UK-GDPR vs EU-GDPR what is changing?

UK-GDPR vs EU-GDPR what is changing?

6 Minute Read


After the Trade and Co-operation Agreement was signed between the UK and EU in December 2021, privacy professionals were left on the edge of their seats for a further six months until the adequacy ruling was reached by the EU in June 2021.

UK-based companies can now process the data of EU citizens in line with GDPR, provided they adhere to a couple of new extra measures such as having a representative in the EU for EU data subjects to interact with in the event of a privacy concern or data subject access request.

For now, the UK has been deemed to have an ‘adequate’ level of data protection meaning that businesses can transfer data between the UK and the EU without needing to put any extra safeguards. However, now that the UK is looking to find opportunities to diverge from EU approaches to the GDPR to improve growth and liberalise international trade. This is happening in two key areas:

  1. International Data Transfer Agreements (IDTAs)
  2. Adequacy Regulations

The Department for Culture Media and Sport (DCMS) has expanded the scope of the ICO as a regulator and has set up a new International Data Transfers Expert Council to advise the government on how to expand the number of countries the UK grants data adequacy to and how to implement safeguards to transfer personal data countries outside any adequacy rulings. Let's look at these new measures in depth.

International Data Transfer Agreements (IDTAS)

When organisations in the EU transfer personal data outside the EEA, Switzerland or any country with EU adequacy, it is mandatory to implement extra safeguards to ensure the privacy rights of EU citizens are protected. A key mechanism used is the Standard Contractual Clauses (SCCs) which is a contract and form with fixed clauses supplied by the European Union Data Protection Board (EPDB). Following Brexit, the UK has now implemented its own version of the SCCs called IDTAs which UK organisations use when transferring data to a country outside the UK, EEA, and Switzerland. Companies must have these in place by 21st September 2022 at the latest.

What's different?

The structure of SCCs and IDTAs are structurally identical and are split into 4 parts: The tables for all the key information around data processing, the optional extra protection clauses, commercial clauses, and the mandatory clauses set by the respective data protection authority.

Here are some key differences:

  1. There is no differentiation between transfer relationships in the IDTA - the EU has differing versions of the SCCs for Controller to Controller, Controller to Processor, or Processor to Processor transfer relationships.
  2. The IDTA makes provisions for "linked agreements" where the SCCs do not. This means that if you are a software development company in the UK and you are using developers in South Africa to help deliver client projects, the IDTA can use and maintain consistency in the definitions across both your service agreement, data protection schedule, and the IDTA.
  3. IDTAs provide a little freedom. You can add extra information required by the clauses in the forms, remove clauses that are not applicable, may amend the IDTA for use in multi-party arrangements and the clauses do not need to be signed to become binding. This makes the IDTA more flexible and can accommodate a wide and varied range of data transfer relationships whether its your suppliers within your group of companies or with your customers.

Adequacy Regulations

The UK has been deemed ‘adequate’ by the EU which means that businesses can transfer data between the UK and the EU without needing to put any extra safeguards in place. At present, the EU recognises Andorra, Argentina, Canada, the Faroe Islands, Guernsey, Israel, Isle of Man, Japan, Jersey, New Zealand, Republic of Korea, Switzerland, and Uruguay.

The UK's version of Adequacy Decisions is the Adequacy Regulations and at present, the UK government is looking to bring the following countries in the scope of the UK's adequacy regulations:

Australia, Brazil, Colombia, The Dubai International Financial Centre, India, Indonesia, Kenya, The Republic of Korea, Singapore, United States of America.

Source: DCMS
Source: DCMS

The UK government has been making efforts to improve innovation and digital trade liberalisation through the introduction of new International Data Transfer Agreements (IDTAs). These agreements are a noticeable divergence from the EU’s Standard Contractual Clauses (SCCs) and it is clear that the aim is to improve both the quality and efficiency of exporting personal data to countries without adequacy status. While it remains to be seen whether these changes will have the desired effect, businesses should start preparing for IDTAs now by getting in touch!

Mushroombiz 2021 Entrepreneur Polling Results

Mushroombiz 2021 Entrepreneur Polling Results

Record number of Generation Z businesses planned this year


  • New poll reveals one-in-seven Britons aged 18-24 plan to start their own business in 2021
  • School and university graduates “rejecting job market to take back control of their futures from Covid”
  • Results demonstrate huge recent uptick in “tech start-ups, passion projects and side hustles started in university dorm rooms”


AS COVID-19 WREAKS havoc on the UK economy, the country’s young people are taking matters into their own hands, a new major poll released today (21 January) reveals.

The poll of over 2000 British adults shows that one-in-seven (15%) young people (aged 18-24) in the UK will start their own business in 2021.

