Technical and Insight
Budget 2016: Finance Bill and directors’ loans
The rate of tax charged on directors’ overdrawn loans has increased to 32.5%.

The rate of tax charged on directors’ overdrawn loans has increased to 32.5%. 

ACCA’s free Budget 2016 newsletter was sent to just over 17,500 members who took and reused the content in record numbers. It had open rates of 45%, click through rates of 23%, and individual articles were viewed over 30,000 times. 

The top 10 guides and articles were each viewed over 1,000 times with the Guide to the Budget being the most popular. The most popular article concerned directors’ overdrawn loans. This was a reminder that from 6 April 2016 the rate of tax charged on loans to participators increased to 32.5%. The new rates apply to loans made and benefits conferred by close companies on or after 6 April 2016. 

Clause 46 Finance Bill (No2) 2016 states in 6 subsection 3, 4 and 5: 

  • the rate of section 464A tax for arrangements conferring a benefit on a participator at the dividend upper rate specified in section 8(2) of ITA 2007 for the tax year in which the benefit is conferred
  • sub-section 2 provides that the increased section 455 rate applies to loans made on or after 6 April 2016.
  • sub-section 4 provides that the increased section 464A rate applies to any benefits conferred on or after 6 April 2016.


In the background note it is stated that ‘The tax rate mirrors the dividend upper rate. To ensure this remains the case, given changes to dividend taxation, the rate is being specifically linked to the dividend upper rate. As dividend tax rates are increasing from April 2016, the loans to participators rates will therefore also increase. The new rates will ensure that section 455 and section 464A continue to meet their policy objective of deterring close companies from making loans or other arrangements which have the effect of minimizing the income tax burden of individuals.’ 

Our free Budget newsletter – include our downloadable Guide to Budget 2016 – is still available to view and use 

Budget 2016: Micro entrepreneurs’ annual allowance
The March 2016 Budget announced that from April 2017 two new allowances of £1,000 each would be introduced for property and trading income.

The March 2016 Budget announced that from April 2017 two new allowances of £1,000 each would be introduced for property and trading income. 

Individuals with property income or trading income below the level of the allowance will no longer need to declare or pay tax on that income. 

Those with relevant incomes above £1,000 can either simply deduct the £1,000 allowance from their property and/or trading income or they can deduct their actual expenditure in the normal way. 

This measure is aimed at taking out of the taxation system those individuals who sell items occasionally whether by new media such as eBay or via more traditional means such as car boot sales.

Individuals who may rent out their house for a few weeks a year, or rent out their drives as parking spaces, may also benefit from these new allowances. 

Examples

  1. Bob has rental income, from letting people park their cars on his drive, of £5,200 for the year ending 5 April 2018 and the actual expenses relating to this are £320 for the year. Bob would declare income from land and property of £5,200 less the allowance of £1,000 to give a net taxable income of £4,200. 
  1. Tom sells tomato plants from car boot sales and via the internet. His sales for the year ended 5 April 2018 are £890. He would not need to disclose this on his tax return or via any other means to HMRC.
Budget 2016: Lifetime ISA and ISA update
Alongside auto-enrolment is the lifetime ISA the new pension for the under 40s?

Alongside auto-enrolment is the lifetime ISA the new pension for the under 40s? 

From April 2017, any adult under 40 will be able to open a new Lifetime ISA from which they will also be able to withdraw amounts they have contributed. 

Making contributions
Up to £4,000 can be saved each year. The government will pay in a 25% bonus on these contributions at the end of the tax year (i.e. up to £1,000 each tax year). 

Savers will be able to make Lifetime ISA contributions and receive a bonus from the age of 18 up to the age of 50. No additional contributions will be allowed after the age of 50. 

Tax free funds, including the government bonus, can be used to buy a first home worth up to £450,000 at any time from 12 months after opening the account. The funds, including the government bonus, can be withdrawn from the Lifetime ISA from age 60 for any other purpose.

Lifetime ISA managers will claim the bonus due on the accounts they manage from HMRC. Where the individual is purchasing a home they will be able to receive their bonus in-year based on the contributions they have made in that tax year. They will not have to wait until the end of the tax year to receive their bonus.

Individuals will be able to transfer savings from other ISAs as one way of funding their Lifetime ISA. In line with existing rules, transfers from previous years’ ISA contributions do not affect that year’s £20,000 overall ISA limit.

During the 2017-18 tax year only, those who have a Help to Buy ISA will be able to transfer those funds into a Lifetime ISA and receive the government bonus of 25% on those savings. Any Help to Buy ISA funds that were saved prior to the introduction of the Lifetime ISA on 6 April 2017 will not count towards the Lifetime ISA annual contribution limit.

Contributions made after this point to the Help to Buy ISA and transferred to the Lifetime ISA will count against the annual contribution limit of £4,000. At the end of the tax year they will receive a bonus on the full amount of the transferred Help to Buy ISA and their Lifetime ISA contributions.

Withdrawal to purchase first home
First time home buyers will be able to withdraw up to 100% of their Lifetime ISA balance, including the government bonus (which will have been added to the account at the end of each tax year and up to the date of purchase in that tax year). 

Their withdrawal can only be put towards a first home located in the UK with a purchase price of up to £450,000. 

The Lifetime ISA must have been opened at least 12 months before the withdrawal that is to include the government bonus for the first home purchase.

If more than one person is buying their first house together they can each use a Lifetime ISA and each benefit from their government bonus.

The withdrawal must be for a deposit on a property for the first time buyer to live in as their only residence and not buy-to-let.

The account holder will inform their ISA manager of the house purchase, who will claim any additional bonus due up to that point from HMRC and the funds will then be paid direct to the conveyance. If a purchase does not complete after a withdrawal has been made then the funds will be returned to the same ISA manager by the conveyancer and will not count against the annual contribution limit.

