UK small businesses record levels of digital adoption in 2023
A recent report by the Federation of Small Businesses (FSB) found that small businesses in the UK are adopting digital technology at a record pace. The report found that 87% of small businesses now have a website, and 70% use online marketing.
This is a significant increase from the previous year, when only 75% of small businesses had a website and 55% used online marketing. The report suggests that the pandemic has accelerated the digital transformation of small businesses, as they have been forced to find new ways to reach customers and sell their products and services online.
Interestingly, the report found that small businesses that have adopted digital technology are more likely to be profitable. 60% of small businesses that use digital marketing are profitable, compared to only 40% of small businesses that do not use digital marketing.
The findings suggest that digital adoption is essential for small businesses in the UK. Furthermore, one can conclude that small businesses that adopt digital technology are more likely to be successful, both in terms of profitability and growth.
There are, however, a number of barriers to digital adoption for small businesses. These barriers include lack of skills, lack of funding, and lack of awareness of the benefits of digital technology.
The FSB report recommended that the government and other organizations provide support to small businesses to help them adopt digital technology. The report also recommends that small businesses themselves make a commitment to digital adoption and invest in the skills and resources they need to succeed online.
The report’s findings suggest that digital adoption is a key factor for small businesses in the UK. By adopting digital technology, small businesses can improve their profitability, grow their businesses, and reach new customers. In summary:
- The most common digital technologies used by small businesses in the UK are websites, social media, and email marketing.
- Small businesses that use digital technology are more likely to be aware of the latest trends and to be able to adapt their businesses accordingly.
- The main barriers to digital adoption for small businesses are lack of skills, lack of funding, and lack of awareness of the benefits of digital technology.
- The government and other organisations provide support to small businesses to help them adopt digital technology.
Examples of small business digital adoption
Here are some examples of the types of digital adoption involved in the small business sector:
- Websites: Having a website is essential for any small business that wants to be found online. A website can be used to showcase products and services, provide information about the business, and connect with customers.
- Online marketing: Online marketing is a broad term that encompasses a variety of activities, such as search engine optimization (SEO), pay-per-click (PPC) advertising, and social media marketing.
- Online marketing can be used to reach new customers, generate leads, and drive sales.
- E-commerce: E-commerce refers to the sale of goods and services online. E-commerce platforms like Shopify and WooCommerce make it easy for small businesses to set up an online store and sell their products to customers around the world.
- Cloud computing: Cloud computing refers to the use of remote servers to store and process data. Cloud computing can help small businesses save money on IT costs and improve their flexibility and scalability. For instance, cloud-based accounting software allows businesses to access their accounting data from anywhere, at any time. This can save businesses time and money, as they no longer need to maintain their own accounting software on-premises.
- Mobile apps: Mobile apps are a great way to reach customers on their smartphones and tablets. Mobile apps can be used to provide information, offer discounts, and facilitate customer service.
- Online invoicing and payments: Online invoicing and payments allow businesses to send and receive invoices and payments electronically. This can save businesses time and money, as they no longer need to mail invoices or process payments manually.
- Receipt scanning and tracking: Receipt scanning and tracking tools allow businesses to scan and track receipts electronically. This can help businesses to automate their expense reporting process and improve their cash flow management.
- Accounting automation: Accounting automation tools can automate tasks such as data entry, reconciliation, and reporting. This can free up businesses’ time so that they can focus on other important tasks.
- Data analytics: Data analytics tools can help businesses to analyze their accounting data to identify trends and make informed decisions. This can help businesses to improve their financial performance.
How can small businesses effectively adopt digital technologies and become digitally enabled?
If you’re a small business owner and you’re thinking about adopting digital technologies and becoming a ‘digitally enabled business’. That’s great! Digital technologies can help you improve your efficiency, productivity, and customer service. They can also help you reach new markets and grow your business.
But before you start adopting digital technologies, it’s important to to create a firm foundation for what lies ahead so here are some tips for small businesses that are looking to adopt digital technology in their quest for digital enablement benefits:
Start with a clear goal in mind. What do you want to achieve by adopting digital technology? Do you want to reach new customers? Increase sales? Improve customer service? Once you know your goals, you can start to develop a plan to achieve them.
Do your research. There are a lot of different digital technologies out there, so it’s important to do your research and find the ones that are right for your business. Talk to other small businesses, read online reviews, and attend industry events to learn more about the latest trends.
Start small and scale up. There’s no need to invest in a lot of expensive technology upfront. Start with a few small projects and see how they go. If they’re successful, you can then scale up your digital adoption efforts.
Get help from experts. If you’re not sure where to start, or if you need help implementing a digital technology solution, there are a number of experts who can help you. There are also a number of government and non-profit organisations that offer free or low-cost support to small businesses.