If they carry out their plans, this would result in a record-busting 800,000 new Gen Z businesses this year[1]. Between 2018 and 2019, 390,000 businesses were started in the UK across all age groups.

According to Ed Surman, Managing Director of Mushroombiz, who commissioned the poll, the results show “that young people leaving school and university are rejecting the shrinking job market to take back control of their futures from COVID-19.”

The OBR estimates that the UK enemployment rate will peak at 7.5% in the middle of 2021 – representing about 2.6 million people out of work – up from about 4% before the pandemic struck.

According to Surman this reality has forced many young people to re-evaluate their futures and “become their own boss.” He says the poll backs up what he has seen: “a huge uptick in the number of tech start-ups, passion projects and side hustles started in university dorm rooms in the latter half of 2020.”

As people adjusted to ‘the new normal’ of the pandemic, the number of new companies being created in the UK compared with 2019 soared in the second half of 2020, according to the Office for National Statistics.  July 2020 set a new record with more than 81,000 businesses registered in the UK.

The poll, carried out by Yonder (formerly named Populus) also found that around one-in-five (19%) young people (18-24) considered starting their own business for the first time last year.

The new polling also revealed that 13% of Britons would start their own business if they had more spare time, while 20% would become their own boss if they had more money.

Notably, the poll shows that across all age groups twice as many men (9%) as women (4%) plan to start their own business this year, while over one fifth of Londoners (21%) plan to become their own boss in 2021.

The news comes in spite of underlying concerns for the UK economy, with the poll revealing a majority of Britons (57%) are not confident in the country’s economic prospects for 2021, with 45% not confident in it over the next five years.

The poll was commissioned by Mushroombiz ahead of its annual conference on the future of business in the UK.

Data will be available here soon.

Do I become a sole trader or set up a limited company?

Do I become a sole trader or set up a limited company?

When starting out on your own as an independent consultant, it can feel like a leap into the unknown and from a financial perspective, being independent has many perks but it does necessitate some discipline and responsibility.

Luckily in the UK, becoming a freelancer is fairly straightforward. The UK is reputed as one of the best places to do business and become an entrepreneur. In 2018, the UK was ranked 1st as the best country for doing business in Forbes magazine.


Deciding between self employment and setting up a company.


Setting up as a limited company is becoming more and more popular for contractors for a number of reasons, but first it is important to know what the difference is. When you become a sole trader, you are self-employed and the business or “job” you are doing is tied directly to you and you are individually liable for anything that goes wrong! When you deliver your consulting services through a limited company, the business of consulting is the business of a limited company and you own the shares. The benefits of setting up your salesforce freelancer business this way can be found in the ‘limited’ which is shorthand for limited liability. This means you, the director and shareholder, are not personally liable for when things go wrong.If you want to understand how the tax works in both scenarios, get in touch!


"Let's talk about the things that can go wrong!"

RiskWorst Case Scenario as a Sole TraderWorst Case Scenario as a Ltd Company
Dispute with a client over project delivery and you must refund £30,000You need to pay it out of your own pocket – personal finances at risk.If the company can’t pay it can go bust without you putting your personal finances at risk.
IR35 – A boring but important piece of regulation (esp. for large corporates).Harder for big companies to comply with IR35 because of the defining scope and means of employment rule.Much easier to establish that the freelancer is “defining the scope and means of employment”.
BorrowingMore likely to use your house for security.Less likely to use your house for security.
HiringYou can employ people as a sole trader, but again if disputes occur, you’re liable for damages.Liability with the company, means you are not personally liable for damages.


We’ve given the sole trader route a bit of bashing. There are benefits going self-employed generally, but given contract sizes for projects will tend to be larger and lower volume than a product business, a limited company might be a better option when starting out. Setting up a limited company might be a little more admin but we believe it is generally worth it from a risk perspective.

Need more advice? Get in touch with the Mushroombiz team today

Our view on the UK economy

Our view on the UK economy

"As Coronavirus quarantine in the UK continues, we outline what we think the mid-term impact will be, as well as the trading conditions after the restrictions have eased." The biggest threat to global economic stability is what is happening in the US. Bank of America recently released their analysis giving a likely scenario of 10% GDP contraction over 3 quarters with 47 million unemployed workers. At present they do not have anything like the Coronavirus Job Retention Scheme. The UK Office for Budget responsibility predicted a 35% contraction and 2 million unemployed. Considering the US picture this is very good and by having an economy in comparatively better shape with a high percentage of companies surviving means that the UK has an opportunity to gain a little bit of market share at home and abroad. Whether you are competing with an American PR firm or an international competitor in the same foreign market, the government has set up these schemes to make sure you can take advantage of the downturn.

