Ian Howard – Written Evidence (DFI0209)

My name is Ian Howard. I am now the chairman of HOWARDSON GROUP LIMITED, my daughter Megan Oliver (36) is the Managing Director and 4th generation in our successful family business.

To understand the depth of our business challenge it is important to look at our journey from 1938 to the present day.

Howardson Group Limited was started in 1938 by Wilfred Howard (my grandfather)  from rented premises in Osleston near Ashbourne, Derbyshire. He was a fully apprenticed engineer with a desire for mastering his own future. His specialty was precision engineering and motor mechanics. He worked hard and soon developed a reputation as the go to company in the area. He rented a petrol station in nearby Kirk Langley from where the motor mechanics were based.

In the early 1950s his son Philip Howard (my father) joined the family business.

In the late 50’s there was an opportunity to buy the site they were renting and they set about building a factory to expand the engineering side and became a renowned jig and tool engineering business working for big businesses such as Rolls Royce, The Railway and Dunlop Rubber Company.

Philip drove the business forward with an extension to the works in the late 60s. When Rolls Royce went bust in 1971 it had a devastating effect on engineering in the Derby area. Philip went out on the road hunting for work to keep the established skilled workforce at Kirk Langley in work. A very stressful time. He managed to secure a long term contract to make mechanisms to modernize the UK steel industry.  This proved to be a turning point. He borrowed a large sum of money from the bank and purchased a much larger factory nearer to Derby to accommodate the increased demand. The workforce grew to some 50 engineers. 

By the late 70s that market was saturated and on the downturn and it was obvious the company needed a new opportunity. 

In 1981 he purchased the assets of a bankrupt business Dennis of Godstone who had been the makers of the world famous Dennis Mowers  and moved the stock and equipment up to our Derby factory. Massive investment in manufacturing followed as it was felt this was a great opportunity.  Howardson was still doing some manufacture for 3rd parties.

I  joined the business in 1985 after a career overseas in the mining industry.

For the first 10 years the mower business did not turn any profit. Large sums were invested in sales, marketing and product development. Long hours, travelling around the UK demonstrating the new product . Turnover grew and continued education helped the business turn the corner.

Dennis became the primary product of Howardson .

By 2010 the Dennis business was growing rapidly to £2m sales per annum. A major order to supply the mowers to the FIFA world cup in South Africa was won launching the company onto the global stage.

In 2011 after long negotiations Howardson acquired to assets of Sisis of Macclesfield . A larger turnover business than Howardson but loss making and in trouble. This was a massive financial commitment by Howardson creating a £4.5m turnover business overnight. 18 staff from the Sisis Macclesfield business joined Howardson and moved down to the Derby site securing their financial future.

A lot of further investment in plant and machinery was required, new marketing, product development. At this stage Howardson was making many of its own parts in house but the demands of the new combined businesses put a lot of strain on this part.

The pressure of running a £4.5m business solo was immense. In 2012 Ian and a business colleague Richard Allen decided to form All British Precision Limited on the site bringing Richards vast production engineering knowledge to the table. The plan was to expand this separate business to manufacture not just Dennis and Sisis components but to expand into aerospace, construction , motor sport and defence once the necessary equipment and certifications had been achieved.

State of the art equipment for producing all manner of engineered components were purchased with large loan from the bank. Turnover grew and a skilled workforce developed in this area.

Howardson focused on design, production ,assembly and marketing of its growing range of products across the globe supplying the FIFA world cup in Brazil in 2014 

In 2015 Howardson acquired the assets of one of our struggling suppliers in Wolverhampton that made the critical cylinders and bottom blades for the mowers. This secured UK production of critical components and 3 staff were retained from Wolverhampton.

In 2016 Howardson invested in its own pre preparation and powder coating plant on site.

Sales of Dennis and Sisis continued on an upward trajectory with export becoming an increasing part of the business. To meet the demands of customers for more environmentally friendly products Howardson developed a range of battery powered products that performed on a level of their petrol equivalents. Development costs exceeded £500,000 to achieve this all funded from the business profits. In 2022 Howardson made a further acquisition of the Lloyds and Hunter grinder business based in Letchworth. A further £350k has been spent to date bringing these products up to our standards enabling us to make them in the UK.

By December 2024 our sales were £17 million for Howardson. Of this over £8 million was exported to over 70 countries worldwide

Likewise All British Precision continued to grow with further capacity and capability being added. Investments of over £4 million have been made in the state of the art facility and we have achieved AS9100 D  enabling  us to work on aerospace, space and defense contracts.

So in summary after almost 90 years in family business we have achieved a great deal. Combined turnover is circa £21 million . We employ over 100 highly skilled well paid staff and our aim is continued growth.

We estimate a further 70 – 100 full time jobs are supported through our working with local companies.

Between the two businesses we generate VAT, NI employer, collect NI employes and PAYE, Corporation tax, business rates, Insurance tax in the order of £3 million per year. Our staff spend their wages in the UK economy, a further £ 3 million.

Prior to the budget of Autumn 2024 when these changes were announce everything was aligned for succession and ongoing survival of our family businesses.

Our shareholding split is as follows

HOWARDSON GROUP LIMITED

Ian Howard (65)  62.2%

Julia Howard(64)  ( Ians wife)  26.6%

Megan Howard (36) ( Ians daughter) 11.2%

ALL BRITISH PRECISION

Ian Howard (65) 45%

Richard Allen (53)  45%

Howardson Group Limited 10%

Balance sheet values are approx. 12 million for the combined businesses but it all depends on how HMRC values the business on death.

