Technical and Insight
Changing your year-end/period of account?

A significant consequence of such a commercial decision will be ‘overlap relief’.


A significant consequence of such a commercial decision will be ‘overlap relief’.

 

Many businesses will be looking to re-set their trading period/year with the promise of lockdown finishing and may look to extend periods of account for this reason. There may be a number of commercial reasons around these extensions. A consequence of this commercial decision will be ‘overlap relief’.

 

Impact of overlap relief

Almost everyone with an accounting date other than 31 March or 5 April will have an entitlement to overlap relief and can ‘cash it in’ either on a change of accounting date or on cessation of the business.

 

Where a business changes its accounting date, there will generally an overall saving to be made where current profits are at a lower level than the profits arising when the ‘overlap’ first arose. So, a benefit from the commercial decision to extend is this relief could help the cash flow for the small businesses when they need it the most, as many SMEs are likely to be in a position of lower profits in the 2020 -2021 tax year.

 

Who can change the year end?

Where a change of accounting date takes place in year four or later years of trading, three conditions must be met for the basis period for the year of change to end with the new accounting date.The legislative provisions are found in S216-S217 ITTOIA 2005.

 

The three conditions are:

  • the first accounts to the new date must not exceed 18 months
  • a notice of the change of accounting date must be given:
    • in a self-assessment tax return for the year of change that applies to the person carrying on the trade, and
    • on or before the date that the return is required to be made
  • in cases where there has been an earlier change of accounting date (which resulted in a change of basis period) in the previous five years:
    • the latest change must be made for commercial reasons, and
    • those reasons must be set out in the SA return referred to above.

 

HMRC manual BIM81050 provides more guidance on commercial reasons for changing an accounting date. It is important to remember that obtaining a tax advantage is not a commercial reason (S218(6) ITTOIA 2005)

 

How to calculate the overlap relief

Once the client decides to change the year end, overlap relief is given as a deduction in calculating the profits of the trade for the tax year in which there is a change of accounting date, if the basis period for that tax year is longer than 12 months. HMRC guidance on basis periods is found at BIM81000 onwards.

 

The amount of overlap relief given for the tax year in which such a change of accounting date occurs is restricted by reference to:

  • the number of days in the overlap period(s) to which the overlap profits relate; and
  • the number of days by which the basis period for the relevant tax year (in which the change of accounting date occurs) exceeds 12 months.

 

Where the accounting date in the year is 31 March or 1 – 4 April inclusive, the basis period may be treated as ending on 5 April for the purpose of calculating the amount of relief.

 

The effect of offsetting overlap relief on a change of accounting date is to ensure that tax is paid on 12 months’ worth of profits. If, for example, the basis period is 14 months long then the overlap relief of two months will be deducted. The legislation achieves this result by listing six ‘steps’ used to calculate the deduction, as follows:

  • step 1: add together the overlap profit arising in all previous overlap periods
  • step 2: subtract from that the amount of any deduction already made under these rules; call the resulting figure ‘the remaining overlap profit’
  • step 3: add together the number of days in all previous overlap periods, deduct the number of days already counted per Step 5 below on any previous occasion; call the resulting balance ‘the number of days on which the remaining overlap profit arises’
  • step 4: calculate ‘one day’s worth of remaining overlap profit’ by dividing ‘the remaining overlap profit’ by ‘the number of days on which the remaining overlap profit arises’
  • step 5: calculate the number of days by which the basis period exceeds the length of the tax year (ignoring 29 February if desired) and call the balance ‘the number of days’ worth of overlap profits that may be deducted on this occasion’
  • step 6: multiply the results of Steps 4 and 5 to calculate the amount of the deduction to be made.

 

The following examples show how these above steps can be applied in practice:

 

Example 1

The overlap profit available for relief after 2016-2017 is £54,492 over 340 days.

In 2018-2019 the accounting date is changed from 30 April 2018 to 31 October 2018. The relevant conditions for a change of accounting date are met.

 

The basis periods are:

2017-2018

Year 8

12 months to 30 April 2017

2018-2019

Year 9

18 months to 31 October 2018

2019-2020

Year 10

12 months to 31 October 2019

 

The profit for the 18 months to 31 October 2018 is £120,000.

 

Overlap relief given for 2018-2019 is restricted (because at least 12 months’ worth of profit must be brought into the charge to tax for that year).

 

The basis period for 2018-2019 exceeds 12 months by 184 days (549 less 365).

 

Overlap relief for 2018-2019 is restricted to £54,492 x 184/340 = £29,490. Profits taxable for 2018-2019 are £120,000 less £29,490 = £90,510.

 

Overlap profit of £25,002 (over 156 days) remains unused. At cessation any remaining relief will be given in full.

 

Example 2

 

A sole-trader business that started to trade on 1 July 2013 and made up accounts to 30 June 2014 was taxed twice on the profits for the period 1 July 2013 to 5 April 2014, a period of 279 days. The amount of profits taxed twice, representing the overlap profits, was £9,000.

 

In a later year, the business shows profits of £25,000 for a period of 15 months to 30 September 2019, a period of 457 days. An overlap relief deduction can be made from the 2019–20 taxable amount of £2,968 calculated as follows:

 

457 – 365 = 92

(92/279) × £9,000 = £2,968

 

On a later change of accounting date, the overlap relief available would be £6,032 (£9,000 less £2,968) and the number of days’ worth would be 187 (279 days less 92). If there were no later change of accounting date but the business ceased to trade, in the year of cessation a final deduction of £6,032 would be available from the assessment.

 

You can find some more related guidance on how to utilise trading losses within this article.

 

 

Useful resources

HMRC manual BIM81080 

 

Business plan and cashflow template

The importance of AML procedures within your firm

A timely reminder of the minimum requirements for all ACCA-supervised firms.


A timely reminder of the minimum requirements for all ACCA-supervised firms.

 

To comply with anti-money laundering (AML) regulations, and to help prevent your firm from unwittingly facilitating the proceeds of crime, all ACCA supervised firms are reminded that at a minimum they must do the following:

  • conduct and document on a periodic basis a firm-wide risk assessment of the Money Laundering and Terrorist Financing (MLTF) risks faced by the firm
  • establish and regularly update AML policies and procedures specific to the firm – considering the risks and mitigation identified within the firm’s firm-wide risk assessment
  • conduct the appropriate level of due diligence on every client including risk rating the client appropriately, identifying and verifying the client, understanding their source of funds and conducting appropriate levels of ongoing monitoring
  • provide adequate AML training on a periodic basis for all relevant employees. The training provided should cover an explanation of the law, explanation of what money laundering is, ‘red flags’, Suspicious Activity Reporting (SAR), tipping off and failure to report suspicious activity.
  • have a formal process for employees to document and escalate suspicious activity to the money-laundering reporting officer (MLRO).   

 

The above applies to all firms regardless of size. 

 

To support members in meeting their AML obligations, ACCA has produced guidance on all the above and more, which can be found here. This includes practical factsheets on SARs, client risk assessment and due diligence procedures, as well as the latest draft guidance for the accountancy sector from CCAB.

 

The role of culture in delivering your strategy

Will Farnell concludes his series on creating the digital firm by examining what culture really means – and closes by hoping he has inspired you to think a little differently.


Will Farnell concludes his series on creating the digital firm by examining what culture really means – and closes by hoping he has inspired you to think a little differently.

 

 

Peter Drucker, the world-renowned management thinker and guru, famously stated that ‘culture eats strategy for breakfast’. This means, it does not matter how good your strategy is - if your firm’s culture is not effective it simply won’t happen.

 

In this last of eight articles in In Practice, it is fitting that we finish on discussing the role of culture to make everything else happen. We have talked about strategy, the need to know where you are and where you want to go. We have talked about the technology available to help you run a more efficient firm and how process is critical in ensuring the technology works for you and your clients. We talked about the drive to deliver greater experiences for your clients and the services that millennial and GenZ clients will, and do, expect from us.

 

In article seven we talked about marketing and the need for firms to have a crystal-clear vision and a set of values that can be communicated effectively. These values and your firm's culture should be perfectly aligned in terms of your brand, your firm’s personality and the very way your firm and the people in it live and breathe every aspect of your operations. If you say one thing and do another it simply becomes confusing to your team and equally your clients. Similarly, multi-partner firms often suffer from a schizophrenic personality due to the collision of multiple personalities and an inability to agree on a single firm culture, brand and personality.

 

Why are people and culture so critical?

 

When we talked about marketing in article seven, I emphasised the shift in client expectations, and particularly buying habits of the millennial generation. Millennials and GenZ make up more than 60% of the workforce today with the oldest millennials approaching 40.

 

They are the entrepreneurs; they are the senior managers. Millennials make many buying decision based on values. The values of an organisation are more important to this generation than to others before them. The key point here is a buying decision may be one made by a prospective client but equally importantly it could be by a prospective employee and team member.

 

If we cannot articulate the firm values and culture, how can our prospective clients and team members make a decision about whether we are the right firm for them? When we focus on recruiting, research has proven that work-life balance, work flexibility and work environment often come out as more important for many millennials than pay. What could your firm offer to a prospective employee if you were asked today? Would yours be a more appealing proposition than your competitors down the road, also looking for good quality staff?

 

Of course, the key point here is that our people are our differentiator. It won’t be long before most firms offer a similar approach to technology to you being an established digital accounting firm. So where is the differentiator then? Our only true difference is the way our people engage and work with our clients. It’s therefore business critical we get this right if we are to survive and prosper in an increasingly digital world.

 

What is culture?

There are many definitions of culture but the one that stands out for me, and the one I always quote, is from Charles Handy, who simply defines culture as ‘the way we do things around here’.

 

It is the unwritten rules of an organisation. I often think about that tradition I have witnessed in most organisations I have worked in. When it’s your birthday YOU have to buy cakes for everyone. Surely if it’s your birthday your lovely colleagues should buy you cakes? This is a great example of culture at play. Nobody makes that rule, it is just the way it is and always has been!

 

Culture is hugely complex and deep rooted.

 

Culture =

  • Values +
  • Traditions +
  • Beliefs +
  • Interactions +
  • Behaviours +
  • Attitudes.

 

This combination of intertwined values, beliefs, traditions, demonstrate the challenges facing firms trying to change culture. Most firms have a culture that was not designed. Elements of it might be, but as teams grow, the increasing mix of values and beliefs collides with the more established elements such as behaviours and traditions. We have to take control of our culture and ensure we recruit team members who will fit our culture and help us shape and maintain the culture we design.

 

Changing just one of these six areas is a significant undertaking so appreciating that culture change requires all six to change really does show the size of the task and it is not something that ever happens overnight.

 

How to begin building a great culture

What steps can you take now to begin building a great culture designed for, and by, you and your team? What do you need to do to begin and ultimately bed in your culture of choice?

