Technical and Insight
What auto enrolment advice can you offer?
Guidance on the level of work that ACCA members in practice are permitted to undertake for their clients regarding pension auto-enrolment.

Guidance on the level of work that ACCA members in practice are permitted to undertake for their clients regarding pension auto-enrolment. 

Auto-enrolment will make it compulsory for all employers to automatically enrol eligible job holders into a pension scheme and to make contributions into that scheme. Many employers have already started automatically enrolling staff into a pension scheme and by the beginning of 2018 all employers will be required by law to follow suit. 

Many ACCA members have been enquiring as to the level of work that they are permitted to undertake for their clients. ACCA practising members are free to advise their clients on the following matters: 

  • staging dates for enrolment
  • who are 'eligible jobholders' for the purposes of auto-enrolment
  • ensuring that systems are compliant
  • tax implications.

In addition to the above, practising members may also advise a client on the selection of an appropriate scheme which is compliant with auto-enrolment. 

So, for example, a member firm may point the employer in the direction of a specific pension provider; the Financial Conduct Authority (FCA) has confirmed that this is not regarded as a regulated activity. 

However, an ACCA firm is not allowed to advise an individual employee on the merits of joining a scheme since this is regarded as a regulated activity. They would only be able to do this if they are authorised by the FCA to carry out regulated activities.

Find more in the dedicated auto enrolment section of our Technical Advisory webpages.

Automatic enrolment: communicating to workers what advisers need to know
All employers, including those with existing workplace pensions, will have to take some action as a result of automatic enrolment.

All employers, including those with existing workplace pensions, will have to take some action as a result of automatic enrolment. 

They will need to identify if and when automatic enrolment applies to each one of their workers. This includes temporary and part-time workers. 

The Pensions Regulator website has information on identification. This can be a difficult and time consuming area and many organisations, including pension providers, have software to assist with identification. For example: 

Where a business has staff to enrol, they need to ensure they have a suitable qualifying pension scheme, enrol them into the chosen pension scheme and make contributions. 

Within six weeks of their automatic enrolment duty coming into effect, all employers must tell their staff how automatic enrolment affects them as individuals. This means employers must inform their staff in writing how they have been assessed for automatic enrolment and what that means for them.  

Depending on whether they are assessed as needing to be automatically enrolled, or as having a right to opt in or join a pension scheme, each member of staff will be sent specific information. Even if a member of staff is unaffected by the changes, for example if they are already members of an existing qualifying workplace pension scheme, they must still be informed in writing about what is happening. 

The table below summarises the information which must be provided to each type of worker. 

Category of worker

You must let them know:

Being automatically enrolled

  • the date they are being automatically enrolled
  • the level of contributions that will be deducted from their pay
  • the level of contributions the employer will pay
  • details of the pension scheme provided
  • their right to opt out

Has a right to opt in

  • their right to opt in
  • their right to receive employer contributions if they do

Has a right to join a pension scheme

  • the opportunity to join the workplace pension scheme

How should the information be communicated?
In order to meet their statutory duty, all staff must be given information explaining how they are affected by automatic enrolment. These communications must be in writing – whether within a letter, email, memo or PDF document. It is not sufficient to merely signpost to an internet or intranet site, attach a URL or display a poster in the workplace. In these circumstances the employer is merely providing the worker access to the information about the duties but is not giving the actual information. 

The Pensions Regulator has a number of letter templates that can be used to write to staff. 

Letter template for employees who are being automatically enrolled

Letter template for those not automatically enrolled

Postponement letter template for all employees



Taking on the cowboys
The ‘secret accountant’ sets out their agenda for fighting back against unqualified competitors in the marketplace.

The ‘secret accountant’ sets out their agenda for fighting back against unqualified competitors in the marketplace. 

In recent years the ‘qualifieds v cowboys’ debate has made no difference to the marketplace where small practitioners continue to slug it out with the £9.99 per month club. 

‘Joe public’ often seems oblivious to those precious letters that appear after our names, taking the view that any accountant is an accountant. The number of cowboys seems to be growing, as does the breadth of clients they serve, from local plumbers and electricians to hair-dressers and cleaners. Thanks to modern technology, the ubiquitous ‘cloud’ and increased connectivity, we are increasingly seeing cowboys based overseas claiming a piece of the action. 

So, what hope for the future of qualified accountants?

A 1990s ACCA exam paper on Ansoff’s growth strategies comes to mind. Penetrating the compliance services market further with the same accountancy and tax services is a non-starter. Thanks to an enterprising taxman our tax laws are already some 12,000 pages long. With every Finance Act you are sure to have some new tax products for your existing clients – SEIS, EIS, SSAS, SIPP, R&D, entrepreneurs’ relief, film tax relief, statutory residence test. The list often appears endless!

Growing your client base
Yet finding new clients for your existing services can still be a tall order. Companies House continues to incorporate about 1500 companies a day and more than half that number get struck off daily. So the need for start-up advice and company funeral services, particularly for those suffering from the £25,000+capital base, is definitely there. 

With Google demolishing geographical boundaries every family business from Poland to Pakistan fancies a UK base given the location, time zone and history. Or from LA to New South Wales everyone owns a London property. Patent box, ATED and the new non-resident ownership rules still can win you new clients. 

