MiP News August 2012

MEMBERS IN PRACTICE

NEWS August 2012

Chairman’s note Dear practitioner friends, It was good to see so many of you at Heythrop Park for the MiP conference in June. We have been poring over your feedback forms with interest. It is of course nice to get praise and we got lots of that, but the main purpose of the feedback is to get constructive criticism so that we can better meet your expectations next year. Some of the issues raised however are difficult to respond to, such as: • Location of the venue. Everyone liked Heythrop Park as a venue but its location does not suit everyone, particularly MiPs in the North, Scotland and Ireland. Our answer to that is to hold more regional CPD events.

• Sales pitches. Naturally we don’t always like being overtly ‘sold to’ at an event we pay to join. However the MiP Panel is commited to running the conference on a break even basis and it is quite a challenge to square this with affordability. Most of our speakers kindly give us their time for free so in return we give them some latitude in promoting their ‘thing’ which some of you also find useful and relevant. In total the conference costs £50,000 to put on. We ask you to pay £30,000 of this and the balance of £20,000 comes from sponsors.

We are currently working on ways to run more events round the country, namely regional CPD and networking events for practitioners and self-employment information events for ordinary employed members. We are setting up two groups to add to the existing conference planning group: one to organise area events and another to develop CPD content: • Conference planning group • CPD development group • Area events group If you would like to contribute in any way, please contact me at ray@baxterworld.com and I will discuss what would be involved.

Ray Baxter Chairman, MiP Panel

Current affairs

Conference 2012 – business breakthrough Delegates left ‘tired but inspired’ after the two day MiP conference at Heythrop Park, Oxfordshire, from Friday 21 – Saturday 22 June 2012. The conference is organised by the CIMA’s MiP Panel to provide excellent CPD, networking and motivation for over 180 practising and consulting members of CIMA. Day one started with high energy as Marcus de Maria took to the stage as first keynote speaker, touching on business development and wealth creation.

This was quickly followed by an address from Ray Baxter, chairman of the MiP Panel, who explained the structural changes of the Panel and how it is going to help represent CIMA MiPs nationally and internationally. If anyone would like more information about how to get involved in supporting MiP representation, please contact Ray at ray@baxterworld.com Ray also presented a remembrance of Paul Koumi, a respected and loved MiP who had been Master of Ceremonies at the 2011 conference. A charity day is being held in honour of Paul; for more details please contact Hayley Dove at hayley.dove@cimaglobal.com The day’s three breakout sessions presented delegates with the choice of how to make the most of their conference, by choosing what is most relevant to them.

The options included an overview of cloud computing, the KPIs all SMEs should have, selling business performance improvement and accounting standards updates.

Joanne Allday presented her seven top marketing tips to get your business booming – and threw in an extra eighth tip for good value. Joanne’s main presentation ensured that her follow up workshop was packed full of delegates wanting more tricks, tips and not least inspiration, to get their businesses going in the direction they want.

The first day was rounded off in style by the inspirational keynote speaker Sahar Hashemi, founder of Coffee Republic and Skinny Candy. Sahar talked about her personal experiences setting up Coffee Republic, the multi-million pound company and the UK’s first coffee bar, including rejections from banks

to fund the business in the first place, to researching how to do it, and finally the decision to sell and work on different entrepreneurial activity.

The Friday evening gala dinner, casino and disco gave delegates the chance to let their hair down after a productive and inspirational day. Andrew Harding, CIMA’s Managing Director, gave the after dinner speech, followed by a raffle for a free place at the 2013 conference which, along with suggested donations for CIMA badge pins, raised over £1,500 for the CIMA Benevolent Fund.

Day two began with Andrew Harding giving an overview of CIMA as relevant to SMEs, including some of his own personal research on SMPs when studying for his masters. The three breakout sessions focused on topics including tax updates, insolvency updates, selling techniques and workshops on running your own businesses.

The afternoon gave the conference organisers a bit of a worry as their next presenter, Nigel Botterill, was stuck in Chicago due to bad weather. Thankfully, Nigel’s colleague Paul Chapman stepped into the breach providing a high energy and motivational presentation on the 18 things super-successful business owners know and do. Attendees left the lively and humorous presentation with plenty of ideas to take to their businesses and implement today.

