Technical and Insight
Summer budget: key updates and guidance to share with clients
ACCA’s Guide to the Budget 2015 was fully revised and updated on 9 July.

Guide to the Budget 2015 highlights the key announcements from the spring and summer budgets and can be used within your practice to help staff as well as shared with clients. 

Key additions from the summer Budget include: 

Property letting
There were a number of announcements regarding property letting. You can see the wear and tear consultation elsewhere in this issue. Restricting finance cost relief for individual landlords was another significant potential change

This measure will restrict relief for finance costs on residential properties to the basic rate of income tax. To give landlords time to adjust, the government will introduce this change gradually from April 2017 over four years. 

Landlords will no longer be able to deduct all of their finance costs from their property income to arrive at their property profits. They will instead receive a basic rate reduction from their income tax liability for their finance costs. 

Dividend taxation – all change from April 2016
The tax regime for dividends will change for 2016. This sees the abolition of the dividend tax credit, a dividend tax-free allowance and tax rates for dividend receipts.
 

Dividend tax allowance

£5,000

Basic rate taxpayers

   7.5%

Higher rate taxpayers

 32.5%

Additional rate taxpayers

 38.1%


Download our Guide to Budget 2015 now. 

Summer Budget: tax treatment of interest paid on property income
New measure will restrict relief for finance costs on residential properties to the basic rate of income tax.

New measure will restrict relief for finance costs on residential properties to the basic rate of income tax. 

This measure will restrict relief for finance costs on residential properties to the basic rate of income tax and will be introduced over four years from 6 April 2017. 

The measure will not affect companies renting out property. The measure will not affect individuals renting out commercial property or furnished holiday letting. 

The measure will affect residential property in the UK and elsewhere. The measure will affect mortgage interest, interest on loans to buy furnishings and fees incurred taking out or repaying mortgages or loans. 

Landlords will no longer be able to deduct all of their finance costs from their property income to arrive at their property profits. They will instead receive a basic rate reduction from their income tax liability for their finance costs. 

Landlords will be able to obtain relief as follows:

                                 Finance cost allowed in full            Finance cost restricted to basic rate

Year to 5 April 2016                   100%                                                        0%

Year to 5 April 2017                   100%                                                        0%

Year to 5 April 2018                   75%                                                          25%

Year to 5 April 2019                   50%                                                          50%

Year to 5 April 2020                   25%                                                          75%

Year to 5 April 2021                   0%                                                            100%


This worked example demonstrates the impact these changes could have. 


Further details of these proposals can be found here

  

Summer Budget: wear and tear allowance
Wear and tear allowance to be replaced with a new relief.

Wear and tear allowance to be replaced with a new relief. 

Landlords can currently claim a wear and tear allowance when they rent out furnished residential property to cover the cost of replacing furnishings. This wear and tear allowance is calculated as 10% of the rental income less expenses incurred by the landlord which are normally paid for by the tenants. No wear and tear allowance is available for unfurnished residential properties. The wear and tear allowance is available for individuals and companies. 

From 6 April 2016 (1 April 2016 for companies) the wear and tear allowance will be replaced with a new relief. This will allows landlords for both furnished and unfurnished properties to get tax relief on the cost of replacing furnishings based on the cost when the furnishings are replaced. 

Furnished holiday lettings will continue to be eligible for capital allowances. 

The consultation Replacing Wear and Tear Allowance with Tax Relief for Replacing Furnishings in Let Residential Dwelling-Houses closes on 9 October and seeks views on replacing the wear and tear allowance with a new relief that allows a deduction for the actual costs of replacing furnishings in let residential properties.

A solid start but the Chancellor should have been bolder
Chas Roy-Chowdhury, ACCA head of taxation, responds to George Osborne’s summer Budget.

Chas Roy-Chowdhury, ACCA head of taxation, responds to George Osborne’s summer Budget.

Inheritance tax
The Chancellor should have been bolder in his first Budget in a Conservative majority government. The change to inheritance tax is a positive step, although he could have just removed the primary residence from the scope of the tax entirely. This would have made it a level playing field for all. He has introduced a highly complex system of relief tapers and carry forwards. 

Many people imagine a house worth £1million to be a mansion but in the South East, and especially London, that is not the case.