The Help to Buy ISA will be open for new savers until 30 November 2019, and open to new contributions until 2029. Savers will be able to save into both a Help to Buy ISA and a Lifetime ISA, but will only be able to use the government bonus from one of their accounts to buy their first home.

The following options will be available: 

  • use their Help to Buy ISA with the government bonus to purchase their first home and save with their Lifetime ISA to make withdrawals after age 60 with the government bonus
  • use their Lifetime ISA with the government bonus to purchase their first home and withdraw the funds held in their Help to Buy ISA to put towards this purchase but without the government bonus
  • use their Help to Buy ISA including the government bonus to purchase their first home and withdraw from their Lifetime ISA to put towards the purchase. Although the government bonuses on the Lifetime ISA savings would be returned to HMRC and the individual would be required to pay a charge as set out below.

Withdrawals after 60 years of age
Full or partial withdrawals including the bonuses can be made from age 60 and used for any purpose and will be free of tax. Funds may remain invested and any interest and investment growth will be tax-free.

Withdrawals in other circumstances when bonus can be retained
Tax free withdrawals including the bonuses will also be allowed where people are diagnosed with terminal ill health regardless of the individual’s age. The definition of terminal ill health will be based on that used for pensions.

Withdrawals in other circumstances when bonus will be returned to the government
Savers will be able to make withdrawals at any time for other purposes, but with the government bonus element of the fund (including any interest or growth on that bonus) returned to the government, and a 5% charge applied. The individual saver will still have access to those savings and any interest or growth earned on those savings minus the 5% charge. 

Balance held on account when the individual dies
Upon the death of the account holder, the funds will form part of the estate for inheritance tax purposes. Their spouse or civil partner can also inherit their ISA tax advantages and will be able to invest as much into their own ISA as their spouse used to have, on top of their usual allowance.

Points for the government to explore in the future

  1. The government wants it to be easy for individuals to save additional funds on top of those receiving a bonus and will explore the best way to achieve that. For example if individuals want to save more than £4,000 per year or keep contributing after the age of 50.
  2. The government will explore whether savers should be able to access contributions and the government bonus for other specific life events.
  3. The government will explore whether there should be the flexibility to borrow funds from the Lifetime ISA without incurring a charge if the borrowed funds are fully repaid. For example some set percentage of the savings could be borrowed subject to some maximum value.


ISA update

Other ISAs
The total amount which can be saved each year into all ISAs will increase from £15,240 to £20,000 from April 2017. Therefore if someone saves £4,000 in a Lifetime ISA in 2017/18 that person will also be able to save up to £16,000 in other ISAs in that year.

From 6 April 2015 to 5 April 2016 the annual amount which can be paid into an ISA has been £15,240. This can be in a cash ISA, a stocks and shares ISA or any mix of both types of ISA. Withdrawn funds cannot be replaced by paying more into an ISA unless still within the £15,240 annual allowance. For example, if during the year to 5 April 2016 £14,000 was paid into an ISA then £5,000 was withdrawn only a further £1,240 would be able to be paid into the ISA (i.e. £15,240 less £14,000).

From 6 April 2016 savers will effectively be able to re-invest withdrawals into ISAs if within the same tax year. For example, if during the year to 5 April 2017 £14,000 was paid into an ISA then £5,000 was withdrawn a further £6,240 would be able to be paid into the ISA (i.e. £15,240 less (£14,000 less £5,000)). Each tax year will be considered in isolation so for the following year to 5 April 2017 withdrawals and contributions in the previous tax year will be ignored. 

Not all providers may be able to offer this additional flexibility, even though they are allowed to under the new regulations.

Help to Buy ISAs
These were introduced from 1 December 2015 and are available to first-time residential property buyers. Such savers, when saving for a deposit, receive a £50 contribution from the government for every £200 the individual contributes subject to a maximum government contribution of £3,000. Savers can pay up to £200 per calendar month into a help to buy ISA except for the first month the account is opened when an extra £1,000 can be paid in making £1,200 in total for that month. These are only available to first time home buyers, so are not available to people who already own a property or have done so in the past.

The government bonus is only paid when the property is purchased so will not be paid if the money is used for another purpose. It is not limited to newly built homes although the property should cost no more than £250,000 or £450,000 if buying in London.

If purchasing a property with other first time buyers, each first time buyer is entitled to this account and the government bonus. So if two first time buyers are purchasing a home together, each would be entitled to a bonus of up to £3,000 making £6,000 in total.

Innovative finance ISAs
These are being introduced from 6 April 2016 and will have effect for qualifying peer to peer loans made on and after 6 April 2016. This account will be available to investors aged 18 and over. Along with loan repayments, interest and gains from peer to peer loans will be eligible to be held within this type of ISA, without being subject to tax. 

Peer to peer lending platforms with full regulatory permissions from the Financial Conduct Authority (FCA) will be eligible to offer the Innovative Finance ISA in accordance with the ISA Regulations. Like other ISA providers, these platforms will be required to supply HMRC with information about the accounts they provide. Various account requirements set out in the ISA Regulations will be amended to accommodate the Innovative Finance ISA. 

These changes will mean that an ISA investor will be entitled to subscribe new money each year to a maximum of one Innovative Finance ISA, one cash ISA and one stocks and shares ISA. The amount of new money paid into all of the ISAs held by an investor must not exceed the overall ISA subscription limit for the year. For the year ended 5 April 2017 that limit is £15,240 and the limit will increase to £20,000 for the year ending 5 April 2018. 

Further information on the Lifetime ISA is available from the government here, here and here

Tax changes affecting buy-to-let properties
The new tax changes for holding a rental property as an individual, or in a limited company, will need to be carefully considered by landlords.

