Advice on bank charges for small businesses
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This year has been a tough one for business start-ups. If the onset of the credit crunch and looming recession haven't given the UK's limited companies and small firms enough to contend with, there has also been the change to the self-assessment tax returns process, which has given accountants plenty to think about this financial year. Perhaps one of the most dramatic twists 2008 has provided is the decision taken by various banks to increase their overdraft rates - a move that saw high street lenders challenged in the High Court over the fairness of their practises. While it is widely anticipated that the UK's small business sector has enough resilience to beat an oncoming recession, the behaviour of several lenders - which raised overdraft charges to as much as 15.8 per cent - has thrown a spanner into the works. In a recent workshop on BBC Radio Four's Money Box Live, presenter Paul Lewis and a team of financial experts and accountants were on hand to provide assessment and much needed-advice on the situation. |
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Stephen Alambritis, a spokesman for the Federation of Small Businesses, told the programme: "It's difficult to switch banks in today's climate. We're not overbanked like in America, we've got four major players, eight at the most, and they know full well that switching is very difficult."
Peter Vicary-Smith, chief executive of the comparison site Which? commented on the recent increases in overdraft fees: "It's extremely disappointing that instead of looking for ways to make their customers' lives easier during these difficult times, the banks are piling on the misery by continuing to hit them with unfairly high unauthorised overdraft fees."
When faced with the possibility of a bank increasing its overdraft fees, he added that it is best to take a diplomatic approach and ask your lender to review its charges, while consulting your accountant can also bare fruit.
Experts on the show suggested looking into other ways to increase revenues during the downturn, such as by checking whether your business is receiving its full entitlement of corporate taxation rate relief, which is generally available to firms occupying one property with a relatively small rateable value.
The criteria for rate relief often varies between local authorities, so businesses would do well to consult their accountant to see if they qualify for this or any other taxation benefits.
As a last resort, small businesses can switch lenders in some circumstances, but exploring every possible avenue and speaking to an accountant is recommended beforehand.
"I would exhaust all internal structures within the bank itself before just cancelling … if you have no luck through the internal procedures, then the Banking Ombudsman should be able to take up your case," Mr Alambritis added.
While the banks scored a victory on the fairness of overdraft rates this month in the High Court, there is no reason for them to record a victory over your business. If you think your business is being ripped-off when it comes to banking fees, there are always steps you can take. Before taking drastic action though, it is always worth listening to what your accountant has to say.
If you are thinking about using a switching lenders then talk to TaxAssist Accountants today on 0800 0523 555 or complete our contact form and we can help make a difference.
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