Adopting digital technology can be a daunting task, but it’s worth it in the long run. By adopting digital technology, small businesses can improve their profitability, grow their businesses, and reach new customers.
What are some of the benefits that digital adoption can bring?
There’s a lot of time and effort that goes into becoming a digital enabled company, not least in the planning and choice of technologies that match your businesses level of service and technological experience. Just the time alone, in training staff and managing customer expectations, mean that the benefits must be significant to justify the level of investment. So here are a few of the main benefits your business and customers can expect:
Increased efficiency: Small businesses are able to automate tasks and streamline their operations. This can free up time and resources so that businesses can focus on other important activities.
Reduced costs: Small businesses can save money on things like printing, postage, and travel. For example, businesses can use online tools to manage their finances, communicate with customers, and track inventory.
Improved customer service: Your business can provide better customer service. For example, businesses can use live chat and online support to answer customer questions and resolve issues quickly.
Increased visibility: In today’s business landscape, online visibility is critical and so the adoption of the right web enabling technologies is essential. This can lead to more customers and more sales.
New opportunities: An example of how visibility through digital technology can open up new opportunities. For example, businesses can use digital marketing to reach new customers around the world.
The importance of security: When adopting digital technology, it is important to take steps to protect your business from cyberattacks. This includes using strong passwords, keeping your software up to date, and being aware of the latest threats.
The need for training: Adopting digital technology can be a complex process, so it is important to provide your employees with training on how to use the new technology. This will help them to get the most out of the technology and to avoid making mistakes.
The importance of measuring results: It is important to track the results of your digital adoption efforts so that you can see what is working and what is not. This will help you to make adjustments to your strategy as needed.
Recent updates to the government initiatives and industry responses
Since the Help to Grow: Digital scheme closed in February 2023 there have been no further updates from the government. However, it is possible that the government will announce a new scheme in the future, but there is no guarantee of this.
The Federation of Small Businesses (FSB) has expressed disappointment at the closure of the Help to Grow: Digital scheme, stating that it was “a missed opportunity to help small businesses invest in digital technologies.”
The British Chambers of Commerce (BCC) has also expressed disappointment, stating that the scheme “was a valuable tool for helping small businesses to improve their digital capabilities.”
The government has said that it is “considering options for how to support small businesses with digital adoption in the future.”
Overall, there is a consensus that digital adoption is essential for small businesses to succeed in the modern economy. The government and other organizations must take steps to support digital adoption by small businesses, and it is likely that this trend will continue in the years to come.
Final thoughts
Digital adoption is essential for small businesses, and at TaxAgility, it’s a subject we discuss often with our client base, especially in relation to the array of cloud accounting tools available to them in the quest for digital enablement.
By adopting digital technologies and following an ongoing path of digital enablement, small businesses can improve their profitability, grow their businesses, and reach new customers. However, it is important to do your research and find the right digital technologies for your business. You should also start small and scale up as you become more comfortable with the technology.
What is the Register of Overseas Entities (ROE) and how does it affect me as an overseas investor in UK property
The new Register of Overseas Entities (ROE) is a public register of beneficial ownership information for overseas entities that own land or property in the UK. The ROE was created under the Economic Crime (Transparency and Enforcement) Act 2022, which was passed in response to the Russian invasion of Ukraine. The ROE is intended to make it more difficult for criminals to launder money through UK property by making it easier for law enforcement to identify the true owners of overseas entities.
The ROE came into force on 1 August 2022. All overseas entities that own land or property in the UK must register with the ROE. The information that must be registered includes the name and address of the beneficial owner of the entity, as well as the date on which the entity acquired the property.
The ROE is a valuable tool for law enforcement and other agencies that are working to combat economic crime. By making it easier to identify the true owners of overseas entities, the ROE can help to deter criminals from using UK property to launder money.
In this article we will cover the following:
- The extent of crime related to property investment in the UK
- A brief overview of the ROE
- An explanation of why the ROE was created
- A description of the information that must be registered on the ROE
- A discussion of the benefits of the ROE
So how big is the problem?
To highlight how big of an issue money laundering through property is in the UK, here are some statistics for 2022 on money laundering related to UK property investment by overseas individuals:
- Total value of UK property investment by overseas individuals: £6.7 billion
- Value of UK property investment by Russians accused of corruption or links to the Kremlin: £1.5 billion
- Percentage of UK property investment by Russians accused of corruption or links to the Kremlin in the City of Westminster: 28.3%
- Percentage of UK property investment by Russians accused of corruption or links to the Kremlin in Kensington and Chelsea: 18.8%
Such statistics highlight the extent of money laundering related to UK property investment by overseas individuals. The UK has long been a target for money launderers, and the property market is a particularly attractive option as it is relatively easy to hide the source of funds. The recent sanctions against Russia have increased the focus on money laundering in the UK, and it is likely that these statistics will only increase in the coming years.
