I never understood modern car loans and now I know why.

In the days when I used to borrow money to buy a car I understood what I was doing. Price was £X000 borrow money at Y% over 3 years means you repay £Z every month until you can either enjoy loan free driving for a year or two or start again. Then the game changed instead of a loan you were asked to get involved in a Personal Contract Purchase (PCP) which sounded to me like renting the car.

Hearing my friend Jimmy extolling its virtues because “you can upgrade your Merc every couple of years because you just roll it on” sounded like pass the parcel but when you eventually removed the wrapping you were left with the bill for the party – or no car.

I presumed that I just didn’t understand and went back to driving my second hand, 3-series Beemers until they died beneath me. Incidentally that’s 4 cars in 31 years – total purchase cost £25K.

It seems that I was right about this PCP business and the balloon payment idea is another bubble (hardly surprising) waiting to burst.

From The Conversation:

Are we facing a car loan credit crunch? Here are the facts

 

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Dental associates; workers or self-employed? The tide is turning…. from JFH lw

Laura Pearce, Senior solicitor at JFH law has written a an informative blog post on the changing position of associates in the eyes of HMRC.

Since the Central London employment tribunal handed down its decision in the Uber case on 28th October 2016, the courts have been awash with claimants seeking to gain worker status. Pimlico Plumbers and CitySprint have both had judgments against them, and claims against Deliveroo, Amazon Logistics and Hermes are all in the pipe line. 

But how is this relevant to the dental profession?

Whilst associates enjoy self-employed status for tax purposes, this is an arrangement with HMRC; not the legal system. Since the Uber case it is clear the courts are cracking down on false self-employment and so dental practices need to be live to this issue.

Failing to identify a person’s status from the outset will be a costly mistake to make.

Here we take a look at the recent judgments in the Pimlico Plumbers and CitySprint cases and explain what impact they have on worker status in the dental profession.

To make sure you don’t wind up before the courts read on here. 

Pharmacists – another endangered species?

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The Minister for Community and Social Care (Alistair Burt) spoke in Parliament on 24 May 2016 a few days before he silver tongued the BDA conference with similar words after which I wrote, “Much of his speech we have heard before and it did little to convince me that (NHS) dentistry is anything other than an irregular irritation in the big picture of health. There will be no more funding in the foreseeable future, no matter what sort of contract is produced, be prepared to deliver it with a tighter belt.”

Hansard has the full transcript of May 24th here but I have selected the phrases (reminiscent of Bullshit Bingo) that chimed with me, thinking back to his speech in Manchester.

We want to empower primary care health professionals to take up opportunities to embrace new ways of working with other health professionals to transform the quality of care that they provide to patients and the public. In particular, we want to free up pharmacists to spend more time delivering clinical and public health services to patients and the public in a range of settings.

I have seen at first hand the fantastic work that pharmacists are doing from within community pharmacies, such as in healthy living pharmacies and other settings, and colleagues have also paid tribute to that work. Pharmacy-led services, such as the recently recommissioned community pharmacy seasonal influenza vaccination programme, can help to relieve pressure on GPs and A&E departments……

The fund is set to rise by an additional £20 million a year. By 2020-21, we will have invested £300 million in addition to the £31 million that NHS England is investing in funding, recruiting and employing clinical pharmacists to work alongside GPs to ease current pressures in general practice and improve patient safety.

The chief pharmaceutical officer, has commissioned an independent review of community pharmacy clinical services to make recommendations on future models for commissioning pharmacy-led clinical services. Clinical pharmacists will offer complementary skills to GPs, giving patients access to a multi-disciplinary skill set, and helping GPs manage the demands on their time and provide a better experience for patients. This is a great opportunity for pharmacists wanting to make better use of their clinical skills and develop them further.

Sweet words indeed, after Alister Burt, who seemed to me to be a pragmatic and likeable (unlike his boss Mr Hunt) moved to the back benches post Brexit vote, the words are transformed into reality.