That having been said, Ansoff’s strategy of diversification (offering new services to new clients) can be tricky – unless you want to take back the surrendered insolvency and audit licences. Or maybe sharing some space with solicitors under the Tesco law camaraderie and creating a one-stop pharmacy for all sorts of tax and legal pains? 

Focusing on niche markets
With cowboys driving down prices, Porter’s strategy of cost leadership won’t work. However, focusing on niche markets like property businesses, contractors, the medical profession, pharmacists etc may offer you a competitive advantage. 

A VAT specialism is complex and the place of supply conundrum against the backdrop of EU rules has created a market for some qualified practitioners. If you are confident enough, you can offer a premium service at a premium price – let’s call it the ‘Rolex’ route. You will always be respected and valued. After all the ‘chartered certified’ tag ought to command a premium. 

There are many other options qualified accountants may wish to consider: merge with – or even acquire – like-minded small firms, create or join domestic and international networks, create alliances with recruitment companies, estate agents, bankers and solicitors. 

Premium advisory services
Premium advisory services will always be in demand because even sole practitioners are going global and need advice. Indeed, by shaping and positioning your firm as one which can provide such services, you will have an effective strategy to compete with mid-tier firms. 

Last, but by no means least, don’t forget the silks’ route (aka barristers) – become advisers to the cowboy firms. They are out of their depth anyway and may need our support! 

Continuing the debate
Do you face competition from cowboys in your area? What steps have you taken to differentiate your firm and the service it provides? 

Share your thoughts and feedback on this article, as well as your experiences in general, via the group for ACCA practitioners on LinkedIn now

VAT on pension fund management costs
HMRC decision affects pension fund management services provided in respect of defined benefit pension schemes.

HMRC decision affects pension fund management services provided in respect of defined benefit pension schemes. 

On 26 March 2015 HMRC published Revenue and Customs Brief 8 (2015) entitled Deduction of VAT on pension fund management costs

This follows the decision of the Court of Justice of the European Union (CJEU) in C-26/12 Fiscale Eenheid PPG Holdings BV cs te Hoogezand (PPG).

The decision affects pension fund management services provided in respect of defined benefit pension schemes. For an employer to be able to deduct any VAT, it will be necessary for them to be issued with a valid invoice for the full cost of the supply and to pay the service provider directly for the full cost of the services. HMRC does not accept that an equivalent increase in contributions to the fund or any payment that is made by, or through, the fund constitutes payment by the employer. 

Transitional period
Businesses may continue to use the VAT treatment outlined in VAT Notice 700/17 until 31 December 2015. However, in order to do so, both employer and pension scheme trustees must agree the same treatment. 

Links to further detailed documents

VAT Notice 700/17 

Revenue and Customs Brief 8 (2015): ‘Deduction of VAT on pension fund management costs’

Further information about the PPG decision referred to above is also available. That brief outlines the VAT treatment that applied prior to the PPG decision, the way that VAT treatment has changed as a result of the decision and the transitional arrangements that are currently in place.



Revolutionise your audit preparation and engagement processes
The accounting industry needs to be proactive as the capabilities presented by technology offer exciting opportunities to redefine roles and client relationships.

The accounting industry needs to be proactive as the capabilities presented by technology offer exciting opportunities to redefine roles and client relationships. 

Technology, always a driver of industrial evolution, is now moving at such a rapid pace that it looks set to shake up the world of accounting, as we know it, forever. 

With an abundance of products and software companies on the market, promising to disrupt and boost the profession, accountants may ask themselves if the technological changes underway are an opportunity or a threat. More specifically, they may want to know if their careers will be driven by technology, or if they will be able to harness technology to advance their careers and make a bigger impact in their organisation and beyond. 

None of us has a crystal ball, but as techies the world over will typically tell you, the key to career enhancement through technology (in any sector) is almost always about the ability and willingness to be agile. The accounting industry needs to be proactive as the capabilities presented by technology offer exciting opportunities to redefine roles. In short, accountants will need to adapt and shape their own technological future, rather than be shaped by it. 

As a FinTech, we’re well aware that technology can be viewed with initial suspicion by practitioners. The accountancy profession in particular has always shouldered a huge responsibility and it now carries out its vital role under the most intense scrutiny, at a time when competition and pricing are particularly fierce. Adding the weight of a new set of systems and processes against this backdrop is unlikely to be greeted without a degree of scepticism. 

Why fix what isn’t broken? 

At Validis, we understand why some practitioners and practices are initially resistant to new technologies, but we also know that from the first time they use our product, the positive impact it has on their practice is clear and simple to see. Our software is supportive of accounting professionals in the workplace – it enables, rather than disables – it’s disruptive because it’s productive. 

In other words, Validis ‘does’, so you can ‘think’. 

21st century accountants can let technology do the heavy lifting
Our software eradicates the need for any manual data transference between accountants and their clients in preparation for audits and review engagements. Via a secure web portal, Validis extracts and transmits data directly from an SME client’s accounting package, capturing the full data set and drilling down to double entry level for 100% accuracy. 

Validis then standardises the data, and generates clear, consistent reports which are presented direct to an accountant’s computer screen ready for review. 

All in just 3-8 minutes. 