Some of you may have read economics at university but a very simple concept is that there is a perfect, inverse relationship between the unemployment rate and growth. As the economy grows, unemployment goes down, as the economy contracts, unemployment goes up. A 35% contraction is a much bigger drop proportionally than the rising unemployment rate. This means that the Government’s policy decision has been about making sure they keep as many people as possible in employment by keeping as many businesses afloat as possible.

For the UK government these are the numbers that count, because this means more businesses will have some cash (via grants) to take advantage of new opportunities and employees, furloughed or not, will still be able to go out in the summer and spend some money (albeit a bit less).

If you work in retail, take advantage when the lockdown is lifted. People will want to meet up for a coffee, food or a drink to socialise again. We all might have awful hair that needs a proper seeing to by a local hairdresser and some of us will want to hit the gym and maybe get our beach bods ready for what is left of the summer.

Assess your own market, your competitors and look at new markets if that is relevant and achievable.


Here’s how some of our clients have been approaching the lockdown...


Michael Harley: Redplug


UK’s leading Rockwool Approved Blown Insulation Installer

In the current Covid 19 crisis we have tried to take a calm, practical approach. We have looked at guidance from the government information for the construction industry. As a small business we have adjusted our operation accordingly with the government advice to be able to keep our employees safe and keep the business running.

Our customers have been understanding throughout this and hopefully we can continue once the restrictions have been lifted.







John Higginson: Higginson Strategy

Award-winning communications agency

We are a purpose-led consultancy based in London and Manchester. We support a range of companies, charities and public bodies, helping them to explain their purpose, getting them media coverage and opinion pieces in national publications. We also have a podcast that looks beyond the headline called Behind the Story.

Prior to Covid-19 we had two offices so we were already good at working remotely. Once the virus hit we immediately started working from home – luckily we don’t make physical products so this was achievable with minimal disruption.

As a result, the operational challenge we have faced has been not so much on the technical side, but more on keeping people motivated whilst they’re apart. Like many we very quickly became video conferencing masters and have conducted much of our business through this medium.

The other key affect on business is the fear of a recession. Being a consultancy is it (fortunately) easier for people to put our contracts on hold than get rid of us completely. The fact that our clients have been able to furlough non-income-generating staff has also worked in our favour as in some cases it has freed cash for them to continue to engage us. As an outside agency we’re also very productive (we have to be to prove our value compared to in-house resources) which is a useful thing for our clients at the moment.

So after an initial drop-off in clients, we now appear to be winning business. Among those signing up have been a number who are wanting to support the NHS or government in some way, such as through the provision of ventilators or Personal Protective Equipment (PPE). Higginson Strategy has benefitted here due to our access to these channels and our specialism in communicating the right messages about people doing good. Providing they are presented authentically – and not just for commercial gain – these kinds of messages help the bottom line for our clients as people in general want to do business with organisations they believe are doing good.

Overall we have been fortunate that our business model has proven resilient to the pandemic so far and, while we are obviously looking forward to returning to normality along with everyone else, we are pleased to have maximised the opportunities identified along the way. Ross Chaplain: Lykke and Hygge



Specialist Hair Professionals in Evesham

“Covid-19 was tough for us to begin with. With closing completely, we have had to be really careful to minimise our costs. Having recently taken on a new member of staff this was especially challenging, and, whist we were able to furlough most people, our new-starter was not eligible so we have had to find an alternative way of protecting what income we can for her by paying her a training wage."

We have since received a small business grant, which has eased our cashflow, and we’re waiting for the outcome of our CBILS (Coronavirus Business Interruption Loan Scheme) application which should help us through the next month or so.

When business gets going again we’re confident the demand will be there. We’re preparing to work differently, with PPE and potentially taking on some new assistants to help maintain distancing between each stylist team.

Our staff are really keen to get going again and we’ll be offering them extra working hours where needed to help meet the new demand. All are welcome down for their first post-lockdown haircut!”

tax credit

R&D Tax Credit Specialists

R&D Tax Credit Specialists

Ed Surman, Director at Mushroombiz, interviewed Mike Newnham, Quantum R&D Tax Specialists, about Research and Development (R&D) Tax Claims, for Ed’s podcast, Business With The Fun Guys.  The podcast interview is available on our website to listen to, however we’ve taken the main points of Newnham’s teachings and illustrate them here:

The R&D Tax Credits Scheme is a simple process which rewards companies for being innovative.  It can be an incredible support to business due to the implications on corporation tax.


What Is An R&D Tax Claim?

An R&D tax claim is an amendment to the corporation tax return.  It tells the HMRC:

  • you’ve been doing Research and Development
  • what you’ve been doing
  • the costs incurred
  • that you’re entitled to money back under the scheme.


How Much Can I Claim?

The R&D Tax Claim looks to enhance your R&D costs by 130%, thereby reducing your profits and allowing you to pay less corporation tax.  For example, if you spent £100K on R&D, this would be enhanced by 130%, equating to a £230K total for R&D.