 

  1. Have true clarity around your vision, mission, purpose and values.  If you have not got this yet, it’s the place to start and we talked about the importance of this on the last session around marketing. If you don’t know what your vision and values proposition is, no one else will.
  2. It is critical that your team feels pride and ownership in your values, what do they want ‘their’ firm to be famous for? There is a real possibility that you will have team members that don’t fit your culture. The impact is here conflict and resistance to where you want to go. Remember culture eats strategy for breakfast!
  3. Alignment – does every aspect of your firm reflect point 1? Everything your firms says, does, delivers, must align to your vision and values. For many years in my own firm we had an office environment that was mismatched to who we were as a firm and what we told the outside world. It meant nobody really knew who we were, just who we thought we wanted to be.
  4. It is essential that we stop and think and look to create a work environment where our team are happy to spend almost half of their waking hours! What does this look like? Flexi-working, comfort, atmosphere? A happy, relaxed and productive workforce will keep your clients delighted and deliver the client experiences you strive for.

 

What happens when we get it right?

I touched upon it in point 4 above. When we get culture right, we deliver on our vision and aspirations. This occurs as we have a unique proposition in the people who deliver our services. Who would not want:

 

  1. Great teams of engaged motivated loyal people focused on delivering your firm's vision
  2. A team that is laser focused and capable of delivering true client experience
  3. A clear firm personality leading to brand identity and competitive advantage
  4. A steady flow of people wanting to come and work for your firm
  5. Reduction in recruitment costs and greater retention of the first-class team you have built?

 

It’s quite compelling, isn’t it? It doesn’t happen by accident. It needs to be planned and considered and the little details matter most.

 

Challenges in creating great culture

We have touched on some of the challenges already. Culture is made up of a number of inter-dependent characteristics that in isolation are difficult to change. So, this is the first big challenge in changing culture.

 

It’s really hard!

 

Culture change won’t happen overnight, there will be some fallout; you may even lose some team members in the process. Having said this, culture is more important today than ever before. Our consumers, in terms of clients and staff, really care about it. It is simply something that we cannot leave to chance and we need to take ownership over the design of the business we want to be.

 

Besides being hard, the other big issue we have to contend with is…

 

We have always done it that way!

 

This is NOT a reason to not change. Just because we have always done it that way it does not mean that it was the right way. Guess what, things change. Clients change, technology changes what is possible. We change as individuals. The most successful businesses evolve. They recognise that change is inevitable. Through history there are many examples of large organisations who have failed and no longer exist and in many cases as a result of a reluctance to change who they were and what they did.

 

Often a big stumbling block for changing culture is simply…

 

Too many different personalities!

 

A lack of ability to decide what is the ‘tone’, what is the ‘personality’ of the firm. The inability to be able to decide on the right culture means we end up with no culture or, worse still, silo cultures and no one really knows who they work for and what is expected of them. This is a really dangerous place to be and not one arrived at by design, rather a lack of design.

 

This takes us to the final real challenge in changing culture. Very simply...

 

A lack of vision!

 

This can be read in a number of different ways. It could be a lack of vision for the business, the vision that drives the value proposition. What it is that the firm is trying to change in the world or deliver to its clients. It could also be a lack of vision from the top of the organisation in terms of strategic vision and it could simply be a lack of vision around the recognition of the importance culture plays in today’s highly competitive marketplace. Whether you are looking for client growth or building a high performing team capable of supporting your firm’s growth, culture matters.

 

Conclusions

Over recent months I have tried to take you on a journey. A journey that I have personally lived and breathed in my own accounting firm, Farnell Clarke. The good, the bad and the downright ugly have shaped my firm over the last 13 years or so. We are a long way from having cracked it. We continue to evolve, try new things and sometimes get it wrong. You know, this is ok, this is how we learn.

 

What I hope this series of articles has done is inspire you to think a little differently. Recognise that there is a different way, there is a whole new business model available to accounting firms to deliver better services and broader, rounded advice to our clients.

 

Much of what I have covered in these articles is available in longer form in my book The Digital Firm. It was written almost three years ago now so some of the thinking has been updated as lots has happened in that time.

 

One thing that has not changed is my excitement for the profession we all work in. We are riding a wave of change and there has STILL never been a better time to be an accountant in practice.

 

Do revisit the articles in the seven previous issues of In Practice and build yourself an action plan. A plan that you and your team can work on to build a better, more profitable, more enjoyable firm and one that can deliver that financial peace of mind to your clients and support them to achieve their own business and financial goals. I wish you well on your ongoing digital journey.

A quick summary of year-end tax planning tips

With self-assessment season over, now it is time to think about year-end tax planning for your clients.


With self-assessment season over, now it is time for practitioners to think about year-end tax planning for their clients.

 

Each year seems to bring with it something new and this year is certainly no exception. The main areas of interest this year will centre around taxpayers seeking to avoid the higher rate of tax of 45% and making use of the current CGT rates and IHT allowances.

 

Matters to consider include:

 

Income tax planning
For tax year 2020/21, personal allowance for individuals is £12,500 and the next £37,500 is taxed at the basic rate of 20%. Higher rate tax is charged from income of £50,001 to £150,000. Income above £150,000 is chargeable at 45%. Dividend income in these bands is charged at the rates of 7.5%, 32.5% and 38.1% respectively.

 

It always pays to estimate your income before the end of the tax year to understand which tax bracket it will fall within in order to plan for the resulting income tax liabilities. For full rates and allowances please see ACCA Budget Guide 2020.

 

Action points can include:

  • make use of starting rate of savings by paying interest from your own company on your credit director loan account (be vigilant regarding CT61 tax deduction requirements for company though). The personal savings allowance entitles basic rate taxpayers to £1,000 of tax-free savings income and higher rate taxpayers £500. Additional rate taxpayers receive no allowance. Also see our article on loans to companies for other aspects relating to this
  • use the dividend allowance of £2,000 by paying dividend from your own company (if applicable)
  • spouses and civil partners should seek to equalise income and utilise their personal allowances and basic rate tax bands, where legally possible. Consider allocation of jointly-held assets and appropriate elections to HMRC on Form 17 for the coming tax year
  • consider tax planning for residential property finance charge impact as there is no deduction allowed for 2020-21 while calculating your rental profits, which can push you into higher rate brackets and affect child benefit charge if applicable
  • make pensions contributions but beware of the anti-forestalling rules for high earners
  • utilise the £3,600 pension limit for non-earners/children
  • consider making gift aid payments to attract tax relief at the higher tax rate
  • utilise ISA limits for all family members (including children)
  • consider Lifetime ISA (LISA) for any children who are above the age of 18 now to get a maximum bonus of £1,000 per year.
  • consider EIS and VCT investments – the investments are, by nature, higher risk but the tax breaks are generous.

 

Incorporated businesses

  • As announced on 12 November 2020, Annual Investment Allowance (AIA) has been maintained to the level of £1m until 1 January 2022 (which was originally due to revert to £200,000 on 1 January 2021). Bring forward the capital investments if needed, to boost the cash flow by claiming AIA.
  • Accelerate directors’ and staff bonuses and employer's pension contribution, where appropriate.

 

Capital gains tax
The current CGT rate of 10% and 20% (residential property 18% and 28%) is payable by taxpayers in basic rate and higher rate respectively. The annual exemption for 2020/21 is £12,300. CGT tips include:

 

  • use your annual exemption by crystallising sufficient gains to use up the allowance. If generating gains from shares traded on the stock market, watch 'bed and breakfasting' and matching rule for shares
  • look at your share portfolio if some of the shares have become valueless: you may be eligible for Negligible Value Claim against your income which is better than capital loss
  • if you had incurred any capital losses since 2016/17 but no formal claim is submitted yet, then the deadline is 5 April 2021 (4 years after the end of the tax year of the loss)
  • if clients are considering selling or gifting their businesses, they may be eligible for Business Asset Disposal Relief (formerly known as entrepreneur relief)
  • before selling a sole ownership property, consider transferring it in the joint name of the spouse or civil partner to use two annual exemptions. However, you may need to seek good advice for other related implications
  • invest in capital-producing rather than income-generating assets
  • employers considering share schemes for staff should consider approved schemes which attract CGT rather than income tax treatment.


 Utilise IHT exemptions

  • £3,000 per tax year may be gifted. The exemption for the previous tax year may be used if not already done so
  • small gift exemptions
  • marriage exemptions.

 
And finally, New Tax Year Eve seems to come around quicker every year! Actually, this year, it does, as the end of the tax year falls on Easter Monday. Therefore, for many, the last working day of the 2020/21 tax year will be Thursday 1 April 2021 - something to be aware of when planning your year-end tax planning.

 

Useful resources

Ten common tax elections and claims

Going it alone – how to create your own practice

We may live in extraordinary times. But where many see trouble and strife, some accountants see opportunity.


It’s a cliché to say that we live in extraordinary times. But where many see trouble and strife, some accounting practitioners see opportunity.

 

ACCA reports a dramatic increase in those looking to setup new practices. As of November 2020, nearly 900 practising certificates had been issued across the year – a significant rise compared to 2019.

 

Is now the right time for you to go it alone – and create the practice of your dreams?

 

Alas, this has never been easy, even at the best of times. I look at some of the key challenges below. But first, you should know that Sage has partnered with ACCA to offer all new ACCA licensed practices complimentary software for their first 20 clients and for the first six months of the business.

 

In short, it means you will have one less thing to worry about.

 

You get free access to award-winning software like Sage Accounting, Auto Entry, and Sage’s excellent range of payroll software like 50cloud Payroll Bureau. Eligible new practices also get access to Sage University and accreditation, and are assigned their own Practice Success Manager, amongst other benefits.

 

You can sign-up here.

 

But now let’s take a look at some of the key challenges around going it alone – and how you can not only come on top, but thrive in the new normal we live in.

 

Business model

This is the basic but essential first step from which everything else springs. So make sure you get it right!

 

Are you going to focus on a bricks-and-mortar base of operations, or are you going to put most energy into an online operation? When it comes to clients, are you going to be a generalist or utilise your specialist knowledge to hone a more select client list? Or a bit of both? What services are you going to offer from day one, and what areas will you expand into in the future when you have increased capacity (eg payroll, auditing etc.)?

 

It’s so tempting to open your doors immediately upon deciding to create a practice. After all, you’ve been doing this for years – so why wait? Well, experience shows that those that first create a rock-solid model tend to do better in those perilous early days than those that don’t. And be aware that deviating from the model tends to bring trouble – it can break your fledgling processes, and thereby create additional costs, such as labour.

 

Stay true and rely upon your experience to guide you!

 

You also have the opportunity to create a thoroughly modern practice, of course. You can insist clients only use direct debits for payments, for example, which dramatically reduces admin around chasing payments. And you might only take on clients that use accounting software – increasingly essential in light of the ongoing Making Tax Digital initiatives, and a game-changer for accounting professionals who can tie it into their practice software for ease of access to client accounting data.

 

One area of the business model to remain flexible around is pricing. You can take advantage of your small size and low costs to undercut competition in those early days. But pricing will inevitably evolve as both your practice grows in size – and your client businesses do too. Make sure this scaling is built into your business plan, and let it inform your targets for growth.

