HOW WE MADE IT

WILL MY SPANISH FIRMFACE A UK TAX BILL?GMwrites: I run a Spanish companythat has been offered contracts toprovide services to festival-goers inthe UK over the summer. Thecompany pays corporation tax at30% in Spain.Will I have anadditional tax charge in the UK?

The company has twomain options:it can operate a branch in the UK orset up a UK subsidiary company,writes Jon Dawson, partner atKingston Smith LLP.If the company operates through a

branch, it will have to pay tax only onUK profits if it has a permanentestablishment in this country. Apermanent establishment is a fixedplace of business. As youwill becarrying out yourwork at variousfestivals, it is unlikely this will apply,so any profits from these contractswould be taxable in Spain.However, corporation tax is

significantly lower in the UKthan inSpain, at 20% or 21%. For thisreason, youmay prefer toincorporate a UK subsidiary to carryout the festival contracts and, afterpaying UK corporation tax, pay adividend to your Spanish company.For dividends paid to corporate

entities, the UK does not havewithholding tax, so any dividends toa company are paid gross. As long asat least 5% of the UK subsidiary isowned for 12months, the Spanishparent company should not pay anyfurther corporation tax on receipt ofthe dividend.In either scenario, youwill have to

consider VAT in the UK. Onceturnover from all festivals here tops£81,000, the UK branch or companywill have to register for VAT, but itmay choose to do so sooner torecover VAT on expenses incurred.

THIS WORKER DOES THEJOB BUT NOTHING MOREHWwrites: How do I deal with anemployeewho is lazy? I have no issuewith job performance, but he isalways the first to leave at 5pm andnever volunteers to help others. Ibelieve he is complacent in hisworkplace behaviour, yet I do nothave any excuse to discipline him.Other employees complain that hedoes not pull his weight.

Some people are just not team playersand have no interest in going thatextramile when other employees do,

writes Peter Done, managing directorof Peninsula. As long as the employeeis doingwhat he is contractuallyobliged to do, it may be inappropriateto discipline him—you say you haveno issuewith his actual performance.It may be thatmotivation is the

problemwith this worker. If he doesnot feel valued, this could be havinga knock-on effect on hiscontribution to the company, givinghim a negative perspective.A negative employeemay have a

detrimental effect on theworkforce,spreading a feeling of discontentthroughout the rest of the staff. Suchbehaviour should not go unchecked,and this employee is clearly givingyour other staff something tocomplain about.Having a process to deal with

employee relations and behaviour isessential for the success and bestinterests of thewhole business.You need to have awordwith the

worker to discuss this matter. Mostemployee issues like this can beresolvedwith a simple informalconversation.Negativity can stem from a lack of

communication between employerand employees— if staff do not feelthat their opinions are sought oracknowledged, they can begin to loseenthusiasm, and resentment andnegativitymay build.If you give the employee an

opportunity to speak to you, evenjust in the forum of a casualconversation, he is more likely to feellistened to and involved.Also, you should not assume that

the employee does not have anyvalid points as the basis of hisnegativity. Hemaywell have goodcause to complain about particularevents at work, or theway that hehas been treated, so youmust keepan openmind.Make sure you take a pen and

paper into themeeting— or, ofcourse, a tablet or other electronicdevice— so you canmake a note ofany action that youmay need to takeafterwards.

Business doctor

When MelissaBurton decidedto take her con-fectionery over-seas, she lookedto theCommon-

wealth for an easy start. “It ismuch faster to enter certainCommonwealth countries be–cause of similar cultures,” saidthe founder of GoodyGood Stuff,which makes sweets suitable forvegans and vegetarians.Since its launch four years ago

with start-up cash of £200,000,the company has grown to sixstaff at home and 19 abroad.Stockists in Britain includeWait-rose, Tesco andAsda. Burton alsoexports to 29 countries, 14 ofthem in the Commonwealth,including Australia and India.“Chances are if yourproduct is

popular in Britain, it will be inmany Commonwealth coun-tries,” she said. Thatmakes life alittle easier for businesses in anumber of ways. “We deliverthings aswewould inBritain anddon’t have toworry about trans-lation,” said American-bornBurton, 34, who is based inHeysham, Lancashire.She is not alone in her quest to

tap Commonwealth nations inthe hope of a profitable relation-ship. As athletes prepare for theopening of the CommonwealthGames in Glasgow this week,businessleaderswillalsobegath-ering in the city.The two-day Commonwealth