Note that you don’t have to make a profit in order to claim R&D Tax.  In this situation, you can surrender the claim at 14.5% and get this back.  For example, if your loss is £230K, you can claim this back at 14.5%, as cash to put back into the business.  There are no restrictions on how you can use this cash, and many businesses have used this money to hire new employees, initiate a R&D project, or to buy equipment.

There is also no limit regarding how much can be claimed which makes this scheme more accessible to small businesses who may wish to claim smaller amounts of £1K for example.  There used to be a £10K limit meaning that in order to claim, your costs needed to be £50K plus.


Am I Eligible?

Most businesses don’t realise they’re doing Research and Development.  However, the claims aren’t purely for technology companies, it can apply to any type of business.  In order to qualify, you need to be trying to make a technical advance in order to solve a problem, where there’s not an obvious or simple solution.  For example, you could be a cleaning company developing eco friendly cleaning materials or a new app.  Many businesses conduct R&D at some time in their business so it’s worth reviewing the R&D tax credit scheme.


How Do I Claim?

You firstly complete your Corporation Tax Form (CT600) then you file an amendment (tax claim).  Both can be done online.  The amendment needs to include two other reports: a financial report containing details of salaries, subcontractors, consumables/materials/prototypes/software and utility costs; and a technical report containing details of the project(s) undertaken, the difficulties you faced, and the process involved.


Note that you don’t have to succeed in solving the problem in order to claim.


If you would like to know more about the R&D Tax Credit Scheme, please read here


If you’d like to talk to someone about a potential R&D Tax Claim, get in touch with Quantum Tax.  Their contact details are available on their website


If you need help with your accounts, completing your corporation tax form or complying with other business obligations, get in touch with Mushroombiz here.


Jargon Buster

To simplify the technical terms used in the podcast, we’ve provided an explanation of each below:

  • CT600: form number of the corporation tax return
  • R&D claim: amendment to CT600 (corporation tax return)
  • Tax credit: deduction on tax liability
  • Technical advance: advance in science or technology that doesn’t already exist
  • Financial report: details all costs incurred in doing R&D
  • Technical report: details the technical advances, difficulties you’ve faced and how you’ve overcome them

How to spot the first signs of failure

How to Spot the First Signs of Failure

Ed Surman, Director at Mushroombiz, interviewed Ron Mitchell of Business Rescue UK, for his podcast,  Business With The Fun Guys.  The podcast interview is available on our website to listen to, however we’ve taken the main points of Mitchell’s teachings and outline them below:


Businesses In Trouble

Business owners or directors don’t aim to get into problems and this usually only happens once, therefore they have no experience.  Some will wait till the 11th hour before getting help.  The earlier you contact someone for advice and help, the better, however there is always opportunity for recovery and success, if you get the right support.

When your business is in trouble you might contact an insolvency practitioner, accountant, or you could contact Business Rescue.


Insolvency Practitioners

One of the options for a business in trouble is to contact an Insolvency Practitioner.  An Insolvency Practitioner will use either an IVA (Individual Voluntary Arrangement) or a CVA (Company Voluntary Arrangement) to help keep your business running.  This involves making an arrangement with your creditors to either pay all or some of the debt off over a period of time, usually five years. This may include selling off some properties, ending leases, etc.  One of the issues with a CVA is that it's advertised, so becomes public knowledge.  Other businesses become wary and any existing credit accounts could soon be replaced with proformas.   But in certain circumstances, a CVA works well.  The client states how much will be paid on a monthly basis, based on a realistic income and expenditure analysis.


How Can Business Rescue Help?

Another option is to contact Business Rescue.  Business Rescue is a group of businessmen who’ve experienced running companies that have had difficulties.  When they are contacted by a client, they ideally like to carry out a ‘business medical’.  They look at all aspects of the business, find the root problems from a business point of view, review all the options available and recommend actions in the short term and long term, that are required in order to improve the direction of the company.  So for example, a lack of cashflow can be a problem but what has caused this?  The answer depends on the solution required in order to repair it.  Unlike some other organisations, Business Rescue aren’t restricted in terms of the products they can offer and work with various other service providers to help turn businesses around ie. Finance, legal, debt management, employing new management, etc.  But the client chooses and Business Rescue will work with them, building up a good relationship.


Business Rescue offer a similar product to the CVA (mentioned above) but Business Rescue negotiate with the creditors. The agreement doesn’t become public knowledge and the only parties aware of the arrangement are the creditors, the client and Business Rescue. They look to pay 100 percent of the debt off within the five years, but there's no restriction, so can extend to six or seven years.  And the established supplier credit accounts are kept.


