We live our lives by evaluating risks and taking adequate procedures to either mitigate or eliminate them completely, so why should it be any different in our business environments?

The moment we climb out of bed, we start taking risks – by switching on the light we may be electrocuted. We make our way down the stairs, careful not to fall down them, all the while holding onto the hand rail for support.

In these 2 actions alone, risks have been assessed and identified AND adequate procedures have been put in place. Our electricity has been wired by an expert and a handrail installed.

We take the car to work and use risk assessments and take adequate procedures, not decided by us, but by legislation. We put on our seat belts and ensure that our mobile phones are on hands free.

The Bribery Act 2010, a new piece of legislation which comes into effect on 1st July 2011, has created a new corporate offence which concerns all Commercial Organisations who carry on a business in the UK.

The offence is for the failure of a Commercial Organisation to prevent bribery by an associated person. The penalties for any individual or organisation falling foul of this offence are severe to say the least. However, a Commercial Organisation can use the Statutory Defence of having 'adequate procedures' in place, to prevent bribery being committed.

Basically, all organisations need to look at the risks that they face in relation to Bribery and, as in all walks of life, it is simply a case of evaluating these risks and applying the relevant adequate procedures.

The Ministry of Justice recently published the much awaited guidance on 'adequate procedures', which gives examples and suggestions with regards to the type of adequate procedures that commercial organisations can implement, in order to show that they have taken steps to prevent bribery.

The guidance was based on 6 Principles. In 3 of those principles, reference was made to whistle blowing services and confidential reporting facilities where the importance of a secure and easily accessible means for parties to raise their concerns about bribery or suspected bribery, was seen as a helpful management tool and an 'adequate procedure'. The need to communicate the organisation's own anti-bribery stance to all employees and associated persons was also highlighted.

Responding and adapting to legislation is nothing new, therefore there are no real reasons for organisations or individuals to fear the Act, providing that they operate legitimately and have robust ant-bribery controls, policies and procedures in place and enforced.

Scott Grant is a Senior Analyst, Fraud Services at Anderson Anderson & Brown LLP, Chartered Accountants.

The Act comes into force today with the clear message that there is no place in business for bungs, bribes or backhanders.

It's not only yourselves that you should consider, but you have to know what your agents, distributors and contractors are doing on your behalf.

Failure to implement adequate anti-bribery procedures in your organisation could result in tough penalties both for the organisation and for the individuals charged with corporate governance within it.

Is your organisation prepared?

It's not too late, but there is a need to assess where your organisation is in relation to the risks facing your business and what you should do with regards to having adequate procedures in place.

For a no obligation discussion on the implications of the Bribery Act 2010, call Scott Grant on 01224 625111 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it

While economic indicators suggest that we may have seen the worst of the recession, we are still in difficult economic times and the impact of the recession is still being felt in many areas. Annual accounts can convey a positive message for some, but for others, accounts and the disclosures within them, paint a very different picture. Deterioration in trading and cash flow can often lead to working capital deficiencies and unhealthy
balance sheet ratios.

In these circumstances, what are directors’ responsibilities? Very clear guidance is available on this, both from accounting standards and a recent publication from the Financial Reporting Council:

• Directors are required to make and, importantly, document a rigorous going concern assessment of their company when preparing annual accounts. In making this assessment, the review should cover a period of at least 12 months from the approval date of the accounts.
• If going concern is an issue, directors must give balanced, proportionate and clear disclosures regarding going concern to ensure that the accounts give a true and fair view.What does this mean for you in reality?

There is always uncertainty in business, but the real issue is whether uncertainties regarding going concern are so fundamental that they require to be disclosed. For example, in a business with long term contracts, a history of profitability, cash generation and sufficient banking facilities, there would likely be little uncertainty.

But, what if a major contract expires in a few months’ time and the banking facilities are due for renewal a few months later? This information is published without the responsibility on our part for loss occasioned to any person acting or refraining from action as a result of any information published herein.

Generally, where such uncertainties exist, directors should be demanding and reviewing projections based on different scenarios to highlight whether there is a potential problem.

Although hopes and expectations may be that contracts will be renewed, it is essential to consider the implications if they are not:

• What opportunities are there to replace lost business?
• How quickly can the business respond?
• What are the implications for staff?
• What ongoing requirements are there for premises and equipment?

