect of negotiations with your Actuary and the Pension Regulator with respect to key issues such as compromise

arrangements, the employers’ covenant, actuarial valuations and deficit reduction plans. Our pension specialists also

offer a full range of advisory services to directors including pension planning, auto-enrolment and flexible benefits.

HW Fisher interviewed for ‘Responsible Business’

Our specialists have been interviewed by Collaborative Media to create a programme that looks at good

financial planning and discusses the important part it plays in the success of every major company.

Nick O’Reilly (Business Recovery Partner), David Breger (Audit Partner) and Jae Mather (Sustainability Director)

provide their views on the current economic climate and how to plan ahead for growth and future success.

The programme will appear on SKY 212 and BBC/ITV Freesat 401 in December. We will keep Insight readers

informed of the exact broadcast date nearer the time.

David Breger, Pensions Partner

T 020 7380 4943

E dbreger@hwfisher.co.uk

Hilary Mantel wins 2012 Man Booker Prize

HW Fisher & Company would like to congratulate our client Hilary Mantel for her outstanding achievement.

With over 100 novels submitted for the “Man Booker Prize” there was only one winner: Hilary Mantel’s Bring up the Bodies.

Hilary previously won the Man Booker Prize for her novel Wolf Hall (in 2009) making her the first woman to

receive the award twice.

The prize, which has been running since 1969, aims to promote the finest in fiction by rewarding the best

novel of the year written by a citizen of the United Kingdom, the Commonwealth or the Republic of Ireland.

www.hwfisher.co.uk Insight | 23

HW Fisher & CompanyBusiness advisers - A medium-sized firm of chartered accountants based in London and Watford.

Related companies and specialist divisions:

Fisher Corporate PlcCorporate finance and business strategy

FisherE@se LimitedOnline accounting and back-office services

Fisher ForensicLitigation support, forensic accounting, licensing and royalty auditing

Kingfisher CollectionsRoyalty administration and collections services for IP owners

Fisher PartnersBusiness recovery, reconstruction and insolvency services

Fisher Property Services LimitedProperty investment, management and finance

Jade Securities LimitedBusiness divestments, mergers, management buy-outs and acquisitions

Stackhouse Fisher LimitedSpecialist insurance services

Eos Wealth Management LtdIntelligent wealth management and financial services

VAT Assist LimitedUK VAT representative

London officeAcre House11-15 William RoadLondon NW1 3ERUnited Kingdom

T +44 (0)20 7388 7000F +44 (0)20 7380 4900E advice@hwfisher.co.uk

Watford officeAcre House3-5 Hyde RoadWatford WD17 4WPUnited Kingdom

T +44 (0)1923 698 340F +44 (0)1923 698 341

HW Fisher & Company and HW Fisher & Company Limited are registered to carry out audit work in the UK and in Ireland. A list of the names of the partners of HW Fisher & Company is open to inspection at our offices.

Fisher Forensic, Fisher Okkersen, Fisher Partners and Kingfisher Collections are trading names of specialist divisions of HW Fisher & Company, Chartered Accountants.

HW Fisher & Company Limited, Fisher Corporate Plc, Fishere@se Limited, Fisher Property Services Limited, Jade Securities Limited, Fisher Forensic Limited, VAT Assist Limited, Eos Wealth Management Limited and Stackhouse Fisher Limited, are related companies of HW Fisher & Company, Chartered Accountants.

HW Fisher & Company, HW Fisher & Company Limited and Jade Securities Limited are not authorised under the Financial Services and Markets Act 2000 but are regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. They can provide these investment services only if they are an incidental part of the professional services they have been engaged to provide.

Fisher Corporate Plc is authorised and regulated by the Financial Services Authority under reference 193921.

Eos Wealth Management Ltd is authorised and regulated by the Financial Services Authority under reference 543025.

Stackhouse Fisher Limited is an Appointed Representative of Stackhouse Poland Limited who are authorised and regulated by the Financial Services Authority under reference 309340.

Insight is produced with the intention of providing general information. Examples used are for guidance only and not a substitute for personalised professional advice. Views expressed are those of the authors and do not necessarily represent the views of HW Fisher & Company. All liability is excluded for loss or damages that may arise as a result of any person acting or refraining to act in reliance upon any material and information appearing in this newsletter.

www.hwfisher.co.uk

If you would like to subscribe / unsubscribe to our publications, please email info@hwfisher.co.uk

This briefing is printed on Essential Velvet recycled paper.

© HW Fisher & Company 2012.Print date: Nov 2012. All rights reserved.

HW Fisher & Company is a member of the Leading Edge Alliance, an alliance of major independently owned accounting and consulting firms that share an entrepreneurial spirit and a drive to be the premier providers of professional services in their chosen markets.