The new tax changes for holding a rental property as an individual, or in a limited company, will need to be carefully considered by landlords. 

These changes impact: 

  • allowable expenses
  • stamp duty
  • interest costs
  • treatment of future gains.


Wear and tear allowance
This has been abolished for individuals from 6 April 2016 and for companies from 1 April 2016. In its place landlords are able to claim as an allowable expense the actual cost of replacing furniture (such as tables, chairs and beds) and fittings (such as carpets and curtains). You can see the draft clauses; Clause 69: Property business deductions: replacement of domestic items and Clause 70: Property business deductions: wear and tear allowance; in the Finance Bill (No2) 2016 


Stamp duty payable on purchase of property
An additional 3% stamp duty land tax is payable for properties purchased on or after 1 April 2016. This is to apply to both individuals and limited companies. There are detailed rules for individuals and for purchases through limited companies.

The surcharge applies to residential properties but not to commercial properties. 

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

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

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

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

Landlords will be able to obtain relief as follows: 

                                    Finance cost allowed in full                    Finance cost allowed at basic rate

Year to 5 April 2016          100%                                                            0%
Year to 5 April 2017          100%                                                            0%
Year to 5 April 2018          75%                                                            25%
Year to 5 April 2019          50%                                                            50%
Year to 5 April 2020          25%                                                            75%
Year to 5 April 2021          0%                                                            100%


Capital gains
In the March 2016 Budget it was announced that the capital gains tax rates for individuals would be reduced. However this reduction would not apply to sales of residential property. However, private residence relief (of principal private residence relief) is still available as before. 

                                                                        Basic Rate                 Higher or Additional
                                                                       Taxpayer                    Rate Taxpayer

Rate on gains from residential property       18%                                   28%
Rate on gains from other assets                   10%                                  20%

Individuals are entitled to an annual tax-free allowance which is £11,100 for the year from 6 April 2016. It would seem that individuals selling shares in companies which own residential companies would be chargeable to capital gains tax at the lower rates shown above.

Companies pay corporation tax on their gains at the corporation tax rate (which for the year from 1 April 2016 is 20%). Companies can claim indexation allowance to reduce the taxable gain whereas individuals cannot.

With regards to the reduction in rate of capital gains tax, you can see the draft clause and schedules: Clause 72 and Schedules 11 and 12: Reduction in rate of capital gains tax; in the Finance Bill (No2) 2016

Auto-enrolment: declaration of compliance
Between May and August more than 100,000 small employers and their business advisers complete and submit a Declaration of Compliance to The Pensions Regulator.

Between May and August more than 100,000 small employers and their business advisers complete and submit a Declaration of Compliance to The Pensions Regulator. 
With this in mind, we share below an article from The Pensions Regulator entitled AE and what you need to know about completing a declaration of compliance

All employers have workplace pensions’ duties which mean they will need to automatically enrol certain staff into a pension scheme and make contributions to it. They need to assess their staff, put those that they need to into a pension scheme, and tell them about automatic enrolment. They should start planning for automatic enrolment 12 months before their staging date. This is the date their duties come into effect.  

Many of your clients may ask you for help and support with their automatic enrolment duties, with insight from The Pensions Regulator (TPR) indicating that many employers are asking their adviser to help them to complete and submit their declaration of compliance. Completing the declaration shows TPR what employers have done to meet their duties. 

Who needs to complete a Declaration of Compliance?
All employers with one or more staff have a legal requirement to complete a Declaration of Compliance. Even if they do not have any staff to put into a pension, they must complete the declaration to confirm they have met their duties. 

When does it need to be completed by?
Each employer has a declaration of compliance deadline which falls five months after their staging date. Their declaration of compliance needs to be completed and submitted to TPR by this deadline. Although employers have five months to complete their declaration, we recommend they start completing it as soon as possible after their staging date. Filling in details as they go through the automatic enrolment process will help employers avoid missing their deadline. 

What if postponement has been used? 
If postponement has been used, a declaration of compliance cannot be completed until after the postponement period has ended. However, don’t leave filling in the details until then as there may be very little time between the end of the postponement period and the declaration deadline. It’s a good idea to fill in the details as you get them so that you do not risk running out of time.

Can I do this on behalf on my client? 
If your client has asked you to complete the declaration on their behalf, it remains the employer’s responsibility to ensure the declaration is completed on time and the information provided to us is correct. If not, they risk a fine. So, make sure there is agreement about who is completing the declaration of compliance and that the information is correct. 

What if I don’t complete the declaration on time?
Failure to complete your declaration on time could lead to a fine. 

How can I access the Declaration of Compliance?
The declaration is a secure, online form. You will need to register with Government Gateway as an employer agent before you can complete a declaration of compliance on behalf of your client.

What information do I need to complete it?
If you have all the relevant information to hand it can take as little as 15 minutes to complete your client’s declaration. Information you’ll need to complete the declaration: 

  • Government Gateway User ID
  • Letter code from TPR
  • Your contact details
  • Your relationship to the employer
  • Name of the employer
  • Employer contact details
  • Employer email address
  • Employer correspondence address
  • Type of pension scheme(s) used for AE (personal or occupational)
  • Employer pension scheme reference (EPSR).


Top tips

  • make a note of all logins and passwords
  • start your declaration before your client’s staging date; you can save your progress and return at a later date
  • if postponement has been used for any staff, the declaration cannot be submitted until after the postponement period has ended
  • save your declaration at regular intervals as the system will timeout after a short period of inactivity
  • remember to select ‘submit’ at the end of the form to complete the process.