Living wage
We welcome that he took the opportunity to incentivise employers to pay the living wage. During the election campaign he and the Prime Minister spoke about raising wages for all but a commitment to eventually raising the minimum wage. This is the right direction at £9 per hour and increasing the NIC relief to £3,000.

Corporation tax
It was a very pleasing and important message to send to the global business community to continue to reduce corporation tax. Although a reduction to 18% by 2020 will be welcome Mr Osborne could have gone further by continuing the 1% per year reductions throughout this parliament. We are in a competitive global market and the more we can do to encourage all businesses to the UK, the better the long-term tax yields will be.

Fiscal drag
We welcome the rise in the 40% tax threshold, something the Chancellor has wanted for some time. Over the past five years, he has restricted the personal allowance increase to basic rate taxpayers and on many occasions lowered the level at which the 40% rate came in. If this change had been delayed much longer we would be in the situation where 40% had, in effect, become the basic rate. The rise to £43,000 by next April will come is a move in the right direction.

Pensions
We are disappointed with the Chancellor’s decision to restrict pension tax relief at higher incomes. This constant tinkering and toying with people’s life-time plans is the wrong approach. This policy is at odds with both his and the Prime Minister’s claims that they want to create ‘a nation of savers’. By restricting relief you are limiting the attractiveness of saving for the future as well as tinkering with people’s long-term plans. This is a short-term tax grab that will have long term detrimental effects.

Non-domiciles
The proposed changes to the non-domicile status are a fair change to a system that was never intended to give high-net worth individual’s permanent tax relief. It is entirely sensible to scrap the status for those who have lived in the UK for 15 out of the last 20 years. 

Road fund
The creation of road fund tax will show transparency by hypothecating the tax raised, and it would be welcome if Mr Osborne applied the same policy to fuel duty.

Rent a room relief
Excellent move to raise it from £4,250 to £7,500 next year, ACCA have been campaigning for an increase for a number of years.

Auto-enrolment: advice for small and micro employers
When offering auto-enrolment advice, are you clear whether you are talking to your client as an employer – or as an individual?

When offering auto-enrolment advice, are you clear whether you are talking to your client as an employer – or as an individual? 

Investment advice to an employer on selecting a workplace pension for automatic enrolment for their workers is not a regulated activity. By contrast, investment advice to an individual is regulated and should only be provided if an adviser has the appropriate FCA authorisation. 

As automatic enrolment moves to small and micro employers, there are instances that could make it difficult to tell whether an employer is seeking advice as an employer or as an individual. An example of this could be where the client is themselves a potential member of the pension scheme. To mitigate the risk of inadvertently providing investment advice to an individual, the adviser may like to specify in their letter of engagement that any advice to an employer is provided to them in their capacity as an employer and not as an individual. 

Business advisers can support their clients in their selection of a pension scheme by: 

  • providing factual information. For example, an adviser could identify the pension providers available to the employer and provide a comparison of the investment funds, charges and services applicable to the schemes
  • providing advice to an employer client recommending a specific pension scheme for automatic enrolment
  • referring an employer client to another adviser or scheme selection tool, as appropriate.


Such activities are not regulated when provided to an employer.  

Regardless of the level of support given by the adviser, ultimate responsibility for selecting an appropriate scheme for their workers remains with the employer. With this in mind, advisers may want to highlight the following to their employer clients: 

  • the importance of selecting a scheme that is well run, offers value for money, protects their workers’ retirement savings, and works with their payroll systems or software
  • the information that will help employers make their choice. 


If an adviser offers a solution that links to one or more specific pension schemes, they should make their employer client aware that there may be other pension schemes available to them in the market that could be more appropriate for their workers. By not doing this, there is a risk that the adviser could be seen to be restricting an employer’s ability to actively choose their own pension scheme. 

Where the cost of a pension scheme is the driving consideration in selecting a scheme, it is important that advisers ensure that their employer client is made aware that there may be other schemes available to them in the market that may be more suited to the particular needs and requirements of their workers. 

More detailed information is available on ACCA’s technical advisory webpages.

Tax schemes – why the fuss?
What are insurers so interested in tax schemes? Lockton’s Amy Newton explains.

What are insurers so interested in tax schemes? Lockton’s Amy Newton explains. 

