There is a huge amount of untapped potential in the number of SMEs who aren’t currently involved in exporting.
With the SME population making up over 99% of businesses in the UK, experts from KPMG are urging the Chancellor to focus on this vital community when delivering his Autumn Statement this week.
*Research out this month found that UK’s small businesses will contribute £217bn to the economy in 2020, an increase of 11% from the £196bn they currently contribute.
In light of the massive contribution the SME sector makes to the UK economy, the professional services firm is urging the Chancellor to keep it simple. The firm is looking to the Chancellor to deliver an industrial strategy which appeals to growing businesses, offers greater support to help SMEs with their export agenda and funding requirements, along with incentives to encourage and support small businesses owners in starting and scaling their businesses.
Commenting on what KPMG hopes to see the Chancellor pull out of his red briefcase next week, Bivek Sharma Head of KPMG’s Small Business Accounting said:
“Philip Hammond’s first Autumn Statement as Chancellor is widely tipped to reset economic policy in light of Brexit and crucially will set the tone for where SMEs feature in the Government’s plans for the future.
“With announcements around infrastructure and construction expected it is important that the focus is not solely on big ticket projects but spread across the UK particularly in upgrading Britain’s road network, which many small businesses rely on to keep their businesses functioning. It is also important that the Government takes the responsibility of dividing up the work fairly. Steps need to be taken to ensure small businesses have just as much access to work in infrastructure projects as large corporates, for example by ring fencing a proportion of construction work for small businesses, to ensure that the firms feel the benefit of investment in this area.”
Providing relief from taxes
The implementation of changes to dividend tax in April came with protests from thousands of small business owners many of whom rely upon dividends in the absence of decent pension savings. Whilst some commentators believe they could be an easy target for the Government to raise further funds, KPMG’s Enterprise team believe it would be helpful if the Chancellor includes a reversal, or at least moderation, of these changes. This would also demonstrate that Government is understanding of the pressure that small businesses are under.
David Bywater, Tax Partner at KPMG added:
“The new business accounting system which requires all businesses to file accounts digitally every quarter, plus a final trading statement, will be hugely onerous and expensive for smaller businesses. At a time of economic uncertainty when our smaller businesses should be using their agility and entrepreneurialism to help boost the economy, it seems wrong to be tying them up in unnecessary red tape. Putting the requirement on hold for a while will enable our SMEs to get on with doing business.
“Equally it would be a very welcome gesture if the Chancellor were to commit to putting the increase in Business Rates Relief on hold, likewise the commercial rates revaluation scheduled for April next year, which could potentially put hundreds of small businesses in city high streets out of business in a very short amount of time. Increasing the employment allowance to £4,000 would also provide a boost to the economy and help to get more people in to work.”
Funding for small businesses is vital and the Treasury’s recently announced new Bank Referral Scheme is a step in the right direction offering smaller business an opportunity to access more finance options. However, there are so many schemes available that some smaller businesses don’t actually know where to turn.
Bivek Sharma adds:
“The Government has been supportive in the past in a number of areas which can help with meeting the funding needs for small, and growing businesses. However, the sheer number of schemes and how to access them is a massive hurdle for most small businesses. Supporting this idea of simplifying the landscape for small businesses it would be great to see the Chancellor bring everything together under one programme. Encompassing the British Business Bank, Enterprise Investment Scheme, Seed Enterprise Investment Scheme and venture capital trusts in one place will not just help more startups access the right finance for them, but importantly, it will be crucial in getting startup businesses to scale up to medium size enterprises.”
Helping SMEs go global
As Brexit puts trade under the spotlight it would seem the perfect opportunity for the Department of International Trade to build on the work that they are already doing to encourage more SMEs to look to international markets for growth. Small businesses who do export enjoy greater revenue and profit growth than those who depend solely on domestic markets.
Kevin Smith, Regional Chairman for KPMG in London and specialist in international trade concluded:
“There is a huge amount of untapped potential in the number of SMEs who aren’t currently involved in exporting.
“The need and desire for British goods and services is there, but there is an important role to play for government agencies to better educate businesses in how to export and identify the opportunities to do so. It would be great to see the Chancellor announce an accelerated roll out of the Exporting Voucher scheme to help more small businesses with their growth agenda as well as some high profiled trade missions involving small businesses – not just the larger corporate brands that often get invited to showcase Britain at its best.”
Notes to Editors:
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KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a revenue of £1.96 billion in the year ended September 2015. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 174,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.