Many companies also have banking covenants which are subject to regular review. Companies with good management information systems generally have up to date financial information and budgets for the year ahead, but these need to be tested against differing scenarios so that the board and management have an early warning of potential issues.

With the changes in availability and pricing of credit over the recent past and immediate future, good information is a prerequisite for discussions with lenders regarding financial requirements.

What about directors of small companies – do the requirements apply to them?

Of course, the extent of the review and work involved depends on the size and complexity of the business. However, the requirements do apply to ALL, regardless of size. An early discussion with your accountants or auditors will help to establish the nature of the review, evidence required and possible outcomes in terms of disclosure.

This may prompt a discussion with lenders on the renewal of facilities. Indeed, the guidance from the Financial Reporting Council states that directors should seek confirmation from lenders over principal terms and conditions where there is a degree of uncertainty.

These discussions may also highlight the best time to sign the accounts, subject to lenders’ requirements and filing deadlines. For example, it may be more appropriate to finalise accounts when facilities have been renewed or an asset sold to provide access to new funds. Such events could be disclosed in the accounts, sending a positive message to readers and also protecting directors from making either inadequate disclosures, or disclosing uncertainties which have been successfully addressed before the accounts were signed.

In conclusion, there are three key questions to be asked:

1. Are you concerned about the implications of assessing going concern for your business?

2. Are you engaging in discussions with your advisors and lenders at the right time?

3. Is appropriate and reliable information available to optimise such discussions?

In any event, action and timing thereof is critical. If you have not thought about these things already, it is never too early to start and you should expect your contact at Anderson Anderson & Brown LLP to be bringing up this issue sooner rather than later.

Employers view share schemes as an effective method of reward. No immediate cash is required. The award can be dependent on individual and/or company targets and can be used as a retention tool where participation is linked to service. Some schemes can be completely tax free, so it's easy to understand their popularity.

Increasing Share Values

Oil company share values, driven by soaring oil prices have, in the most part, performed well compared to the rest of the stock market over recent years. As a result, many senior employees have accumulated significant share wealth, often spread over a number of different employer schemes. Understanding these from a tax perspective can be challenging particularly where Capital Gains Tax (CGT) is concerned and, too often, CGT is not an area where employers will offer guidance.

Capital Gains can be Taxing

Many employees incorrectly believe that if they may have suffered Income Tax and National Insurance on the acquisition of shares, any future sale of shares is tax free. Unfortunately this is not the case and it is vital that the CGT position is considered prior to the disposal of any shares.

There are strict rules to identify the CGT base cost of shares. There are rules for same day sales, for acquisitions within 30 days of a sale and for share pool sales, all of which must be considered in calculating the correct CGT position. It's possible that shares have been acquired, perhaps over a number of years, via Approved Options, Unapproved Options, Long Term Incentive Plans, Save As You Earn Schemes, Share Incentive Plans and Restricted Share Schemes, to name but a few. The deemed dates of acquisition for CGT purposes can vary significantly, as can the CGT base cost of the shares, both of which can impact on the CGT payable on the shares which have been sold.

Sharing the Wealth

Share awards received over a number of years can create significant asset wealth. Individuals may invest in other shares, second homes, buy to let properties, investment portfolios and so on. The increased disposable income may be invested into pension schemes, perhaps exceeding HMRC allowable limits. In addition, many individuals look to make significant gifts of this income to family, perhaps funding school fees, or helping children acquire their first homes. All this can make tax affairs more complex generally.

Have you planned the tax you leave behind?

Another consideration is Inheritance Tax (IHT). No one wants 40% of their estate on death disappearing to pay IHT, when this should be benefiting their nearest and dearest. It's not unusual for HMRC to end up with more in IHT than is left for the beneficiaries.

Don't pay more tax than you need to

There is no doubt that managing the tax implications surrounding share awards can be challenging but seeking professional advice in good time can result in significant tax savings.

HMRC SHARPENS ITS CLAWS

HM Revenue & Customs ("HMRC") have confirmed that five plumbers have been arrested and around 600 are under civil investigation by HMRC for failing to pay the right amount of tax.

The arrests and investigations have taken place during a campaign targeting plumbers which invited them to put their tax affairs in order. Some of those involved owe up to £150,000. This is the start of co-ordinated action and more raids are expected to take place over the coming weeks across the UK.

