UK Business Barometer

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The August survey asked for views on investment in plant & equipment, reinvesting profits, transfer of ownership, research & development tax credit, holidays and abuse from customers.

210 Business Advisers responded to this Survey.

Survey Findings

The first three questions in the August Survey were about investment decisions. The August UK Business Barometer, which drew 177 respondents, asked Businesses to consider their own investment decisions, and the two sets of results are compared here. .

The influence of fiscal measures on investment decisions was the focus of the first question, and 5% of Advisers thought their clients decisions were highly sensitive to fiscal measures, while only 4.5% of Business Barometer panellists said that their decisions were highly sensitive . 49% of UKBAB and 40% of UKBB respondents replied in categories 2 and 3 - relatively to moderately highly sensitive. Far more UKBB respondents, 18%, than UKBAB, 6%, said that investment decisions are not at all sensitive to fiscal measures such as taxation.

14% of UKBAB respondents didn't know what their clients' decision sensitivity was and 15% of UKBAB respondents found this question was not applicable to their circumstances.

The second question looked at whether the design of corporation tax is relevant to the propensity to reinvest profits in the business. Nearly a third of UKBAB respondents, 29%, and over a third of UKBB respondents, 38%, said that corporation tax design influences profit reinvestment decisions highly or relatively highly. 8% of Business Advisers believe that the design of corporation tax does not influence their clients' propensities to reinvest profits at all, compared with 22% of UKBB respondents. The results for UKBAB respondents are shown after adjusting for the 12% of Advisers who didn't know.

Looking at long term investment resources, 70% of responding Advisers believe clients' would prefer taking on more debt to raising equity finance. This compares with 44% of UKBB respondents with this preference. However, 18% of UKBAB respondents didn't know and 37% of UKBB respondents found this question not applicable.

A small proportion of business are enough concerned, about transferring all or part of their businesses, to consult a Business Adviser. Although 23% of Advisers had no clients seeking this kind of advice in the last year, 47% had requests from between 1% and 5% of their clients, and 1% of Advisers had more than 50% of clients consulting them in this area. Of those Advisers who were involved in any of these consultations, 21% estimate that over 50% of transfers encounter severe problems, but 48% reckon that severe problems are encountered by 5% or less.

The most common barriers to a straightforward business transfer appear to have been captured by the choice of responses to the question, since only 2% responded with 'other'. The chief reason detected by Advisers is managerial dependence on the owner, closely followed by lack of preparation for transfer. Poor performing businesses appear in third place, but this was only selected by 15% of Advisers.

The Research and Development tax credit scheme was introduced in April 2000 for small and medium sized enterprises. Through the R&D Tax Credit scheme, eligible companies are able to reduce taxation or claim cash sums. Knowledge about eligibility seems to be relatively scarce among smaller businesses. Business Advisers were asked to what extent their clients were aware of the R&D tax credit - 11% of Advisers thought that their clients were fully or largely aware, 52% thought that clients were either basically aware or aware but not in detail and 19% of Advisers thought clients are unaware. In the parallel UK Business Barometer Survey, 43% of UKBB respondents don't know if they are eligible for the scheme, and 46% do not consider themselves eligible, leaving only 11% who say they are eligible.

Advisers were asked to what extent their eligible customers are claiming the R&D tax credit. Advisers with eligible clients vary in the percentage of clients that they think are claiming - the results are shown in the chart below. The percentages shown have been adjusted for the 31% of Advisers who don't know. 25% of responding Advisers found that none of their clients is eligible for the scheme. The UK Business Barometer survey showed that 22% of the eligible businesses claim under the scheme, but also that 39% of those eligible don't know if they are claiming.

Comments submitted through the UK Business Advisers Barometer Survey on why many eligible companies do not claim R&D tax credit encompassed views that the scheme is too complex for the sums involved and generally little understood by businesses, with poor information available, while comments received from the UK Business Barometer Survey included views that the scheme is difficult to understand and/or claim.

The benefits to the business of a summer break might be reflected in how people feel about their return to work. Both UKBAB respondents and Business Barometer Survey respondents were asked how they personally feel. There was a degree of concurrence in the responses as can be seen in the chart, with more responding in the middle categories 2 and 3. The totals of the two most positive categories were over 50% for both UKBAB and UKBB respondents.

41% of UKBAB respondents have the length of their holidays determined by business factors beyond their control, to a high or relatively high extent, but 44% find this either not at all or only to a relatively small extent. Unsurprisingly, Business Advisers generally are freer to determine for how long they can take holidays compared to those running businesses.

Clearly the interpretation of the term 'abuse' can be very wide. The question on abuse was asked in the context of a 'Respect for Shopkeepers Week' in July 2004, which followed the revelation that shop assistants were subject to verbal abuse and physical attack. The UKBAB Survey asked if Advisers' clients have experienced abuse, and 7% said frequently, after adjusting for the 14% 'don't know' response The level of abuse experienced personally by UKBB respondents was lower, with only 1% of UKBB respondents saying that it has happened frequently. However,. what may be more surprising is that only 27% of UKBB respondents could say 'never' and also that Advisers believe that only 3% of their clients have never experienced abuse from customers.