Small business retention deposit schemes supported by accounting body
The Association of Accounting Technicians (AAT) is the first accounting body to lend its support to a multi-business, cross-party campaign aimed at introducing retention deposit schemes targeted at SMEs. The new scheme would put an end to the practice of withholding payments for unreasonable amounts of time and remove the risk of losing retention costs via contractor bankruptcy.
Conservative MP Peter Aldous kick-started the campaign with the introduction of a Private Members’ Bill in order to protect retention deposits in conjunction with construction contracts. The bill is set for a second reading in parliament on 15 June, and more than 150 MPs from Labour, Conservative, Liberal Democrat, SNP, Green, Plaid Cymru and DUP have already given their support.
Retention refers to money (often as much as 10%) that has been retained from the SME until they have finished construction work and is withheld as a form of security in the event that any future defects are not rectified by the SME. However, in reality, the larger company often uses that money in order to boost their working capital. The money should ordinarily be returned within no more than a year, but it can sometimes take up to three years, and there are even cases on record of the money not being returned for more than ten years.
AAT is now the 80th organisation to have officially given the bill its support. It now has representation from more than 500,000 self-employed professionals and small businesses, with other supporters including the likes of the Federation of Small Businesses, the British Chambers of Commerce and the Institute of Directors.