HMRC have stated:

"We provided a chance for those we have arrested, and the 600 we are investigating, to come forward voluntarily and put things right. These arrests send a clear message that HMRC will take action against those who choose not to come forward and pay the tax they owe."

"These arrests are just the start. HMRC is considering hundreds of further cases for criminal investigations in the plumbing and medical professions. Some people may have thought we were bluffing when we said we have information that we will use to prosecute tax evasion."

Under the Plumbers Tax Safe Plan ("PTSP"), plumbers, gas fitters, heating engineers and members of associated trades who owe tax that they had not declared faced a maximum penalty rate of 20% if they disclose in full.

These HMRC statements and actions merely confirm what we already knew, namely that HMRC are becoming far more aggressive in terms of all investigation/enquiry type work.

The message is therefore clearer than ever, if you have a disclosure to make irrespective of the nature of the disclosure and regardless of your trade or profession, a full and unprompted disclosure is the best way to ensure HMRC do not come knocking at your door next .........

For further information, please contact Stuart Petrie ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ).

An intriguing decision has been handed down by the Tax Tribunal in relation to a chain of sports clubs. The Tribunal decided that payments received by Esporta from members who had defaulted on their membership dues were not subject to VAT.

The background is that Esporta operated a sports club membership scheme. Members paid subscriptions which allowed them access to their chosen club to use the facilities. Where members failed to make the regular (monthly) payments of their membership fees, their access rights would be suspended. Defaulting members would in certain cases be referred to a debt collection agency that would pursue the debt on Esporta's behalf.

Esporta successfully argued that any money recovered by the debt collection agency was not consideration for a VATable sale. The main reason for this is that the defaulting member did not receive any VATable supplies because they were not allowed the required access to the clubs in order to receive them.

The outcome of this case may only have application in limited circumstances because of the nature of the underlying facts. However, clubs or organisations in a similar position should consider whether they can make a claim for overpaid VAT.

Truprint wins photo book case

In a recently released decision, the Tribunal found that Truprint's photo book products should be treated as books for the purpose of zero rating. HMRC had argued that VAT should be applicable to the books because they contained primarily pictures. The Tribunal wasted little time in concluding that a book containing pictures rather than text can still be regarded as a book for the purposes of VAT legislation.

Truprint had arrangements with various retailers including Tesco whereby customers could take their photographs to a data station, upload them to Truprint's website and select a photo book product from a range. Truprint put the photos into the selected book product which it then delivered back to the retailer within an agreed timeframe in exchange for payment by the customer.

HMRC argued that:

1) Truprint was providing photographic services, and

2) The photographic books did not constitute books for the purposes of the zero rating provisions.

The Tribunal dismissed this argument saying that books can still fall within the zero rating provisions whether they contain text or photographic images or a mixture of both providing they fulfil all the normal characteristics expected of a book.

With the increasing range of goods and services in the media sector, this decision is bound to be of interest to a range of businesses. In particular, businesses which have been paying VAT on similar products should now consider making claims in order to avoid losing out in view of the time limits involved.

Business Record Checks by HMRC

HMRC have announced that they will be undertaking a programme of checks on the adequacy of records maintained by small and medium sized businesses. They say they will be targeting businesses and organisations in Aberdeen and Inverness over the coming weeks.

The result of an earlier pilot exercise has led to HMRC deciding to complete up to 12,000 Business Records Checks by the end of this financial year. It plans to increase this to 20,000 for 2012/13.

In cases where records are found to be incomplete or inaccurate, HMRC have the power to issue penalties. We understand that HMRC will only be issuing penalties in the most extreme cases at the outset of the programme. However, they have said they will be imposing penalties of up to £3,000 for serious inadequacies in the longer term.

If you receive a letter from HMRC regarding this matter or if you require assistance to prepare for a visit please let us know.

Salary Sacrifice

This is a reminder about the VAT changes to salary sacrifice arrangements which take effect from 1 January 2012. We highlighted these changes in an earlier newsletter and HMRC have now issued further guidance in Revenue & Customs Brief 36/11.

The changes follow the outcome of the Astra Zeneca case which found that VAT is due on all benefits involving a supply which is paid for through salary sacrifice. Common examples include cycle schemes, face value vouchers (other than child care vouchers) and parking spaces where employees have a specific amount deducted from their salaries as payment for the benefits.