Frequently Asked Questions
Q: My client only has one member of staff and he doesn’t want to be in a pension scheme. Does a declaration still need to be completed?
A: Yes – every employer with at least one member of staff will need to complete a declaration of compliance. If only one member of staff needs to be put into a scheme, they’ll still need to be automatically enrolled before they can ask to opt out. 

Q: What happens if the declaration is not completed by the deadline? Can it still be completed if it's late?
A: It is the employer’s legal duty to complete their declaration of compliance correctly and on time. If it is not completed on time, then action is likely to be taken by TPR which could lead to a fine. If you are or your client is having difficulties implementing automatic enrolment or gathering the information to complete your declaration by your deadline, please contact TPR immediately. 

Q: I’ve signed up for a Government Gateway ID on behalf of my client and it says I’ve enrolled, but I haven’t had to provide any information apart from a letter code and PAYE reference number – does this mean I’ve completed the declaration?
A: No it doesn't. When you successfully sign up for a Government Gateway account, you’ll receive a message confirming this. It doesn’t mean that the declaration has been completed, it just means you’ve successfully created a Government Gateway account. Once you have an account, you can then complete your client’s declaration of compliance online. 

Q: Can I provide approximate figures at declaration and then confirm them at a later date? Can this information be updated after the declaration is submitted? If so, how long do I have to update it?
A: Your client is legally responsible for ensuring  the information you submit is complete and correct and you will be required to confirm this on the declaration.  You must not submit the declaration with inaccurate information as it’s an offence to knowingly or recklessly provide false or misleading information. If, after you complete your declaration, you find out you have mistakenly provided incorrect details, you should update them as soon as possible. You’ll need to confirm again that the information provided is correct and complete before re-submitting the declaration of compliance.


Case study
Swindon Town Football Company Limited (STFC) received fines from The Pensions Regulator totalling of £22,900 after it failed to put eligible workers into a pension scheme or comply with other workplace pension duties. STFC was issued with a compliance notice on 18 August 2014 directing it to automatically enrol staff and pay contributions but failed to comply by the deadline of 17 October 2014. There were several further delays in the employer complying with their duties, and as a result TPR’s intervention escalated from a focus on remedial action to one of enforcement action. You can read about the case at full details of the case.


Useful links

Checklist of information you’ll need to hand

Essential guide

Webinar

Demonstration video 

New state pension: what the changes mean for you
The Department for Work and Pensions introduces the new state pension.

The Department for Work and Pensions introduces the new state pension. 

The new state pension has been introduced for people who reach state pension age on or after 6 April 2016. You’ll be able to claim the new state pension if you reach state pension age on or after 6 April 2016. This applies to: 

  • men born on or after 6 April 1951
  • women born on or after 6 April 1953.


If you were born before those dates you’ll be able to claim your state pension under the old system instead. You can check when you’ll reach state pension age. 

How much will you get?
The amount of new state pension you get will mainly depend on your own national insurance record. You’ll usually need at least 10 qualifying years on your national insurance record to get any new state pension. 

As the new state pension is normally based on your own national insurance record you could get more or less than the full rate in certain situations. We will calculate the minimum amount of new state pension you could get when you reach state pension age. To do this, we do two calculations to work out your starting amount, which will be the higher of either: 

  • the amount you would get under the old state pension rules (which includes basic state pension and additional state pension)
  • the amount you would have got under new state pension rules.


Starting amounts will include some adjustment for time contracted-out of the additional state pension. 

Unless you are already at the full new state pension amount of £155.65 per week (2016/17 rate) or have reached state pension age, you will add to your new state pension by 1/35th of the full amount (about £4.45 for 2016/17) for each qualifying year on your national insurance record from 6 April 2016. 

Contracting-out
Most people reaching state pension age after the introduction of the new state pension will have been ‘contracted-out’ of the additional state pension at some time – something they may be unaware of. The old state pension has two parts: 

  • basic state pension
  • additional state pension (sometimes called State Second Pension, S2P or SERPS).


Anyone who has been contracted-out either paid national insurance at a lower rate or some of their national insurance contributions were used to contribute to a private pension instead of the additional state pension. This will be taken into account when we work out your starting amount in the new system. 

This means that although many people with more than 35 qualifying years will get a starting amount lower than the full rate of the new state pension, many will have more than the new full rate if they add their state and contracted-out pension together. You could only be contracted-out of the additional state pension if you were building a private pension instead. So you’re not missing out, just getting the amount in a different way. 

In April 2016, contracting-out – and the reduction in national insurance that contracted-out employers and employees got – ended. For more information on these changes and what they mean for you, visit our dedicated webpages 


An animation explaining contracting-out and the impact on the new state pension – together with other relevant videos – can be found on Pension Tube

What the EU General Data Protection Regulation means for accountants
A uniform data security regime is being introduced across all EU member states. Find out what it means for your practice.

A uniform data security regime is being introduced across all EU member states. Find out what it means for your practice. 

On 18 December 2015 Europe’s General Data Protection Regulation (the ‘GDPR’ or the ‘Regulation’) was, after almost three years of negotiations, agreed. While the final wording hasn’t been released, we know it will have a material impact on organisations that hold or handle corporate, financial or personal data in any media format whether digital or physical. 

Why is the new GDPR required?
The 20 year old Data Protection Directive (DPD) – which is being replaced by the Regulation – is part of the overall strategy across the world to prevent and respond to cyber disruptions and attacks. The EU has recognised that cybersecurity incidents are increasing in frequency and magnitude and becoming more complex and cross-border in nature. As such incidents can cause major damage to safety and the economy, the EU Commission considered that efforts to prevent, co-operate on and be more transparent about cyber-incidents should improve.

The old DPD was limited because it was just that – a Directive. As a Directive it could only set the minimum legal standards. The member states could otherwise craft their legislation as they saw fit. This led to a patchwork of data protection laws across Europe.