 

Onboarding

While established practices treat onboarding as one process amongst many, for a new practice it’s surely an area that requires intense focus.

 

While giving each new client care and attention is sure to pay dividends, and may be necessary to instil trust in your start-up business, it can also be very labour intensive. There’s poor value represented by highly-qualified and experienced accounting practitioners spending time filling in forms.

 

Onboarding software can really help, as can hiring temporary staff to help out, but for guidelines around creating practice engagement letters, money laundering declarations, professional ethics statements and more, you can make use of the ACCA’s resources. Why reinvent the wheel?

 

Similarly, there’s a lot to be said for taking a sneaky peek at how your direct competitors do things. For example, what technology do they appear to use for their website? What marketing techniques do they use (eg newsletter, webinars, mailouts etc.).

 

Start slow, and build up speed

It’d be nice to get 100 clients the day you open your door (or publish your website), but the reality is likely to be more of a hard slog and gradual growth – at least for year one.

 

Take every chance to network. Focus almost exclusively on growing the client list, and honing processes for efficiency.

 

The best advice is to fish where you know fish to be, rather than simply cast your net into the middle of the ocean and keep your fingers crossed. You’ll almost certainly have some idea where the kind of clients you want hang out. Make use of this knowledge, and be fearless in your pursuit.

 

Don’t be afraid to get help. Attend trade shows like Accountex (post-Covid!) and discuss what you’re doing with other professionals. You might even seek the help of a business coach who can come in, view your processes, and spot your weaknesses – as well as your strengths. This kind of investment can pay for itself 100x over.

 

Conclusion

An amazing 1,843.5 start-ups were created every day in the 2018/19 tax year. When it comes to side hustles – those with a second job or self-employed outside of a main job – there are 1.1m people in the UK.

 

These people need what you offer. And Covid-19 has unfortunately brought a wave of redundancies – but ones where people have taken their settlements and invested it in creating something new.

 

These are very uncertain times but – counter-intuitively – uncertainty creates opportunity. You can be there waiting. This can be your time to shine. If not now, then when?   

 

 

Sign up for the Sage/ACCA new practice support now

 

Tax payments – remember the 1 April deadline

Individuals granted an extension to submit their tax return by 28 February face a 5% late payment penalty.


Individuals granted an extension to submit their tax return by 28 February face a 5% late payment penalty.

 

Around 1.8m individuals are set to benefit from a hard-fought campaign which encouraged HMRC not to charge a late filing penalty – provided they submit their return online by 28 February. HMRC has confirmed that the initial 5% late payment penalty on self-assessed tax won’t be charged if the tax is paid, or a time to pay arrangement is agreed, by 1 April*.

 

It is important for these and many other taxpayers that they pay any outstanding balance, or arrange a payment plan, before 1 April 2021* to avoid a 5% late payment penalty.  For a time to pay arrangement you need to know the amount of tax due hence filing the return and agreeing payment plan.

 

As a reminder, anyone who cannot pay their bill in full can apply to spread the cost. Taxpayers can set up a payment plan, in up to 12 monthly instalments, online via GOV.UK provided they meet the following requirements:

  • they have no:
    – outstanding tax returns
    – other tax debts
    – other HMRC payment plans set up
  • the debt needs to be between £32 and £30,000
  • the payment plan needs to be set up no later than 60 days after the due date for payment – but they should really do it as soon as possible, and certainly before 3 March to avoid a 5% late payment penalty.

 

Those who do not meet these requirements, or who need more than 12 months to pay off their bill, can apply for a payment plan by speaking to one of HMRC’s debt advisers.

 

*Editor's note: When this article was first published on Friday 19 February, the deadline was 3 March. The article has been edited on Monday 22 February to reflect the amended deadline of 1 April 2021.

 

Fee disputes and negligence where letters of engagement have failed

What happens when inadequate letters of engagement affect accountants' and their professional indemnity insurers' ability to defend claims?


What happens when inadequate letters of engagement affect accountants' and their professional indemnity insurers' ability to defend claims?

 

In our previous article we addressed the importance of having a properly scoped letter of engagement;  in this article we will look at a couple of examples where inadequate letters of engagement have affected accountants' and their professional indemnity insurers' ability to defend claims.

 

Exclude advice provided by a third party

One of the most costly areas of loss to professional indemnity insurers, in recent years, has related to accountants introducing their clients to firms specialising in tax mitigation schemes. Often it was just that, an introduction, but in many cases the accountancy firm themselves benefited from a commission or introducer fee, meaning they were intrinsically linked to the transaction.  

 

All too regularly these schemes failed, often with the firm providing the advice failing at the same time. The client then sought to recover their losses and sued their accountant for negligence in recommending them to the tax scheme provider. Where the accountants' letter of engagement remained silent on the tenet of that introduction and failed to specifically exclude any responsibility for the advice given by the third party provider, the claim against the accountant was successful.  

 

In some cases the losses were substantial, with clients having taken out loans to invest in the scheme that still required to be repaid. At very least many clients incurred interest and penalties on unpaid tax and had to find the money to pay a large, unexpected bill. In any circumstances where you are introducing a client to a third party provider, we recommend that you exclude liability for advice given by them and ensure, where possible, the client enters into a separate agreement with the third party.

 

Ensure the letter of engagement evolves with your services

The services you originally contract to undertake can often evolve with a client over time. Do you always make sure your letter of engagement evolves at the same time? In one situation, the accountant’s client passed the VAT threshold and became liable to pay VAT on sales; however, the client failed to take the accountant’s verbal advice and register with HMRC.

 

Unfortunately this verbal advice was not recorded by the accountant nor was their letter of engagement updated. The accountant continued to carry out his contracted services and eventually HMRC caught up with the client and demanded payment of the outstanding VAT. The client’s defence was that the accountant should have advised him appropriately. At a subsequent hearing, the decision went against the accountant as there was no paperwork on file to support the accountant’s position that their advice to register for VAT was properly given.

 

As the professional, the accountant was duty bound to evidence the advice was given and should at very least have recorded the call but even better followed up this advice with his client in writing. To add insult to injury, although the accountant had a limitation of liability clause within their letter of engagement, the clause failed as it only applied to those services listed in the appointment document and did not apply to the VAT advice. The accountant’s professional indemnity insurer became liable for the full amount of the claim which exceeded £150,000.

 

Avoid unnecessary fee disputes

Fee disputes are all too common and while most are unlikely to involve your professional indemnity insurers, these can take time to resolve and may result not only in a financial loss of income to your practice, but worse, a lost client. Such disputes all too regularly lead to counterclaims where the client makes allegations of poor service or negligence to avoid paying a fee. You can reduce the chance of a fee dispute or even eliminate it completely with a carefully worded clause in your letter of engagement.

 

Tips:

  • clearly state whether you are charging a fixed fee or hourly rate. If a hourly rate, what time units do you charge in: six minutes, 10 minutes? Can you estimate the total fees? If not, say so
  • what level of experience will the individual(s) carrying out the work have and what is their charge out rate? Is the client happy with this?
  • do you warn that fees could increase if a matter becomes more complex than originally anticipated or is taking longer to conclude through no fault of your own?
  • outline details of possible outlays that will be incurred and charged.
  • revisit at regular intervals to avoid surprises!

 

It’s so much easier to speak to a client about fees if it is clearly set out in writing for both parties, eliminating as far as possible any room for confusion or disagreement.

 

Time taken drafting and agreeing any letter of engagement is time well spent and will help significantly if you find yourself on the wrong end of a dispute.

 

Catherine Davis – ACCA relationship manager, Lockton companies

 

If you have any questions please contact your Lockton Account Manager for further advice or email ACCAaccountants@uk.lockton.com 

 

Lockton is ACCA’s recommended broker for professional indemnity insurance

 

 

Digitalising your practice’s client onboarding process

ACCA is collaborating with Practice Ignition to provide a solution that helps you to streamline and automate your client onboarding experience, from engagement letter creation to debt recovery.


Practice Ignition has launched a version of its product with ACCA templates. These templates have recently been updated by ACCA.

 

For next steps, and to start a free 14 day trial of Practice Ignition, you’ll find all the information here.

 

Their return on investment calculator allows you to determine how much your ROI would be if you use Practice Ignition in your firm.

 

They have bespoke pricing for smaller firms (a client base of fewer than 15), so if you are interested, please get in touch with alice@practiceignition.com (put 'ACCA templates' into the subject line) and a member of the Practice Ignition team will be in contact.

 

Rest assured that ACCA will always have free engagement letters for members to use. You can download our free factsheets from our website:

 

Engagement Letters for tax practitioners

Engagement Letters for practitioners: accounts production

 

Each factsheet contains a main client covering letter with a privacy notice, a terms and conditions document and the most commonly used schedules of services.

Getting your ducks in a row

As we reach the end of another tax season, accountants can focus again on clients' advisory needs.


As we reach the end of another tax season, accountants are able to release some capacity to focus again on the other advisory needs of their clients.

 

It is likely that during January you may have had to prioritise those clients who were particularly hit hard and struggling. Many were resilient enough to withstand what 2020 threw at them, but when another lockdown was announced, this was one step too far for some businesses.

 

Triaging your client base now allows you to focus your efforts and resources on the most appropriate advice for each client’s situation. 

 

Last spring, we found that many accountants weren’t sure which of their clients did have sufficient reserves to manage through the lockdown and part of the #LeaveNoBusinessBehind campaign, supported by many in the accounting profession including ACCA, focused on assisting accountants with practical tools so they could be confident to speak to every client and understand their requirements. 

 

By the time this lockdown was announced, far more clients had cash flow projections and were able to understand the implications of another downturn or even growth spurt on their business. In addition, accountants also understood much more about their clients’ capital position and level of resilience.

 

This increased awareness allows accountants to quickly predict which of their clients would be struggling, those who are steady and able to cope, and the businesses which are still able to grow. This makes the work far more efficient as it’s possible to direct these possible and specific solutions to each group:

 

Struggling:

  • reviewing cash flow projections to understand the short-term and longer term implications of the lockdown and the impact on the burn rate and cash runway
  • discussing time to pay arrangements with HMRC
  • considering whether insolvency advice is needed, especially if the business is a limited company and the balance sheet is or will become insolvent
  • reviewing strategies for the trading and capital position to decide whether a turnaround situation can be managed.

 

Steady:

  • the clients who will survive the lockdown will require sufficient working capital facilities to continue to trade, so addressing their cash flow needs is still crucial. It may be that there are other assets in the balance sheet which the business can leverage at this time. The Coronavirus Business Interruption Loan Scheme (CBILS) remains the most powerful product for directors to access if that is possible for them
  • considering whether there are any other ways to inject capital into the business using tools such as R&D relief, capital allowances claims, debt recovery for slow or unwilling customers and having systems so that the internal capital is tightly managed - all remain options for most businesses.