Under transitional arrangements, salary sacrifice schemes that were put in place on or before 27 July 2011 and which continue after 31 December 2011 will continue to be VAT-free until either the scheme changes, expires or becomes due for annual review. All other schemes will need to change after 1 January 2012.

If they have not already done so, businesses should be putting measures in place to be ready for these changes with effect from 1 January 2012. This may include reviewing current arrangements with employees to consider whether they wish to continue or to come out of the arrangement before the changes take place.

Low Value Imports

HMRC have announced that low value goods being imported into the UK from the Channel Islands will no longer be free of VAT. The move is being made to counter perceived avoidance of VAT by UK businesses locating their mail order operations in the Channel Islands for the purpose of benefiting from VAT relief.

Goods that are imported into the UK from countries outside the EU are generally subject to import VAT and duty on their arrival in the UK. However goods with a value of less than £15 may be imported free of both import VAT and duty under Low Value Consignment Relief (LVCR).

The move follows years of lobbying by UK based businesses that have seen their businesses eroded by the disparity in VAT treatment. According to statistics, 75% of all international parcel post to the UK from outside the EU is estimated to originate from the Channel Islands. The ease of access to the UK consumer market via the postal system has made the Channel Islands attractive to businesses looking to move their operations to a non EU country in order to operate the LVCR.

It has been suggested that HMRCs latest move to abolish the relief only in relation to the Channel Islands may be discriminatory and therefore illegal. However, it will remain to be seen whether a legal challenge will be made. Also open to question must be whether retailers will move their business elsewhere outside the EU in order to continue benefitting from LVCR.

Design and Build Contracts

In our August 2011 Newsletter we included an article regarding changes HMRC were proposing to impose VAT on to "design and build" arrangements. This proposal received fierce opposition from various groups including housing associations, charities, property rental businesses and trade representatives. As a result, the proposal was subsequently withdrawn.

At the time our newsletter was issued this change was still being debated. However shortly after HMRC confirmed they had "re-evaluated" their proposal and concluded that zero-rating would remain.

A revised HMRC Notice 708 Building and Construction, has been issued this month, with amendments at Section 3.4.1. to clarify the conditions for zero rating.

INTRASTAT declarations

HMRC have announced two INTRASTAT changes that will take effect from 1 April 2012.

The first change is that it will become mandatory for a business to submit its monthly declarations to HMRC electronically.

The second change is that the deadline for submitting INTRASTAT declarations will be brought forward to the 21st day of the month following each reporting period end.

INTRASTAT is the system used to compile statistical data about the movement of goods around the European Union. UK businesses have to report these transactions to HMRC on their VAT returns and if they reach a certain threshold also submit an INTRASTAT Supplementary Declaration every month.

The current INTRASTAT thresholds are £250,000 per calendar year for goods dispatched to other EU countries and £600,000 per calendar year for goods arriving from other EU countries.

These changes are part of HMRC's ongoing aim to introduce universal electronic filing of business tax returns by 2012.

Should you have any queries on the above issues please do not hesitate to contact either Joyce Nicolson or Mike Whittall at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

HM Revenue & Customs ("HMRC") will be extending their Business Records Checks ("BRC") programme to include the Aberdeen and Inverness areas in the next few weeks. Poor record keeping by small and medium-sized enterprises is the target of this crackdown by HMRC.

Background

BRC began earlier this year in eight areas around the UK. The programme involves checks on the adequacy of business records, including trading records for business tax and accounting purposes generally, employer PAYE and NIC records (including employee expense and benefits records) and VAT records.  HMRC are selecting cases on the basis of risk assessment, focussing on businesses/employers where they perceive the taxpayer is demonstrating features associated with poor record keeping. There will also be a small number of cases selected at random. Initially, HMRC seemed to be indicating that BRC would be used partly in an educational sense to help taxpayers improve record keeping. However, HMRC are imposing penalties for significant record-keeping failures.

What has happened so far?

The visits conducted from April 2011 to September 2011 totalled around 1500 and were part of a "test and learn" phase for HMRC. These were undertaken by around 30 staff. However, from September 2011, HMRC has announced an increase in the BRC team to 120 with plans to complete up to 12,000 checks by the end of the current financial year, and 20,000 provisionally planned for 2012/13.

What can you expect from HMRC?