The new Regulation is meant to solve this problem. As a Regulation it directly imposes a uniform data security regime across all EU members. There will be no need to enact the legislation: it will become law, thereby harmonising EU data protection law across the whole of the EU.

How does the GDPR differ from the outgoing Directive?

1) Increased fines for violations – if a company violates certain provisions within the GDPR – such as basic data  processing principles or the rules relating to cross border data  transfers – it may be subject to fines amounting to 4% of the company’s worldwide annual  turnover.

2) Data breach notification– data controllers will be required to notify the appropriate supervisory authority (in the UK this is likely to be the Information Commissioner’s Office) of the data breach within 72 hours of learning about the breach. The notification must describe the nature of the data breach, the categories and the approximate number of data subjects implicated, the contact information of the organisation’s data protection office, the likely consequences of the breach and the measures the data controller has taken or proposes to take to address and mitigate the breach.

Additionally a data processor is required to notify a data controller of a data breach ‘without undue delay’.  Article 32 of the GDPR requires data controllers to notify data subjects of breaches when the data is likely to result in a high risk to the rights and freedoms of individuals and must notify subjects of the breach ‘without undue delay’ 

3) Data protection officers – Article 35 requires companies whose ‘core activities’ involve large scale processing of ‘special categories’ of data – defined as information that reveals a data subject's racial or ethnic origin, political opinions, religious or philosophical beliefs, trade union  membership, genetic data, biometric data, health or sex life or sexual orientation - to designate a data protection officer. Companies should be aware that even if they don’t collect this type of data from clients they may collect some of this information from their employees for human resources purposes and therefore may need to appoint a data protection officer.

4) Greater controls for data subjects - Article 17 set outs the ‘right to erasure’ also known as the ‘right to be forgotten’ which gives a data subject the right to order a data controller to erase any of the data subject's personal data in certain situations. The Article requires the data controller to erase a data subject's personal data ‘without undue delay’ when  the personal data is no longer necessary in relation to the purposes for which it was collected or processed or the data subject withdraws his or her consent or objects to the processing and there  is no other legal basis for the processing.

How can companies prepare for the GDPR?
There is no question all companies will need to determine how the new GDPR will relate to them. Our conversations with clients show  that organisations are taking a moralistic view  to protecting personal data  and we recommend any company transacting business  across the world should,  if they  haven’t done  so already, prepare for and address  the following items  well in advance of the GDPR coming into  effect:

  • Are you a data controller or a data processor or a mixture of both? Review your contracts with third parties to understand where respective roles and responsibilities lie.
  • Get your privacy policies, procedures and documentation in order and keep them up to date:  data protection authorities will be able to ask for these at any time.
  • Form a governance group that oversees all your privacy activities, led by a senior executive. If you appoint a data protection officer (recommended for companies that employ more than 250 people) they  should develop metrics to measure  the status of privacy efforts, report regularly and create statements of compliance that  will be required as part  of your organisation’s annual report.
  • Implement a breach notification process and enhance your incident management processes and your detection and response capabilities. Any data breach must be notified to the relevant data protection authority, even if protective measures, such as encryption, are in place or the likelihood of harm is low.
  • Prepare your organisation to fulfill the ‘right to be forgotten’, ‘right to erasure’. A strategy covering topics such as data classification, retention, collection, destruction, storage and search will be required – and it should cover all mechanisms by which data  is collected, including the internet, call centres and paper.


The new rules will have direct effect from early 2018 – two years from the date of formal adoption and publication of the Regulation. Businesses have time to prepare, but there is much work to do. We are moving towards the most stringent data laws in the world. Data permeates everything we do in our digital lives and touches all organisations.

However, in the short time that remains before implementation, organisations will need to completely transform the way they collect and use personal information. This is not a compliance or legal challenge: it is much more profound than that. Organisations will need to adopt entirely new behaviours in the way they collect and use personal information.

If you have any questions about the new Regulation please contact your normal Lockton Associate or a member of the Global Technology Privacy Practice:

 

Brett Warburton-Smith - Partner
Tel: +44  (0)20 7933 2242
Mobile: +44  (0)7768 917550
E-mail: brett.warburton-smith@uk.lockton.com

 

Cliff White  - Senior Vice President
Tel: +44  (0)20 7933 2704
Mobile: +44  (0)7500 226366
E-mail: cliff.white@uk.lockton.com

 

Lockton Companies LLP
Authorised and regulated by the Financial Conduct Authority. A Lloyd’s broker. www.lockton.com 


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

 

Why keeping it professional can help avoid negligence claims
A duty of care is owed by a professional when providing services free of charge in the course of a long running friendship.

A duty of care is owed by a professional when providing services free of charge in the course of a long running friendship. 

In Burgess & Anor v Lejonvarn [2016] EWHC 40 (TCC) the subject matter was an informal agreement between a professional consultant who performed various gratuitous services relating to her friend's landscape gardening project. The project did not go smoothly, the relationship broke down and her former friend claimed for the cost of remedial works. 

The judge had to decide on a number of preliminary issues, including whether the conduct had given rise to a contract for the provision of services and whether the defendant assumed responsibility for these services and was under a duty of care to the claimant to perform them with reasonable skill and care. 

The judge concluded that there was a lack of clarity over the terms (if any) upon which the defendant would provide the claimant with professional services, and that it was plain that there was no contract between the parties. The claim in contract therefore failed. 

The court then looked at whether there had been a breach of a duty of care in tort.

The court confirmed that a professional person can owe a duty of care in respect of pure economic loss on a project. It also held that such liability is not restricted to advice given by the professional consultant, but can also cover other services that it performs.