Based on profits the combined values could be in the order of £20 million. (15m Howardson 5m All British)

Selling the businesses has never been a preferred option. Family business ifs what we do. We invest for the long term thinking 10 years ahead. There have been approaches especially from overseas particularly the USA. Were it to be sold to the USA all production would be shipped over there I am sure.

I need to explain what I understand would happen on a sudden death after April 5th 2026

With my shares of 62.2% Howardson Group and 45% +( 62.2% of 10%) of All British)  would pass to Julia (IHT free)

Upon her death her 86.8% of Howardson and 45% +10 % of All British) would pass to Megan

This would create an enormous Inheritance tax burden on Megan.

This same scenario would be the case were we both to be killed in an accident etc.

As we have a farming enterprise and other assets assume all allowances used up.

86.8% of 15m £13,020,000

55% of 5m               £2,750,000

Total value of share transfer £15,770,000

Liability for Megan on inheriting these is 20% IHT of £3,154,000 assuming allowances used elsewhere in our estates

Megan has no great cash reserve to her name having a young family, a mortgage etc.

To generate this sum requires a dividend from the companies, Div tax is 39.3% higher rate

Dividend required before tax at 39.3% is £5,196,046

To generate this before corporation tax at 25%  requires a pretax profit of £6,928,061

Even spread over 10 years this is near on impossible.

Its not a 20% IHT its more like a 55% tax on the business.

Would the next generation want this burden? Even spread over 10 years its demanding a pretax profit of nearly £700k per annum just to pay the liability.  That’s £700k not paid in wages, investment, product development and growth.

So the answer is?

Option 1 sell the businesses before death of the main shareholder . This would inevitably lead to it going overseas. Reduced head count, less tax take . What a waste of two good solid engineering businesses exporting worldwide and employing well paid skilled workforce.

Option 2  gift shares to Megan using the 7 year rule . This is filled with inherent risks. Julia and Ian Howard want to leave their investment intact, This their money tied up in the business.

Option 3 is to take out a life insurance policy payable on second death. Both in our mid 60s and both having had some health challenges this would cost in the order of £60- £80,000 per annum we are told subject to medicals etc.

Consider the family business where the major shareholder is in their late 70s or early 80s. they are trapped with nowhere to go.

Consider the family business where the next generation are very young say 20. It would be madness to hand a high value business to someone so young. In answer to the questions 10-15

Q10

Valuations

From a family engineering business perspective how can this be valued? Is it assets only, balance sheet or a multiple of EBIT. Is this EBIT this year, or based on a range of years. Is this open market? Willing buyer willing seller? Stock valuations, in our business stock is the lower of cost or net realizable value. In a forced sale these value can vary wildy. Plant and machinery in engineering, is this written down value, auction value , part of the business value.

With a farming enterprise how are you to value land? This is highly dependent on the market place at the time, the quality of land, the topography.   Regarding farm machinery will a detailed valuation of all equipment and livestock be required.

11

My view and that of our family is that this is very ill conceived. To begin with farms. These are often multi generational. Older farmers are now trapped, the 7 year rule unusable as they are likely to die before the transfer is IHT free. Farmers are considering suicide before 5th April 2026. Farming is asset high cash and return low.

They cannot afford life insurance to cover potentially high iht liabilities. Trusts are complex, expensive and only make lawyers wealthy.

Gifting prior to death has other complexities, houses, capital gains tax etc. A typical farmer with 250 acres (say £2.5m) perhaps has 500 cattle, that’s £1m , expensive equipment easy to be £500k  often much more, sheds, house,  Valuations on open market value are unfair. Farmers are not ready for this, the next generation could be forced to sell chunks of their farm to pay the debt. If it’s a limited liability company they may need to draw dividend and pay corp tax and dividend tax to get the cash.

Many will simply bury their heads and carry on regardless.

From a family engineering business perspective its catastrophic as illustrated above. There is no simple solution. Life insurance is prohibitive. My view is that instead of passing down generational wealth this could have the very opposite effect by husband/ wife survivor retains that holding until their death rather than 1st death passes down their holding to next generation. If it’s a small business the 1m can be used but in many larger businesses such as ours its not beneficial to do so.

Is the aim to raise taxes?. If it is this policy is not going to work. If the aim is to pass down wealth to younger generations this will not work.

The help they need is to STOP the IHT loophole options advertising on the internet and protect the hard working entrepreneurs and farmers. Multi generational business are not doing what the do to avoid inheritance tax. It’s the London money men who you should be targeting. Look at the adverts. Lawyers are scheming to create IHT saving schemes that in effect are creating this policy.

13. Reliefs are complex, no one wants to give all their hard earned assets to the next generation in a forced manner. They are not helpful to anyone but small business and small scale farmers.

14

Timetable. Depends what you are trying to achieve. No tax will be coming in before Jan 27 and then with 10 years to pay it will be a dribble in the early years. Giving a long run in period but excluding the schemers from London’s money will help. Family business, long established say 5,7 or 10 years excluded. Farmers likewise block out the schemers. Best timetable is no timetable. At least give us chance to sort out to achieve whatever it is you are trying to achieve. You need to tell us that.

15. I have communicated with NFU, CLA, MakeUK and many others. My local MP is not interested. Your policy of GROW the economy is completely opposite to what this policy will achieve. You have to work with business regardless of your political colour. No business no taxes no money for public spending.

Ian Howard

Howardson Group Limited

All British Precision Limited

Hough Park Farm, Ashbourne

I am more than happy to come and talk face to face on this matter and explain everything.

7 October 2025