HMRC should not arrive unannounced and give at least 7 days notice in writing of their intention to visit. To date the programme has found that around 44 per cent of businesses visited had issues with their record-keeping, while around 12 per cent of those visited had seriously inadequate records.

Do you need a health check?

This is a developing area by HRMC and if you have any concerns and want to be reassured, please contact us. We can offer a range of tax, accounting and systems advice appropriate to the needs of your business. In the first instance, please contact Gordon Robertson ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) on 01224 62511.

BAA LOSES FIGHT FOR VAT ON DEAL COSTS

The background is that Ferrovial's acquisition company, ADIL, incurred VAT on professional fees in the course of acquiring the BAA group and sought to recover this VAT after joining BAA's VAT group. The Upper Tribunal helpfully found that ADIL was engaging in an 'economic activity' but went on to say that it could not rely upon the VATable turnover of the companies within the VAT group in order to recover VAT it had paid on these fees.

The decision appears to have been very fact specific and to a large degree the conclusion of the Upper Tribunal seems to be based on the timing of events. In particular, it focused on the lack of evidence of an intention for ADIL to join BAA's VAT group as a principal reason why it could not link VAT it paid on the fees with the taxable turnover of the VAT group.

The decision, in our view, provides businesses with an opportunity to review costs relating to acquisitions and similar transactions to identify further amounts of VAT which could now be reclaimed. HMRC are likely to look closely at claims so it will be important to review the facts of each case in detail to avoid over claiming.

VAT on green fees

The Tribunal delivered its judgement on 1 June 2011 in the case of Bridport and West Dorset Golf Club. See Case Transcript. The Tribunal allowed the Club's appeal and agreed that the VAT exemption should not be limited to members' playing fees but should also apply to visitor income i.e. green fees generated by the Club.

The background is that playing fees charged to members by certain non-profit making clubs are exempt from VAT. The decision in this case confirms that UK law is too restrictive and that VAT exemption should apply to all playing fees charged by such bodies.

In light of this result, golf clubs should be considering whether they have overpaid VAT on green fees in the last four years and whether a claim to HMRC would be appropriate. All claims would need to take into account the effect of treating visitor income as exempt from VAT as this will have a bearing on the VAT reclaimed on costs in the same period.

The decision may also be of benefit to any non-profit making sports club with non-member income.

HMRC may appeal the decision so clubs should continue to account for VAT on visitor income in the meantime. However submitting a claim at this stage will preserve the right to a refund if the end result is a defeat for HMRC.

PROPOSED CHANGES TO 'DESIGN AND BUILD' CONTRACTS

HMRC have drafted changes to the VAT treatment of construction services provided under 'Design and Build' arrangements. This they say would be the case even if the construction work under the contract is zero rated, e.g. new house builds. Under the proposed changes, on this element, the design work will have to be separately identified and VAT charged at standard rate. If implemented, the change will substantially increase project costs of any businesses unable to recover the VAT on these services, for example residential investment property businesses.

Currently a business can engage a main contractor to carry out both the design and construction work of a project, in these instances the main contractor arranges and pays for all design work and is able to recover the VAT on costs. These costs are then zero rated as part of the overall cost when charged to the business.

HMRC say the move is prompted by the Talacre Beach Caravan Sales case which concerned the supply of furnishings (standard rated) along with a residential caravan (zero rated). See case transcript. However, fierce resistance is being mounted to the charge which appears to be HMRC engaging in 'artificial supply-splitting' which, in other cases, they argue is unacceptable.

VAT AND TEMPORARY STAFF

The First Tier tribunal has ruled in favour of Reed Employment Ltd in an appeal regarding the VAT treatment of temporary staff. See case transcript. The Tribunal decided that VAT should only be charged on the commission fee element of Reed's charge to its clients and not, as HMRC wanted, on the whole charge which included wages and associated NIC.

Businesses and organisations which use temporary staff and which cannot recover all the VAT they pay on costs should consider contacting the employment agencies they use to discuss the possibility of using this decision to obtain a VAT refund. Even though Reed had not made a distinction between the elements of the charge on its invoices the Tribunal held, after reviewing contracts and advertising literature, that VAT was only due on the commission element and therefore agreed that Reed had overdeclared VAT.

The current general policy of HMRC (taking into account the withdrawal of the Staff Hire Concession on 1 April 2009); is that the whole amount charged for commission and wages/NIC elements is treated as consideration for the supply of staff and VAT charged on the total value. There is an opportunity for potential claims as noted above.