There were a number of factors which pointed to this conclusion, all of which could prove to be decisive: 

  • this was a significant project and not ad hoc advice
  • the project was being approached in a professional way
  • the services were provided over a lengthy period
  • it involved commitment on both sides
  • it involved significant commercial expenditure.


The case demonstrates the importance of documenting an agreement when providing professional services. A well drafted engagement letter would have brought much needed clarity, not only to the professional consultant’s role, but also to the contractual framework for the project more widely. The defendant failed to select the correct project team, failed to prepare designs that were needed, failed to exercise cost control and failed to inspect the works. 

This case also serves as a further reminder to a professional person that they should never advise in a professional capacity without having PII cover in place.

End of year payroll routines
A summary of the main payroll routines to complete and the deadlines which need to be complied with.

A summary of the main payroll routines to complete and the deadlines which need to be complied with.  

We are also highlighting the major changes to payroll and related issues for 2016/17. 

Basic year-end routines

  1. Your final FPS return for the tax year should be sent on or before the payment date of your employees. This will mean that you should have filed all of your FPS returns for 2015-16 by 5 April 2016
  2. Produce P60s for all employees. This summarises an employee's total pay and deductions for the year. You need to provide a form P60 (either paper or electronic) to each employee on the payroll who was working for you on the last day of the tax year (5 April). The employee must receive their P60 no later than 31 May 2016
  3. Update the payroll for 2016/17. This involves:
  • preparing a payroll record
  • identifying the correct tax code to use in the new tax year
  • entering their tax code in your payroll software.


Identifying the correct tax code for 2016/17 

  • Employees without a new tax code: carry forward the authorised tax code from the 2015 to 2016 payroll record to the 2016 to 2017 payroll record. Authorised codes include BR, D0, D1 and NT. Then:
    • Add 40 to any tax code ending in L, for example 1060L becomes 1100L
    • Add 44 to any tax code ending in M
    • Add 36 to any tax code ending in N.


But if you have received a 2015 to 2016 tax code on a form P6 too late to use in 2015 to 2016 carry forward this code instead. Do not copy or carry over any ‘week 1’ or ‘month 1’ markings. The payroll records for these employees are now ready for the new tax year.

  • HMRC will send you a: P9T form for any employees who need a new tax code and/or
  • P9X form with general changes for employees whose tax code ends with an ‘L’.


The main deadlines

31 May 2016: You need to provide a form P60 (either paper or electronic) to each employee on the payroll who was working for you on the last day of the tax year (5 April). You must do this by no later than 31 May.

6 July 2016: P11D and P11d(b) should be sent by 6 July 2016 where applicable

22 July 2016: Last date for payment of class 1a NIC on expenses and benefits (19 July 2016 if payment is being made by post).


It is important to remember that HMRC will NOT accept FPS submissions for 2015-16 after 19 April 2016. If you attempt to file an FPS after this date your return will be rejected by HMRC. If you missed the 19 April deadline and need to submit pay information to HMRC for 2015-16 then you will need to do so via an 'Earlier Year Update (EYU), which must be submitted by downloading and installing HMRC Basic PAYE Tools software. 

Major changes to remember for 2016/2017

  • Tax code uplifts: HMRC has announced a general 'uplift' of all tax codes with an 'L' suffix by 40. This means for example that an employee with tax code 1060L in 2015-16 will have their tax code uplifted by 40 from 6 April 2016 to 1100L

  • Apprentices’ NIC: From 6 April 2016 employers with apprentices under 25 years old will no longer have to pay Class 1 secondary National Insurance contributions (NICs) on earnings up to the ‘Apprentice Upper Secondary Threshold’ (AUST) for those employees. The value of the AUST for the tax year 2016 to 2017 will be the same as the Upper Earnings Limit (UEL) which is £827/week, £3,583/month, £43,000/year. Note that this change affects the employer's NIC contribution only and does not reduce the amount of NIC that the employee pays

  • End of contracting out: Contracting-out of the additional State Pension will end on 5 April 2016. This means that from 6 April employees will automatically be brought back in to the state pension. If you have employees on the payroll that were previously contracted-out of the State Pension then they would have had their NIC calculated using NI table letters D, E, L, I or K in 2015-16. These NI letters are to be replaced by letters A, B, J, M and Z


For more information including how the end of contracting out affects pensions follow New State Pension

  • Increase in Employment Allowance: From 6 April 2016 the Employment Allowance is increasing to £3000 from £2000 in 2015/16.

  • Changes to student loans: From 6 April 2016 there will be two student loan plan types which will be known as Plan 1 and Plan 2. Each plan will have a different threshold (£17,495 for Plan 1, £21,000 for Plan 2). When HMRC sends notification to the employer to start making student loan deductions (via an 'SL1 start notice') they will indicate which of the plan types to use. For more information on this follow Repaying your student loan

  • Dispensing with dispensations: From 6 April 2016, a new exemption means you will no longer have to agree a dispensation with HMRC or report expenses or benefits in kind on form P11d where the employee is entitled to tax relief for those expenses or benefits in kind. However, the correct tax treatment of each item still needs to be established and records of payments still need to be kept

  • National living wage: From April 2016, if the employee is aged 25 or over and not in the first year of an apprenticeship, they will be legally entitled to at least £7.20 per hour 

  • Benefits in kind through payroll: From 6 April 2016 HMRC is introducing a voluntary framework to allow employers to include a notional value for employee BiKs as taxable pay into the regular payroll processing. This will have the effect of collecting any tax due in real time. 
Company distributions
Consultation highlights concerns over changes to taxation of dividend income and share disposals.

Consultation highlights concerns over changes to taxation of dividend income and share disposals. 