How do criminals achieve their goals? Here are some of the ways that money launderers use UK property investment to launder their money:
Buying property in cash: This is the most common way to launder money through property investment. Criminals can simply buy property in cash, without having to provide any evidence of where the money came from.
Using shell companies: Criminals can set up shell companies to buy property on their behalf. This makes it difficult to trace the ownership of the property, and therefore the source of the funds.
Using trusts: Criminals can set up trusts to own property. This can also make it difficult to trace the ownership of the property, and therefore the source of the funds
This is why the UK government has taken steps to combat money laundering in the property market. These include introducing new regulations for property transactions, increasing the powers of law enforcement agencies to investigate suspected money laundering and recently, the introduction of the ROE.
The creation of the ROE
The ROE is a public register that lists the beneficial owners of overseas entities that own land or property in the UK. The register was created as part of the Economic Crime (Transparency and Enforcement) Act 2022, which was passed in response to the Russian invasion of Ukraine. The aim of the ROE is to increase transparency and make it more difficult for criminals to launder money through UK property. The ROE has been welcomed by anti-corruption campaigners, who believe that it will make it more difficult for criminals to hide their assets. However, some critics have argued that the ROE is too complex and that it will be difficult to enforce.
Are you looking to invest in UK property, or perhaps you already own property here?
If you are an overseas investor who owns property in the UK, or if you are considering buying property in the UK, you will need to be aware of the ROE. The following are some of the key things you need to know:
Who is required to register?
The ROE applies to all overseas entities that own land or property in the UK. An overseas entity is any entity that is not incorporated or registered in the UK. This includes companies, trusts, partnerships, and individuals.
What information must be registered?
- The ROE requires overseas entities to register the following information about their beneficial owners:
- Name
- Date of birth
- Nationality
- Residential address
- Occupation
How do I register?
You can register your beneficial ownership information on the ROE website. The registration process is free.
What are the penalties for non-compliance?
If you fail to register your beneficial ownership information on the ROE, you could face a fine of up to £2,500.
Benefits of registering on the ROE
There are a number of benefits to registering on the ROE, including:
Increased transparency: The ROE makes it easier for law enforcement agencies to track down criminals who use UK property to launder money.
Reduced risk of fraud: The ROE makes it more difficult for criminals to steal your identity and take control of your property.
Improved market reputation: By registering on the ROE, you are demonstrating that you are a responsible investor and that you are committed to compliance with the law.
The ROE system may seem like a lot of additional paperwork, but it is important to remember that it is designed to protect you and your investment. By registering your beneficial ownership information on the ROE, you are helping to make the UK property market a more transparent and secure place.
Final thoughts
The ROE is a new initiative that is designed to increase transparency and reduce the risk of financial crime in the UK property market. If you are an overseas investor who owns property in the UK, or if you are considering buying property in the UK, we strongly suggest that you register your beneficial ownership information on the ROE. By doing so, you are helping to make the UK property market a safer and more secure place for everyone.
How AI is Helping HMRC to Collect Taxes and Crack Down on Tax Evasion
HMRC has been developing its AI capabilities for a number of years. In 2016, it launched the AI Lab, which is a team of experts who are working to develop new AI-based tools and techniques to help HMRC collect taxes more effectively. In this article, we explore some of the ways HMRC is using its new tools to crack down on small business tax evasion.
The AI Lab has made a number of significant achievements in recent years. For example, it has developed an AI-based tool that can automatically detect fraudulent tax returns. This tool has been used to identify millions of pounds of fraudulent tax claims.
AI Lab is also working on developing AI-based tools to help HMRC with other tasks, such as identifying businesses that are at risk of tax evasion and targeting businesses for audits.
It appears that HMRC is committed to using AI to improve its ability to collect taxes and to crack down on tax evasion. The AI Lab is playing a key role in this effort, and it is likely that HMRC will continue to develop its AI capabilities in the years to come.
Here are some of the ways in which HMRC has been developing its AI capabilities:
- Investing in research and development. HMRC has invested heavily in research and development of AI technologies. This investment has led to the development of a number of innovative AI-based tools and techniques.
- Partnering with academia and industry. HMRC has partnered with academia and industry to access expertise and resources in AI. This collaboration has helped HMRC to accelerate the development of its AI capabilities.
- Scaling up its AI capabilities. HMRC is scaling up its AI capabilities by training more staff on AI technologies and by investing in infrastructure to support AI-based processes.