We understand that HMRC is not appealing the Tribunal's decision which means that HMRC may have to consider a review of its policy in this area in line with the decision made in Reed.

Please contact us if you would like further information or assistance with the process of approaching an employment agency to obtain a refund.

VAT TREATMENT OF COMMERCIAL WASTE COLLECTIONS SERVICES PROVIDED BY LOCAL AUTHORITIES

HMRC had undertaken a review of the VAT treatment of local authority waste collection services. Their review has led to the conclusion that these services should be treated as outside the scope of UK VAT. However, waste collection services have been charged previously to VAT at the standard rate.

Therefore there is a potential opportunity for businesses with charitable/welfare activities, or any other business that cannot recover VAT in full to request a potential refund from local authorities overcharged in the last 4 years.

Please contact us if you would like further information to assistance with the process of approaching the local authority to obtain a refund.

HMRC TARGET VAT CHEATS

HMRC have announced that they are stepping up their search to identify businesses which they believe may be evading VAT payments. (See HMRC campaign information.) HMRC say they will be using a range of search techniques including internet software to target specified people and companies who may not be declaring accurate income information and where there is a high risk of VAT being 'lost'.

This is being seen as an extension to the 'Plumbers Scheme' which HMRC say was successful in targeting certain trades where cash payments have traditionally been common. It is estimated that as more than £600m has been recovered to date as a result of this initiative.

HMRC have said they will be targeting VAT rule-breakers who have been trading above the current threshold without VAT registering. This will be launched in the summer of 2011 and the campaign will later be extended to focus on other areas, which will include those providing private tuition and coaching, those who are using e-marketplaces to buy and sell goods as a trader, and further groups of trades people.

Acquisition search activities can play a key role in ensuring that the right acquisition targets are identified by a potential purchaser, yet it is an area which is often overlooked and rarely treated with the attention it deserves. In many ways it is natural for purchasers to pursue 'obvious' targets and businesses which are being marketed for sale, but will that approach necessarily produce the best results? So how do you use acquisition search activities to your benefit in identifying the right targets?

1. Review acquisition strategy in context of firm's growth strategy

On too many occasions there is a disconnect between a firm's growth strategy and its acquisition strategy in the sense that potential targets being pursued do not fit with the overall growth strategy. If acquisitions form a part of a firm's growth strategy it is advisable to develop a formal acquisition strategy which is clearly aligned with the firm's overall growth strategy.

2. Clearly define acquisition criteria

A key part of developing a formal acquisition strategy is to clearly define specific acquisition criteria. Unfortunately there is a significant amount of time wasted by companies reviewing potential targets which are retrospectively ruled out for fairly generic reasons. Whilst purchasers like to maintain an element of flexibility in their acquisition strategy it is always advisable to be as focussed as possible in terms of specifying key acquisition criteria such as market position, locations, customer profile, financial performance and potential deal size.

3. Detailed acquisition/market profiling

Once the acquisition criteria has been specified, the next stage is to conduct a detailed review of the market to identify targets and to effectively create a working database with details of all possible targets. It is important in this context to tier the targets into specific categories linked to the overall acquisition strategy. This process will facilitate detailed discussions at management level as to the strategic fit of potential targets and the outcome of this typically will be that a shortlist of 3 or 4 targets is identified from the overall list of targets. Following this it is likely that formal approaches will be made to the most attractive targets. This will facilitate talks with the shareholders of the targets and ultimately this can lead to the purchaser completing an 'off-market' deal which can be a distinct advantage to being involved in a competitive bidding process.

4. Post acquisition integration

As part of the acquisition search process it is important to consider the key potential risks associated with the integration of the target and develop possible mitigation strategies - clearly if the integration of the target is deemed to be challenging then this needs to be considered up-front in terms of the potential shareholder value than can be realised from the transaction.

5. Project management

In addition to the factors noted above, it is critical that the acquisition search process itself is managed effectively. Many organisations do not have the in-house resources to co-ordinate and drive forward the process and this can result in a lack of efficiency and significant time delays. The companies which adopt a rigorous approach towards acquisition search activities are far more likely to identify the right targets and deliver greater shareholder value from acquisitions over the medium to long term.