 

Growth:

  • business owners who are able to continue to grow their companies should be nurtured because they are valuable people who will contribute to rejuvenating our economy. Providing them with the confidence and skills to develop their strategies is one of the most powerful things an adviser can do for a client. Brainstorming, writing business plans or just being a sounding board are all ways in which you can help that management team to succeed
  • funding routes to support growth strategies may still include CBILS or other debt products, but perhaps equity finance in the form of business angels, private equity/venture capital or crowdfunding could be more appropriate for some businesses
  • grants will continue to be announced as the economy looks to support the recovery, and those businesses which are able to demonstrate that they intend to increase employment opportunities or protect other jobs will find that they are more likely to be able to access many of these grants
  • if your client is ambitious and intent on growth then buying a company may be a quicker and more efficient route to achieving that objective. There will be multiple acquisition opportunities across most sectors as many other business owners find they are unable or unwilling to continue to trade. Corporate finance advisers will become very busy in 2021.

 

It’s worth remembering that the deadline for applications to the government-backed loan schemes such as CBILS is 31 March 2021, at the time of writing. While it is expected that there will be a new replacement scheme announced shortly, it is highly unlikely to have as attractive terms as these current schemes. If clients are eligible for CBILS, they should be encouraged to use it while it exists in order to bring some capital into their business.

 

Visit this page for more information and practical resources to support your clients through using a triage system.

 

Sometimes accountants do not recognise that they already have the professional training, skills and experience to be able to offer all these services to their clients and therefore they hold back from offering them.  If you feel that your team requires more support to have the confidence to speak to businesses about this broad range of capital advisory and corporate finance routes, you may be interested in the unique online ‘Learn’ courses, many of which are available to members of the ACCA through the partnership with Capitalise:

 

  • Core – free to ACCA members to access
  • Adviser – free to ACCA members to access
  • Mastery – available for free to subscribers of Capitalise with Starter package from £78/month
  • Corporate Finance – available for free to subscribers of Capitalise with Starter package from £78/month.

 

In addition, those firms which subscribe to Capitalise on a Partner or a Pro subscription will receive the additional resource of a Partnership Manager, who will review your whole portfolio, identifying each client’s most likely requirements, and can then assist firms to understand how to progress each client case. Firms find this an invaluable support when they are developing their services so they can ensure they are able to offer the capital advisory services which their clients will require during the lifetime of their business.

 

For more information book a demo via Capitalise.com

Tax planning guides

New guides will ensure your clients are utilising all available reliefs and allowances to maximise tax efficiency.


Our latest guides will help ensure your clients are utilising all available reliefs and allowances to maximise tax efficiency.

 

The self-assessment deadline is behind us, notwithstanding the fact that there will still be some late filings in the month of February – but thanks to the feedback from various members and ACCA’s efforts on behalf of members, HMRC extended the time for when automatic late filing penalties will be charged to the end of February.

 

Looking ahead, practitioners should be planning for the end of the tax year and ensuring clients are utilising all available reliefs and allowances to maximise tax efficiency. Do have a look at our other article on end of year planning in this issue.

 

Below are some quick guides to assist with capital gains, salary and dividend planning and loss reliefs. The guides can be re-purposed to your business headings and should serve as a quick resource for basic tax planning around these areas.

 

The guides can be accessed on the pages below:

 

CGT for individuals, sole traders and partnerships

Personal and business capital gains are treated differently, depending on whether you are self-employed (as a sole trader or in a partnership) or trade as a limited company

 

Chargeable gains for companies

Capital gains for limited companies and unincorporated associations (eg clubs and co-operatives) are dealt with through corporation tax and are referred to as chargeable gains. The total chargeable gains are included in the corporation tax return and taxed along with your business profits, using the corporation tax rate (rather than a separate capital gains tax)

 

Corporation tax reliefs and allowances

Corporation tax reliefs and allowances help you to minimise your corporation tax liability. It's worth understanding the different ways in which the annual investment allowance, other capital allowances and allowable expenses are treated

 

Salary or dividends: tax calculations

We explain the basics in deciding between paying yourself salary or awarding dividends from your limited company for the tax year. Your personal circumstances will dictate the exact levels and if your finances are complicated you should seek professional advice.

 

 

We will continue to bring more guides for you in the coming months so please look out for these.

Building your ideal practice: accelerate your progress

You are ready to change your practice - now get a framework that gives you the best chance of success…


Congratulations. – you’re ready to change your practice. Now you need a framework that gives you the best chance of success…

 

I’ve talked before about why so many accountants put off making the changes they know will help them. And I hope you’ve taken a look at how to tackle procrastination in Chapter 5 of my book, Putting Excellence Into Practice.

 

What I want to look at now is building a framework that gives you the best chance of success in making those changes. I’ve done extensive research into this to identify how AVN can best support our members, but it’s also relevant to accountants in practice like you who want to work on this by themselves.

 

The framework is best summed up by the acronym REACH.

 

Roadmap

Environment

Accountability

Community

Human to human/handholding.

 

Let’s have a look at each of these.

 

Roadmap

Whether you call it a roadmap, a system, a process or something else entirely, you need to know what you’re going to do and the order you’ll do it in. Without this you’ll just make piecemeal progress. The roadmap that my team and I developed forms the basis of my book.

 

Environment

What’s the best environment for you to really focus on your business? You could shut yourself away in a room on your own – but then you’ll miss out on bouncing ideas off other people, which is a great way to accelerate innovation. You could join something like a peer-to-peer mentoring or mastermind group – but these can end up as just a talking shop. And often, there’s no desire to make fundamental change happen.

 

In my experience, the best environment is one that places you in a room with non-competing peers, where you can bounce ideas off each other but an expert is on hand to lead the discussion, challenge the status quo, and share their expertise. This is the environment we aim to replicate in AVN.

 

Accountability

When you work with an external individual who holds you accountable for doing what you say you’ll do it makes a big difference. They are there to remind you of what’s really important and to act as sounding board. But this person must be right for you.

 

There are many, many people calling themselves a business coach, a consultant or a mentor. But not all of them merit the title and not all of them will give you the support you need. Personally, I’ve found that a coach is the best fit for me: someone who asks questions rather than giving me answers; who drills down into the real issues so I can find the solution for myself. A great coach will develop your skills and strategic thinking.

 

Whether you decide to work with a coach, a mentor or a consultant, before you commit make sure you gauge the types of questions they ask. Do they tend to jump in with solutions before you’ve even finished talking, or do they listen and probe first? Are their questions open and exploratory?

 

Community

Running an accountancy practice can be lonely. Even if you have a team of people or co-partners or directors, it’s not always easy to be completely open or to get fresh insights about the challenges you face.

 

Being part of a community with a common purpose overcomes this. Your journey is so much easier when you’re part of a community of non-competing peers where you can share your thoughts and experiences and learn from each other. This is what we have created at AVN.

 

Human to human/handholding

Your accountancy practice isn’t just a business – it’s people too. You and your team make up your business and your individual personalities, concerns and aspirations make it unique. So as you develop your ideas, make sure that your coach, mentor or consultant doesn’t try to tell you what your practice should be like. It should reflect your personality and be what you want it to be, not anyone else.

 

Remember, you can download a free copy of Putting Excellence Into Practice 

 

Shane Lucas – Keynote speaker, author and trainer at AVN

Employment law – key legal issues governing employees’ contracts

With Covid-19 continuing to cause uncertainty for businesses planning for the future, you can help ensure clients are on top of employment law matters.


With Covid-19 continuing to cause uncertainty for businesses planning for the future, you can help ensure clients are on top of employment law matters.

 

Many businesses, including practices, will be facing uncertainties in relation to staff resources. Whilst the Coronavirus Job Retention Scheme has been extended to 30 April 2021, now may be a good time to review whether you or your clients are up to date with any employment law matters.

 

In this article, accountancy lecturer Louise Dunford highlights key legal issues governing employees’ contracts, including consent, bonuses and benefits of those furloughed during the crisis. ACCA has made available factsheets on employment law and contracts which are being updated and will be available in March.

 

Employers may also be concerned about the implications of the Covid vaccination drive for senior citizens and vulnerable individuals. ACCA partnered with Croner-i to bring a short webinar on how to manage the health & safety implications of the Covid-19 vaccine roll out in your business. A recorded version of the webinar held on 8 February can still be accessed by registering here.

 

Added to the Covid-related uncertainties, of course, are issues with Brexit and any changes to cross-border employment of staff, including students. ACCA’s Brexit Hub contains some factsheets on issues relating to employing staff from EU. See the additional resources below for links to the factsheets and our other article on Employment of EU Nationals after Brexit

 

Additional resources

 

Employment factsheets (current suite, new revised factsheets are available in March)

 

Contract of Employment

 

Technical factsheet: freedom of movement to live and work in the EU or UK after the transition period

 

Technical factsheet: freedom of movement to study in the UK or EU after the transition period

 

 

Technology – a cost or an asset?

How to help clients efficiently harness the power of technology.


How to help clients efficiently harness the power of technology.

 

The use of technology in accountancy has escalated over the last five years – much as a consequence of Making Tax Digital and the increase in the use of cloud accounting software such as Xero and Quickbooks.

 

This has brought with it a number of significant benefits including easier access to data, time saving automations and the ability to provide new services and services to clients. However, other changes are the costs and charges associated with using these applications.

 

Not in all cases will these costs be new costs. Some of these solutions will replace the old, typically desktop, applications that were used before. However, the vast increase in the solutions and tools available and the new applications that allow accountancy firms to offer new services have resulted in a significant increase in technology costs in accountancy practices today.

 

However, should these costs be viewed as another overhead for the firm or are they in fact a chargeable asset for the business?

 

Technology in accountancy firms today

If we compare accountancy now to five years ago, there have been huge changes in the use of technology. Now everyone is using computers, sending emails, using online applications both for the management of the practice and for their services to clients.

 

There has been a massive increase in the software solutions available for accountants. Now accountants can look beyond the core accounting software and can use add-on applications (the apps) and provide a much wider solution to clients.

 

There is now a huge choice of apps available and many have direct integrations with core accounting software like Xero and Quickbooks. This, in turn, allows accountants to quickly deliver solutions to clients which will save them time through automations, improve workflows and controls, and provide insightful data to allow the business owner to see how their business is performing.

 

With all these apps available, it is very easy to lose focus – the Xero app marketplace is full of lots of new and exciting apps to tempt us! These apps allow us to offer new and exciting solutions and services to our clients and it is easy to feel like a child in a toy shop tempted by everything in there! However, it is very easy for these app subscription costs to build up and become a significant overhead for the business, eroding the financial benefits they may bring.

 

Bundled deals and discounts

It is not uncommon for apps to offer discounted prices for a period of time. This allows the accountants to try the application with their data and with their clients and then decide if the app is something they want to continue with in the future.

 

However, it is easy to sign up to these discounted offers and then not have the time to try the app out properly as work commitments take over. Then when the discount period ends, you just leave it there and decide you will get round to trying it in time – but you rarely do and the costs are incurred month after month.