As insurance brokers, we’re having a lot of discussions at the moment with clients who have been involved in tax schemes, as to why insurers are asking for so much information and why premiums are going up. We want to try to make this as easy as possible for you and to assist with as stable a pricing environment as we can. Therefore, in this article, I hope to explain why this is happening and what we can do to manage it together.

First, insurers are becoming more interested in tax schemes simply because they are paying out more claims in connection with them. The more insurers shed in claim payments, the more they seek to recover through premiums. Accordingly, they increase their rates, which means that historical discounts can be removed and loadings are applied where appropriate. Unfortunately, this often ripples across the book of business to spread the load, but it also applies more heavily where insurers deem that the major risks settle.

State of the market
The reality is that the professional indemnity market has been very soft for the past few years (i.e. premiums have been cheap) and we are still in a relatively soft market. However, it is hardening, meaning premiums start to increase. A comfort, however, is that insurers are often not loading premiums at all – they are simply taking off previous discounts. Essentially, they are asking for their technical rate, which has been what they desired all along, but were able to make concessions because the market was very soft and they weren’t paying out that many claims. In a lot of cases, discount still remains – the insurer just removes a proportion of it. Therefore, please rest assured that a balance is being struck and we always negotiate where we can.

Further to this, as a consequence of claim payments, many insurers are closing their doors altogether to clients who have been involved in tax schemes in any way. They aren’t inviting renewals and they aren’t taking on any new business. This withdrawal obviously affects the market somewhat. A slim number of insurers are still writing cases with tax schemes exposure, but are doing so at increased rates which take the risks into account.

However, as brokers, we are always thinking of new solutions – new partnerships with insurers and new ways to reach a mutual understanding that is fair to everyone. Therefore, when one insurer might close its doors, we do all we can to ensure another opens.

The change in the market is unfortunately a truth which applies for all clients, although, for those that are involved in tax schemes, it rings truer still. We regularly hear clients say that they have only made introductions, and give no advice on the schemes, in the hope that this removes the risk. In reality, we see very few clients who have any role in giving advice; the majority do the former alone – introduce and later complete the tax return.

As discussed in the April issue of In Practice, being an introducer only is no panacea to liability. There are many factors that mean a claim can come back to the introducing accountant. It can be the case that promoters are difficult to find, insolvent or have given comprehensive risk warnings to the client meaning liability can be pushed away from them. 

Alternatively, the accountant’s letter of engagement may not be comprehensive, or is not in place. The accountant may not have stressed the risks emphatically enough, and the burden of this duty is increasing all the time. At Lockton, we have seen clients of ours, who have only introduced, suffer large claims for these reasons. 

Furthermore, even if the introducer has done everything that is reasonable and followed the professional guidance to the letter, an attempted claim still needs to be dealt with, however spurious, and defence costs are rising. Some solicitors will adopt a scattergun approach and name everyone who is connected in any way to the scheme in a claim attempt, and extricating one’s selves can be time-consuming and expensive. Accordingly, it must be appreciated that these claims do occur and they can have a significant effect on your claims experience and the insurers’ pockets.

Government’s stance
Also having an effect is the recent strengthening in the government’s stance against tax schemes, as it suggests that more claims may be on the horizon. With the advent of DOTAS, POTAS, conduct notices, monitoring notices, follower notices and APNs, it is clear to see that the government is looking to attack the tax deficit, which will have a knock-on effect on investors. 

HMRC have put additional resources and £1bn into their pursuit of tax schemes, which has resulted in £26bn being recovered in the past year alone. The aim is to settle thousands of cases and individual HMRC officers have limited freedom to settle with taxpayers, therefore there is less likelihood of a deal being struck. APNs are being issued, which indeed some clients are paying without gripes, and this does work in your favour. However, no doubt there will be some who are unhappy with it. 

GAAR can apply to any communication with HMRC and utilises a very expansive test – ‘cannot reasonably be regarded as a reasonable course of action’ – which enables HMRC to capture potential evasion at any point. Combined with the fact that the 2015 Budget advised that a specific penalty is to be introduced for breach of GAAR, these remedies for HMRC are very wide. 

Furthermore, as many of these powers are new, there is a vast amount of uncertainty as to how they will be applied, which puts insurers even more on the back foot. Although there are challenges and we are aware that the APN legislation is to be judicially reviewed later this year, it must also be remembered that HMRC currently win approximately 80% of their cases. 