When Business Rescue are first approached for help, they generally have to take action quickly and buy some time.  They will call creditors telling them of their involvement, that they’re reviewing the situation and will contact them with a plan in a month.  During that month, they complete their ‘business medical’ as mentioned previously.  Business Rescue once received a phone call from someone who stated they had a winding up petition, due to be heard, the following day.  So they had to arrange a barrister to attend court the next day in order to at least get an adjournment while they completed their business medical.


Potential Problems

 There are many reasons why a business develops difficulties.  Internal and external change is always likely so needs to be monitored and planned for.  A few examples of potential problems are:


  • Major customer goes bust
  • Past loan has enormous interest rates
  • Product Life Cycle changed – now lack of demand
  • HMRC debts
  • Supplier relationship is weakening
  • Losing valuable staff
  • Cashflow problems


One of Business Rescue’s clients runs a commercial laundry.  He was subcontracting some of the work and doing hotel laundry for very major hotels.  Unfortunately the subcontractor had a fire and the majority of sheets and blankets were destroyed.  The subcontractor wasn’t insured, and had to replace £75,000 worth of linen for a hotel the next day.  The problem wasn’t the fire, but lack of insurance.  Often the essentiality of these products doesn’t become obvious until there’s a problem.

Another thing that seems obvious is having a business plan, even if it’s on one sheet of paper, with a plan of where the business is going.  Most businesses don’t, and they also don’t monitor what’s going on in their business.   They have no idea what their sales forecast is.  They might have a historic set of accounts but they don’t use them to regularly measure the key factors, graph them or look for trends, to help identify any early warning signs.

Some small traders have started business because they may be a technician, a plumber, bricklayer etc. and that's what their skill is. The company's got bigger, but they haven't been taught management and business skills to cope with this.   Small companies tend to work hard and keep going until the problem becomes too big.  But any business owner needs to understand his business or understand what’s going on in his business and it’s amazing how many people don’t.


Business Rescue help businesses as much as they can and are aware of the difficulties involved, particularly for a small business owner or SME, where for example, the owner’s house might be in jeopardy, he is in fear of losing the business and may not yet have told his wife.  He’s putting his future in Business Rescue’s hands so there’s a big responsibility involved.  However having shown their clients direction, many retain their services as business mentors to help out in the future.


Is your business in difficulty?  If you would like to find out more about how Business Rescue could help, click here.


If you’d like some business support (so you are less likely to need to call Business Rescue) please contact Mushroombiz today here.

Setting up shop in Europe?

Setting Up Shop in Europe?

Ed Surman, Director at Mushroombiz, interviewed Marcus Broix of Trade with Europe for his podcast, Business With The Fun Guys.  The podcast interview is available on our website to listen to, however we’ve taken the main points of Broix’s teachings and illustrate them here:

Trade with Europe ultimately helps companies trade in the EU.  They’ve been helping businesses for two decades but after Britain’s vote to leave EU, Broix realised many UK companies would need support and solutions to trading in the EU in the future and therefore changed their business model in 2017.

The general election on 12th December saw Conservatives win by a large majority.  Before this there was major uncertainty.  Conservatives offered to complete Brexit, Labour offer ed another referendum, Liberal Democrats offered to cancel Brexit altogether.  So with Conservatives in power and Boris Johnson as Prime Minister, what is likely to happen going forward?  Firstly, Broix says that nothing will change until end 2020 and that changes will happen from 2021.


The Deal

Boris Johnson’s deal includes 95% of Theresa May’s deal.  However the 5% change is crucial and is much closer to ‘no deal’ in terms of its effects for UK businesses.  May’s deal stated that the UK needed to stay in the EU Customs Union, Johnson’s deal doesn’t.  This means that if nothing happens by the end of 2020, on 1st January 2021, UK businesses will have to pay full tariffs, and for any exports they need a full customs declaration.  This also applies if a free trade agreement isn’t signed by end of 2020 which looks 99.9% unlikely to happen.  The trade agreement would agree how UK businesses will be able to trade with Europe and the rest of the world.  It affects other countries outside the EU because the EU has 8 free trade agreements with 80 countries which UK will not be part of anymore.

May’s deal included a mandatory need for a level playing field in that, there would be alignment between UK and EU regulations.  Johnson’s deal does not include this, which means social work, medical and agricultural regulations could differ.   Europe will not accept any deal that softens its standards which could make further progress regarding a trade deal by end 2020 difficult.  However, due to current discussions between Johnson and the US regarding salvaging the NHS, is Johnson moving away from the EU and looking for a no deal?


What Can UK Businesses Do?