By automating the process of data compilation and preparation before a review or audit, Validis gives hours back to accountancy practices and their practitioners, freeing up time and resource that can be spent on higher value strategic work like forecasting and consulting. 

The software is simple to use, for accountants and their clients, and is ISO 27001 certified so it’s secure. By extracting data directly from a client’s accounting package, Validis ensures that all data referenced during review is completely accurate, enabling a transparent process and reducing the risk associated with traditional methods of data sharing. 

All in just 3-8 minutes. 

Accountants are influential agents of change, both within their own organisations and their clients’, and their expertise offers a strategic insight that is invaluable to any business. Software, such as Validis, exists so that accountants can continue to upskill and push the boundaries of the profession. 

Because it’s true that technology is shaking up the world of accounting, but it’s the forward thinking accountants who will ensure that it evolves. 

Find out more about Validis and how it can enhance your practice now

Don’t just take our word for it; here’s what one customer has to say:

‘Validis facilitates connectivity with our clients in our markets, simplifying interactions with client personnel and providing enhanced access to client data in a secure manner. The ease of use, consistency of reporting, and quick turnaround contribute to improved client service and delivery.  We are also pleased with the level of support provided, both to our practitioners and support teams. Validis sets a high standard in the service it provides.’
Steve Lawrenson – partner, Canadian Assurance and advisory analytics and innovation leader


How to win clients and influence people
Have you taken advantage of comprehensive, and free, guidance on how you can give your practice an edge through green accounting?

Have you taken advantage of comprehensive, and free, guidance on how you can give your practice an edge through green accounting? 

An authoritative global survey of the views of smaller accountancy practices was published in March 2015 by the International Federation of Accountants. The survey concluded that the biggest challenge faced by firms was attracting new clients and half of those surveyed said they were concerned about differentiating their firm from the competition. 

One UK firm that has cracked this problem is Green Accountancy. If you call yourselves Green Accountancy the differentiation from competitors is about as obvious as it can get. But what lies behind this is an innovative service that any firm can add to its own service lines to give an edge in attracting new clients. In this case, clients that benefit from it may also get a 'green advantage' with their own customers. 

ACCA has worked with Green Accountancy to promote this service. We issued detailed guidance in the form of Technical Factsheet 190, which is available as a free download on the ACCA website and crucially it is issued copyright free, to encourage firms, other accountancy bodies, or indeed anyone, to tailor it to their own needs: translate it, change UK to local figures, or include it in their own materials. The service is all about helping smaller businesses measure and reduce their main environmental impacts, so the more accountants that get involved in this the better. 

To quote ACCA past president, Brendan Murtagh: 'ACCA believes that our members’ accounting and financial reporting skills have a key role to play in the transition to and management of the low carbon economy. By providing additional green accounting skills . . .  professional accountants will have a pivotal position measuring and managing carbon emissions.’ 

Recently we have released a video to introduce the service in detail and have put a transcript and the slide deck online. There are also short articles that provide an overview: on the IFAC Global Knowledge Gateway as well as elsewhere on ACCA's website

Feedback welcome
The guidance was initially issued as 'interim guidance' because we wanted to improve it by responding to feedback from users. It is now (June 2015) due to be updated for 2015 year end reporting and so, in addition to a feedback request in the factsheet itself (many thanks to those who have already provided their views), we have launched an online survey. The survey is not just for those who have introduced this service; anyone who has read the factsheet can comment. Please do so. 

Is an end to late payment on the cards?
Trade credit needs a boost, says ACCA.

Trade credit needs a boost, says ACCA. 

Policymakers involved in SME financing need to rethink how they manage and regulate trade credit and late payment, says ACCA in the final instalment of our three part research into late payment called Ending Late Payment

ACCA believes that governments and their policy-makers have a big responsibility to build a financial infrastructure that diminishes late payment, and boosts trade credit. 

This is because late payment is a life-threatening challenge for many businesses around the world and its impact on the weakest of businesses is acute – those with fewer than 50 employees are typically twice as likely as large corporates to report problems with late payment. 

Rosana Mirkovic, SME policy adviser at ACCA, says: ‘For many, late payment is a fact of business life. At its most basic, late payment is a form of credit and in an ideal world, where all solvent businesses would have prompt, uninterrupted access to finance from diverse sources, late payment would be very rare. It would present only a manageable risk to businesses. 

‘We need to revisit late payment habits. Policymakers can greatly improve access to trade credit and discourage late payment by improving the efficiency of the courts, and by providing arbitration and alternative redress options for businesses. These are all important objectives, but for trade credit regulation to be more widely effective, the onus cannot be solely on suppliers to report and police late payment.’ 

Ending Late Payment looks at how suppliers and buyers can improve the situation, by working more closely together and by investing in customer / client relationships. On the supplier side, they can protect themselves through careful due diligence, and by understanding the administration of their operations. 

On the buyer’s side, they can protect themselves by signing up to prompt payment codes and sticking to them. In the interests of their own long term sustainability, they need to monitor the financial health of their supply chains and be vigilant. 