If your firm retains an involvement with tax schemes, it is generally accepted that the greater distance you place between yourself and the scheme, the better. Aim to follow the ACCA’s guidance and engage as little as possible with the planning and implementation processes. A point often in question is commission – if taken, it is challenging to argue that the introducer wanted nothing to do with the scheme. 

Increased questions
We appreciate that the growing concern about tax schemes has resulted in increased questions from insurers. As arduous as it may be, and we apologise for this, every piece of information that is requested is important and is used to assist us in getting the most competitive premium that we can. Details that can help us are as follows: 

  • Your letter of engagement – does it have a good third party advice exclusion? Was it in place for all the introductions that you have made? Please send us a copy as this may work in your favour.
  • Have your clients got separate letters of engagement with the promoters?
  • Are any of the schemes under a Spotlight, or DOTAS registered?
  • Are any of the schemes being investigated?
  • Have any of the schemes been reviewed under GAAR?
  • Have any clients received an APN? If so, how have they reacted?
  • What commissions have you received from introductions?
  • What is your stance to schemes now – are you actively introducing, not at all, or just on request?
  • Do you comply with the ACCA’s professional guidance, i.e. Technical Factsheet 166, which was updated in May 2015? 
  • How did/ do you explain the risks to your clients? If in writing, send us a copy of what you gave to the client.
  • Who is the promoter? What is your relationship with them? What stance are they taking to the most recent changes? Insurers do differentiate between promoters and their schemes as to how much risk they present.
  • How exactly does the scheme work? Is money being invested, or is it a way of structuring assets to shelter a profit? If amounts were invested, please advise us of what the figure was. If profit sheltered, please advise us the amount, plus the fee the client paid to the promoter.


Your knowledge of the scheme itself can be better than ours, so please help us. If you feel confident in the promoter, or the particular scheme, tell us why. We wholly appreciate that it can be time-consuming, but please trust that the more information we receive, and the earlier we receive it, the more powerful we can be to negotiate with insurers on your behalf.

Please rest assured that insurers do not just see the phrase ‘tax schemes’ and decide to increase your premium disproportionately. Many discussions and negotiations are happening behind the scenes and we are doing all we can to present your case in as best light as possible. At the first renewal during which schemes are disclosed, it is often the case that the premium increases. However, in the following years, provided no further introductions are made and no claims are faced, the premium will often stabilise.

Ultimately, it is all about communication, between you and the insurer, through your broker. If our presentation is reasonable, detailed, prompt and informative, insurers will engage in the same way and we can reach a mutually-agreeable goal.

Amy Newton – account manager, Lockton Companies LLP

The purpose of this article is to provide a summary of our thoughts on this matter. It does not contain a full analysis of the law nor does it constitute an opinion by Lockton Companies LLP. The contents of this article should not be relied upon and you must take specific legal advice on any matter that relates to this. Lockton Companies LLP accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of the material contained in this article. No part of this article may be used, reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, reading or otherwise without the prior permission of Lockton Companies LLP.

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

 

UK GAAP: reporting options for micro, small and medium/large companies
FRC introduces changes in response to EU Accounting Directive.

FRC introduces changes in response to EU Accounting Directive. 

The Financial Reporting Council (FRC) has issued a suite of changes that are largely in response to the implementation of the new EU Accounting Directive, and include: 

  • a new standard, FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime
  • new Section 1A Small Entities of FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland
  • other changes necessary for continued compliance with company law
  • the annual review of FRS 101 Reduced Disclosure Framework. 


The main changes are effective for accounting periods beginning on or after 1 January 2016, with early application permitted for accounting periods beginning on or after 1 January 2015.

The FRC has also made available an Overview of the financial reporting framework, which describes the financial reporting framework applicable for accounting periods beginning on or after 1 January 2016. It includes key differences between the FRSSE and the new requirements set out in FRS 105 and Section 1A of FRS 102.

The reporting options available are: 

Micro
The definition of a micro-entity is contained in sections 384A and 384B of the Companies Act 2006. The qualifying conditions are met by a company in a year in which it does not exceed two or more of the following criteria: (a) Turnover - £632,000 (b) Balance sheet total - £316,000 (c) Number of employees – 10. 