HMRC’s investment in AI is a significant development that has the potential to transform the way that HMRC collects taxes. By using AI, HMRC can become more efficient and effective in collecting taxes, and it can crack down on tax evasion more effectively.
HMRC cracks down on small business tax evasion with AI
Small businesses are a vital part of the UK economy, but they are also at risk of tax evasion. The UK tax authority, HMRC, is using artificial intelligence (AI) to crack down on small business tax evasion. This is a significant development and it’s important for small business owners to be aware of the risks and to take steps to protect themselves and thus avoid the prospects of a tax investigation.
Why small businesses need to know this
There are a number of reasons why small businesses need to be aware of HMRC’s use of AI to crack down on tax evasion.
The use of AI is a significant development that small business owners need to take note of. AI is a powerful tool that can be used to analyse large amounts of data and identify patterns of suspicious activity.
This means that HMRC is now able to identify businesses that are at risk of tax evasion much more easily than in the past.
Small businesses are a target for tax evasion. Small businesses are often seen as being less likely to comply with tax laws than larger businesses. This is because small businesses may have fewer resources to devote to tax compliance, and they may be more likely to be run by individuals who are not familiar with tax laws.
The penalties for tax evasion are severe. If a small business is caught evading tax, it could face significant penalties. These penalties could include fines, asset seizures, and even imprisonment.
How AI is identifying businesses at risk of tax evasion
AI is being used to analyse data on businesses to identify patterns of suspicious activity. For example, AI can be used to identify businesses that are reporting unusually high expenses or that are making large cash payments.
Here are some examples of suspicious activity that AI can identify in businesses that are:
- Reporting unusually high expenses, such as travel and entertainment expenses.
- Making large cash payments, especially for items that are typically paid for by check or credit card.
- Reporting inconsistent income and expenses from year to year.
How AI is assessing the risk of tax evasion by businesses
AI is being used to assess the risk of tax evasion by businesses. This risk assessment takes into account a number of factors, such as the business’s size, industry, and location.
Here are some factors that HMRC considers when assessing the risk of tax evasion:
- The size of the business. Larger businesses are more likely to be audited by HMRC than smaller businesses.
- The industry of the business. Some industries, such as construction and hospitality, are more prone to tax evasion than others.
- The location of the business. Businesses that are located in areas with a high concentration of tax evasion are more likely to be audited by HMRC.
How AI is supporting HMRC’s enforcement activities
AI is being used to support HMRC’s enforcement activities. For example, AI can be used to identify businesses that are not complying with tax laws and to generate reports on tax evasion.
Here are some ways that AI is being used to support HMRC’s enforcement activities:
- AI can be used to identify businesses that are not filing tax returns or that are filing late.
- AI can be used to identify businesses that are underreporting their income or overstating their expenses.
- AI can be used to generate reports on tax evasion that can be used by HMRC to target businesses for audits.
What this means for small business owners
As a small business owner, it’s important to be aware of the fact that HMRC is using AI to crack down on tax evasion. This means that you need to be more careful than ever to ensure that you are complying with all tax laws.
Here are a few things you can do to protect yourself from being caught up in HMRC’s AI crackdown:
- Keep good records: It’s important to keep good records of all of your business income and expenses. This will help you to ensure that you are able to declare your income correctly and that you are not claiming false expenses.
- Keep all of your receipts, invoices, and other documents related to your business.
- Organise your records in a way that makes them easy to find.
- Keep your records for at least seven years.
- Get professional advice: If you are unsure about your tax obligations, it’s important to get professional advice from an accountant or tax advisor.
An accountant or tax advisor can help you to understand your tax obligations and to ensure that you are complying with all tax laws.
Be aware of the risks: Tax evasion is a serious offence and it can lead to penalties, asset seizures, and even prosecution. It’s important to be aware of the risks of tax evasion and to take steps to avoid it.
Penalties: HMRC can impose penalties for tax evasion. The amount of the penalty will depend on the severity of the offence.
Asset seizures: HMRC can seize assets, such as bank accounts, cars, and homes, from businesses and individuals who have evaded tax.
Prosecution: In some cases, HMRC may prosecute businesses and individuals who have evaded tax. If convicted, individuals can face up to seven years in prison.
How TaxAgility has helped clients avoid tax evasion issues
As a specialist small business accounting firm in Richmond and Putney, we’ve been on hand to assist our clients ensure they meet all their tax reporting obligations in a timely manner. We are also able to spot simple and more elaborate issues in their day-to-day operations and tax reporting, that may bring them to the attention of HMRC, often quite inadvertently so.
Don’t hesitate to contact TaxAgility, if you’re concerned that mistakes may have been made and you are worried about HMRC’s response. Call today on: 020 8108 0090.