The report also offers nine conditions that need to be met if trade credit is to be sustainable:

  1. Buyers’ and suppliers’ standard terms of credit should be transparent.
  2. Cash flows to suppliers should be predictable through explicit credit policies and contract terms.
  3. Invoicing, collections, accounts payable and invoice dispute processes should be efficient and transparent, with senior staff taking responsibility.
  4. The status of invoices should be easily monitored throughout their lifetime.
  5. Suppliers should be aware of the cost of providing credit to customers.
  6. Differentiated pricing should reflect the suppliers’ cost of capital, so that neither they nor their prompt-paying customers are forced to subsidise late payers in the long term
  7. Customers and suppliers should give each other adequate notice before seeking new terms of credit, so that alternative financing can be sought in time.
  8. Suppliers should seek to understand, and customers should be honest about, the causes of late payment and the viability of late paying customers.
  9. Payment plans should be set out explicitly in contract terms and genuinely troubled customers should opt for these rather than resorting to late payment.

Rosana Mirkovic concludes: ‘Ending late payment has been an elusive goal for many governments across the world. What governments need to bear in mind is that late payment, in its various forms, is essentially a demand for credit. As such, their efforts need to concentrate on building a financial infrastructure that will mitigate late payment and boost trade credit through support of alternative finance and availability of credit information, for example. 

‘This approach goes much wider than improving the legal framework and ensures that government policy makes a positive difference much earlier than when supplier relationships are beyond repair or when customers fail.’

Harben Barker re-visited?
When is an accountant obliged to volunteer advice even when that advice has not been specifically requested by the client?

When is an accountant obliged to volunteer advice even when that advice has not been specifically requested by the client? 

The recent case of Altus Group (UK) Ltd v (1) Baker Tilly Tax & Advisory Services LLP (2) Baker Tilly Tax & Accounting Ltd (Judgement issued on 7 January 2015) has effectively revisited the vexed question of when an accountant is obliged to volunteer advice even when that advice has not been specifically requested by the client. 

The accountancy profession breathed a collective sigh of relief when the Court of Appeal reversed the first instance decision in Mehjoo v Harben Barker but the decision in Altus provides a timely reminder that the scope of the obligation to volunteer advice is, in truth, very fact sensitive. Such that the issue and regular review of client engagement letters remains an absolutely critical part of a well-run firm's risk management procedures. 

But in a more positive vein the Altus decision provides a useful reminder that for a claim in negligence to succeed it will require a claimant to prove not only a negligent breach of duty but also that the outcome would have been different if the non-negligent advice had been given. 

Factual background
The claimant was one of two corporate members of an LLP which had been incorporated in order to purchase another business. The acquisition of that business gave rise to an asset in the LLP's accounts in relation to the business's goodwill. It was decided that the goodwill would be amortised over a five year period, concluding at the end of the third quarter of 2012. This would create an allowable deduction against the claimant's profits. 

The claimant retained the defendants to prepare its corporation tax returns from 2007. The defendants submitted the returns for the periods ending on 31 December in 2008, 2009 and 2010 on the basis that the claimant had been allocated the deduction. This meant that the claimant had incurred a loss, which it could then carry forward to set aside its liability for corporation tax in future years. 

In December 2008, the Corporation Tax Bill was introduced in the House of Commons and the resulting Corporation Tax Act 2009 came into force on 1 April 2009. This Act applied to corporation tax for accounting periods which ended on or after 1 April 2009. The effect of sections 1263 and 1264 of the Act (both of which had been included in the Bill) was that the claimant could not, in fact, be allocated the deduction with effect from the corporation tax period ending on 31 December 2009. 

Unfortunately, the defendants did not inform the claimant of the effect of sections 1263 and 1264 on the claimant's tax affairs until October 2011. The following month, the claimant spoke to a tax adviser (Ernst & Young), which proposed a restructure to mitigate the claimant's tax liability. The claimant tried to implement the restructure but ultimately abandoned it in 2012. 

The claim 
The claimant claimed damages for professional negligence from the defendants. In summary, the claimant said that the defendants should have advised it in January 2009 of the effect of sections 1263 and 1264. The claimant further argued that, if it had been properly advised at that time, it would have implemented the restructure within about four months and there would have been a substantial chance that that restructure would have been successful in mitigating the claimant's tax liabilities. The claimant claimed damages for the loss of the chance of implementing a successful re-structuring.

In response, the defendants admitted that they ought to have advised the claimant about the effect of sections 1263 and 1264 in about mid-July 2009, when they prepared the claimant's corporation tax computation for the six-month period up to 30 June 2009. However, they denied that they were under any duty to volunteer that advice in January 2009. 

The defendants further argued that, even if they had given the advice, the claimant would not have implemented the restructure and that, even if the claimant had done so, the restructure would have taken approximately nine months rather than four months to implement. 

The defendants also said that, as a matter of law, the restructure would not have effectively mitigated the claimant's tax liabilities. However, even if damages for the lost opportunity were recoverable, those damages should be negligible because of the strong likelihood that HMRC would have successfully challenged the restructure.  

The judgement – breach of duty
Judge Keyser QC held that the defendants were in breach of duty in January 2009. He stated that, if the defendants had become aware or ought to have become aware of the possible change in the Corporation Tax Bill, they should have notified that change to the claimant, not only because it was relevant in 2008 but also because it would be significant for future years. The judge also said that the defendants ought to have considered the relevance of the Bill when dealing with the filing position in 2008 and they should have brought the proposed change to the attention of the claimant. 

