Entrepreneurs: the UK's unsung economic heroes
By Rebecca Burn-Callander Tuesday, 20 November 2012
In the Prelude/PwC 'Unsung heroes of business' report, seven entrepreneurs open their books to reveal just how much of what they make goes to HMRC.
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Corporation tax. VAT. Income tax. National insurance. UK businesses contribute to the Exchequer in myriad ways, but have you ever wondered just how much it adds up to? Seven fast-growing businesses from across the UK have answered a challenge from entrepreneurs' network Prelude and financial services firm PwC to reveal just that, opening up their accounts to show just how much value they bring to the UK economy.
Alex Cheatle, founder of lifestyle management firm Ten UK, reveals that for every £120 subscription paid to his firm, £32 goes to the taxman through VAT, income tax and national insurance - and that's before corporation tax kicks in. Jonathan Quin, who started currency exchange World First back in 2004, will pay £2m in corporation tax this year alone. Managed offices business Instant Offices was launched by Rob Hamilton when he was just 24. According to his accounts, 30% of his turnover ends up in the taxman's pocket each year.
The report also details many of the challenges these entrepreneurs have faced in order to build their businesses. Whether they barely saw their wives during the first year of marriage (Andrew Noble, co-founder of occupational health consultancy Health Management), or built up huge debts to pay other people's wages (Ten UK's Cheatle), it's clear that creating something from nothing is no mean feat.
These businesses now make a sizeable contribution to the economy, their industries and often their local communities too. Take Moneypenny, the outsourced PA service founded by Rachel Clatcher and her brother in 2000. This firm is one of the key employers in the Chester area, and has applications arriving in droves. As a result, Moneypenny hasn’t advertised for a PA or reception role for 10 years. ‘Over 900 people applied to work for us last year,’ says Clacher.
And, in terms or economic value, every penny - or should that be cent - of turnover at videogames developer Splash Damage comes in from outside the UK, mainly the US. ‘We’re fantastic for the economy,’ says founder Paul Wedgwood.
Why does this matter? Well, according to Ruby Parmar, tax partner of PwC, which co-produced the report, it's time that the wider public was made aware of the endeavours and sacrifices of the UK's entrepreneurial community. 'The personal and financial sacrifices taken by entrepreneurs, particularly in the early years, should not be underestimated,' she says. 'All of the entrepreneurs in this study have created jobs and wealth for workers. They have benefited their local economies and the wider UK economy by paying increasing amounts of tax to the UK Exchequer. These case studies show how vital it is that the contribution made by entrepreneurs is recognised and that they are encouraged to keep taking risks and to grow their businesses.'