Games Business Conference willallow companies to showcasetheirproductsandservicesto200chief executives from the 53Commonwealth states.There will be workshops and

presentations run by UK Trade &Investment, theScottishgovern-ment, Scottish Enterprise, andthe Commonwealth BusinessCouncil. They will help compa-nies to connect with some of thefastest-growingeconomiesintheworld, including India,Malaysia,Nigeria and Singapore.“Britain has great social, his-

torical and economic connec-tions with the Commonwealthand our shared values, language

andlegalsystemsmakeiteasiertodo business,” said Lord Living-ston, the minister for trade andinvestment, who was formerlyBT’s chief executive.AstudybytheRoyalCommon-

wealthSocietysuggested that theties between the membercountries add up to a “Common-wealth effect’” that is equivalentto a 20% reduction in the cost ofdoing business with them.“The Games will provide us

with a fantastic opportunity tohelpmoreBritish firms todeepentheir relationships with thosecountries,” said Livingston.According to figures from

UKTI, British businesses haveabout £100bn invested in otherCommonwealth countries, while£40bn comes into Britain fromthe 52 other nations.“We will connect companies

with the high-growth opportu-

nities that are available across theCommonwealth in sectorsincluding rail, construction, ITand agritech,” said Livingston.Ian Stevens is one of the bosses

hoping tobagmoreoverseascus-tomers this week at the BritishBusiness House opened inGlasgow for the event. He willshow off the work of TouchBionics, a medical technologycompany in Livingston, WestLothian.“I am interested in the Games

butwewillbethereforbusiness,”said Stevens. The 11-year-oldbusiness makes prosthetic handsand has helped 5,000 people. Ithas 115 staff and has raised about£10m to date from ArchangelInformalInvestmentandScottishEnterprise.About 75% of Touch Bionics’

£12.3mrevenues aregenerated inAmerica, but Stevens also sells to

the Commonwealth nations ofAustralia,NewZealand,IndiaandSouth Africa.“Wefoundtheassociationwith

Britain helps when entering amarket,”saidStevens,51.“Coun-tries are receptive and knowingthe language is a bonus.”LizVillani specifically targeted

a Commonwealth nation whenshedecidedtobroadentheexportmarketsforhercompany,Coura-geous Success, which providesHR training programmes. Itopened for business in Australiatwo years ago.“The culture is similar and

they haven’t had an economicdownturn,” said Villani, 41, whohas 12 staff at her UKbase nearGrantham, Lincolnshire. Today15%ofrevenuesarebrought inbyAustralians.“There seems to be an emo-

tional link as well as a trade rela-

tionship,” she said. “Britain isseen positively by Common-wealth countries, and businessesunderestimate thestrengthof theBritish brand.”Businesses reap the benefits of

exporting products or servicesswiftly, according toUKTI. “Evi-denceshowsthatcompaniesnewto exporting experience, onaverage, a 34% increase in pro-ductivity in the first year,” saidDominicJermey,thechiefexecu-tive of UKTI.The Commonwealth Games

also generates rewards, with asignificant boost to economicgrowth for the host city. Man-chester benefited to the tune of£2.2bn in 2002, Melbourne by£1bn in2006andDelhiby£2.5bnin 2010.“Weare creating a lastinglegacy so that Glasgow and Scot-landwillbenefitformanyyearstocome,” Jermey said.

TheGlasgowGameswill helpbusinesses raceinto primeexportmarkets.ByKiki Loizou

Commonwealth putsme in a sweet spot

Melissa Burton exports to14 Commonwealth nations

PAUL COOPER

Husband and wife peg futureto a traditional clothes lineJENNY PARKER and her husband Richardmet 20 years ago and have been businesspartners for almost half that time. “Livingandworking with each other comes quitenaturally,” said Jenny,whometRichardathis 21st birthday party.She started her first business in 2000,

straight out of the University of Derby,whereshestudiedproductdesign,innova-tionandmarketing.Thecompany,EquineInnovations, developed horse-care prod-ucts for clients suchas the royal equestrianZara Phillips and the police.Jenny expanded the range to include

Barbourclothingin2003,andthepartner-shipinspiredherandRichardtostartanewventure. “It was becoming easier to go toretailers than to design and manufactureproducts ourselves,” he said. “The facto-ries couldn’t handle the hi-techmaterialswewere using.”In 2006 the couple founded Country