However, even if the defendants had come to the view that nothing in the Bill affected the risks of the filing position in 2008, the proposed change had such a major effect on the position in future years that the defendants ought to have brought it to the claimant's attention. 

In reaching this conclusion the judge seems to have been heavily influenced by the fact that the defendants are and hold themselves out as being ‘a top-end and very large firm of specialist advisers’ and as such it is reasonable to judge them by standards appropriate to that standing. He therefore concluded that the defendants should be expected to have much greater technical resources than an ‘ordinary’ firm of accountants and as a result should be advising on relevant impending changes to tax legislation. 

The judge also confirmed that the following well known passage from a solicitors’ negligence case was applicable to accountants too: 

Although a professional is not normally under an obligation to advise on matters that go beyond his express retainer if that professional ‘in the course of doing that for which he is retained, [becomes] aware of a risk or a potential risk to the client, it is his duty to inform the client. In doing that he is neither going beyond the scope of his instructions nor is he doing “extra” work for which he is not to be paid. He is simply reporting back to the client on issues of concern which he learns of as a result of, and in the course of, carrying out his express instructions. In relation to this I was struck by the analogy drawn by [the claimant's counsel]. If a dentist is asked to treat a patient’s tooth and, on looking into the latter’s mouth, he notices that an adjacent tooth is in need of treatment, it is his duty to warn the patient accordingly. So too, if in the course of carrying out instructions within his area of competence a [professional] notices or ought to notice a problem or risk for the client of which it is reasonable to assume the client may not be aware, the [professional] must warn him. …’ 

Is this a ‘loss of chance’ claim?
The judge then went on to consider the damages for the consequences of the breach of duty. The judge held that where the breach of duty consists of an omission but the benefit to a claimant, had the breach not occurred, would have depended upon the actions of a third party, the court will usually analyse the case in two stages. The claimant must first prove, on the balance of probabilities, what it would have done had the breach not occurred. If the claimant overcomes this first hurdle, then the damages will be assessed on the basis of the value of the chance that the third party would have acted in such a way as to confer the benefit. 

Therefore, the claimant needed to show that, but for the breach, it would have implemented the restructure and then its damages would depend upon the prospects of that restructure not being subject to a successful challenge by HMRC. 

The judge had little difficulty in finding as a fact that, if the claimant had instructed Ernst & Young in 2009, it would have implemented the restructure. However, he considered that the significant question was whether the claimant would have instructed Ernst & Young at all in 2009. He was not persuaded, on the balance of probabilities, that the claimant would have consulted them in 2009. And effectively the judge concluded that no other accountant would have recommended the restructure subsequently proposed by Ernst & Young. 

Consequently, the claimant had not proved that it would have completed the restructure and so the claimant's claim failed. 

Despite the claimant not overcoming the causation hurdle the judge did go on to discuss how damages would have been assessed had they done so. He ultimately concluded that there was only a 7.2% chance that the claimant would have retained the tax benefits of its original filing position. So any damages that the judge might have otherwise awarded would have been reduced accordingly. 

Although the claim in this case ultimately failed, the case does provide a useful reminder that those professionals who are or hold themselves out to be ‘top-end’ risk being judged against a higher standard with regard to breach of duty, as the defendants were in this case. 

Prepared for Lockton by Claire White and Ross Barker of Bond Dickenson LLP 

Lockton Companies LLP is ACCA’s recommended broker for Professional Indemnity insurance. For information, please contact Lockton on 0117 906 5057.

Get to know the ADR regulations
Alternative dispute resolution regulations coming into force.

Alternative dispute resolution regulations coming into force. 

The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 bring in further changes that will affect consumers, providers of goods and services, and providers of ADR services (such as ACCA). 

The purpose of the Regulations is to ensure that alternative dispute resolution (ADR) is available for all contractual disputes arising out of complaints by consumers, and ACCA has produced Technical Factsheet 192 providing guidance to practitioners. A guidance note also assists members in implementing internal complaints-handling procedures. 

ACCA and its members are required to be compliant by 9 July. 

Charity GAAP changes
Due to changes in company accounting, changes are to be made to UK Generally Accepted Accounting Practice (GAAP).

Due to changes in company accounting, changes are to be made to UK Generally Accepted Accounting Practice (GAAP). 

These changes will take effect from 1 January 2016. The role of the Statement of Recommended Practice (SORP) is to provide guidance on the application of GAAP. The Charity Commission is consulting on three different matters that affect the SORPs now in issue. 

The consultation opened on 18 June and will last three months to 18 September 2015 and covers: 

  • amendments to the Charities SORP (FRS 102)
  • replacement for the Charities SORP (FRSSE)
  • a revised definition of ‘larger charity’ in the SORPs. 


Late payment, prompt payment and duty to report
Webinar helps you find out what large and small businesses will be required to consider under any duty to report requirements.

Webinar helps you find out what large and small businesses will be required to consider under any duty to report requirements. 

Over 650 members listened to the recent ACCA and CICM webinar to find out what large and small businesses will be required to consider under any duty to report requirements introduced in secondary legislation as part of the Small Business, Enterprise & Employment Act. 