 

Some apps also offer firms bundles of their apps for a reduced fee so the cost per licence is significantly less than the cost of one. This is very tempting, but it is not uncommon to find that all these licences are not filled, and these ‘empty licences’ are an overhead the firm then suffers each month.

 

So how can we stop this from happening? Is technology not a cost but actually a chargeable asset for the firm?

 

Technology as an asset

When we are using the technology to deliver a service to a client, this should not be seen as an overhead that the accountant has to suffer. This technology is allowing the accountancy firm to deliver a service to meet their client’s needs and so they are adding value. This is therefore a chargeable service that the app facilitates and is therefore chargeable.

 

As a result, the costs of the technology used to deliver the service should be included within the fee – just like any other business asset – and not split out separately.

 

These should be fully recoverable so it is important not to over-commit yourself to a vast array of expensive subscriptions if these will not be recharged and a targeted recovery achieved for the work overall.

 

Strategy and focus

The first thing is to have a clear strategy for where you are going with your business, what you want to do for your clients and what you want to achieve. Then build your app stack around this and avoid losing focus and subscribing to apps that will take you away from this goal.

 

Start with the core and build up from there. For example, migrate clients to the cloud software and then add an app for invoice processing to remove the need for manual entry - a real time saver.

 

Also ensure that this is a service that many of your clients will benefit from having and will be willing to pay a little extra for. Start with the broad applications that work across many sectors and are ones you want to use with all your clients.

 

Having a clear focus will ensure that you work on one area at a time and deliver a solution to your clients that they need.

 

Slow and steady

It is tempting to quickly add different apps so that you can quickly offer a whole range of services. However, taking it slowly and ensuring that you get the maximum use and value out of the app before you add any more is a much more controlled approach.

 

This ensures that you (and your team) are confident with the app and that you have rolled it out to a number of clients before you look to add any new apps to the mix.

 

Control your costs

Do you know how much your subscriptions cost your firm per month? It may seem obvious, but it is very easy for payments to be made on credit cards and by direct debit each month without the total costs being monitored. Sometimes it can be a real shock when you assess the overall costs of subscriptions to the cloud software and apps.

 

Monitor your costs monthly and keep these costs under control. Look at the recoverability, look at where you have any unused licences and any underperforming services and take action to prevent it rolling on into future months – this may be cancelling subscriptions or focusing your marketing efforts on that service line.

 

Also, when deciding on the apps to use, look out for those which have a flat fee per firm regardless of the number of clients using the app. These are starting to become a little more popular and can offer significant cost savings if you use the one app for a number of your clients.

 

Decide on your pricing methodology

How are you going to price your services?

 

This is a key consideration and there are a number of options available including:

  • price per month based on transaction volume for that service
  • fixed price per month for that service
  • service packages.

 

With service packages, the client buys a service that includes use of the relevant apps. An example could be a general bookkeeping and cashflow management service which would then include the apps for invoice processing, approvals, cashflow management and the core accounting software itself.

 

It is critical to ensure that you have the processes in place and the people to deliver this service first and then you set a price for the overall package which includes the costs of each of the apps.

 

In all cases, ensure that the fee includes the costs of the applications so that these are not an overhead that is borne by the firm. Also, remember that the subscription fees are often billed a month in advance so you should consider this when you are agreeing fees with the client and the payment profiles. If you do not bill in the same manner, you could then run into cashflow issues yourself.

 

Technology has become a central part of many accountancy firms today and with it has come the potential for large subscription fees. However, with a clear strategy, focus and billing structure, these costs become chargeable assets of the business which allow the firms to offer their clients a wide range of services that will, in turn, save them time and help them run their business in an efficient and effective manner.

 

Caroline Harridence – founder and director, Counting Clouds Cambridgeshire

Why a career in accountancy has never been more attractive

David Ezekiel FCCA knew nothing about accountancy as a young teenager – the first time he heard the word bookkeeping, he thought that he would end up with a career as a librarian!


I knew nothing about accountancy as a young teenager – the first time I heard the word bookkeeping, I thought that I would end up with a career as a librarian!

 

A careers talk at school enlightened me and led to a summer internship at a West End accountancy practice where the partners all encouraged me to qualify. Unfortunately at that time my father’s health was poor and I had to put my studies on hold as I needed to help my parents financially. I was in my 30s by the time I qualified but the work experience I had gained meant that I passed all 14 papers within two years when I re-sat them.

 

I qualified with Silver Levene and became a partner shortly thereafter. I have always enjoyed client contact but I was also extremely interested to understand the business management of the practice. I volunteered for many roles within the practice over the coming years, from heading our statutory, HR and audit departments, and then joining the management executive and eventually becoming the managing partner. The experience in these varied roles, which happened every two to three years, gave me a broad and detailed insight into practice management.

 

My practice and my clients

Silver Levene has historically specialised in three main areas: 1) media (predominantly the film and television industry but over the last few years, increasingly, with all types of digital content and production), 2) the legal profession (mainly with barristers and chambers) and 3) independent pharmacies.

 

However, we have numerous clients in other industries such as hospitality, travel and accommodation, publishing and music. Additionally, we also provide a number of added value services such as digital accounting/bookkeeping services, tax consultancy and planning, HR and payroll services, probate and company statutory and formation services. The practice has coped well during the pandemic despite the many challenges that we have faced and we are all confident that this will continue in the future.

 

Covid-19

The first few months of the pandemic were disastrous for the film and television industry – productions were cancelled suddenly with no indication of when they would resume given the uncertainty regarding the impact of the virus on the economy. By the late summer production in the film and TV industry was starting to resume, albeit quite slowly, and since the autumn many clients have been working again although the production process is more difficult and more time-consuming because of the need to comply with Covid regulations.

 

I was initially advising clients on government support schemes but unfortunately many of them did not qualify because they are directors/shareholders of limited companies, who receive their personal income as a combination of salary and dividends.

 

However this position was recently addressed by the Chancellor, which means that many will now qualify for some financial assistance.

 

Challenges, risks and opportunities

Ever changing technology is the biggest challenge facing our profession as AI is capable of processing larger of volumes of data faster and more accurately especially regarding bookkeeping and accounting for SMEs. Therefore, we need to be proactive in using technology more advantageously for clients and ourselves.

 

Many of our clients now use cloud-based software such as Xero or QuickBooks and we are able to proactively help clients as we are able to review accounts in real time and give effective advice and planning.

 

Accountants now need to be real-time advisers and we need to see ourselves as business service providers rather than just compliance filing businesses. This means considering other business services such as outsourced HR services, digital bookkeeping/accounting, probate services, quasi FD services and, in the near future, the possibility of offering in-house legal services. In my mind, this is the direction that the profession is rapidly moving towards, especially for mid-tier and smaller practices.

 

Also, I impress upon our younger staff that to work in practice, they have to be a more rounded business adviser as our roles have moved on significantly. The current availability of software on the market allows us to see information in real time and enable us to act as quasi financial directors for clients, giving regular advice and attending board meetings, etc.

 

The biggest challenge that I now encounter more often is meeting clients’ expectations on a timely basis given the speed of response that can be demanded. A rushed response could lead to incorrect advice being given with subsequent adverse consequences, so it is critical to ensure that correct time is spent before replying.

 

In my view, psychology also plays a huge role in a practitioner’s make-up as we tend to become a confidante of our clients – they can come with matters that you would expect, such as financial issues, but also the unexpected, which can be very personal. We are not trained to support clients with these personal matters but their trust in us leads to an openness from them.

 

The attractiveness of the profession

It’s important to encourage the next generation – particularly as they are near to qualification and moving into the next stage of their career. Undoubtedly passing professional exams is, quite rightly difficult, but deciding on a career path once qualified is, in my view, as important. Planning a career path and ensuring that using practical and academic knowledge is vital in determining their future.

 

We must encourage and show them all career paths that are open – whether in practice or in public or privately owned businesses to FTSE companies. There is so much choice than ever before and this is a huge attraction of the profession.

 

David Ezekiel FCCA – partner, Silver Levene

 

The basics of marketing your accountancy firm in 2021

Accountants who want to win more clients can’t just wait for them to come along – they have to take action. But what exactly should they be doing? Well, for starters...


Accountants who want to win more clients can’t just wait for them to come along – they have to take action. But what exactly should they be doing? Well, for starters...

  1. Get an up-to-date website.
  2. Fill it with engaging, search-friendly copy targeted at their ideal clients.
  3. Produce regular, relevant, targeted blog content.
  4. Get active on social media – engaging, not just broadcasting.

 

Of course there’s a lot more you could be doing, from systematic search engine optimisation to video, but without the basics above, you’re essentially making yourself invisible.

 

You’ll notice that those essentials I’ve suggested all use digital channels and in 2021, that’s about right. The fact is, it’s more efficient, more flexible and more effective than any other medium.

 

Research shows that consumers and business-to-business (B2B) buyers increasingly research decisions online. Even if they’re acting on a referral, they’ll generally want to see supporting evidence. These days, that means Googling your name, or that of your practice.

 

Alternatively, they might search for ‘accountants in Shropshire’ (location) or ‘accountants for builders’ (sector specialism) or some combination of the above.

 

If they find and click through to your website, what they find should help them decide to buy from you:

  • service pages that set out what you do
  • case studies, testimonials and team profiles
  • sector pages, indicating your specialisms
  • information on how and what you charge.

 

When it comes to convincing potential clients that you know their industry and have professional credibility, your blog is also vital.

 

If you claim to specialise in working with charities, for example, someone looking at the most recent posts on the blog should easily be able to pick out at least one relevant piece of content on that subject. The headline should make them want to click. And, finally, the body of the post should deliver on the promise, answering their questions and needs.

 

You can have vast swathes of amazing content but if it isn’t getting found in search, you’ve got a problem. That’s where search-engine optimisation (SEO) comes in.

 

SEO requires patience and the investment of time, energy and money in ongoing technical fixes, like tuning an engine; the creation of keyword-targeted content; and the improvement of existing content to better meet the quality standards set by the Google algorithm.

 

If you’re not sure how your firm is performing in search, here’s a quick test.

  1. In your chosen web browser, select incognito or private mode.
  2. Search your firm’s name.
  3. Search your specialism, eg ‘accountants for construction’
  4. Search your region, eg ‘accountants in Chippenham’.
  5. Finally, search, eg ‘accountants for construction in Chippenham’.

 

If you’re not on the first page of results for some or all of those terms, your website might benefit from some love and care from an experienced SEO expert.

 

As for social media, that’s appealing because the entry costs are low and it takes relatively less time to produce 280 characters than the 1,000+ words Google’s algorithm currently prefers. Or to share an animated GIF of a cat.

 

It’s also about going where people are actually hanging out. The Digital 2020 report from We Are Social found that 3.8 billion people worldwide are active users of social media – that’s a lot of eyeballs.

 

In 2021, an accountancy firm that isn’t active on social media almost seems suspicious. People will expect to find your brand on Twitter and Facebook, and to find your partners being the best version of themselves on LinkedIn.