HMRC’s ‘company distributions’ consultation highlighted the concern that the changes to taxation of dividend income and share disposals would drive some to look to dividends and capital distributions, rather than salary or income. 

The government has stated that it ‘will continue with plans to amend the Transactions in Securities rules and introduce a new TAAR [Targeted Anti-Avoidance Rule]’ and says that the legislation will be amended so that: 

  • it will not apply to minority shareholders
  • ‘arrangements’ is clearly defined
  • distributions will not be treated as income to the extent that they represent the capital gains ‘base cost’
  • the exemption for distributions of irredeemable shares will be widened to ensure that the TAAR does not apply to standard ‘liquidation demergers’.


The revised legislation is part of the Finance Bill 2016 and remains due to come into effect from 6 April 2016. 

You can expect more on this area in the coming months.

Going concern
The FRC has issued guidance on going concern to assist both SMEs and larger entities.

The FRC has issued guidance on going concern to assist both SMEs and larger entities.

Guidance on the Going Concern Basis of Accounting and Reporting on Solvency and Liquidity Risks: Guidance for directors of companies that do not apply The UK Corporate Governance Code has brought going concern guidance into one place and highlights the scope of going concern on different sized entities.

The type of work and obligations are unchanged but are written to assist users. The table on page 5 will be of use when explaining to directors and employees the requirements for different sized entities. The ‘principles for best practice’ outline the key concern in each of the sections and provide a useful summary. 

Agent online self service
HMRC has renamed its Agent Online Self Serve (AOSS) to Agent Services (AS).

HMRC has renamed its Agent Online Self Serve (AOSS) to Agent Services (AS). 

It has said that the four priority delivery areas for AS are: 

  • On-boarding – to enable agents to access services and features contained in the personal and the business tax account using third party software which will give them the ability to see and do what their clients are able to do through their tax account
  • Subscription – a process that will allow HMRC to collect data about a tax agency as part of HMRC's agent strategy
  • Authorisation – enhance existing online agent authorisation (OAA)
  • Inbound secure messaging – work to understand what information agents want to send to HMRC and explore the digital solutions that can be used to cater for this requirement.  


A Talking Points digital meeting on AS is scheduled for 12:00-12:45 on 19 May 2016. You can register online to attend this meeting.

 

 

International Education Standard (IES) 8 (revised)
IFAC has issued International Education Standard (IES) 8, Professional Competence for Engagement Partners Responsible for Audits of Financial Statements (Revised).

IFAC has issued International Education Standard (IES) 8, Professional Competence for Engagement Partners Responsible for Audits of Financial Statements (Revised). 

IES 8 prescribes the professional competence that professional accountants are required to develop and maintain when performing the role of an engagement partner responsible for audits of financial statements. 

Under the revised IES 8 professional accountants performing the role of an engagement partner will be required to develop and maintain professional competence that is demonstrated by the achievement of learning outcomes. They will also be required to undertake CPD that develops and maintains the professional competence required for this role. 

The following guidance has been issued by IFAC:

When is the change taking effect?
IES 8 (Revised) becomes effective on 1 July 2016 at which point the extant IES 8 will be withdrawn. 

Who is the subject of IES 8 (Revised)?
The engagement partner responsible for audits of financial statements, as defined by the International Auditing and Assurance Standard Board (IAASB), is the subject of IES 8 (Revised). During the development of IES 8 (Revised), it became clear that this is a role that is common to every audit engagement and, from a public interest perspective, the engagement partner has ultimate responsibility for the performance of the audit. 

What is required?
It is the responsibility of the professional accountant performing the role of an engagement partner to develop and maintain professional competence by undertaking relevant CPD activities, which include practical experience. 

Why does IES 8 (Revised) highlight the importance of professional competence within the requirements?
IES 8 (Revised) recognises that only those professional accountants who develop and maintain the professional competence specified in IES 8 (Revised) will be able to deal with the complex situations that engagement partners face during their careers. By focusing on professional competence, IES 8 (Revised) helps to: 

  • contribute to audit quality
  • promote the credibility of the audit profession
  • protect the public interest.


What is the relationship between practical experience and CPD?
CPD includes practical experience. Practical experience is workplace and other activities that are relevant to developing competence. Practical experience as described in IES 5 has to be:

  • of the necessary depth and breadth to develop and maintain professional competence
  • measurable and verifiable.


For example, through practical experience, an engagement partner may develop an understanding of an industry an entity is operating in. This knowledge obtained through practical experience could be used to assess the business risks faced by the entity and to help inform audit risk assessments. 

Further information about these requirements will be provided to members in due course. You can also find further information on IFAC’s website here and here 


“This article includes extracts from the IAESB Staff Questions & Answers Publication, Implementation Support for IES 8, Professional Competence for Engagement Partners Responsible for Audit of Financial Statements (Revised) of the International Accounting Education Standards Board published by the International Federation of Accountants (IFAC) in December 2015, and is used with permission of IFAC. All rights reserved.”

 

Insolvency litigation and the Jackson reforms
New report from R3 provides an update on the Jackson reforms and what what they mean for insolvency litigation.
New report from R3 provides an update on the Jackson reforms and what what they mean for insolvency litigation.

In 2013, the Jackson Reforms came into force and made significant changes to how civil litigation is conducted in the UK. However, the government recognised that there were specific types of litigation whose characteristics made them different from typical civil litigation. Due to this recognition, insolvency litigation was granted an exemption from the Reforms.