You can still register and listen to the recording and hear about key issues that businesses need to consider, which included:


  • Late payment is a common by-product of one of the most important financial markets in the world – trade credit - which supports almost half of all business-to-business transactions globally.
  • The term ‘late payment’ can refer to many different types of behaviour, but the most common form appears to occur when healthy customers simply pay invoices after the agreed date.
  • At least 30% of all credit-based sales in developed and emerging markets are paid outside the agreed terms, although fewer (between 16% and 21% of all credit-based sales) are paid more than 60 days after the invoice date.
  • Bad debts in trade credit are relatively rare: consistently below 3% of the total.
  • Contrary to what is commonly thought, it is larger businesses with better access to finance that are net creditors rather than smaller businesses.
  • Late payment in its various forms is essentially a demand for credit.
  • Its appeal to buyers stems from the fact that it is cheaper and more flexible than loans, and its appeal to suppliers is that it provides them with a claim on their customers’ future business.
  • From the supplier’s point of view, tolerating late payment against the promise of future business is often a rational choice. This incentive makes it very hard for policymakers to tackle late payment; and in economic downturns or less developed markets the case for tolerating late payment becomes stronger.
  • In an ideal world, where all solvent businesses would have access to finance from diverse sources, late payment would be very rare and it would present only a manageable risk to businesses. Suppliers would factor it into the cost of doing business and cost-conscious buyers would keep payment as prompt as possible. Regulation would be unnecessary.
  • Smaller businesses face significant financial constraints and arranging a new facility can take between one and six months – making late payment much more than simply a ‘cost of doing business’.

Late payments and insolvency

  • UK business victims of late payment saw almost one-in-six (15%) of their invoices paid late in the last six months.
  • Research found that late payment is a primary or major factor in one-in-five corporate insolvencies.
  • Late payment puts unnecessary strain on a business’s cash flow, increasing the risk of insolvency. Despite government guidelines and business campaigns, late payment still remains all too common.
  • When a business enters insolvency, customers can see this as an opportunity to further delay payments or avoid payment altogether. Doubts over cash flow caused by late payment can make it impossible to continue to trade a business in administration until a buyer is found.

The weight of evidence showing the damage poor payment practices are having on the UK economy grows greater each day with the amount owed in late payments now at £41.5 billion. Once again we find it is sole traders and smaller firms which are facing the brunt of late payments, and this is putting viable businesses at risk of closure.

Sole trader late payment victims are most likely to have most invoices paid late, seeing an average of 17.3% of invoices being paid late in the last six months. Late payment victims employing over 250 people only had an average 12.3% of invoices paid late.

  • It’s the smallest companies that bear the brunt of late payment. The consequences of late payments are magnified for smaller companies too: one invoice being paid late will have a disproportionate impact on a very small company compared with a larger counterpart.

Duty to report requirements and prompt payment code

  • Late payment has been identified as an issue that needs to be tackled. Duty to Report requirements and the Prompt Payment Code have been strengthened, with the creation of an Advisory Board and Code Compliance Board that rules on challenges raised against signatories’ payment behaviour that is detrimental to the supply chain.
  • Any duty to report requirements are likely to draw on the code. We may see large companies reporting the following twice yearly within their reported numbers, and possibly also to a separate web portal that will be available for public access:
    • standard payment terms, including any changes to these in the last reporting period (guidance will be provided to clarify those circumstances where companies have different standard terms for different kinds of products)
    • average time taken to pay
    • proportion of invoices paid beyond agreed terms
    • proportion of invoices paid in 30 days or under, paid between 31 to 60 days, and paid beyond 60 days
    • amount of late payment interest owed and paid
    • whether financial incentives were required to join or remain on supplier lists
    • dispute resolution processes
    • the availability of: e-invoicing, supply chain finance, preferred supplier lists
    • membership of a Payment Code.


  • Smaller organisations that are signatories of the Prompt Payment Code are likely to have to report annually on the following:
    • standard payment terms, including any changes to these in the last reporting period
    • average time taken to pay
    • proportion of invoices paid beyond agreed terms
    • proportion of invoices paid in 30 days or under, paid between 31 to 60 days, and paid beyond 60 days.

View or sign up to the Prompt Payment Code
now, or find out more about CICM, the credit management profession, and cashflow advice and resources.

College accounts
Accounts Direction for 2014 to 2015 financial statements applies to colleges’ financial statements for periods ending on or after 31 July 2015.

Accounts Direction for 2014 to 2015 financial statements applies to colleges’ financial statements for periods ending on or after 31 July 2015. 

It highlights that FRS 102 and the new Further and Higher Education SORP (2015) will only apply for the 2015/16 financial statements and onwards and must not be adopted early. Colleges will continue for the 2014 to 2015 financial statements to use SORP (2007). 

The guidance highlights that ‘the following must be submitted to the responsible funding body no later than 31 December 2015. For FE colleges this will be the Skills Funding Agency and for sixth form colleges, the EFA: 

  • audited financial statements (including the regularity assurance report) of the college and its subsidiaries (where applicable) for the year ending 31 July 2015 (electronic copy of signed financial statements)
  • finance record for the year ending 31 July 2015 signed by the accounting officer of the college (electronic copies for signed version and unsigned Excel version)
  • financial statements auditor’s management letter, including the college’s response (electronic version only)
  • annual report of the audit committee.’
Subscriptions and flat rate deductions
The list of allowable fees and subscriptions, including journals for professional organisations, has been updated.