By Mike Brown, Head of Corporate Finance, Anderson Anderson & Brown LLP

There is a growing hunger and desire for increasing cross-border mergers & acquisitions (M&A) activity in the energy sector globally but as we’re at OTC in Houston its the time of the year to focus on the potential for UK/US cross border transactions.

The oil and gas sector has enjoyed increased M&A activity in the last 12 months, as oil prices have rebounded and credit markets eased slightly.  The major global oilfield service companies, many of which are headquartered in the US, are actively looking to pursue M&A opportunities with many sitting on significant cash reserves.

There is a huge appetite being shown by US energy service companies in their UK counterparts, as recently witnessed for example by GE Oil & Gas's announcement of the proposed acquisitions of Wellstream and the Well Support division of Wood Group.

Many of the US based energy equipment and service companies are continuing to invest heavily outside the US to further develop their product/service offerings and increase their presence in key oil-producing regions.

UK companies in the Oil and Gas service sector and in particular those in the North East of Scotland are tremendously innovative and as such are attractive to US acquirers looking to expand their activities in the Eastern Hemisphere. Our people and technology are deployed across the globe and it is that transportability which is attractive to acquirers as these companies have the capability to internationalise and as such deliver real value to their customers as well as their shareholders.

There also continues to be significant interest in the UK from the US private equity investors -  for example the significant recent merger of five portfolio companies of SCF Partners to form Forum Energy Technologies included Aberdeen-based Triton Group and the new combined group are currently pursuing a number of bolt-on acquisition opportunities in the UK.

The majority of UK oilfield service companies have also been focused on overseas growth for a number of years and this will continue to increase as international expansion is a key driver underpinning growth prospects with the North Sea now classed as a mature region.  However many UK service companies perceive the US market to be very competitive and as such are more inclined to focus their growth efforts in developing regions such as the Middle East, North and West Africa (albeit the recent political and more significant problems in countries in this region are bound to impact negatively) and the Far East and as such there tends to be less M&A activity involving the purchase of US companies by UK trade players.

From a M&A perspective the greatest potential lies with matching the US trade players and private equity investors looking to expand in the Eastern Hemisphere with appropriate target businesses in the UK; our people and technology are what is attractive and there is no reason why the big appetite being shown by US service companies in their UK counterparts will not continue to be the case for the foreseeable future.

New Service Offering and Appointment at Anderson Anderson & Brown – Strategy and Business Transformation

Anderson Anderson and Brown LLP ("AAB"), Aberdeen's largest independent firm of Chartered Accountants, is pleased to announce the launch of a new suite of Business Transformation services. AAB has an established track record of providing Strategic Planning and Development services to its clients and understands that Strategy sits at the heart of any thriving organisation and is critical to its continued success and future growth.

AAB's newly created Strategy and Business Transformation business unit enhances the well established Strategy services by introducing a number of complimentary new Business Transformation services which are as follows:

– Project Management

– Requirements Gathering & Analysis

– Business Process Mapping & Improvement

– Customer Experience Definition & Improvement

– Change Management

The Strategy and Business Transformation offering will provide clients with a comprehensive range of services which can be tailored to meet their specific needs and provide support throughout the entire business lifecycle – from initial scoping and definition of Business Strategy through to implementation and delivery of Business Transformation projects to performance management and monitoring.

To support this new service offering, AAB are pleased to announce the appointment of Ciara Blackwood as Head of Strategy and Business Transformation. Ciara is an experienced Management Consultant, having previously worked for both Accenture and Serco Consulting on a variety of Customer Relationship Management and Business Transformation projects for a number of Multi-National Blue Chip clients. Most recently, Ciara spent 2 years as the Operational Delivery Manager for London Mayor Boris Johnson's Barclays Cycle Hire scheme which launched to great acclaim in July 2010.

Mike Brown, Managing Partner, commented, "We are delighted to be launching a new suite of Business Transformation services to our clients and Ciara's appointment brings a wealth of experience and expertise to this area. We have successfully been providing Strategic Planning and Development services to our clients for a number of years and by establishing and developing a complimentary range of Business Transformation services this will enable us to provide a wider service offering to our clients."

For more details on AAB's Strategy and Business Transformation service offering, contact Ciara Blackwood on 01224 62511 or at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Notes:

Anderson Anderson & Brown was formed in 1990 and, following a continuous period of substantial growth, now has 12 partners and over 160 staff. The firm has 7 key service areas namely; audit, accounting, taxation (personal, corporate, international and VAT), accounting outsourcing (including payroll), corporate finance, management information solutions and fraud investigation.