Reporting options: 

  • FRS 105
  • FRSSE 2015 (one year only)
  • Section 1A of FRS 102
  • FRS 102
  • EU-adopted IFRS 


Small
The definition of a small entity is contained in sections 382 and 383 of the Companies Act 2006. The qualifying conditions are met by a company in a year in which it does not exceed two or more of the following criteria: The thresholds are: (a) Turnover - £10.2m (b) Balance sheet total - £5.1m (c) Number of employees - 50. 

Reporting options: 

  • FRSSE 2015 (one year only)
  • FRS 102
  • EU-adopted IFRS 
  • Section 1A of FRS 102


Medium/large
Reporting options: 

  • FRS 102
  • EU-adopted IFRS


For more information, visit ACCA’s technical advisory webpages.

Is fundamental reform of IR35 on the horizon?
The government has no plans to abolish IR35. Instead, you have an opportunity to comment on how to reform the legislation.

The government has no plans to abolish IR35. Instead, you have an opportunity to comment on how to reform the legislation. 

Intermediaries Legislation (IR35): discussion document highlights that the abolition of IR35 is not considered to be an option for the government but that the legislation needs to be straight-forward and easier to understand and apply. 

The door seems to be open for a fundamental reform and comments are invited to be received by the end of September. The key points for discussion are: 

Views on the current IR35 system; specifically: 

  • any evidence on the use of other types of intermediaries, aside from PSCs, to which IR35 may apply
  • any evidence on how PSCs currently operate IR35 and the issues the rules create for individuals and businesses across the market.


Views on options for reform; specifically: 

  • any proposals for how to improve the effectiveness of IR35 that meet the objectives outlined in this document
  • any views on the implications of a change in the test which determines whether IR35 applies, both positive and negative, and what stakeholders’ preferred approach would be
  • any views on the potential option outlined in this document which would result in the engager taking on a greater role in being responsible for operating IR35, including:
    • whether such an approach would be effective in achieving the objectives outlined in this document
    • how it could be made as straightforward as possible for engagers to determine whether IR35 should apply as part of their routine hiring conversations
    • whether there are particular sectors or types of engagers which would face particular challenges
    • how such an approach should work where a PSC is engaged by an individual rather than another business, and if there should be different rules which apply in these circumstances
    • any other views on the impacts of such a change and how they might be addressed to minimise any additional burden on engagers.
Developments for accountants who prepare SRAs
The rigid requirements on the submission of accountants' reports are set to be relaxed.

The rigid requirements on the submission of accountants' reports are set to be relaxed. 

Accountants will be able to use their professional judgement in future to assess if the reports they prepare for solicitors' practices comply with SRA account rules. Accountants will no longer need to qualify accounts for trivial breaches of the rules, but instead can focus on risks to client money. 

The exemption from the requirement for lower-risk firms to obtain an accountant's report will be extended to include firms with an average client balance of less than £10,000 a year and a maximum account balance of £250,000. 

The SRA changes are subject to approval by the Legal Services Board. If approved, the amendments would be part of Version 15 of the SRA Handbook that goes live on 1 November 2015. Revised accountants' report forms will be available for use after 1 November 2015 and will apply to all firms whose accounting period ends on or after that date. 

The SRA board papers include the following proposed changes to the reporting accountant’s requirements in the SRA Accounts Rules 2011 (the ‘Accounts Rules’):  

  • note the report summarising the outcome of our consultation on the reporting accountant’s requirements attached at Annex 1 (paragraphs 5 to 8)
  • note the new guidance for reporting accountants (Annex 3) and the new accountants report form (Annex 4) (paragraphs 9 to 38)
  • to agree to extend the categories of lower risk firms exempt from the requirement to obtain an accountant’s report to include those who, during the relevant accounting year have had an average client account balance of £10,000 or less, and a maximum client account balance of £250,000 or less (paragraphs 39 to 61)
  • to make the amendments to the Accounts Rules under rule 2 of the SRA Amendments to Regulatory Arrangements (Accountant’s Reports and Overseas Rules) Rules) [2015], with the exception of the changes to Part 7 of the Accounts Rules (Annex 2). (paragraph 64).
VAT treatment for prompt payment discounts
Changes to the VAT treatment of prompt payment discounts for all supplies of goods and services came into effect from 1 April 2015.

Changes to the VAT treatment of prompt payment discounts for all supplies of goods and services came into effect from 1 April 2015.  