The list of allowable fees and subscriptions, including journals for professional organisations, has been updated. 

As a reminder HMRC states that ‘you can reclaim tax you pay on fees or subscriptions to some approved professional organisations – but only if you must have membership to do your job or it’s helpful for your work’. 

Other deductions including flat rate deductions are also available. Flat rate deductions are set amounts that HMRC has agreed are typically spent each year by employees in different occupations. 

HMRC also stresses that if your occupation isn’t listed, you may still be able to claim a standard annual amount of £60 in tax relief. 

Employees can opt to claim allowable expenses where they are under £2,500 for the tax year, by completing form P87.

P2P bad debt relief
If a P2P loan is not repaid, then the loss that the lender suffers on that loan will be set against the income that they receive on other P2P loans before that income is taxed. 

If a P2P loan is not repaid, then the loss that the lender suffers on that loan will be set against the income that they receive on other P2P loans before that income is taxed.  

Legislation is proposed for the Finance Bill 2016, but relief is likely to be available for the current tax year.

It is proposed that P2P lenders who suffer bad debts on P2P loans that meet the conditions for relief between 6 April 2015 and 5 April 2016 will be able to claim relief in their tax returns.

Pensions’ automatic enrolment Q&A
The Pensions Regulator’s LinkedIn Q&A on automatic enrolment.

The Pensions Regulator’s LinkedIn Q&A on automatic enrolment. 

Experts from The Pensions Regulator were online today (30 June) to answer questions from business advisers about auto enrolment. 

Catch up on the discussion now


Help test new HMRC service
HMRC seeking accountants to test online PAYE service.

HMRC seeking accountants to test online PAYE service. 

HMRC will shortly launch an expanded view of employer clients' PAYE accounts which will provide a monthly breakdown of employers’ PAYE liabilities and explain how the payments received have been allocated to each period. 

To help test this enhanced feature, they are seeking new volunteers and are asking volunteers to complete a questionnaire. This will remain open until 30 October 2015 and asks agents for some key information about their business. This detail enables HMRC to issue a personalised invitation into the service. 

Agents who have already volunteered to test the initial private beta service do not need to re-apply. 

You can find the questionnaire at volunteer questionnaire 

HMRC’s Agent Blog highlights the latest AOSS news.


Making the most of ACCA’s website
Take a look at our website resources for practitioners.

Take a look at our website resources for practitioners. 

ACCA’s website provides a wide range of resources for members working in different business sectors. A broad overview of resources for SMPs is now available, as are pages dedicated to SMEs

Our Practitioners’ Hub and Technical Advisory pages provide more in depth content for practitioners. 

Take a few minutes to browse these resources and find those that will benefit you and your practice.

Become a charity trustee
Put your financial skills to good use.

Put your financial skills to good use. 

Trustees Unlimited is an organisation which seeks to help charities to recruit high quality trustees and non executives in a rigorous and yet cost effective way. Many organisations have a gap in financial acumen and accountancy on their boards and are seeking the skills and support a chartered certified accountant can provide. In return, you will be able to gain valuable new experience. 

Find out more by visiting Trustees Unlimited or by email to



Survey: the UK and the EU
ACCA wants to understand members’ views on the EU.

ACCA wants to understand members’ views on the EU. 

The outcome of the EU referendum will have an impact on every single business in the UK. 

As a membership organisation, it is important that we reflect the view of our members; we are therefore asking you to complete this short survey to help us understand our members’ views on the EU.

Opportunity to work for military charity
Victory Service Club seeks finance manager.

Victory Service Club seeks finance manager. 

The UK charity sector is clearly large and varied, and offers many fulfilling career and development opportunities for fully qualified or part qualified accountants.  Within the charity sector, and focused on serving personnel, veterans and their families is the Victory Services Club

The Victory Services Club was established in 1907 and is a tri-service, all ranks Members’ Club for currently serving and retired members of the UK Armed Forces and their families, together with the Armed Forces of the Commonwealth and our Allies. 

The Club has two charitable objectives: to provide a place for serving and ex-serving personnel to meet; and to support serving or ex-serving personnel who face hardship or distress, including those wounded as a result of operational service. 

It is very proud of the ‘respite & welfare breaks’ that contribute to the delivery of the second charitable objective. These breaks provide free weekends in London to individuals and families who are recommended to the Club by either a military charity or the single service welfare staffs. In addition, the Club provides seven meetings and event rooms for military charities at extremely good value, and uses spare capacity to fund the respite breaks and to also subsidise breaks from operational service for those who are regulars or reservists.

The Club is located near Marble Arch in London and features a truly unique Club atmosphere, offering excellent service and value for money, together with impressive accommodation, varied dining options and events. 

The Victory Services Club now seeks to appoint a new Finance Manager to support the Financial Controller, CEO and Trustees. This type of appointment provides an excellent opportunity for either a second career, or a key stepping stone in an accountant’s professional pathway.  

A position description is attached


Professional Courses events
The latest CPD events for practitioners.
Online learning opportunities
The latest online learning opportunities from ACCA and selected partners.
Take advantage of the Pick 'n' mix offer* this June for £262.50 (+VAT) and you will get access to your chosen online courses until the end of 2015!