The conference was rounded off by a very special guest, Sir Alec Reed FCMA, CGMA, founder of Reed Specialist Recruitment and the Reed Foundation. Sir Alec gave his time voluntarily to talk to fellow CIMA members and entrepreneurs about his life, from building his company from a set up in the back of a carpet shop to the multi-million pound recruitment empire. Delegates attending this presentation were also given a copy of Sir Alec’s book, I Love Mondays.

The annual meeting of the MiP Panel followed shortly after and gave delegates another chance to make their views and suggestions known to the Panel, whilst finding out about Panel activities, achievements and projects.

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Current affairs

Many thanks to our sponsors: Sage, ATT, KPI Insight, Banklink, ProfitCents, Moneypenny and Zenith Tax Solutions. Without their support and breakout workshops, the conference would not be such a success, and we’re sure they provided our delegates with ways to improve their businesses through their products and services.

The 2013 MiP conference is already accepting bookings. For more information and to book your place, please visit www.cimaglobal.com/mipevents.

The 2013 MiP conference is already accepting bookings. For more information and to book your place, please visit www.cimaglobal.com/mipevents

Testimonials It was the best conference I have been to and I am full of ideas for my business.

The best thing is how willing people are to share their best tips and ideas and genuinely to help you improve your business.

A brilliant weekend as always.

Thanks so much!

MiP conference delegate survey Thanks to the 101 delegates who returned their survey forms after the MiP conference on 22-23 June 2012.

The survey gathers data anonymously on delegates, their practices and clients. The main points from this year’s data compared to that from 2011: 77% described themselves as primarily in accountancy as opposed to consultancy. This is down from 85% in 2011. There was a slight fall in the proportion who offer a ‘full’ service of management accounts, statutory and tax, and a rise in those doing statutory and tax.

81% report that they are the sole qualified in their practice. This is up from 72% last year. About 60% continue to operate without support staff.

In terms of income per qualified this has gone up from a median of £67,000 to £71,000, but the result could be due to the increase in consultants.

For those offering accountancy services, the median has only risen from £65,600 to £66,300. The vast majority of respondents are working with ownermanaged businesses, so the offering is to provide the sort of techniques and advice that would be provided to PLCs by their in-house CIMA accountants but to organisations who are not sufficiently large to employ a full time team in this role. As with other CIMA members in the SME sector this will often include accounts preparation and associated matters for businesses below the audit threshold. Typically a person in this type of work will be working with 15 to 20 client organisations There has been an increase from 58% to 63% of those who say that they are not achieving the number of chargeable hours they would like, but five say they are overcommitted compared to two in 2011.

The major perceived competition to those offering accountancy services are the ‘high street audit firms’, up from 47% to 55%.

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Current affairs

Engage your inner entrepreneur It’s funny that one of the side effects of a recession is often that more new businesses are created than in good economic times.

This is as true of CIMA members going into practice as it is of businesses in general.

3. The business is properly funded. In the days when banks are very reluctant to lend money it is foolish to start a new business unless the money is available to do it! Using own funds first is the cheapest and safest way of starting a business. If bank funding is needed it is important to make sure it is secure before spending starts!

There are several reasons for this: Firstly, people who are made redundant may use their redundancy money, and newly found free time, to launch a business idea they had been thinking of for a while. Whilst they were in employment they did not want to take the risk of leaving their safe job to go into the more risky world of self employment. But once the safety net was gone they were prepared to give their new idea a go. Secondly, as they say ‘necessity is the mother of invention’. People can become more creative. In a world of constant change and instability entrepreneurs can take advantage of others’ indecision to take advantage of opportunities.

Also, people who have been out of the job market for a while and need more flexibility than traditional employment can offer, look to start their own business to enable them to have the flexibility they need.

Examples of this are parents returning to work after looking after their young children, or other carers.

When the economy is buoyant and jobs plentiful it is easier to find flexible employment opportunities – these opportunities often fall by the wayside when times are hard.

However, just because there are more businesses starting out does not mean that they will be successful.

4. The business owner is passionate about their business. There are much easier ways to earn a living than running a business and it is passion and drive which will ensure momentum is maintained in the early days. If a business owner is not passionate about their business proposition it is very difficult to keep up the energy required to see it properly established. Also it is much more difficult to get anyone else interested.