A Prompt Payment Discount (PPD) is an offer by a supplier to their customer of a reduction in the price of goods and/or services supplied if the customer pays promptly; that is, after an invoice has been issued and before full payment is due. For example a business may offer a discount of 5% of the full price if payment is made within 14 days of the date of the invoice. 

Prior to 1 April 2015 suppliers making PPD offers were permitted to put on their invoice, and account for, the VAT due on the discounted price, even if the full price (i.e. the undiscounted amount) is subsequently paid. Customers receiving PPD offers were able to recover as input tax the VAT stated on the invoice. 

After 1 April 2015 suppliers must account for VAT on the amount they actually receive and customers may recover the amount of VAT that is actually paid to the supplier. 

These changes will mean an increase in the VAT due on supplies of goods and services where a prompt payment discount is offered but not taken up. Customers that have restricted VAT recovery such as private and non-business customers and partially exempt businesses will suffer additional VAT costs as a result of this change.  

Accounting treatment
On issuing a VAT invoice a business will have to record the VAT on the full price in their accounts. If offering a PPD suppliers must show the rate of the discount offered on their invoice. 

If the PPD is taken up then the supplier will have to make an adjustment in their accounts to reflect the reduced consideration. In addition the supplier will have to decide which method they wish to use to inform their customer that PPD has been validly claimed and the reduced VAT payment accepted. 

This can be done by issuing a credit note to evidence the reduction in consideration or an approved statement on the original invoice. 

An example of this would be: ‘A discount of X% of the full price applies if payment is made within Y days of the invoice date. No credit note will be issued. Following payment you must ensure you have only recovered the VAT actually paid.’ 

The legislation in relation to prompt payments on imports has not changed.

Time to pay
HMRC has introduced mandatory payment by direct debit for taxpayers who use time to pay arrangements.

HMRC has introduced mandatory payment by direct debit for taxpayers who use time to pay arrangements. 

HMRC says it is not its ‘intention to routinely revisit any existing non-direct debit agreements however for any new agreements we will expect the customer to agree to payment by direct debit.’ 

The updated guidance is available on HMRC’s website.

 

NEWS
Helping vulnerable people in crisis with their tax
How you can help people facing major problems with their tax.

In May, we introduced the work of Bridge the Gap, a charity which helps vulnerable people in crisis with their tax. Here we take a closer look at the charity’s work – and how you can help.

Not only the better off need professional tax advice. Vulnerable people on low incomes can also have complex tax situations and need professional help. If they can’t pay for that support they face serious problems as Jessica experienced:

A commitment to Jessica
Jessica entered into a partnership agreement with her husband at some point during their relationship. She was the victim of domestic abuse and is now terminally ill. It is likely that the partnership agreement is not legally valid because Jessica did not understand the nature of the agreement she was entering into and it was not entered into voluntarily. 

Her husband subsequently locked her out of the family home and as a result she has no access to the business bank accounts and other information. On paper she has assets, but in reality she has nothing and is currently living with her parents. She is now being pressed by HMRC for large tax payments for the past couple of years and came to us as no-one else could help her.

Jessica’s issue is a legal one concerning the validity of the partnership agreement and she cannot resolve her tax debts until this matter is concluded. We have been able to help Jessica at this stage by contacting HMRC and informing them of her situation. Because of her ill health we were able to persuade HMRC to stop pressuring her for payments until the legal issue is resolved. We have promised Jessica we will take up her case with HMRC again once the legal issue is clarified.

Safety net
Jessica was lucky in that she found one of our two tax advice charities. TaxAid serves people of working age and Tax Help for Older People supports the over 60s. They were both founded by tax professionals who identified a need for the tax profession to support vulnerable unrepresented taxpayers in certain circumstances. In effect, we provide the tax profession’s safety net.

Who are the people we help?
The people we see are genuine deserving cases. They are vulnerable and may be in crisis by the time they find us. They come to us because they have nowhere else to turn. 

People can be vulnerable for a variety of reasons. A recent survey of 7000 of our clients showed around half either suffered from mental illness, severe physical illness, disability or had a severe learning disability. And over half were now on incomes below the tax threshold.

Our help makes a huge difference, is frequently life changing, and gets them back on their feet.

What tax problems affect people on low incomes?
Unrepresented people frequently don’t understand the language on HMRC forms and correspondence – and don’t know how to respond. Some situations bring particularly difficult tax issues: for example, serious illness, loss of their business, retirement, family breakdown or bereavement.