(*30% off 21 hours of CPD; offer expires June 30)

Make sure your knowledge of the new accounting standards is fresh and up-to-date this year with these learning bundles from BPP:

IFRS basics – 5 hours for £99

IFRS procedures – 10 hours for £195

ACCA’s IFRS Fundamentals e-learning system brings all your IFRS learning needs together with one easy to use desktop application – £99 for one year’s access

Microsoft Office Specialist - Excel
MOS - Excel certification and video training.


Certification in Microsoft Office Specialist (MOS) - Excel and 15 hours of online video training is available in partnership with Prodigy Learning.

Microsoft Office Specialist – Excel 2010

Microsoft Office Specialist – Excel 2013

The productive and flexible approach to meeting your annual CPD requirements!
Could you be an award winner?

British Accountancy Awards – entries close Friday 17 July

British Accountancy Awards – register to enter now
Entry deadline: Friday 17 July 

View criteria and how to enter 

The British Accountancy Awards will return to the spectacular Old Brewery in London on Tuesday 24 November. Will your practice be short-listed for an award? 

Full list of categories
The best independent firms within six regions across England, as well as Scotland and Wales, will be honoured – with the overall ‘independent firm of the year’ drawn from this list. 

Individual excellence awards will recognise the ‘practitioner of the year – sponsored by ACCA’, ‘new practitioner of the year’, ‘training team of the year’ and ‘outstanding contribution’. 

Other categories will honour the global and mid-tier firms of the year as well as the top teams within firms in Accountancy Age’s Top 50 firms in the following specialisms: tax, audit, restructuring, corporate finance, advisory, pensions and wealth management. 

How to enter
The awards are open to all accountancy firms (including non-ACCA firms). Create your entry statement and upload any supporting documentation. This can be updated and altered at any time until you choose to submit your entry, giving you time to review and revise your entry. 

You can increase your chances of winning by considering the following: 

  • do stick to the criteria for your category
  • use KPIs and supporting stats to demonstrate the financial impact of what has been described in the entry
  • consider the narrative that helps ‘sell’ the story about how the firm has performed
  • use supplementary information to project the personality of the firm: eg what makes it different (perhaps a focus on social responsibility)
  • client testimonials are really important – they demonstrate independent verification.

Still wondering ‘why’?
In this video Accountancy Age editor Kevin Reed talks to Peter Gillman, consultant to, and former managing director of, Price Bailey (which won ‘large firm of the year 2010’ and ‘audit firm of the year 2013’) who is on the judging panel. Together they highlight: 

  • the fantastic recognition for your staff for all award winners
  • the integrity and esteem bestowed on winners who have been independently assessed by others
  • the marketing opportunities winning presents (Lamont Pridmore credited its 2012 success with generating an additional £100k in fees in the subsequent year).

As Peter Gillman says: ‘Focus on what sets you or your firm apart and what you do really well. This might be a niche part of the market which you have really focused on.’ 

The deadline for entries – which are free – is Friday 17 July. 

If you have any queries about the entry process, ACCA is here to support you. Just email us 



Queen’s Award for Enterprise
Have you got what it takes to win a Queen’s Award for Enterprise?

Have you got what it takes to win a Queen’s Award for Enterprise? 

ACCA is a past winner of the Queen’s Awards for Enterprise. But not only large organisations should consider investing in the application process. 

There are many winners from different sized businesses who use the awards to differentiate themselves in the marketplace in which they operate (the award is valid for five years). 

The awards are open to UK organisations in the categories of:

  • innovation - for commercial success as a result of innovation
  • international trade - for growth and commercial success in international trade
  • sustainable development - for commercially successful products, services and management that benefit the environment, society and the economy

To enter any of the categories, the organisation (business or non-profit) must: 

  • be based in the UK (including the Channel Islands and the Isle of Man)
  • be a self-contained enterprise that markets its own products or services and is under its own management
  • have at least two full-time UK employees or part-time equivalents.

(Each of the organisation categories has additional entry criteria.) 


  • Now until September - prepare applications
  • 30 September - application period closes
  • December - shortlisted organisations receive notification of selection
  • March 2016 - winning organisations informed
  • 21 April 2016 - winners officially announced

Find out more
You can read more about the Queen's Awards for Enterprise at GOV.UK. 

Futhermore, you can join the LinkedIn group, follow the Twitter feed and keep up to date with the blog and YouTube channels. 

Over the coming months we will provide further support to help you and your business should you wish to apply for these and other awards. 

Finally, a question: is there a barrier that stops you entering awards that we could assist you with? Please let us know at 

Issues with HMRC Government Gateway
Last week HMRC issued a statement regarding issues with corporation tax and self-assessment on the Government Gateway.

Last week HMRC issued a statement regarding issues with corporation tax and self-assessment on the Government Gateway. 

‘We are aware that you may be experiencing a delay in receiving your acknowledgement to submissions made. Your acknowledgement will be sent once the service is restored. Please do not attempt to resubmit your submission. We are working with our IT partners to provide an urgent fix for the problem and apologise for any inconvenience caused.’

It also highlighted that PAYE was also affected.

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