www.pwc.co.uk/privatebusiness Private Business Bringing your business the value it needs April 2011 In this issue: Page 2 Budget 2011 – Helping businesses grow Page 8 Karren Brady – Playing at the top of your game Page 16 Shaf Rasul – Investing in success Also in this issue, we talk to two Introduction business people who are well aware of the need for an upturn in the economy: Karren Brady talks to us about her business outlook and the need for diversity in the boardroom, while Shaf Rasul tells us about his entrepreneurial roots and his management style. Welcome to the spring issue of Supporting new businesses is at heart of Private Business. what we do at PwC, so I’m delighted that we’re involved with the Private Business Editorial, April 2011 Awards for 2011. We’re looking for With the need for economic growth at companies who really showcase the the forefront of his mind, George Osborne drive and ambition of private businesses. delivered the second Budget of his time If you’d like to nominate your company in office on 23 March 2011. The Chancellor you can read more on page 19. talked of a Budget that contained the We round things off with our regular ‘hard truth’, and outlined the tough ‘Bits at the back’ section, where we reforms that were needed to bring the outline the current hot topics that your deficit under control. He went on to business needs to be aware of. announce measures specifically aimed at promoting enterprise and making As always, if you have any feedback UK plc a more attractive business option on the topics raised, we’d love to hear – for everyone from new start-ups to from you. overseas multinationals. On page 2 of this edition, we talk to Mary Monfries – Head of Private Business Kind regards at PwC – to guage her reaction to the Ruby Parmar Government’s plans. We look at how the [email protected] Budget may affect your business and also ask if the Chancellor has really done enough to promote meaningful growth. Contents Budget 2011 – Helping businesses grow 02 EU planning – Finding the right jurisdiction 05 Playing at the top of your game: an interview with Karren Brady 08 Corporate structures – Passing your MOT 12 Investing in success: an interview with Shaf Rasul 16 Celebrating the best: the Private Business Awards 19 Bits at the back… 20 Contacts 22 April 2011 1 here without paying a non-competitive international tax rate – and that’s a Budget 2011 huge step forward. Having said that, I do think there’s more that needs to Helping businesses grow be done. So number one, it’s great that there’s a commitment to making the UK competitive. And that recognition of the need for change is something On 23 March, the Chancellor delivered a Budget we’re seeing already in practice. that he described as ‘the hard truth’ for Britain. We’re working with HM Revenue & Customs (HMRC) to agree George Osborne talked of a ‘plan for growth’ and arrangements for our clients now, outlined this plan’s four main aims: even before the new rules come in: that make commercial sense. • To create the most competitive tax system in the G20. There’s a real change of attitude. • To make the UK the best place in Europe to start, But I think it would be unwise of the finance and grow a business. Treasury to think that they’ve fixed • To encourage investment and exports as a route to the issue entirely. It’s a fantastic step in the right direction but, actually, a more balanced economy. if you’ve got a large UK business that • To create a more educated workforce that is the is mostly UK-based, it’s not particularly most flexible in Europe. going to help you. Additionally, if there are non-domiciled investors We sat down with Mary Monfries, PwC’s Head of owning shares they may still need Private Business, to find out if she believes this really a holding company outside the UK. was a Budget for growth. On the corporation tax rate cut to 26%, you may say it’s only another 1% cut over and above what was already announced, but the fact remains that by the time it gets Creating the most competitive down to 23% in 2014, it’s a pretty tax system in the G20 competitive rate. And we do have to Has the chancellor done enough recognise this against the backdrop to lower the corporation tax rates? that the Chancellor hasn’t got a lot Will the extra 1% drop really make of money to play with, at present. the UK more competitive? So what else is there on the “Fundamentally, it’s very pleasing positive side? to hear that reiterated commitment to making the UK competitive. If you “I think it was positive that the look at corporation tax (CT) reform Chancellor reiterated yet again – there wasn’t a lot made of it in this that the 50% income tax rate is Budget because it had been pre- temporary. For privately owned announced on 9 December last year, businesses, this is just as an but it will enable easier international important factor as the headline structuring for a group headed in corporation tax rate. Of course, the UK but carrying out on the downside, there was no international business. It should timescale given on when he thinks enable a number of groups to stay he’ll be able to take that top rate away. 2 Private Business The other thing that may help the Making the UK the best place Encouraging investment and competitiveness of the UK as a place in Europe to start, finance and exports as a route to a more to invest is the piece around non- grow a business balanced economy domiciled individuals (non-doms). Where there enough changes in How important is private investment We’ve yet to see the details, but being this Budget to make the UK a more in getting the economy back on track? able to remit income and gains into attractive place to do business? the UK and invest them in British “I think that private investment is companies without suffering UK tax “It’s really important that the hugely important. The critical thing on the remittance should be attractive. Government, the press and any is encouraging entrepreneurship and The non-dom rules are favourable voices that can be heard are saying encouraging entrepreneurs to build here, recognising the importance of how important it is to make the businesses – and indeed students encouraging international investment, UK attractive to businesses – and coming out of universities and schools but at the same time they can seem also creating a sense of pride in to build their careers through working counter-intuitive – by acting as a entrepreneurs and entrepreneurship. for entrepreneurial businesses. If you deterrent to people bringing funds I don’t want to knock that. Having look at what was in the Budget to into the UK. What’s not yet clear is said that, if you talk to most people support that, there was of course the what is meant by ‘commercial who are at the early stages of change in the entrepreneurs’ relief investment in UK businesses’ and setting up a start-up business, (ER) limit from £5m to £10m – a big how that’s going to work. Is it going I think they’ll tell you that they’re step in the right direction. to be an investment in any UK frustrated. I don’t think many would commit to a statement that There’s a second piece which is un-quoted trading businesses or also critical. We need to make sure will it be more restrictive?” said the UK is the best place in the world to get help in starting we’re looking to individuals with The Office of Tax Simplification (OTS) a business. private money to go in and help has advised on the removal of several fund that entrepreneurial aspiration reliefs, but the tax code is still complex. It was interesting to see the – it can’t all come from the Do we need more simplification? Chancellor announce the Start-Up entrepreneur alone. For me, we have Britain campaign. Launched on 28 to recognise that there are different “I’ve had a couple of very useful March 2011, it’s part of a drive by sources of capital and different meetings with John Whiting entrepreneurs for entrepreneurs, to investment behaviour. A trick missed, (Director of the OTS) in the last few help start-up and growing businesses from my perspective, was that months and I think there’s real to access practical help. It will be although we had the increase in ER, commitment to simplify things. interesting to see how this develops.” it can only benefit people who have The difficult task that he and the a 5% or more stake and who are Government have is that, in the one Will the proposed extension of employed in the business. It would Budget, you might lose 43 obscure enterprise zones have the have been great if they had opened reliefs but you’re also creating more desired effect? that up to external individuals who are prepared to put their money complexity and/or change with the “There’s been very mixed at risk investing in unquoted new things you’re bringing in. experiences with enterprise zones trading businesses. We do call for simplicity, especially in the past.