Pharmacy plan ‘could lead to High Street closures’ BBC website (October 20th 2016)

The Department of Health said it wanted to reduce the £2.8bn a year pharmacy bill by more than £200m over the next two years.
…It has been suggested cuts on this scale could lead to up to 3,000 of the 11,700 pharmacies being closed.
Currently, the average pharmacy receives £220,000 a year from the NHS.
This accounts for between 80% and 90% of their income and includes a flat rate of £25,000, which nearly all pharmacies receive.
The changes being announced scrap that and put much more emphasis on performance-related funding, with ministers understood to see the current system as outdated and inefficient…

I repeat….There will be no more funding …. no matter what sort of contract is produced, be prepare to deliver it with a tighter belt.

Sidney Toledano on numbers.

I have recently worked with a couple of clients who have been obsessing about and dominated by numbers – it turns out that a previous adviser had insisted that they use systems where everything is counted, measured and future performance is predicted. The problem is that many of the predictions were unrealistically optimistic and the subsequent counting and comparing has produced a sense of failure in the management team. Add in a feeling of overwhelm where the counting takes over from the doing and there is a feeling of inertia. I love numbers as much as, if not more than, the next man or woman but by no means are they the be-all and end-all of a business. So the Key Performance Indicators (KPIs) should be decided and monitored but they need to be realistic, easy to see and part of a system where changes can be made in response to stimulus.

I read the interview from which this is an excerpt whilst on a flight over the Irish Sea, and I was thinking that at the front of the ‘plane there were a couple of pilots with a bank of instruments in front of them which they were monitoring but not obsessing about. In the same way that when you drive a car you are subconsciously scanning speedometer, fuel gauge, temperature, sat-nav, rev-counter, rear mirrors and it’s only when one of these shows something for concern that you take action.

It’s the doing that is most important, not the counting – that’s just a tool.

Sidney Toledano has been the President & Chief Executive of Dior Couture since 1998. During his time in charge the group have opened another 200 stores and both turnover has risen from €134 million to €5 billion. In his interview in the FT recently I was struck by the former mathematician’s attitude to numbers and business.

Sidney+Toledano+Arrivals+Guggenheim+International+wCmpa01HuxGl“We already had the culture at Dior, but we had to be more agile and reactive. That is why I always say, ‘If business is not good, don’t stay in the office’. Some people try to find out what’s wrong through the numbers. But if you stay in the office nothing will change.”

“My Father taught me it’s better to have no explanation for success than to have a lot of explanations for a failure. Success is intuition, action, decision and take some risks. Frankly, numbers; I see them every day when I get the worldwide update. I can see every single figure for every single piece. But I don’t spend more than 10-15 minutes on it because I follow them every day.”

“It’s like a good doctor. They see the numbers very quickly – temperature, whatever – but they talk to the patient. I’ve never seen a doctor fixing a problem with a thermometer. And you never fix a problem with the numbers. Don’t look and you miss everything.”

 

Summer soft patch significant? – from RBS Chief Economist’s Weekly Brief

Here are a some of the stats that leapt out at me. The full report is here.

Italics are mine.

Weak signal. The soft patch for British business continues, according to the latest Purchasing Manager’s Index, with activity remaining subdued in each of the UK’s three main sectors in May. Manufacturing output, at 50.1, just about scraped above the 50-mark that separates expansion from contraction. But orders are weak and come mainly from domestic demand. Meanwhile output in construction is the weakest in three years, although true to form construction firms remain optimistic. Lastly, activity in the dominant service sector, at 53.5, remains below its long run average of 55.2.

Re-writing history. Once a year the Office for National Statistics makes new estimates for GDP growth over the past few decades. These revisions are normally small but sometimes they are meaningful. Take the first two years of this recovery. The original data showed that 2010 was a year of fairly slow growth (1.5%) before the recovery speeded up to a sprightlier 2% in 2011. But the revised statistics have now reversed that, with 2010 being the year of 2% growth before a slowdown in 2011. What hasn’t changed is the fact that this is one of the slowest recoveries the UK has ever experienced.

Comeback kids. Ireland and Spain were amongst the economies hit hardest by the Euro crisis, but their growth is now the envy of the rest. Business confidence, as measured by the PMI, is highest in Ireland (59.1) with Spain in second place on 54.8. But current concerns are concentrated on two big economies that aren’t doing very well. France and Italy are hovering close to the stagnation point of 50. That’s unfortunate for France, but at least the GDP of the Euro 2016 hosts is 3% above its pre-crisis peak. But it is disastrous for Italy whose economy is still 7% smaller than it was in 2008.

