Call for simple tax breaks to help business

Andy Raynor, chief executive of the listed accountancy firm, said the new 50 per cent income tax rate acted as a "clear disincentive" to enterprise and warned that many private businesses have yet to feel the full force of the increase.

His comments came as the UK slipped down from 11th to 16th in international rankings of tax effectiveness, according to a study by the World Bank.

Mr Raynor said: "The vast majority of our clients do make profits and they reinvest those profits because their great god is business growth and if you have got business growth, you have got greater employment, you have got greater profits and you have got greater taxation. That is a virtuous circle that I think we need to get back to."

He added: "We ought to be celebrating entrepreneurial Britain because irrespective of taxation rises, pension changes and public sector cuts, it's going to be businesses who generate wealth who will get us out of any pickle we get into."

RSM Tenon is the first accountancy firm to be listed on the main London Stock Exchange. City analysts expect revenues of up to 270m and profits of 35m this year.

Tenon grew as a consolidator by acquiring a number of provincial accountancy firms throughout the last decade, showing profit growth since 2003.

Last year it merged with RSM Bentley Jennison to form the seventh largest accountancy firm in the UK, although Mr Raynor said in many cities its representation is ahead of that position.

The new business has around 50 offices across the country, with 35 offering full service to mainly SME clients. It employs 310 people across Yorkshire and the North East.

In an interview with the Yorkshire Post, Mr Raynor was upbeat about the prospects of his customers.

He said: "I believe that the segment we serve, which is predominantly privately owned businesses, will get along just fine. I'm a huge believer in them; we all are and that's why we have dedicated our business to that segment."

He said forces in the wider global economy, such as Ireland's banking woes, meant that accurate forecasting was difficult.

"I do not see any rapid great take-up of recovery but I do not at the moment see quite a double dip, but I do see we bobble along pretty closely to the bottom for a period of time.

"Our job therefore is to protect clients' businesses, take opportunities where they can and to find ways for people through a bit of a jungle because if they really have got a good business prospect that requires investment to be able to grow, it can be quite tricky to find, with banks which are quite rightly being prudent and private equity houses who also quite rightly are being very careful about the investments that they make.

"For businesses that have the right merits and characteristics and are willing to do the things that are necessary, the funding is available."

This month, RSM Tenon gave evidence to the House of Lords committee looking into the domination of the audit market by the Big Four accountancy firms of PwC, Deloitte, KPMG and Ernst & Young.

The committee will decide if this market dominance contributed to the failure to identify the risks taken by big banks in the lead-up to the financial crisis.

In the event of one of the Big Four running into difficulty, he said conflicts would inevitably arise. He added: "People who are doing very deep advisory work cannot do audits so the majority of major financial institutions probably have two of the Big Four working for them already."

Mr Raynor said RSM Tenon in its evidence had warned the committee against the introduction of new legislation on auditing and risk management.

He was in Leeds last week to talk at a seminar held by the London Stock Exchange and Law Society on the Legal Services Act, which will open the sector to outside investors.

He said law firms of a reasonable size with a clear market focus and strategy and a culture that may be attractive to others would be most successful at bringing in external finance and he would be "unsurprised if one of the early movers came from Leeds".

Good progress on integration

In a trading update in July, RSM Tenon said it was making good progress on integrating recently-acquired businesses and was trading in line with its expectations.

The group bought RSM Bentley Jennison for about 76m late last year, and, in June, spent 6.8m buying assets from failed administration group Vantis.

Tenon said integrating RSM Bentley Jennison should be completed by the new year. The acquisition increased the turnover of the group's Yorkshire operations to 17m, giving it more than 200 staff.

The group now has offices in Leeds, Hull, Wakefield, Grimsby, Doncaster and Harrogate. Tenon said it continued to look for ways to increase efficiency, which will lead to "modestly increased restructuring costs in the short term".