Although we MiPs are professionals we can make the same mistakes as other business owners and not focus on these fundamentals. We are not always as focused on planning as we should be; we don’t employ other professionals to help with areas we are not good at i.e. marketing; we run our businesses on a shoe string and don’t spend enough on marketing or training; and we don’t focus on what we are passionate about.

Give yourself, and your business, the best chance of success and do those things we advise our clients to do!

Remember running your own business is by no means an easy option but it can be completely liberating.

Fiona Bevan Member, MiP Panel

In my experience there are several reasons why a business will succeed: 1. The business owner has properly investigated their chosen market and taken the time to understand what their customers are looking for. They have a properly thought through business plan investigating all areas pertinent to their business.

2. The business owner gets proper professional advice in areas they are not expert in. This means they do not make the wrong decisions through lack of knowledge/skill.

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Current affairs

Employing children: a summary of the rules and benefits for young workers A ‘child’ is a person under the age of majority – under 18 years of age.

Taking your children onto your company (or selfemployed business) payroll, getting them to earn the money you might be currently paying them as pocket money, gives them an appreciation of money values and independence. Your business can claim a deduction against profits for the costs of wages and save you some tax.

For example, if your 13 year old daughter and 15 year old son receive £10 and £12.50 a week respectively, it won’t cost you £1,170. In fact, the gross, pre-tax amount you have to earn to pay them this sum is actually £2,017. (Higher rate tax payer 2012/13).

Including employers 13.8% NIC = £2,295.

youngster. Every person in the United Kingdom has, from birth, an Income Tax Personal Allowance, by which, if their earnings or income in a given tax year are below that level, no Income Tax is payable.

The Personal Allowance for tax year 2012/13 from 6 April 2012 is £8,105 (£155.86 per week). The National Insurance regulations do not apply to children under age 16.

Employers can pay whatever sums they like to their (and other) children as employees. However, HMRC might not allow excessive (above market rate) payments as wholly tax-deductible from the business profits. See: Copeman v William Flood & Sons Ltd. The National Minimum Wage regulations should be adhered to: • 16 - 17: £3.68 per hour

It is not ‘illegal’ to employ children; in fact it should be encouraged. But there are restrictions under both the Children and Young Persons Act 1933 and Local Authority bye-laws as to the kinds of work they should do and hours of work. In most cases the youngest age at which a child can work is 13 or 14.

You could employ them in the office on a Saturday morning to carry out filing duties, tidying up, counting stock, etc. Or for a couple of hours after school during the week too, as long as they don’t work past 7.00pm. You have plenty of flexibility here.

Maybe the fleet of company cars needs a wash?

It is also good for the child to receive a payslip as a record of their work done and to the value of their efforts. There is no need for complicated formal contracts of employment but it is a good idea to set out in writing their key duties and expected hours of work. Don’t forget the value of regular positive feedback of a job well done and appraisal. Don’t take your family for granted!

Regular employment by a company, self-employed business or partnership is normally subject to the usual PAYE procedures. There are exceptions for employing students in holidays and other casual short-term payments. The arrangement is extremely tax efficient for both the employer (you) and the

• 18 - 20: £4.98 per hour • Apprentice under 19: £2.65 (or first year) Children should be guided and encouraged to open a savings account and perhaps open a Mini-ISA (£3,600) or Cash ISA (£5,640). Giving them benefitsin-kind, such as a mobile phone, can be entirely tax free and again form a business tax deduction. No P11D is needed below £8,500.

Finally, in expanding a teenager’s responsibilities and contribution to your business, note that directors of companies now must be at least 16 years old (s.157 CA 2006) but there are no age restrictions upon being a shareholder.

For a full detailed paper on employing children, with further references and examples, please contact: Tristan Maynard FCMA, CGMA T. +44 (0)1706 646664 E. bcs@bscpart.co.uk W. www.bscpart.co.uk

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Current affairs

Monitoring of mandatory requirements – why it is necessary CIMA is extending its monitoring work in 2012 to include the MiP mandatory requirements. This is in line with the recommendations of the national regulator but CIMA supports this as it will provide us with a valuable way of highlighting and promoting the professionalism of our Members in Practice. As we indicated at the time the new online Practising Certification process was launched, we will be asking a sample of members to submit terms of engagement, complaints handling procedures and continuity agreements for review. We will use the process to reaffirm compliance with the requirements for practicing certificates and to disseminate best practice and improve onward guidance. By the time you read this the process will be under way and you may receive an email notifying you that you have been selected for monitoring this year.

