Member Article

Crowe welcomes £400m NPIF with caveats

SMEs in the north west have been warned to beware that what the government gives with one hand, the taxman does not take away with the other.

Michael Jayson, managing partner at the Manchester office of national audit, tax and advisory firm Crowe Clark Whitehill, said he welcomed the announcement of the £400 million Northern Powerhouse Investment Fund (NPIF).

NPIF will distribute funding via fund managers who can offer microfinance in the range £25,000-£100,000, business loans £100,000-£750,000, and equity finance up to £2 million.

But Mr Jayson cautioned that SME owners should make sure they understood fully what they were taking on, both legally and financially, when applying for finance.

“This is a great opportunity for small businesses, although we would argue that the value on offer to each company is slightly too low.

“If increased by a further 50%, available funding could have had a much greater impact on the region,” he said.

He cautioned that those applying for finance should make sure they take professional advice to ensure they make the most of the money.

“In some cases, firms may need to consider alternative advisers to maximise the use of the funds available,” he stated.

“It’s essential they get advice on managing and making the most of any investment.

“This will require robust financial processes and reporting to ensure they are able to track and monitor their business.”

He pointed out that the fund managers appointed would also be required to undertake due diligence into businesses applying for funds to ensure they are not simply giving money away.

“This necessitates an understanding of what they will require, whether it is up-to-date management accounts, a trading history and a clear picture of who the owner-drivers of the business are.”

The NPIF is a result of an initiative announced in November 2015 and driven by the Sheffield-based British Business Bank.

It is intended to address issues such as the business funding market being heavily skewed towards London and the south east.

The NPIF combines capital allocated to the 10 local enterprise partnerships in the North West, Yorkshire and Humber and the Tees Valley by the European Regional Development Fund, a loan from the European Investment Bank, funding from the Department for Business, Energy and Industrial Strategy and an additional loan from British Business Finance Ltd, a British Business Bank group company.

Michael Jayson said: “It is vital that businesses are advised by an accountant who can take a long term approach, provide realistic commercial advice and understand where the business owners ultimately want to take the business.

“You need to take advice on how to structure your business. Whether to operate as a sole trader, partnership, limited or otherwise, or corporation.

“Making the wrong decision at the outset could have dramatic implications later on.

“Not only can it affect how you hold property and contracts, but it will also affect the rate of tax you pay and the availability of funding and tax reliefs.

“Which brings us back to our starting point. Be sure to take advice before you apply for NPIF funding so that you understand how it works, your legal commitments and how it all fits into your overall business strategy,” he said.

Ends

Contacts:

Angela Pitsillides, National Marketing and Communications Director, Crowe Clark Whitehill LLP. Tel: 020 7842 7117

Prepared and issued by Andy Skinner of ASAP – 01789 490786 or 07990 978257

Notes to Editors:

Crowe Clark Whitehill is an audit, tax and advisory firm and the UK member of Crowe Horwath International, the eighth largest global professional service organisation with over 200 independent member firms operating from offices around the world. The firm has eight offices in the UK, with more than 70 partners and over 500 members of staff. Crowe Clark Whitehill is one of the leading advisors to the UK mid-market, and holds a top 10 position in the 2016 Corporate AIM Adviser Rankings in Technology, Basic Materials, Oil and Gas, Industrials, Consumer Goods and Financials. The firm was named: Top Charity Auditor of the Year (Charity Financial Audit League Table 2016) and Best Tax Investigations Team (Taxation Awards 2016). For more information, visit: www.croweclarkwhitehill.co.uk

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This was posted in Bdaily's Members' News section by Andy Skinner .