With feelings of uncertainty and lack of control at the moment, what can UK businesses do?  Trade with Europe offers UK businesses the chance to ‘remain’ by establishing a business for them in Europe, similar to a Gmbh or BV company.  Broix suggests that the European business can operate with very little disruption to the UK business.  Trade with Europe helps by hosting the business in terms of administration, tax and operations.  They have an office building in Dusseldorf, which on a par with Munich and Hamburg, that offers virtual, serviced or real offices and meeting rooms.  Once a company statute at the Notaries office is signed and a bank account opened, the German business is up and running.  A network of associates including Chartered Accounts, lawyers etc. are also available to help with accountancy and tax, legal advice and business advice.  Depending on the business model, operators and service personnel to run the German business can also be found.  The Dusseldorf office was primarily set up to support UK businesses offering services however, production is also possible.  UK company Lush chose this option about 15 years ago, years before Britain’s decision to leave.

Trade with Europe have a fulfilment centre in Roermond, Netherlands which is ideal for distribution due to infrastructure and legislation benefits and operational costs.  There is no import tax, tax only applies when the goods are sold plus there are lower delivery and forwarding costs. A UK business can register their company in Roermond which includes all administration, taxation (a Chartered Accountant works in-house) and fulfilment.  If the UK business sells online, platforms are provided from which to sell, orders are taken, packed and distributed worldwide.  As Trade with Europe are a medium sized company, solutions can be tailored to suit individual requirements.  Packaging used is green, biodegradable and plastic is used only in terms of product safety.


Whether a UK business is exporting or not, the following is recommended:

  • Prepare your business to be more resilient for economic changes. Check all legal requirements, data protection, IP protection, GDPR and check all contracts with suppliers, to ensure you’re working from a good legal base.
  • Increase your capital base. Review your monthly outgoing costs e.g. rent and make savings where possible.
  • Review your business model and overhaul as necessary. Stop the less profitable/costly sectors that lack future potential and enhance your core business.
  • Grow your market by exporting – online if possible.
  • For those that are already exporting, build a bridge into Europe to access new markets or to stay competitive.


Trade with Europe helps you grow your business in a way that you wouldn’t be able to purely from the UK.

Whether you are already exporting or not, Trade with Europe could help.  To find out more, click here.

If you’d like some business support for your UK business, please contact Mushroom by clicking here.



4 Ts of Risk Management

4 T's of Risk Management


"Risks are the probabilities of bad things happening. In short, the uncertainty surrounding your objectives."

When managing risks, you need to set out Control Statements i.e. what you are going to do to minimise the likelihood of an adverse incident occurring and – if it does – minimising its impact. A clear understanding of your risks and achievable Control Statements is often a major competitive advantage for any company. To do this you need to understand the different types of risk management options you have available.  There are really only 4 types – the 4 Ts.

  • Treatment
  • Transfer
  • Terminate
  • Tolerate


This little blog sets out these 4 different types of control statements.


Think drugs, think staying healthy. To avoid getting ill you try to stay fit and healthy. 5 Fruit and Vegetables per day, no smoking, low alcohol consumption, regular exercise.

When you’re ill you take drugs like paracetamol and anti-biotics.

We’ve just described different types of treatment, some that are pre-emptive and reduce the likelihood of a threat materialising or reduce its impact before the risk materialises, and some that minimise its impact if or when it does materialise.

For businesses we believe treatment is always a great place to start managing risks. When assessing a risk like a product defect that causes injury, often identifying and addressing training gaps or the need for investing in some new quality assurance tools can knock a hammer blow to the probability of this risk ever happening in the first place. If the risk does occur, having a slick investigation process can do wonders for reducing the negative impact of that product defect in your market. There is often a large number of treatment options available to a company that can cost very little in many cases.

For making your workplace Coronavirus secure and to reduce the likelihood of an infection breaking out, these are some of the many common treatment options:

  • 2m distancing
  • Perspex checkout counters and workstations
  • Personal protective equipment
  • Infrared thermometers
  • A different office rota system
  • Occupational infection control training


The clue is in the name. When we transfer risk, we pass on the risk management responsibility, relying on other parties to assist with managing the impact of that risk. Companies have multiple options. A major one is insurance; some are mandatory like Employers Liability, but you may want to take out a Cybersecurity policy. Here, you are transferring the risk of a particular loss from you as the policyholder onto the insurer.

You can also implement risk transfers in your contracts. Run a gym and don’t want to be held responsible if your member gets an injury by dropping a weight on their foot? Limit your liability in your contract.

Are you a construction company that hasn’t built an electricity connection to your new housing development? You could bring in an expert cable installation company. Subcontracting here is a no brainer; if things go wrong, you have another party to claim from if your new homebuyers make a claim against you.

As an overview, Transferring Risks include the following activities:

  • Taking out insurance policies
  • Having good contracts and limiting your liability
  • Subcontracting

Removing the risk. This is often underrated but can often be the most effective when you really go into the detail of a particular risk. This decision can often be made after assessing the costs of treatment (buying protective kit, investing in software and new machinery) or insurance policies and solicitors fees when transferring, and actually the costs don’t outweigh the risk management benefits. In this case, it’s often better to replace or remove a process or procedure to stop that risk from ever occurring in the first place.