 

In fact, social media isn’t easy – you have to stick at it to build a following and it doesn’t necessarily suit thoughtful, introverted personalities. (Of course, I wouldn’t dare generalise about accountants.) That’s why for most firms, it will just be one part of the mix – and an up-to-date profile and three or four posts a week is better than nothing.

 

Get in touch for strategic marketing advice, a new website or hands-on help producing engaging content.

 

Ray Newman – Head of content and insight, PracticeWeb

 

ACCA and BEIS - working together to support practitioners

Access webinars and on-demand training to help with Brexit - plus share your feedback with BEIS.


BEIS wants to hear from ACCA members!

 

Our recent Talking Brexit session for members was attended by the Department for Business, Energy & Industrial Strategy. The Department has subsequently asked for members to share their experiences with government support for businesses preparing for Brexit so they can improve resources for accountants going forward.

 

Please share your feedback now

 

 

BEIS offers ACCA members Brexit business adviser training sessions

 

The Department for Business, Energy and Industrial Strategy is hosting a further series of free webinars for business advisers. These sessions are intended to help you to understand the new trading rules with the EU, so you can help the businesses you work with adapt to make the necessary changes.

 

Details

  • you will receive standard Business Readiness PowerPoint presentations and script for use at your own events/discussions containing information on the actions businesses can take
  • BEIS will host the training sessions, to help you use the material and will keep these updated, as we progress through 2021
  • BEIS is running sessions at 14:30 on 23 February and 3 March (you only need to attend one).

 

To sign up please click here
(Password:
BIRD.Readiness).

 

 

 

Free on-demand government training for Brexit compliance

The Department for Business, Energy and Industrial Strategy has made its sector specialist video series available on demand for ACCA members. These videos are segmented by sector to help businesses familiarise themselves with the relevant rules and the actions they should take to prepare for changes arising from Brexit. Register here to access the video content on demand.

 

The new content covers 18 topic areas (full list below), with additional sector signposting for 12 BEIS sectors (details below).

 

Video topics:

  • Businesses and Trade Agreements (not yet available)
  • Businesses Engaged in Emissions Trading
  • Businesses Hiring Overseas Staff
  • Businesses Involved in the Horizon 2020 Funding Service
  • Businesses Involved with Data
  • Businesses Operating Online
  • Businesses Preparing and Auditing Financial Accounts
  • Businesses who Import and Export
  • Businesses Providing Services to EU Markets
  • Businesses Shipping Waste between GB and EU
  • Businesses Working with Intellectual Property
  • Chemical Regulations
  • Moving Goods into, out of, or through Northern Ireland
  • Placing and Selling Goods on the Market
  • REACH Chemical Regulations
  • Recognition of Professional Qualifications
  • Rules of Origin
  • Trade Tariffs 

 

Alphabetical list of sectors (signposting key videos for each sector)

  • Aerospace
  • Automotive
  • Chemicals
  • Civil Nuclear
  • Construction
  • Consumer Goods
  • Electronics and Machinery
  • Energy
  • Life Sciences
  • Metals and Other Materials
  • Retail
  • Services and Investment

 

 

Seeking to improve cashflow via a director’s loan?

Issues to consider around directors’ loans when advancing funds to help improve business cashflows.


Issues to consider around directors’ loans when advancing funds to help improve business cashflows.

 

Due to the effect of Covid, directors of an owner-managed company might be required to advance funds via a ‘director’s loan’ to help improve the cashflow of the business.

 

Below are some of the issues that directors should consider.

 

Formal agreement

It is not mandatory to have a written loan agreement in place, but it is always advisable to formally document a loan arrangement. The agreement should include the interest rate (or range of rates) and repayment date (or range of dates).

 

The loan can be interest free or charged at any agreed rate but if it exceeds the ‘arm’s length’ rate, there is a danger that the excess may not be allowable as a tax deduction against corporation tax for the company.


What is ‘arm’s length’ is determined by reference to the commercial interest rate charged by a third-party lender, taking into account the size and term of the loan as well as the risk profile of the company.

 

Interest charged by the director to the company on the loan is usually an allowable business expense for the company. However, if the funds provided aren’t used for the purposes of the company’s trade, the interest will not be tax deductible.

 

Income tax deducted by the company on interest payments

If the loan term lasts for longer than a year, the company must deduct basic rate tax from payments of ‘yearly interest’ made to an individual.

 

Companies must account for income tax on a quarterly basis, using a CT61 quarterly return, based on amounts paid and received in the particular quarter.

 

The main provisions covering CT61 returns are contained in Part 15, Chapter 15 of the Income Tax Act 2007.

 

The quarter-ends are based on the normal calendar year, ie 31 March, 30 June, 30 September and 31 December. However, if a company’s year-end does not fall on any of these dates, the balance sheet date is also deemed to be a quarter-end, so there will be five return periods.

 

Further guidance on CT61 returns can be found here.

 

Personal implications

1. Interest received on a loan given to the company counts as personal income for the director and must be reported on the director's self-assessment tax return and taxed accordingly. If the company has retained tax (on the ‘yearly interest paid’) credit would be given in the usual way. See also our article on year-end planning for some tips.

 

2. An individual who borrowed money in order to lend it to the company is entitled to relief for the interest paid on that loan provided that he/she:

  • works for the company and owns some of the ordinary shares (the full-time working condition), or
  • holds at least 5% of the share capital, taking into account shareholdings of ‘associates’ (the material interest condition), and the loan is a ‘qualifying loan’.

 

A loan is a ‘qualifying loan’ if:

  • it is used to acquire ordinary shares in a ‘close company’ that is not a ‘close investment-holding company’ or
  • it is lent to such a company and used wholly and exclusively for the purposes of the business, or
  • it is used to repay another qualifying loan.

 

No relief can be claimed for interest on overdrafts or credit cards.


From 6 April 2013, the total amount of qualifying loan interest relief that can be used to reduce a person’s total taxable income is limited to £50,000, or 25% of their adjusted total income if higher.

 

Further guidance on qualifying loans can be found here.

 

3. If the loan becomes irrecoverable, capital loss relief may be available in accordance with S253 TCGA 1992 under the rules for relief for loans to traders.

 

Relief may therefore be claimed against capital gains of the year of claim or carried forward to the first available gain(s) of subsequent tax years. However, the legislation also permits a claim to specify an earlier date, not more than two years before the tax tear of the actual claim, provided that the amount was also irrecoverable at that earlier date.

 

Further guidance can be found here.

Preference shares – equity or liability?

Many businesses will be looking at ways of strengthening balance sheets with the introduction of equity.


Many businesses will be looking at ways of strengthening balance sheets with the introduction of equity.

 

One solution is a share issue but it is important to ensure that they are classed as equity.

 

The classification of preference shares in the financial statements of the issuer depends on the terms and rights attached to the shares with regards to redemption and dividends. The classification criteria are set out in FRS 102 section 22 – Liabilities and Equity. 

 

Preference shares are likely to be recognised as a liability when:

  • they carry fixed dividend rights where there is a contractual obligation to deliver cash
  • they provide for mandatory redemption by the issuer for a fixed or determinable amount at a fixed or determinable future date
  • they give the holder the right to require the issuer to redeem the instrument at or after a particular date for a fixed or determinable amount.

 

The absence of terms stated above is likely to indicate that preference shares may be classified as equity.

 

Whilst the mandatory nature of dividends or mandatory redemption for cash at the option of the holder indicates that the shares are likely to be classified in part or wholly as a liability, an exemption exists which allows certain instruments that contain an obligation to deliver a pro rata share of net assets only on liquidation to be presented as equity even though they meet the definition of a financial liability. This exception is set out in FRS 102 paragraph 22.4. An example of mandatory dividend may include preference shares with a fixed (and/or cumulative) coupon and those which require a mandatory distribution of a percentage of the profits of the company.

 

The terms of a preference share may also be set such that it contains both equity and liability elements (ie a compound instrument). In such cases, it is necessary to identify the liability and equity components and account for each separately.

 

Below is a summary of the recognition and accounting treatment as a quick reference:

 

 

Principal

Dividends

Treatment

1

Non-redeemable or redeemable at issuer’s discretion

Discretionary

The instrument is an equity instrument as the entity has no obligation to deliver cash or another financial asset.

Any dividends are shown as a distribution of profit.

2

Non-redeemable or redeemable at issuer’s discretion

Non-discretionary

The instrument has both equity and liability elements.

The liability element is calculated as the present value of the future contractual cash flows, discounted at a market rate of interest for a similar liability that does not have the associated equity component. The interest expense will be calculated using the effective interest method and charged to profit or loss each year.

The equity element is calculated as any residual value, ie the difference between the proceeds from the issue of the shares less the liability component. The amount calculated as equity would be zero where the dividend represents a market rate of return and the instrument is issued at fair value. 

3

Redeemable at a fixed date or at the holder’s option

Non-discretionary

The instrument is a financial liability as the entity cannot avoid the outflow of cash.

The instrument is recognised at the transaction price, including any transaction costs. Subsequent measurement is at amortised cost using the effective interest method.

The interest expense on the liability element will be calculated using the effective interest method and charged to profit or loss each year.

 

 

Identifying your aspirations

What do you really want from your accountancy practice?


What do you really want from your accountancy practice?

 

That’s one of the first questions I ask when I start working with an accountant. And all too often, the answer is that they don’t really know.

 

I vividly remember visiting Robert, one of our AVN members, who was struggling to come up with a pricing solution for his practice. When I offered my assistance, it soon became clear that he was trying to accommodate such a wide variety of clients that every scenario he considered contradicted a previous one.

 

I quickly stopped the discussion on pricing as there was obviously a far more fundamental question that needed to be answered first. What did Robert really want from his practice? What was his vision?

 

Your fundamental purpose

Often when I ask the question the initial answer centres on a financial aspect. Bigger turnover. Better profits. Higher fees. And those are important, of course. But in most cases the real motivation is something deeper, something that gives you a purpose.

 

With Robert, I asked him a few exploratory questions and then we started to focus specifically on his ‘why’. What was he really passionate about?

 

After quite some time digging ever deeper, we worked out that he’s most passionate about helping people to be the best they can. That was his purpose.

 

Your personal goals

This tied into his personal goals – which is what we discussed next. Your business and your personal goals are intricately connected. You need to be clear on your personal goals so that you can develop your business in a way that helps you achieve them. Otherwise, you will always be fitting your personal life around your business.

 

One of Robert’s personal goals was to continue working with his local children’s football club, doing their accounts and coaching the children. He also wanted to spend more quality time with his own children.

 

Your business vision

What do you want your business to look like in a few years’ time? What will it be doing for you and for your clients? How will your team feel about working there? Your vision is not so much about specific numbers: it’s about what those numbers represent.

 

In Robert’s case, he wanted a practice that would be helping his clients to grow their businesses and give them their lives back. He wanted his practice to create a better life for the people behind each business and he recognised that the accounts and financial reports he produced were the means to an end – in this case, of starting conversations – rather than the end in themselves. He also wanted his practice to be a great place to work, where all his team enjoyed coming in and received a huge sense of fulfilment from what they did.