Some people get caught up in self-assessment unnecessarily and suffer inappropriate late filing penalties, often out of proportion to any tax owed. Some don’t understand the multiple tax codes on their small incomes and pensions (have you tried to explain a K code to a client?). Many don’t understand underpayments on form P800; others struggle with calculations, allowable expenses and can’t fill in a form. More generally, a significant proportion don’t know their rights or obligations.

Worse, some suffer from abusive employer situations which can result in inappropriate self-employment or under declarations for tax. Others suffer from inappropriate HMRC reviews or investigations and at the other end some suffer from abusive ‘accountants’, contractors or scams. All of these people desperately need professional advice. Some also need representation.

The problem is getting rapidly worse
Our two charities were founded many years ago and have been serving vulnerable low income taxpayers for over 20 years. The need for us has never been higher. And it is increasing rapidly. Why? 

One of the key reasons is that the working environment has become much harsher. A greater proportion of the working population are now in low paid work – either small multiple employments or self-employment. It is also more difficult at retirement: older people face lower pensions and many are forced to remain in part time work. So there are many more vulnerable people.

But at the same time the tax regime becomes more difficult for them: those least able to cope now have more complex tax affairs through self-employment or multiple employments, or both. This is compounded by changed tax law and practice at HMRC – late filing penalties; the greater focus on compliance activity and tightened practices on debt. And while these may be an appropriate response to deliberate evasion they bear harshly on vulnerable people who didn’t set out to evade tax.

An urgent appeal to tackle this problem
This has sharply increased the demand for our services. But our resources are already significantly overstretched. Last year, together we assisted 25,000 people. At least 6,000 more needed our support – it could be a lot more. So we have launched an urgent appeal. We have come together to launch the ‘Bridge the Gap’ appeal to the tax profession. We want to raise another £250,000 in recurring donations to: 

  • serve another 6,000 people a year in crisis with their tax
  • strengthen our geographic reach
  • develop our services for homeless and vulnerable people.


Who is supporting this appeal?
Bridge the Gap is being strongly backed by ACCA, CIOT, ATT and the ICAEW Tax Faculty. Its patrons are Sir Andrew Park and Steve Edge. 

Please support this urgent appeal with a donation:

  • £42 (£3.50 a month) provides professional tax advice over the phone for one more vulnerable person
  • £100 (£8 a month) helps a newly bereaved widow with the tax consequences
  • £120 (£10 a month) enables us to help three more people over the phone.


You can make a donation quickly and easily online  Please help us help more vulnerable people in crisis with their tax.

Rosina Pullman and Gary Millner, CEOs of TaxAid and Tax Help for Older People, the two tax advice charities

Comment from Chas Roy-Chowdhury – subject matter expert, taxation, ACCA
‘I urge you to support this urgent Bridge the Gap appeal. These two charities are a part of our profession. The people they help are vulnerable, urgently need tax help and have nowhere else to turn. 

The work these two charities do can be life changing. But the demand for their services outstrips the support they can give and is increasing rapidly. This is why ACCA, CIOT, ATT and the ICAEW Tax Faculty are all strongly backing this appeal.

Please consider making a regular donation so that we can help vulnerable people in crisis with their tax.’

Inspire a trainee accountant!
Become a workplace mentor for an ACCA trainee.
CPD
CPD events for practitioners
Get equipped with the right set of skills and knowledge.

Keep up to date with latest developments within the accountancy profession and ensure that you are equipped with right set of skills and knowledge to best support your practice. 

SATURDAY CPD CONFERENCE THREE

  • UK GAAP Reporting        
  • Summer Budget and 2nd Finance Act 2015       
  • Self Employed Status and IR35 Issues and Planning     
  • Pensions Update

 

AUTUMN UPDATE CONFERENCES

Business Advice Conference

Accounting Conference

Taxation Conference

 

PRACTICE MANAGEMENT

Guide to Practical Audit Compliance for Partners and Managers

Practical Guide to ISQC 1 for Partners and Managers

Money Laundering Workshop

 

Residential Conference for Practitioners

20-21 November, Radisson Blu Hotel, Derby

 

ONE DAY COURSES

Accounting Standards - Changes, Choices and Challenges

General Tax Update for Accountants

 

Online learning from ACCA
Benefit from a range of online learning opportunities this summer.

