Uncertainty has been the buzzword of the year for British business. While the return of the Autumn Budget may have an air of novelty, many of the economic challenges facing the UK are all too
familiar. Although the post-Brexit future is still unclear, bold leadership and forward-thinking policy can still make a big impact in the here and now.
The Association of Chartered Certified Accountants (ACCA) has identified some key areas Philip Hammond should prioritise to tackle structural problems around productivity and growth while providing assurance to business.
Simplifying the tax system
ACCA supports the delay of the mandatory introduction of Making Tax Digital (MTD) to at least 2020, but the government should be mindful of the system and process change needed for its implementation.
A realistic expectation needs to be set about what can be achieved in the short term.
Overall, the tax system needs to be simple and transparent, with minimal burden to business, reducing unintended costs and resource impact in the wider economy. Complex system of reliefs and the accompanying eligibility criteria may lead companies to adopt inappropriate practices to benefit from such tax structures.
A recurring complaint heard from business on both sides of the Brexit debate has been the stifling impact of regulation – either now or in the future. We should therefore be particularly cautious about needlessly adding to this burden.
A simplified tax system would be a major boon to UK competitiveness and the Exchequer will reap the benefits irrespective of a final Brexit deal.
Brexit and tax
ACCA has been fully engaged in the consultation of the customs white paper, which only deals with goods.
It does not contain any policy proposals for the main contingent of our economy – the service sector, which contributes to almost 80 per cent of the UK economy.
The biggest part of the service sector will have neither the time nor resources to implement systems which deal with any trading changes: this includes VAT, stamp duties, and potential direct tax changes.
This Budget should serve as a springboard for a new transparent and open approach to business regarding the Brexit negotiations.
Certainty may be difficult to provide for the government at this stage – a degree of clarity should not.
Exporting is key to productivity
Companies that export are 30 per cent more productive than companies that do not. This is an opportunity for UK plc to take advantage of Brexit, and develop new international trade links around the world.
The government should encourage more exporting, and support those that do. Simple policy initiatives aimed at providing export relief and providing accurate market intelligence will be useful.
The Budget must be able to support measures to boost regional trade as part of the government’s proposed Industrial Strategy.
There needs to be a particular focus on improving skills, connectivity and growth strategies for businesses across the UK, so as many enterprises as possible can take advantage of new markets.
The global economic, social and political impacts of climate change can no longer be ignored. Taxation is one key to driving the necessary behavioural change in companies and individuals.
Modest measures, such as London’s new “T-Charge” on older polluting vehicles, can encourage better behaviour and innovation, while raising revenue to support policy initiatives elsewhere.
Importantly, government and business can work together in this area: it is not a zero-sum game.
The growing popularity of integrated reporting highlights the role professional accountants play in driving better corporate behaviour that positively impacts society and the environment.
ACCA is committed to supporting sustainable economies and will work with the government to improve corporate performance in this space, alongside continuing to make current and next generation professional accountants aware of their responsibilities.
Supporting SME growth
Small and medium businesses require long term investment to develop and grow. ACCA supports a new National Investment Fund, which would replace the current European Investment Fund to avoid a potential cliff-edge in funding.
Investment is fundamental for early growth in innovative startups in regions outside of the South-East of England.
Ultimately, what is needed most of all from government is clarity of vision. Professional accountants acutely understand the need for clear information to assist with planning and future-proofing organisations.
ACCA members across the UK, embedded in every business and industry in the country, have been clear regarding the benefits which can come from simplifying business transactions, support economic growth, and build stronger connections.
More than ever, this Budget offers the opportunity for achievable policy which can unlock much of the potential in the UK economy at large.
Delivering these proposals would be offer a warming dose of confidence to take through an increasingly chilly Autumn.