Then cherry-pick according to your needs!  Accounting Resource Solutions is a service offered by A2+B, under the banner of Business Support Services, to provide people or teams covering all levels and disciplines according to your particular needs.

Services Outline

• Staff secondment
• Temporary staff cover
• Rapid response support
• Cross-functional teams
• Finance Director/Controller
• Project resources

Benefits to Your Business

• Access to accounting & tax staff
• Tap into industry-wide knowledge
• Augment your in-house team’s skills
• Minimise recruitment & training costs
• Flexibility & continuity of quality support
• External resources solving internal needs
• Integrated multi-disciplined service delivery
• Right resource at the right time at the right price

What Our Clients Say About the Service

"Thank you for finding resources for us at very short notice. Both secondees made an immediate impact and very quickly became invaluable members of the team. We would not have met our objectives had it not been for your staff's hard work, diligence, willingness to help, good humour and positive attitude. I cannot sing their praises highly enough, they are a credit to themselves and to your organisation."  Andrew Glen, Finance Director, RBG Limited

"The secondment support provided by accounting and MIS staff from A2+B helped us streamline our accounting processes and enable us to produce automated management reports from our accounting software. We have seen real benefits in both the quality and timeliness of our management information, and a reduction in the manual effort required to produce it. The confidence and efficiency of our existing staff has also flourished with the introduction of ideas brought during the support – thank you!"  Charlie Parker, Group Financial Director, John Lawrie Group

We’ll quickly deploy suitably experienced staff to suit your requirements.  For a no-obligation discussion contact Gary Johnstone on 01224 625111.

In the current economic downturn, this is a time when streamlining your back-office is more important than ever.  A time for focusing on what you're good at, your core business and strengthening customer relationships.  Being customer-focused is being process focused and they are two sides of the same coin.  Get the back office right and the rest will follow.

The Benefits to Your Business

Outsourcing allows you and your management team the time to concentrate on building your business, ensuring your admin team are utilised correctly and cost effectively allowing for improved business performance. 

The overall and combined benefits of outsourcing are wide ranging:

• Service levels and costs are agreed at the outset of any engagement allowing for thorough understanding of financial services support costs.
• Quality and value for money from a dedicated team also allowing you peace of mind on staffing issues e.g. holidays, sickness, recruitment.
• Allowing you the opportunity to utilise existing office space for your core business activities.
• Access to proactive, accurate and timely financial information maintained by a dedicated resource to your business.
• Reduced investment required IT and software to support for finance function.

Creating time for you to strengthen relationships with your customers as we take care of the day to day running of the finance department.

Finance Service Lines Provided

By outsourcing your finance function, your business can grow with the help of our staff who will work with you to control every aspect of purchase and sales invoicing, suppliers payments and credit control, VAT returns, payroll support, banking and cash flow.

We can provide these services on-site at your offices or offsite whilst at all times providing you access to timely, accurate financial information.  We can also provide experienced motivated staff for short or long term cover, assistance with ad-hoc work to project support.

We complete this end to end support by preparing management accounts as well as providing assistance with budget and forecast activities, tailored to your requirements, all vital to the continued success of your business.

Flexibility

Our outsourcing service is totally flexible allowing you to select the finance services you need to meet your business requirements.

The flexibility that our dedicated team provides is wide ranging.  We pride ourselves in putting our clients first and helping them to build their business.  We can provide advice on process improvements, strengthening internal controls and in-specialised technical accounting areas.

A Winning Relationship

Our team approach to supporting our clients and our firm belief in our staff has led to the firm achieving accreditation from the Sunday Times Best Companies To Work For.  We want to help you and your business flourish and grow.  We are not only interested in what you need to achieve but also committed to helping you through our internal network of highly qualified and specialist staff.
Businesses require a great deal more from advisors and accountants than a one size fits all approach.  Our ability to be flexible within our outsourcing department and indeed the wider company should give you the comfort that we have a firm, wide team approach to the work we undertake for your.  You also have confidence in knowing that you are getting the right advice, first time, from people who are interested in your business and highly experienced in that field.

A guaranteed smooth transition with our full support means it is business as usual for you with improved results and the creation of an open, honest, winning business relationship.