Say you’re a lending company and you make manual loan payments to borrowers. The risk is money being lost from the loan drawdown process due to human error.  The cost of training your staff, along with extra fraud prevention software and expensive insurance policies, outweighs the cost of implementing an automated lending system where the payment details are automatically populated by the borrower, thus removing the risk of human error by your staff. This is a form of termination.

Another termination example: an architect being approached to design a shopping centre when they only have expertise in residential homes. The costs of a claim on future insurance policies or fixing errors for free as expected by the angry client may outweigh the short term cost of not taking up the contract! Tolerating Risk is where no action is taken to mitigate or reduce it. This could be because the costs involved in managing the risk are not worth it, or because the probability and impact of a particular risk is so low that it is deemed an acceptable risk for the business.

Caution here:

Even when these risks are tolerated, they should still be monitored because future changes may make them no longer tolerable.

Risk Management is becoming an increasingly important theme for businesses amid the Coronavirus pandemic and getting employees back to the workplace. Different businesses and workplaces carry different risks and risk management is going to get more crucial to any business development decisions your company may take as we deal with changing trade arrangements with the European Union, cyber attacks increase in sophistication and the recession looms.

This is obvious, right?

Well yes, but we believe lots of companies aren’t approaching risk in the right way.

Our view is that SMEs are often sold the dream of good risk management; buying an expensive cyber security insurance policy, or outsourcing certain pieces of work or production to a counterparty, without a detailed understanding of the weaknesses of their models and the threats they face in their markets.

So take your business risks seriously. Make sure you spend time thinking carefully about the risks you face, define your control statements properly and ensure you therefore have a clear plan of how you’ll protect your company and its people, both now and in the future.

You can also check out a free risk management webinar here

For help managing your business risks, take a look at our Risk Management Resource Centre or get in touch.


Mental Health in and out of the Workplace

Mental Health in and out of the Workplace

When you consider the most important things in relationships, common themes include communication, honesty, respect and trust.  This doesn’t just relate to romantic or family relationships, it also applies to the employer/employee relationship.  Right now, more than ever, it’s vital for honest communication between different parties.

It’s important to understand employees’ needs.  They may, for example:

      • Have childcare issues or be home schooling
      • Be vulnerable and shielding
      • Have a family member who currently has COVID-19
      • Be concerned about returning to work and what this will mean

As an employer, clearly communicating your plans for home working and returning to work is extremely valuable, and so is inviting feedback from staff.  This can reduce or allay any fears from the outset.

Employees might benefit from:

      • Flexible working hours/days/times
      • Regular check-ins whilst homeworking, including virtual team meetings
      • Regular performance management

If you can provide positive feedback and reward, constructive feedback, advice and support where needed, and identify future training and progression within the business, you’re often rewarded with more motivated, committed, productive and loyal staff that will go the extra mile for you willingly. According to Mind, approximately 1 in 4 people in the UK will experience a mental health problem each year, and in England, 1 in 6 people report experiencing a common mental health problem (such as anxiety and depression) in any given week.

Why do people struggle with mental health?

Maslow’s Hierarchy of Needs model (below) shows that humans have a basic need to feel safe and secure, and then to feel loved and that we belong.  If you’ve had:

      • An Adverse Childhood Experience (ACE) – e.g. loss of a loved one, emotional/physical abuse or neglect, a parent with a mental health issue/addiction, parents separated or divorced, or a parent in prison;
      • A UDIN - an Unexpected, Dramatic, Isolating event with No strategy to deal with it;

It can lead you to feeling these needs aren’t met, affecting your confidence, resilience, and the ability to share or cope with your feelings.  Over time this can lead to mental health or physical illness, and/or unhealthy coping strategies such as addictions.

Why it’s important to deal with the root cause?

 A person visiting a GP with stress and anxiety can often be prescribed a break from work, or even antidepressants.  An addict may be supported to stop drinking, smoking, using drugs, or change their eating habits.  Of course this is beneficial, but what happens afterwards?  When returning to work?  When the coping mechanism is simply taken away?  This doesn’t solve the real issue; it just deals with the symptoms.  The mindset needs to change so the person can:

  • Feel more positive and confident about themselves
  • Feel safe, secure, loved and that they belong,
  • Deal with the stresses of life and not need unhealthy coping strategies.

What can people do to help themselves?