 

Once you know what you want your practice to be, you can start putting things into place to help you achieve it – your business goals.

 

Your business goals

It’s a common mistake to look to the past when you’re setting your business goals. If you’ve been growing turnover at 20% each year, your goal might be to continue that or to increase it modestly, say to 25%.

 

But what would happen if you made your goal 100% growth? Or even 1000%?

 

Those figures might seem ridiculous. But what if you really committed to them? What different ideas might you begin to have? What help could you get to achieve them? Perhaps you could take a shortcut through acquisitions, or come up with a new, innovative way to grow.

 

I’m not suggesting that you aim for something so extreme that it’s impossible to buy into, but do make sure you pick the middle ground that’s leading towards being very ambitious. I promise you’ll be amazed by how much it changes your thinking and approach!

 

Robert set some very audacious goals during my visit, including ensuring that absolutely nothing in his practice would rely on him being there. Every part of the service-delivery, including advisory, would be delivered by his team. In fact, as per his original plan, he intended to run his practice as a business. He also assigned target dates to meet them; this plays a key part in making any goal seem real.

 

We went on to look at Robert’s practice in depth and identify the areas that needed most focus. I asked him, if he were to start his practice again from scratch, which clients would he choose to work with and what would he choose to deliver? As he described his ideal scenario, it became clear that this would include getting the accounts produced externally and then using the information he gleaned from these to help his clients analyse their businesses and look for opportunities to improve them. He could benchmark the accounts to identify the strengths and weaknesses of each business and then – using the AVN Performance Measurement and Improvement methodology – take each client through a journey of improvement. As Robert described the impact this could have on his clients, he came alive and his energy became infectious. Imagine the impact that could have on a team of people!

 

So do you know what really matters most to you, both personally and in your business? Do you have a clear vision of what you want to achieve and goals that will take you there? When you have this clarity it makes it so much easier to move forwards.

 

This is a condensed version of Chapter 8 of Putting Excellence Into Practice – to read it in full, download your copy here.

 

Shane Lukas

New post-Brexit requirements when hiring EU nationals

Are you – or your clients – considering hiring EU nationals? What you need to know.


Are you – or your clients – considering hiring EU nationals? What you need to know.

 

From 1 January 2021 UK businesses employing EU nationals without settled or pre-settled status needed to meet the requirements of a new points-based system and obtain a sponsorship licence. The requirement aligns the EU-workers immigration and employment regime with that previously only applying to non-EU nationals.

 

Points-based system

Following Brexit, for EU nationals wishing to come and work in the UK, the prospective employer will need to be licensed. The points-based immigration system  and licensing regime requirements do not apply to EU nationals who already reside in the UK and have a settled or pre-settled status.

 

Settled and pre-settled status

Since the Brexit referendum, EU nationals already living and working in the UK by December 2020 have been required to apply to the EU Settlement Scheme and be granted a settled or pre-settled status to be allowed to stay and work in the UK. The deadline to apply is 30 June 2021.

 

The settled status is granted to EU nationals who can evidence that by the time they apply they have been in the UK for five years. Those who have not lived in the UK continuously for at least five years will usually get a pre-settled status. Subsequently, they are expected to apply for the settled status once they reach five years of residency.

 

Sponsorship licence for EU nationals

As part of the new licence application process the employer is responsible for verifying that the candidate has the necessary skills, qualifications or professional accreditations for the advertised job, and must keep relevant documentary evidence to that effect. Sponsorship licence conditions define the minimum rates of pay and skill required of prospective candidates. This is currently set at £25,600 or the 'going rate' for the job and skill level of RQF3 (Regulated Qualifications Framework Level 3). Candidates are required to speak English.

 

The employer organisation is required to appoint relevant sponsorship managers to oversee compliance with the licensing requirements. Key personnel must ensure relevant records and right to work checks are up to date, including notifying UK Visas and Immigration (UKVI) of any changes within the organisation or to the migrant’s employment status within a specified timeframe.

 

Sanctions for non-compliance include revoking the licence, fines up to £10,000 or prosecution.

 

How to apply 

Application for a sponsorship licence is online and must be accompanied by additional documents and evidence provided by post or email. Which documents are required depends on the type of organisation looking to employ overseas nationals.

 

The detailed list of documents can be accessed at Appendix A of the licensing guidance.  It is possible employers will get a pre-licence visit from a compliance officer from UKVI.

 

How long does it take to apply?

Licensing decision and approval is likely to take eight to ten weeks with possible delays due to Covid.

 

What to do now

Employers should look ahead to plan their hiring needs and apply for the licence in advance of the hiring process starting, allowing sufficient time for the process to run through and for the employer’s name to be included on the register of licensed sponsors. If help is needed with the application process, it is advisable to arrange a consultation with a OISC registered advisory organisation.

 

View more information about the sponsorship licence application process

 

Additional resources

 

Technical factsheet: freedom of movement to live and work in the EU or UK after the transition period

 

Technical factsheet: freedom of movement to study in the UK or EU after the transition period

 

Are all trusts subject to IHT?

A basic understanding of wills and trusts can help an executor to consider the options available and questions to ask when looking after the wealth of the family.


A basic understanding of wills and trusts can help an executor to consider the options available and questions to ask when looking after the wealth of the family.

 

Settlements in trusts are taxable for IHT purposes as if they are trusts without an interest in possession, 'the relevant property regime' (excluding settlor interested trusts). However, there are three exceptions:

  • an ‘immediate post death interest’ - trusts created on death for the benefit of one life tenant
  • a ‘disabled person’s interest’ - trusts created either in the settlor's lifetime or on death for a disabled person as defined in s89 of IHTA
  • a ‘trust for bereaved minor' - trusts created on death by a parent for a minor child who will be fully entitled to the assets in the trust at age 18.

 

Since 22 March 2006, the main disadvantage of making a relevant property trust has been that the settlor incurs an immediate IHT charge (unless it falls in one of the above categories), if the value of the settlement exceeds their cumulative nil rate band, whereas prior to 22 March 2006 the settlor would make a potentially exempt transfer (PET) on making an Interest in possession or Accumulation and maintenance trust.

 

What is immediate post death interest?

Immediate post-death interest was defined under The Finance Act 2006. It is an interest in possession trust where an individual has the interest in possession of settled property and:

  • the settlement must be affected by a will or under intestacy
  • the life tenant must have become beneficially entitled to the interest in possession on the death of the testator or Intestate
  • the settled property does not fall within S71A (trusts for bereaved minors) and has never done so since the individual became beneficially entitled to the interest in possession
  • the interest is not a disabled person’s interest (IHTM42805) and has never been so since the individual became beneficially entitled to it.

 

What is a trust for disabled persons?

Section 89 of the IHTA 1984 applies to settled property transferred into a settlement after 9 March 1981 and held on trusts for:

  • the property can be applied for the benefit of the disabled person, and
  • either the disabled person is entitled to all the income arising from the property or, if the disabled person is not entitled to all of it, none of the income can be applied for the benefit of anyone else.

 

For the purposes of the regime for trusts with vulnerable beneficiaries a disabled person is either:

  • a person unable to administer his or her property or manage his or her affairs because of mental disorder within the meaning of the Mental Health Act 1983, or
  • a person in receipt of any of the following:
    • attendance allowance
    • disability living allowance, by virtue of entitlement to the care component at the highest or middle rate, or the mobility component at the highest rate
    • personal independence payment
    • an increased disablement pension (under s104 SSCBA 1992 or s104 SSCBS(NI)A 1992)
    • constant attendance allowance
    • armed forces independence payment.

 

What is a trust for bereaved minors?

In order for a trust to be treated as a trust for bereaved minors, the following conditions must be satisfied:

  • at least one of the minor’s parents must have died
  • the trust was created by the parent’s will, on intestacy, or under the Criminal Injuries Compensation Scheme
  • the trust must meet the conditions set out in section 71A Inheritance Tax Act 1984:
    • the minor becomes absolutely entitled to the trust property on or before they turn 18;
    • whilst the minor is under 18, if any capital is applied to a beneficiary, it is applied to the benefit of the bereaved minor; and
    • while the minor is living and under 18, the minor is either entitled to all income generated by the trust or if income is applied, it is applied only for the benefit of the bereaved minor.

 

Potential tax implications

Assets held in an Immediate post death interest do not count as ‘relevant property’ and, as such, are not subject to any tax regime, such as

  • the assets are transferred out of the trust (this is known as an exit charge); or
  • when the ten-year anniversary of the trust occurs.

 

Immediate post death interests and trust for disabled persons mean that the beneficiary owns the underlying trust assets for IHT purposes. If a bereaved minors' trust is created, then IHT may be payable on the parent's estate, but if the age contingency is 18, there is no further charge to IHT. There could be a possibility of IHT charge if the age contingency is 18-25 and the contingency is satisfied.

 

Practitioners interested in basic IHT planning should watch our free webinar that comes with a technical factsheet.

 

ACCA has a suite of trusts factsheets which members can request by emailing supportingpractitioners@accaglobal.com for detailed guidance.

What is troubling you? What opportunities do you foresee?

Catch up on - and contribute to - our ongoing policy work on vital areas for practitioners and clients.


ACCA needs your views and insights, and takes and uses these. You can catch up with a few of the policy areas we have been undertaking now.

 

Also please do respond to our surveys or send your thoughts on areas such as the recovery to UKPolicy@accaglobal.com

 

PCRT Interim guidance on the CJRS

Guidance to help members working with clients who have made CJRS claims comply with PCRT obligations.

 

.


Guidance has been drawn up to help members working with clients who have made claims under the Coronavirus Job Retention Scheme to help them comply with relevant professional obligations under Professional Conduct in relation to Taxation (PCRT).

 

Ultimately, it is envisaged that it will be included as guidance within PCRT but in the meantime it is issued as supplementary guidance for ACCA members. The Chartered Institute of Taxation and ATT have issued similar guidance.

 

View the full PCRT guidance

NEWS
Budget 2021 – we’ve got it covered

Will this year’s Budget on 3 March contain a number of significant announcements?


Will this year’s Budget on 3 March contain a number of significant announcements?

 

Our team of experts will be on hand to dissect the key announcements and we will publish our annual Budget Special on the evening of the Budget itself. Ready for you to share with your team and clients the next morning.

 

Why not also join our UK Budget Update the following morning (4 March, 09.30-11.00)? Hosted by Paul Soper FCCA, you will be able to hear about the changes that will impact you and your clients. 

 

Members can register for free (on the checkout page, under Promo and Discount Code enter: 2021Budget) while non-members can join for just £25+VAT.