Attire, an online store for classic Britishbrands such asHunter andBelstaff, aswellas Barbour. The company is based inCheshireandhas31staff.Saleswere£6.9min2012and£10m-plusisexpectedthisyear.Half its revenues are generated overseas.Overseas brands with a similar design

ethic have been added, including CanadaGoose and Hugo Boss. “We can’t just gowith British brands, we need synergy,”said Jenny,who is themarketing director.“Our name represents the best of Britishstyle worldwide.”Country Attire introduced its own label

last year, called CO/AT. “Our focus is toraise our profile as a brand, and make itpersonal,” said Richard, 41, themanagingdirector.The site’s popularity has earned

CountryAttireaplaceinTheSundayTimesFast Track 100 league table of Britain’sfastest-growing private businesses. “Westill approach things from a customer’sperspective, not a retailer’s,” said Jenny.Jenny, 37, was born in Glossop, Der-

byshire, and grew up in nearby Buxtonwhere sheattendedStThomasMoreCath-olic School.Her fatherwas aplasticsman-ufacturer inManchester and hermother ahousewife. Her younger brother, AndrewHargreaves, is the head of web develop-ment at Country Attire.“I was always passionate about British

manufacturing,it’smyheritage,”shesaid.“Mymother’s family made hats in Stock-port andmy father’s family owned cottonmills in India.”In 1995 Jenny enrolled on a one-year

horse management course at NottinghamTrent University, looking after 50 horses aday. “It was amazing, but hard graft. Ittaught me a lot about self-reliance, andgaveme the idea for Equine Innovations.”She then studied at Derby University’s

School of Engineering, where she wrotethe business plan for Equine Innovations,and also gained a Chartered Institute ofMarketing diploma. “Iwas encouraged bymy tutors to take my horse rug design tomarket,” she said. “The project evolvedover the years and eventually led to thefounding of Country Attire.”Richard spent most of his childhood in

Sale, Greater Manchester. His parents leftcareersatBTtostartarestaurantinSpainin1984. He spent a year with them beforereturning home to attend Sale GrammarSchool.“Myparentsdidn’tstarttheirownbusi-

ness till their40s,”hesaid.“Iwasthinkinglike an entrepreneur from the age of 14.”In 1992, Richard enrolled at theUniver-

sity ofManchester to study politics, but hedropped out after 12 months. “I found theacademic life a bit too slow.”His parents moved back to Manchester

in 1990 to open a nursing home, andRichardbecameamanagingpartnerthere.

Thehomewassold in2004for£1.1m.Until2002healso importedandsoldsportscars.The following year Richard co-founded

Space IT Computer Recycling, but it wasshut down in 2006. “It was moderatelysuccessfulbutIdidn’twanttosplitmytimewith Country Attire,” he said.The clothing retailer was started with

onecomputerat thecouple’shomeinSale.“Technologywas catching upwith ecom-merce,” said Richard. “The speed of theinternet made fulfilling online ordersmuchmore viable.”Theyboughtahouse inthePeakDistrict

national park in 2007, a year after theymarried. Soon after, theymoved the busi-ness to an industrial estate in WhaleyBridge, Derbyshire. “We stupidly thoughtwe could still operate from home.”In 2012 they relocated to a 36,000 sq ft

site in Bredbury, Stockport. “We haveplenty of growing space so we’re hopingnot to have to move for some time.” Theyalso recruited two board members: HelenBlomeley, financial director, and JamesPow, chairman. “We were stretched andthere was only so far we could have takenthe business,” said Jenny. “We neededtheir retail backgrounds and experience.”TheParkershavetwodaughters,aged10

and 6. Richard’s advice to aspiring entre-preneurs is: “Talk topeoplewho’vedone itbefore and learn from other businesses inthe sector.”Jenny adds: “Dig deep. No onewill ever

hand it to you on a plate. You have toworkthe hours and there are a lot of sacrificesbut in the long term everyonewill gain.”

Hattie Williams

The Parkers started their business at home — today they occupy 36,000 sq ft

PAUL COOPER

Jenny & Richard ParkerFounders ofCountry Attire

Kingston Smith LLP, the charteredaccountant, and Peninsula, theemployment law firm, can adviseowner-managers on their problems.Send your questions to BusinessDoctor, The Sunday Times, 3 ThomasMore Square, London E98 1ST. Adviceis givenwithout legal responsibility.

bizdoc@kingstonsmith.co.uk

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