      • Talk to someone you trust about how you’re feeling, whether it’s a doctor, family, friend, manager or colleague.
      • Know that life’s not perfect and it’s normal to sometimes feel sad, frustrated, or angry.
      • Difficult situations do arise but you don’t have to bottle things up or put on a brave face and deal with it on your own. It’s OK to say you’re struggling and that you’re not OK.
      • It’s easy to make comparisons and assume other people are doing better than you, but remember, you don’t know what’s going on in other peoples’ heads. Even people who seem to ‘have it all’. Remember the shock of Robin Williams’ death.
      • Find tools that can help you let go of any negative emotions that you’re feeling e.g. EFT (Emotional Freedom Techniques), Mindfulness, Meditation, Yoga, CBT (Cognitive Behavioural Therapy), Hypnotherapy, Journaling.
      • Write a gratitude list (to focus on the positives in your life) and create a vision board (to plan for a positive future).
      • You may benefit from working with a professional, and if so, keep looking until you find a therapy that works for you and the right practitioner. This may mean looking outside the NHS, but the value and difference to you and your life could be incredible.
      • It’s important to let go of the past and let go of blame so you can be free and move on.
      • Even as a business owner, you can be affected by negative beliefs around success and money which can stop you achieving your goals.

How can you help someone?

      • Encourage them to talk about their feelings and to seek help if necessary.
      • Ask what might help them and offer to talk through various options/strategies.
      • You can’t fix them but you can support them to feel more empowered.
      • Helping someone with mental health can be difficult so if you find yourself being triggered, try to stay calm, take a break and look to deal with your own feelings around this.
      • Remember that a person with anxiety, other mental health condition or addiction is still a human being and not just the illness, so try to be kind.
      • There is no magic wand.
      • It can be difficult to reach out and make changes, but it is possible.
      • A person has to be ready and you can’t force them.


Introducing our Productivity Blog

Introducing our Productivity Blog

Macro Productivity/Labour Productivity

Labour Productivity is a measure of output per unit of labour or hours worked. Since the recession, productivity growth has been sluggish.

Macro Productivity or Labour Productivity is only really useful for policy decisions, not businesses decisions. This blog sets out why  productivity is a worry for Government and the Bank of England and why policy tools won’t fundamentally solve the problem. There needs to be a culture shift in the way SMEs operate their businesses because we think improving productivity can only be done at a micro-level and not a policy level.

Labour productivity is really important for policymakers because it indicates how fast the economy can grow before it starts to push inflation up. Bank of England economists call this “slack” and the measure of this stuff influences  the Bank's decision on interest rates.

If you are into homemade lemonade, a good analogy of slack or productivity is how much juice you can squeeze out of each lemon before you increase the number of lemons.

The Data

As you can see from the chart below, labour productivity has not followed the pre-crisis trend:

Output per hour (UK), 2000-2015. Source: Bank of England

This is the UK’s biggest headache. This is one of the main reasons why interest rates have remained so low and are unlikely to change before the end of the decade.

Some reasons have been put forward by the Bank of England in their piece on the productivity puzzle.  One reason is that many businesses kept their workers in 2008 to side-step any cost of rehiring when the economy picked up and the new jobs that have been created are in low skilled and low productivity areas of work.

For Mushroombiz, there are two stand out reasons for the UK's current productivity problems:

  • Unproductive companies are facing little pressure because interest rates are so low, so the cost of overdrafts and loans have kept weak companies afloat.
  • Businesses were spending less money on investing in new skills and technologies (but this is changing).


Poor productivity is systemic.

SMEs account for 99.9% of all private sector businesses in the UK. Totaling £1.8 trillion last year, SMEs’ combined turnover was 47% of all private sector income in the UK economy yet 60% of all private sector employees were employed by SMEs.

That means that companies over £40m turnover employ roughly 40% of private sector employees and contribute 53% of private sector income.

So, poor productivity can be summarized as the following:

99.9% of all UK companies and 60% of the country's private sector employees produce less than half of private sector income.

0.01% of all UK companies and 40% of the country's private sector employees produce more than half of private sector income.

There are many small businesses out there, that are making a profit, but day-to-day operational cash-flows are often a daily pain. Taking growth to the next stage always seems difficult.

How do Large companies scale?

At some point, large companies got their scaling right. After starting up, running your business in preparation of this scaling is the hardest phase.

This is a problem for ambitious businesses and a problem for the Bank of England too.

Those companies that scale, generate 69% extra in income per person, per year. If more companies fall into this bracket, wages increase and living standards rise. This pushes up inflation and interest rates, creating a more stable (in price terms) economy.

We think, as accountants, SMEs should always think less about tax and more about operations. Throughout this blog series, we will go through some of the great tools and calculations you use. We are here to up-skill your management and resource planning. But for now, these are some key questions to ask yourself as an established or newly started business:

Is my spend on marketing justified for my operations?

Can I scale up my operations effectively to cope with higher demand?

How much net profit do I make per unit of goods or services?

Where/What/How/When/Why do I invest capital to improve the answers to the first three questions?

For more information, get in touch with the Mushroombiz team here.