Non-ACCA members - £25 + VAT (£30)

 

 

 

Budget consultation and detail

HM Treasury has announced its intention to lay a Command Paper, Tax policies and consultations (Spring 2021), before the House on 23 March which will contain further announcements relating to tax policy:

  • announcements which have fiscal implications, and measures to be legislated in the Finance Bill, will be made on Budget day in the normal way
  • however, there is a case for announcing consultations separately from the Budget, where those consultations do not have to be published on Budget Day
  • the Command Paper will include a number of consultations, most of which will be published on the same day. Several of these consultations are an important part of the government’s 10-year tax administration strategy, ‘Building a trusted, modern tax administration system’, which was published in the summer of last year. Some documents which are announced in the Budget and which the government would usually have published alongside the Finance Bill, will also be published on this day.

 

This will be analysed by ACCA and we will be reaching out to you for your thoughts.

AML supervision and the OPBAS Levy

Has your firm paid its OPBAS levy?


It is a legal requirement under the Money Laundering Regulations 2017 (MLRs) for anyone engaged in public practice to have anti-money laundering (AML) supervision in place with a Professional Body Supervisor (PBS) or with HMRC if not a member of a professional body.

 

ACCA is a PBS named in the MLRs. We play a vital role in upholding the requirements of the law by ensuring our supervised firms are compliant with the legislation.

 

ACCA supervises firms (not individuals) for AML where ACCA members holding an ACCA Practising Certificate have a combined majority control over the firm.

 

The Office for Professional Body Anti-money Laundering Supervision (OPBAS) was established in 2018 to strengthen the UK’s AML supervisory scheme and it oversees all PBSs to ensure they provide consistently high standards of AML supervision.  

 

OPBAS is housed within the Financial Conduct Authority (FCA) and is entirely funded by the PBSs that it supervises. In line with other PBSs, these costs are recovered from the population of firms that we supervise.

 

Invoices were emailed to all AML supervised firms in February 2020 covering the periods 2018/2019 and 2019/2020.The fee was £13.50 per firm per year so for two years’ supervision a firm will need to pay £27.

 

Other PBS have their own pricing approach for AML supervision. It is important to note that ACCA only recovers the cost of levy with no extra administrative cost passed onto members.

 

ACCA’s approach to charging the levy represents a significant financial benefit when compared to other bodies. For example ICAEW’s levy was £28 for 2019, £49 for 2020 and £59 for 2021. HMRC acts as the default supervisor for any business not overseen by a professional body. They are not required to contribute to the cost of OPBAS but will charge an annual fee of £300 per premises to act as the AML supervisor for a firm.

 

Due to the Covid-19 pandemic and the extraordinary situation being faced by firms, ACCA withheld sending payment reminders but there is still a large population of firms that have not paid.

 

If you are an ACCA supervised firm and have not paid your invoice please log onto the myACCA portal using your firm’s ACCA reference number where the invoices will be found.

 

ACCA provides useful resources as part of your membership to help your firm comply with money laundering legislation in the UK.

 

We have developed informative and easy to follow factsheets that ensure you have practical resources to help you comply with your requirements. They cover a range of topics from conducting a firm-wide risk assessment through to a useful client risk assessment tool that can be adopted to help you assess the money laundering risks of your clients.

 

View further AML resources, including the factsheets mentioned above and the FAQs on the OPBAS levy.

A chance to acquire probate and estate administration skills

Introducing a tailored solution which provides your practice with the opportunity to become authorised to undertake non-contentious probate work.


Introducing a tailored solution which provides your practice with the opportunity to become authorised to undertake non-contentious probate work.

 

Over the last year, the pandemic has led to a rise in requests for wills and probate services across the globe. You may be seeking to support your clients with such a service during these difficult times and beyond.

 

So, with this in mind, the ACCA and BARBRI Altior are pleased to announce that the Probate and Estate Administration course will return in March via BARBRI Altior’s virtual classroom, Live Online, helping you to support your clients through the whole process.

 

A tailored solution for ACCA members, this training will provide your practice with the opportunity to become authorised to undertake non-contentious probate work. A number of members have already become authorised since its launch in 2018 and it’s helping to improve client relationships across the UK.

 

The next round of training and assessment will take place on the following dates via Live Online:

 

Training

  • Session 1: 22 March
  • Session 2: 24 March
  • Session 3: 26 March
  • Session 4: 29 March
  • Session 5: 31 March
  • Session 6: 2 April

 

Assessment

  • 19 April

 

Find out more and register today

Understanding clients' challenges, needs and expectations in 2021

Capitalise has surveyed over 150 accountants while examining what 2021 holds in store.


Capitalise has surveyed over 150 accountants and created a new guide for accountants by accountants examining what 2021 holds in store.

 

To help you prepare and support your clients for 2021, Capitalise has created a guide for accountants by accountants on the challenges, needs and expectations for your clients during this next year.

 

Accountants from over 150 organisations shared that they are prioritising client retention, growth and acquisition for their strategic 2021 goals according to a Capitalise survey. While pursuing these initiatives, 88% will focus on raising finances to better support clients.

 

From what client support firms are prioritising this year, to what's most important when considering your clients' capital position, the guide covers:

  • how and why firms need to change with the times
  • using cash flow projections to maintain strong balance sheets
  • triaging and segmenting your clients to increase work efficiency
  • long-term plans post-pandemic trading
  • raising, recovering and protecting capital
  • automating services to identify future advisory opportunities
  • formalising advisory services in your practice.

 

Get the guide now

 

 

How to succeed in practice

Join us for a series of webinars looking at modern methods of managing a successful practice.


Join us for a series of three free webinars for practitioners in which ACCA UK member Christina Christoforou of CMNC Associates Ltd looks at how to move your practice to the cloud, how your practice can offer advisory services, and how social media can provide you with a reliable source of new clients:

 

Modernise your practice whilst saving time and increasing profit 23 February (12:30)

 

The future of practice – you are more than just a number cruncher! 4 March (12:30)

 

Learn to leverage social media that actually converts clients 11 March (12:30)

 

Register for any or all in the series.

Free technical webinars for practitioners

Book now for any of our free technical webinars for practitioners in February and March!


ACCA UK is running a series of free technical webinars for practitioners in February and March in partnership with Practice Ignition featuring these topics:

 

Accounting for Covid-19 reliefs and grants Available on demand

Speaker: Steve Collings, LWA Ltd

 

Protecting your data Available on demand

Speaker: Dr Stephen Hill, Hill Bingham Ltd

 

IR35 – the extension of IR35 to the private sector 2 March (12:30)

Speaker: Louise Dunford, LD Consultancy Limited

 

Cross border VAT post-Brexit 10 March (12:30)

Speaker: Dean Wootten, Wootten Consultants Limited

 

Register for any or all of these sessions using this link. If you are unable to join us for the live webinars then you will be able to watch them on demand at your convenience.

 

Each webinar will count for one unit of verifiable CPD where it is relevant to the work that you do.

Business recovery and resilience in the continuing pandemic

Access our suite of resources available on our Covid Hub; key resources are highlighted below.


Podcast – running your practice remotely

With lockdown restrictions still in place and tight restrictions likely to continue when the lockdown is lifted, Heather Smith FCCA suggests some tools to help you to continue running your practice remotely.

 

Strategies for SMEs

Some useful insights from Aleksandra Zaronina, head of SME Professional Insights at ACCA, on various formal and informal solutions as a means of protecting a business based on the need to understand different situations.

 

Opportunities on road ahead for SMPs

A look at how practitioners should be looking at expanding their services via digitalisation (also see the report mentioned below) and other key areas of business advisory services, such as cashflow forecasting – a must-have in the current situation. Members should always keep in mind the importance of issuing letters of engagement for any new services provided to their clients. ACCA’s engagement letter templates have been updated and should be utilised.

 

Digitisation and the global pandemic

A report examining the impact of Covid-19 in areas that relate to the digitisation agenda of organisations and how organisations around the world are responding to the Covid-19 crisis. Read about ACCA’s recommendations for charting a path to recovery.

 

Achieving accounting excellence with technology

 

An interview from our partners at AccountingWeb with Alistair Barlow - Co-founder of flinder, who shares his view on technology and its place within the accounting space and offers insightful tips on how flinder evaluates software to continually maintain excellence in their endeavours.

Brexit and Beyond – a chat with industry experts in collaboration with Barclays

Promoting services the profession can supply for businesses dealing with EU customers or suppliers.


Find out how ACCA promoted the services that the accountancy profession can supply for businesses dealing with EU customers or suppliers.

 

ACCA recently participated in an online event hosted by Barclays’ Co-Head of SME Business Banking, Ian Workman, who welcomed experts from the CBI (Confederation of British Industry), IoE (Institute of Export & International Trade) and DMA Group (Data & Marketing Association Group) to answer questions from businesses and outline ways to deal with new challenges and make the most of opportunities.

 

Amongst issues such as VAT changes, the experts also talked about business processes, including import tariffs and customs declarations, as well as implications for data integrity and transfer.

 

It was a good opportunity for ACCA to promote the services that the accountancy profession can supply for businesses dealing with EU customers or suppliers. Whilst dealing with the technical aspects of VAT issues might be at the top of the agenda for many practitioners, enhanced or advisory work such as cashflow forecasting should also be at the forefront of services that ACCA members provide.

 

Details of the recorded version of the live event can be found on our Brexit Hub, where you will also find other resources and insights in relation to various Brexit-related issues.

 

Further resources

Technical Factsheet on Cross-border VAT

 

Post-Brexit UK Border controls

 

Cashflow Plans and Template

 

Business Plans and Cashflow

 

 

 

Furthering diversity and inclusion in your organisation

Our new D&I report asks how we as a profession can ensure fair treatment and open access for all.


ACCA’s new ‘Leading Inclusion’ report looks at our understanding of diversity and inclusion and asks how we as a profession can ensure fair treatment and open access for all.

 

Alongside the main report, you will find two short guides offering pointers for approaching diversity and inclusion in both small and large organisations.

 

Access these in our full suite of resources now.

 

High quality CPD for ACCA members

Browse and book upcoming Professional Courses events.


UK Budget update

This may be one of the most critical budget speeches in recent years. Chancellor Rishi Sunak is still grappling with the problems created by the pandemic and is under pressure to increase spending and may feel the need to increase taxes now rather than wait.

Date: 4 March

Time: 09:30 – 11.00

CPD units: 1.5

Fee: ACCA members Free (on the checkout page, under Promo and Discount Code enter: 2021Budget)

Non-ACCA members - £25 + VAT (£30)

 

 

Conference one for practitioners

Date: 17-19 March 2021

Fee: £115 + VAT (£138) per person

CPD units: 8

Sessions include:

  • IR35: The new regime
  • Capital taxation update
  • Anti-money laundering, Bribery Act and practice regulation
  • Property tax update.

 

ALL SECTOR COURSES

 

One-day webinar

 

General tax update

Recorded webinar

Time: 09:30-16:00

CPD units: 6

Fee: £115 + VAT (£138) per delegate

 

Half-day webinars

 

Time: 09:30-12:30

CPD units: 3

Fee: £60 + VAT (£72) per delegate

 

CIS domestic reverse charge for VAT

Recorded webinar

 

Protecting your data and digital privacy

Recorded webinar

 

Company law update

09 March

 

Employment law update

11 March