Small Talk: It's all in the numbers for small firms

Click to follow
The Independent Online

It is not as though small companies haven't got enough things to worry about with the recession: a lack of willing lenders, nervous shareholders, sluggish demand etcetera, etcetera.

So it must be all the more frustrating when things that should be easy just heap on more woes. According to accountancy group UHY Hacker Young, small companies are struggling to achieve growth in part because of delays of between three and five months as they wait for, of all things, VAT numbers.

The bean counters point out that HM Revenue and Customs (HMRC) is supposed to complete VAT registrations in just two weeks. UHY say the delays are due to backlogs as HMRC carries out anti-fraud checks in its clampdown on carousel fraud, and also reflect sheer administrative inefficiency in processing applications.

It might sound like a trifling point, but the accountants argue that for small companies desperately in need of cash, the delays in allocating VAT numbers can be a very real problem.

Businesses waiting for their numbers can face severe restrictions on their capacity to trade, it said. Firms without VAT numbers may not be able to get invoices paid, for example, and property deals can collapse because for some types of transactions the law requires that the buyer should be VAT-registered.

"The backlog at HMRC has never been worse, despite assurances over the last few years that the issue was being resolved," says Simon Newark, a VAT Partner at UHY.

"These delays are causing serious problems for small businesses trying to start up in a tough business environment, and are hampering wider economic recovery," "Fraud will always be an issue, particularly during a recession, but if HMRC is to blame for delays, why should taxpayers bear the cost? HMRC needs to streamline its processes and get a grip on its staffing issues as a matter of urgency."

Coal power to the people

One challenge facing smaller companies operating in South Africa is how to comply with the country's Black Economic Empowerment (BEE) laws, passed by the government to give the majority of the population greater control over assets and capital in the post-apartheid era.

One of the biggest companies on the Alternative Investment Market (AIM) is Coal of Africa. Last week the group announced its plans to comply with its BEE responsibilities.

The company closed on AIM on Friday with a market capitalisation of £509m, and is also listed on the Sydney and Johannesburg stock exchanges. It said it is set to issue 50 million options, representing almost 10.9 per cent of its issued capital, to Firefly Investments, a group "wholly owned and controlled by historically disadvantaged South Africans".

Firefly will also get two seats on board in a deal that represents compliance with the new South African legal requirements for black-empowered groups to hold at least a 26 per cent equity interest in mining companies by 2014. "This is the culmination of a great deal of effort and consultation to ensure broad-based community participation in the future success of Coal of Africa," said the group's managing director Simon Farrell.

"This historic agreement paves the way for Coal of Africa's long-term future in South Africa and our development projects," he said. It means the company "not only has community participation, but also community support for our development plans."

Imaginatik's mysterious new client

There was a fair bit of mystery surrounding AIM-listed technology group Imaginatik last week.

The software company, which says its programmes allow large organisations to collect and analyse cost-saving ideas from their employees, issued a press release saying it had won "a significant two-year contract with a global technology leader".

Chief executive Mark Turrell, pictured, said the transaction was a significant contract, and that with $6.3bn (£3.9bn) in revenue "our customer is one of the biggest technology companies in the world."

The deal is no doubt one of genuine importance, but we are still none the wiser about who it might be. Many big organisations are protective about their names, but that has not stopped the likes of Coca-Cola, Dow Chemical and Xerox acknowledging that they are all Imaginatik clients. It is also worth noting that in a year when AIM-listed stocks have generally taken a battering, Imaginatik's shares have risen 132.3 per cent over the past year.

Mr Turrell says he wants Imaginatik to become a leading – and independent – technology group. The fact that he holds nearly 60 per cent of the stock himself, means that, at the very least, he'll achieve the independence part of his ambition for the company.

Comments