More of the same? Surveys suggest the US growth slowdown might be more than a passing phase. The Institute for Supply Management’s service sector index slipped from 55.7 in April to 52.9. That was the lowest level since February 2014. Especially notable was the fall from 59.9 to 54.2 in the new orders gauge. The manufacturing report was more encouraging. It rose by 0.5 points but a reading of 51.3 hardly signalled runaway growth.

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“Be Careful With Tax Avoidance..”

Here’s an extract from the most recent newsletter from Ray Prince and Graeme Urwin at Rutherford Wilkinson Ltd. I bumped into Ray at The Dentistry Show recently. A short while later I met someone who told me he had been talking to an accountant who guaranteed to cut his tax bill by a half. All I could think to say was, “If something seems to good to be true, it usually is.” I’m pretty sure that Ray & Graeme would agree.

QuestionMark1Hot Topics Q&A: Be Careful With Tax Avoidance
Every week we receive questions from clients regarding all aspects of their financial planning. So, rather than keep the answers to ourselves (and clients) we publish one key topic each issue.
Q. As a high earning dentist, I pay large amounts of income tax. I get it that this goes with the territory, but I want to explore schemes which can help reduce my tax bill.
What advice would you give?

A. You are of course not alone in wanting to minimise the amount of tax you pay. This is something that we cover with all clients to one degree or another.
Sticking to income tax, and gaining a relief, there are few tried and tested routes that would make a significant impact.
Pension Investment – if you invest in a pension then this will reduce your top level of tax you pay. The problem however is that the vast majority of our clients are being hit by the reduction in the Lifetime Allowance, that limits the size of the pension pot you can build up.
You could take out a pension for a spouse or children however.
Enterprise Investment Scheme (EIS) & Venture Capital Trusts (VCT) – here you can gain 30%tax credits as long as you have paid the amount of income tax you are claiming. So a £100k investment would get a £30k tax credit.
These are riskier investments, with special rules, but can be valuable as part of an overall strategy.
Of course there are other ways you can help save tax. For example, maximise your Isa allowances which are now a lot higher at over £15k pa per person.
We would add a note of caution at this point!
We have had clients who have in the past been advised by advisers or accountants to invest in various weird and wonderful schemes.
This has in our experience resulted in a massive tax bill in the future when the scheme fails!
The carrot of wiping out a tax bill is very tempting, and these schemes can sound almost foolproof. Our advice would be to think many times before you even consider them!!
Figures show that HMRC had collected more than £2 billion in disputed tax from tax  avoiders, in 2014 alone. If anything HMRC are tightening the noose.
This is merely a brief look at this subject, and as ever we urge you to get professional advice.”

Please send us your questions! It’s easy to do. Just email us at docden@rwpfg.co.uk (and if we publish it we’ll make it anonymous).

 

NASDAL results show growth in private practice profits.

NASDAL

NASDAL – the National Association of Specialist Dental Accountants and Lawyers – today released their analysis of client figures for the year ending April 2015. Full report in Dentistry Online here.

Key points are:

  • The UK dental market has continued to grow at a rate of around 4.4% with relatively unchanged costs and a prolonged recovery in profitability.
  • Private practice profits per principal just overtook NHS profits in 2014 for the first time since 2006.
  • Average private practice profits per principal have jumped to £140,129 in the year ending 5 April 2015, compared with £130,613 the year before.
  • In NHS practices, the average practice profits per principal have marginally increased to £129,265, compared with £129,054 the year before.
  • Associate profits have remained relatively stationary in 2015 at £68,024 compared with £68,544 in 2014.
  • The average unit of dental activity (UDA) rates for NHS practices remained relatively stable at around £26.50, while the average UDA rates paid to associates in 2015 was £10.75, down from £11.23 in 2014.

The sample size for the statistics included 600 practices (which equated to 650 principals) and 600 associates.

I’ll comment tomorrow.

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