Welcome to the March 2009 Newsletter from Connolly Accountants & Business Advisors

As Alistair Darling prepares to meet world leaders for the G20 summit, business groups are already looking ahead to the Chancellor's belated Budget on 22 April.

The British Retail Consortium has urged Darling to use his forthcoming Budget to delay the increase in VAT until at least February 2010. The call follows the recent publication of further reports suggesting that last year’s controversial VAT cut has had ‘little effect’ on small firms. We will be publishing a summary of the main Budget announcements, so visit our website regularly for all the latest information.

Meanwhile, employers are preparing for a raft of new employment regulations which are scheduled to come into force early next month. Notably, amendments to the Working Time Directive will grant employees the right to take a minimum of 28 days of annual leave, rather than the 24 days currently permitted.

Government urged to delay VAT increase

Retailers are urging Chancellor Alistair Darling to delay the increase in VAT scheduled for December.

The Chancellor reduced VAT from 17.5% to 15% in the 2008 Pre-Budget Report, in a bid to boost consumer spending. The higher rate is due to be reinstated on 31 December.

However, the British Retail Consortium (BRC) is arguing that the planned increase will come at the busiest time of the year, and will cost retailers around £90 million to implement. The organisation has called for the reintroduction to be delayed until at least February 2010.

Stephen Robertson, Director General of the BRC, said: 'Changing VAT rates back to 17.5% at the end of December will soak up a lot of effort at the busiest and most important time of year for most retailers. For some shops post-Christmas sales are 50% above normal – so it's a time when staff should be focusing on serving customers'.

The BRC's Budget submission also calls for a number of other measures to help businesses, including an immediate freeze on all new business rate burdens, and a reintroduction of empty property rate relief.

Meanwhile, a new poll by the British Chambers of Commerce (BCC) has revealed that businesses believe the reduction in VAT has done little good. According to the survey of 400 firms, 76% of respondents claimed that the VAT cut had been of 'no benefit' to their businesses, while nearly a fifth said the cut had actually been a burden.

The study also found that companies are increasingly pessimistic about their prospects, with 43% expecting turnover to fall by up to 50% over the next three months and 28% indicating they would be reducing working hours over the same period.

'Some of the Government’s initiatives have been gratefully received, but the £12.5 billion VAT cut at the centre of the fiscal stimulus would clearly have been better spent elsewhere,' commented Steve Hughes, economic adviser to the BCC.

'When the Chancellor gives his Budget in April, it must include measures to ease cash-flow difficulties and promote the retention of jobs.'

Is your business feeling the pinch? We can help you plan for troubling times – please contact us for more information.

Workers poised for new holiday entitlement

Workers are set to gain additional statutory holiday when a plethora of new employment regulations comes into force next month.

On 1 April 2009 the statutory holiday entitlement will rise from 4.8 weeks (24 days) to 5.6 weeks (28 days) for employees who work a five day week. The new entitlement, which is the second stage of a two-phase increase, will also apply to part-time workers on a pro-rata basis.

Days off for public or bank holidays may count towards the minimum allowance, providing that they are treated as paid leave. However, from 1 April 2009 payment in lieu will not be permitted. Depending on the employment contract, payment in lieu of any leave above the statutory entitlement is allowed.

As the increase in holiday allowance is a beneficial change for workers, the Government has confirmed that employment contracts will not need to be reissued. However, businesses should inform staff of the change through some form of written communication.

The revised entitlement is just one of a number of employment changes coming into effect in the coming weeks. On 6 April the dispute resolution procedures will be repealed and replaced by a new ACAS code of practice, while tougher penalties will be imposed on employers who fail to comply with National Minimum Wage legislation from this date.

April also sees increases in statutory maternity, adoption and sick pay, and the right to request flexible working is due to be extended to eligible parents with children up to the age of 16.

For more information on the impending changes, visit www.businesslink.gov.uk.


Click here for key tax deadlines for the coming month.


'Today's decision by the European Court of Justice is a victory for common sense. Some people can happily work in their existing job beyond the age of 65, but this is not possible for all occupations.'
John Cridland, CBI Deputy Director-General, reacts to the ECJ ruling that the UK's default retirement age of 65 does not breach EU law.


The official website for The London Summit 2009, which provides news, information and analysis relating to this year's G20 summit.


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2009 Budget 'must help small businesses'
The Forum of Private Business has called on the Government to put in place measures to boost businesses and restore consumer confidence in the forthcoming Budget.
Click here for the full story

Business groups criticise redundancy pay plans
Plans to increase redundancy pay may risk the survival of many small firms during the recession, business groups have warned.
Click here for the full story

Tougher HMRC compliance regime looms
Businesses are being urged to prepare for a tougher HM Revenue and Customs (HMRC) compliance checking regime, which is due to come into force next month.
Click here for the full story

Interest rates fall to new low
The Bank of England has slashed interest rates to a new low of 0.5% in an attempt to haul the UK out of recession.
Click here for the full story

UK compulsory retirement age 'does not breach EU law'
The European Court of Justice has ruled that it is not illegal for UK employers to force workers to retire at the age of 65.
Click here for the full story