We have worked with some of CPD partners to develop some learning material that has been specifically designed for finance professionals working in the public practice sector. The courses will develop the skills needed to carry out your day-to-day job as well as enhance your employability for the future. 

Learning bundles from BPP

Public practice - 5 course pack – £99*
Public practice - 10 course pack – £195*
Public practice - 20 course pack  - £295*

(*all prices exclusive  of VAT) 

Online courses from accountingcpd.net
accountingcpd.net have a selection of courses in the following areas: 
 

  • performance and financial management
  • practice management
  • governance and risk management
  • corporate reporting
  • taxation
  • law and regulation.


Simply pick and mix any five courses of your choice and get a free one hour course in financial crime or ethics.

21 hours of CPD for £262.50 (excluding VAT)

To book, please click here and then follow the booking instructions on the ACCA website.


Buy four 4hr Grant Thornton Financial Modelling online CPD courses from accountingcpd.net and get 25% discount*

(*offer ends 31 July) 


MICROSOFT OFFICE SPECIALIST (MOS) - EXCEL
MOS - Excel certification and 15 hours of online video training 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!


Whether you are looking for a book to help you with your CPD requirements or simply a book to read for your own pleasure, come and have a browse through our two new online bookshops.

CAREERS
Boost efficiency and performance for small businesses
A one-size-fits-all approach to corporate governance for SMEs will not work because their needs are vastly different to that of bigger corporations.

A one-size-fits-all approach to corporate governance for SMEs will not work because their needs are vastly different to that of bigger corporations, says a new report from ACCA. 

The report, Governance for all: the implementation challenge for SMEs, establishes that while in larger organisations corporate governance is primarily tasked with ensuring that management acts as shareholders’ agents, for SMEs it is mainly about improving business performance and managing risk. 

Reacting to the report, Rosanna Choi, chair of the Global Forum for SMEs, said:

‘SMEs need to realise the potential benefits of implementing corporate governance within their businesses. But equally, governments, advisers and other stakeholders need to realise the challenge for SMEs is that established corporate governance frameworks have been developed with large, listed companies primarily in mind. Such frameworks and codes may not reflect the realities of running a small business.

Governance issues are nevertheless of critical concern to small businesses, where owners may often be its managers as well, or where company ownership may be shared across family members. Sometimes the line between business and personal interest can be blurred. Corporate governance should establish clear roles and responsibilities for each individual and as such is relevant to businesses of all sizes.’

The key findings of the report include: 

  • There should be clear reporting lines and clarity about how decisions are made and risks controlled, and about other matters that need to be brought to the board’s (or committee’s) attention for review or approval.
  • The framework should promote understanding of roles and responsibilities and limits of each person’s job, as well as show the board the balance of an organisation such as risk and reward.
  • Any incentives for staff need to be supportive of board strategies.
  • There needs to be clear communication by board to management and staff about issues such as strategic goals and expected behaviour.
  • Appropriate internal controls should be established, related to key risks.
  • Boards need to have good visibility of management actions and decision making, which includes the provision of high quality information on business performance and risk management.


Rosanna Choi concludes: ‘For corporate governance to work in small businesses the framework needs to take into account the diverse needs for them – they are not all run in the same way.

‘Advisers and international institutions, such as ACCA, need to also help by campaigning for the cause of why corporate governance matters to SMEs – this is vital for creating a receptive environment and overcoming barriers to action.’ 

The report details why corporate governance matters for SMEs; how good corporate governance looks for these businesses and how they can benefit from them; the value and impact of boards; the triggers of change and the challenges of introducing corporate governance. 

The global body for professional accountants canvassed views from members of its Global Forum for SMEs for the report, which also incorporates discussions held during a seminar held by the Economic and Social Research Council (ESRC).

Updated links in ACCA’s model FRSSE 2008 accounts
ACCA has updated the links in the accountants’ reports of its model FRSSE 2008 accounts.

ACCA has updated the links in the accountants’ reports of its model FRSSE 2008 accounts: 

  • Model FRSSE 2008 company abbreviated accounts
  • Model FRSSE 2008 company unaudited accounts.

You can obtain a copy of these updated model accounts by emailing us at supportingpractitioners@accaglobal.com and quoting your ACCA membership number.

 

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