In a recent survey of CIMA members worldwide, ethics, conduct and professional standards emerged as the most important aspect of membership to students and members of CIMA. But this is not just a ‘facet’ of your membership – it is a requirement and it underpins everything you do as a professional management accountant.

The clients of CIMA Members in Practice are an important audience for the message of professionalism.

Larger businesses are used to “business to business relationships” but as with many professional bodies it is the contact between members and the public or clients in smaller businesses where misunderstandings occur and expectations far exceed what is practical and realistic.

That is why it is so important to have good terms of engagement, an effective and accessible complaints procedures and an up to date arrangement with your continuity partner. Things will go wrong – they always do – but your professionalism provides the best way of preventing escalation of issues into complaints.

The requirements for monitoring are not burdensome and we will make every effort to assist if you have any questions. More details are available on a new dedicated web page Monitoring For Compliance.

The information provided should answer all questions or issues but we are of course happy to address any specific questions. Please contact prof.standards@ cimaglobal.com

You have told us that you value your professionalism so CIMA promotes that to the world, helping to grow your identity and reputation as the experts in management accounting and responsible business. Despite the importance we all assign to professionalism, failure to deal professionally with the public remains the key complaint to CIMA. Why might this be?

CIMA promotes the professionalism of its members with confidence but you only have to look at the television to see that the world is becoming an ever more litigious society, quick to complain and increasingly reluctant to pay for a professional service.

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Useful links

Where do I go for… … business legal support for UK

… help on ethical issues and

CIMA Members?

whistleblowing?

As a member of CIMA you are expected to uphold the highest professional and ethical standards in your business dealings with clients and/or colleagues.

There are many sources of information but CIMA has arranged for Law Express to provide web based legal information relevant to the requirements of CIMA MiPs running businesses.

CIMA provides speak-up services within the UK through Law Express. Should a member or student have whistleblowing concerns they can contact Law Express at no cost for specific advice about actions they should take and information about the protection under UK law. CIMA also recently launched a global guidance line to support members and students in all our markets with regard to an ethical concern.

You can access a range of business focused legal information which should supplement the information on the CIMA website and provide another source in addition to the MiP Panel and the MiP group on CIMAsphere.

CIMA is also piloting a limited free telephone helpline service for UK and EU business support on referral from the Professional Standards Department.

Should you want guidance around your obligations related to the Code of Ethics you can call the ethics helpline. To remind you of your obligations and the key principles don’t forget to view our animation.

Find out more about our helplines at www.cimaglobal.com/helplines

There is also a personal legal web resource and a low cost telephone advice service for personal legal issues.

This service is for UK CIMA members so please go to the new business and personal legal information webpage in the practice management section of the CIMA members’ handbook for further details, terms and conditions and contact information.

MiP events Members in practice annual conference How to stand out from the crowd Date: Friday 21 and Saturday 22 June 2013 Venue: Heythrop Park Crowne Plaza, Enstone, Chipping Norton OX7 5UF One day conference (Friday or Saturday): £120

For full listings of upcoming CIMA MiP events, please visit www.cimaglobal.com/mipevents

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And finally...

MiP Panel Ray Baxter Chairman Stephen Milne Vice Chairman

The life of J Tristan Maynard FCMA, CGMA, has made available a case study extract presented to the North West CIMA MiP group in March 2012 which lead a discussion on professional ethics. The discussion amongst about 30 experienced MiPs lasted over two hours and asked questions including:

Antony Holdsworth Vice Chairman

• What would you have done?

Alan Scott Secretary

• What should have been done?

Mike Houldershaw Treasurer Elected Members Mark Allen Tony Boffey Kim Swarbrick Fiona Bevan Harry Hornby

• Is it possible to capitalise from these events?

• What are (your) ethical aspects?

For the full article, please contact Hayley Dove: hayley.dove@cimaglobal.com

Click here for MiP Panel contact details Hayley Dove Event Co-ordinator T. +44 (0)20 8849 2406 E. hayley.dove@cimaglobal.com

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