Swapping Banks Made Easy 
Small business owners will be able to switch banks with ease from mid-September, thanks to a new service managed by the Payments Council called the Current Account Switch Service.

At the moment, switching current accounts is a long and arduous process. After opening a new account and informing the old bank or building society of the move, customers have to wait between 18 to 30 days for the new account to be up and running.

This can cause them major problems, as during that time, they could be missing out on payments or delaying payments to suppliers through no fault of their own.

However, from September 16, when customers, including charities and private individuals, move banks, all existing payment arrangements will be moved across automatically, ensuring that direct debits and other agreements are honoured and the payee will be sent a message informing them to update their records with the new account details.

The scheme is also backed by a guarantee, so if anything goes wrong during the switch and charges or interest are incurred, the bank will refund that money.

The new service has been two years in the making and was born out of the 2011 Independent Commission on Banking report, which called for more competition between UK banks, increased innovation in banking and a reduction in the market share held by the Big Four

According to the Payments Council, customers using the new service, will receive a clear and consistent standard level of service, so that anyone who wants to switch provider can be confident about what will happen, and when.

For more information, speak to Harris Lipman, Chartered Accountants in London.

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G20 to Tackle Tax Avoidance 
The G20 summit which begins in St Petersburg today (September 5) is expected to see the group of developing and developed nations formally backing plans to tackle international tax avoidance and evasion.

Tax avoidance has been one of the main topics to emerge this year at summits, specifically multinational companies' use of legal, highly complex tax minimisation systems, and a Treasury spokesperson said that this summit must build on the one in June when the Prime Minister put tax "at the heart" of the agenda.

One global charity warned this week that tax avoidance on a global scale was not only harmful to the countries in which companies were based, but paid little or no tax, but was also damaging to developing nations, with African countries losing 2 per cent of national income to tax-dodging by businesses.

In fact, writing in the Guardian today, Kofi Annan said that from a sub-Saharan perspective, G20 tax reforms must tackle transfer mis-pricing, including the undervaluation of exports by a company to understate its tax liability, enforce transparent beneficial ownership and link African tax authorities into global reforms.

Meanwhile, the charity went on to say that the lost income of African countries through tax dodging was the equivalent of more than half of the money spent on health by governments throughout sub-Saharan Africa and added that, if the G20 countries meeting on Thursday lost the same proportion of GDP it would cost them £770bn collectively, with the UK losing £26.6bn.

A spokesperson for the charity said that the G20 should be ashamed to be at the helm of an economic system that allows companies to “rip off Africa” to this extent, and added that it is an outrage that the poorest countries not only suffer this, but are not even invited to the table to take part in tax talks.

For more information, speak to Harris Lipman, Chartered Accountants in London.

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Another Forecast Raised 
Following a raft of favourably revised estimations on economic growth, this time it is the turn of the Organisation for Economic Co-operation and Development (OECD) to increase its forecast for the UK for 2013.

The agency has almost doubled its forecast for this year, from 0.8 per cent to 1.5 per cent, because of the momentum of growth in the economy seen in the first half of the year and following news out this week that the UK construction sector grew at its fastest pace in August for nearly six years.

In its analysis of 34 major economies, the influential think-tank has put the UK behind the US, which it expects to grow by 1.7 per cent, and Japan, at 1.6 per cent, but ahead of Germany, at 0.7 per cent and France, at 0.3 per cent.

The agency believes that Italy’s economy will actually decline by 1.8 per cent, although this does not affect the performance of the Eurozone as a whole, which has now come out of recession, and that several emerging economies will experience a slowdown in growth.

In fact, the OECD warned in its report that China’s slowdown in growth, partly triggered by a tapering of quantitative easing in the US, has highlighted problems with a number of other emerging economies, particularly those with large current account deficits.

The agency also warned that the global recovery is “not yet firmly established” and that important risks remain, such as renewed financial, banking and “sovereign debt tensions” in the Eurozone.

On a year-on-year basis, the OECD’s current estimation is that GDP in the UK will increase by 3.7 per cent this quarter, compared with the same period in 2012 and, on the same basis, by 3.2 per cent in the last three months of the year.

For more information, speak to Harris Lipman, Chartered Accountants in London.

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SME Lending Drops 
Despite lenders borrowing billions from the Bank of England through its flagship Funding for Lending Scheme (FLS) net lending has been negative this year.

Bank figures published yesterday (September 2) showed that over the four quarters to June, participating institutions contracted their loan books by £2.3bn, even though they drew down a cumulative £17.6bn from the scheme.

The Bank’s quarterly survey shows that the 41 lenders participating in the FLS lent a net £1.6 billion during the quarter, the first substantial increase in lending since the scheme was set up last August. However, lending to small and medium-sized enterprises (SMEs) continues to fall, shrinking by a net £583 million during the quarter.

Under the scheme, banks and building societies receive discounted loans in return for increasing lending to households and businesses, but, while it has helped to slash the cost of home loans, credit to small firms continues to fall.

The idea behind the FLS was to make it easier for SMEs to access funds but the evidence suggests that the money has instead found its way into the mortgage market.

Gross mortgage lending has recovered to its pre-financial crisis levels, and looks set to remain strong, while house purchase lending is 30 per cent higher than last year and the number of loans could hit 70,000 per month by the end of the year.

However, the very people who were supposed to benefit are still being parched for funds, which was not the idea when the scheme was extended earlier this year.

Despite the figures, Bank officials insist that the FLS is continuing to support lending to the UK economy with a range of indicators suggesting that credit conditions are steadily improving for households and firms.

For more information, speak to Harris Lipman, Chartered Accountants in London.

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SMEs Repaying More Than They Borrow 
Although figures from the Bank of England show that bank lending to small and medium-sized enterprises (SMEs) rose to £3.8bn last month, up from £3.6bn in June, SMEs repaid a total of £4.1bn during the month, which reduced net lending overall by £287m.

July’s repayment level was far higher than the £3.5bn average over the past six months and was, in fact, the highest since March 2012, which challenges Bank Governor, Mark Carney’s argument that his policy of keeping interest rates unchanged until employment falls to 7 per cent will encourage companies to borrow and invest.

Mr Carney unveiled a potential credit boost to businesses last week when he said the Prudential Regulation Authority would allow the big high street banks and building societies to free up £90bn of funds, providing they meet regulatory capital thresholds equivalent to 7 per cent of their loans.

However, economists say that the environment for credit remains “very subdued” and that those firms that are able to access loans were paying more.

The average interest rate on new lending to private non-financial businesses rose by 30 basis points to 2.71 per cent during the month “in a further indication that corporate financing conditions remain tight”.

Meanwhile, others say that many firms were using cash reserves to fund investment, rather than taking out more debt, so it is possible that these figures mask an even larger increase in investment activity that is currently under way.

The data also supports a general observation that capital and liquidity issues, with perhaps one or two exceptions, are not holding banks back from new lending.

For more information, speak to London Accountants Harris Lipman.

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