Professor Peter Walton has conducted a review, on behalf of R3, and you can read his full report now. The key findings are summarised below:

  • CFA-backed insolvency litigation was used in 2014 to pursue claims whose value was likely to be in excess of £1bn - up from £300m in 2010
  • approximately £240m of these claims relate to money owed to HMRC – up from £50-70m in 2010
  • CFA use in insolvency litigation (in compulsory liquidation cases) rose 39% from 2010 to 2014, while the total number of compulsory liquidations fell 22%
  • the median average value of the insolvent estate (in compulsory liquidation cases in 2014), where CFA-backed litigation was pursued, was a debit balance of £598
  • CFA-backed insolvency litigation realised approximately £500m per year for insolvent estates (up from £160m in 2013), with around £120m of this owed to HMRC (based upon a survey of R3 members)
  • third party funding is a relatively small part of the insolvency litigation market: approximately 160 cases per year use third party funding, realising £50m – compared to a total of approximately 2,300 cases per year and around £500m of realisations in cases using CFAs
  • without the insolvency litigation exemption from the LASPO Act, 51% of appointment takers say none of their cases would have gone ahead
  • impact of the end of the exemption:
    • 86% of respondents to the survey believe that less money will be returned to creditors
    • 63% will take on fewer ‘no asset’ cases 
    • 49% will stop or decrease litigation 
    • 54% will seek to use third party funders; 52% of survey respondents have never used third party funding 
    • 22% will seek to use Damages Based Agreements; 90% of survey respondents have never used a Damages Based Agreement.


FRS 105 – a new reporting regime for micro-companies
FRS 105 is a simpler reporting regime which is being introduced for a new sub-category of small company: the micro-entity.

FRS 105 is a simpler reporting regime which is being introduced for a new sub-category of small company: the micro-entity. 

Micro-entities will have the greatest choice in reporting, where the choice will determine what is available to other users and different forms of reporting will impact on taxes. The first consideration is eligibility and what information will be published. 

The Small Companies Accounting Regulations 2013 as amended by SI 2013/3008 introduced a simpler reporting regime for a new sub-category of small company: the micro-entity. The decision to apply the micro-company provision is for the directors to make, and does not require shareholders’ approval or other formalities. The new micro-entity limits are introduced in section 484A A of Companies Act (CA) 2006 and apply to companies which need to deliver accounts for financial years ending on or after 30 September 2013.

Companies qualifying as micro-entities
FRS 105 may be applied by micro-entities. A company is a micro-entity if it does not exceed at least two of the following three thresholds in relation to a financial year: 

  • turnover does not exceed £632,000 (adjusted for periods longer or shorter than 12 months)
  • the balance sheet total does not exceed £316,000
  • the average number of employees does not exceed 10.


The criteria must be met in two consecutive years for a company to qualify as a micro-entity and must be exceeded in two consecutive years for a company to cease to qualify.

Any entity that is excluded from the small companies’ regime may not apply FRS 105. In addition the following types of entity are excluded from being treated as a micro-entity:

a)    LLPs (although this is currently under review)
b)    charitable companies
c)    investment undertakings
d)    financial institutions
e)    subsidiaries that are fully consolidated in group accounts and parent companies that prepare group accounts. 


Statutory requirements – balance sheet format
 

Balance sheet format 1

 

 

 

Balance sheet format 2

A Called up share capital not paid

ASSETS

B Fixed assets

A Called up share capital not paid

C Current assets

B Fixed assets

D Prepayments and accrued income

C Current assets

E Creditors: amounts falling due within one year

D Prepayments and accrued income

F Net current assets (liabilities)

 

G Total assets less current liabilities

LIABILITIES *

 

A Capital and reserves

H Creditors: amounts falling due after more than one year

B Provisions for liabilities

I Provisions for liabilities

C Creditors:  amounts falling due within one year

J Accruals and deferred income

    Creditors: amounts falling due after more than one year

K Capital and reserves

D Accruals and deferred income

 

 

 

 

* For companies that have adopted the amendments made by SI 2015/980 this heading is amended to CAPITAL, RESERVES AND LIABILITIES

Profit and loss account format

Turnover

 

 

 

 

Other income

 

Cost of raw materials and consumables

 

Staff costs

 

Depreciation and other amounts written off assets

Other charges

 

Tax

 

Profit or loss

 

 

 


Micro company formats are highly prescriptive. You cannot use a different description or change the order of the items; however, the addition of further lines is permitted. 

  • ‘Prepayment and accrued income’ main heading can be included within ‘other debtor’
  • Other debtor is a component of ‘Current assets’
  • ‘Accrual and deferred income’ heading can be included within ‘creditors’
  • A micro-entity is required to prepare a profit and loss account to its members but there is no requirement to file it at Companies House.


Other information
No notes to the accounts are required.

The disclosures required by CA and Small Accounting Registration Regulation (Reg) should be included at the foot of the balance sheet rather than a note. These are:
 

  1. Details of any advances, credit and guarantees with directors (s413 CA2006)
  2. Particulars of any charge of the assets to secure a liability (Reg Sch 1.57(1))
  3. Information about contingent liability not provided for (Reg Sch 1.57(2))
  4. The aggregate amount of contracts for capital expenditure not provided (Reg Sch 1.57(3))
  5. Pension commitments (Reg Sch 1.57(4))
  6. Any other financial commitment (Reg Sch 1.57(5)).


There should be a statement on the balance sheet, in a prominent place above the signature, to the effect that the accounts have been prepared in accordance with the micro-entity provisions (CA 2006 s414(3)). 

No accounting policy options are available and as a result the accounts are prepared under historical cost convention with no revaluation option being available.

A micro company is not required to prepare a director’s report (SI 2015/980). 

FRS 105 model accounts will be available in May 2016. If you would like to request a copy please email advisory@accaglobal.com with the subject line FRS105 accounts.

Dealing with challenging clients
The secret accountant on… dealing with challenging clients.

The secret accountant on… dealing with challenging clients. 

Clients come in all shapes, sizes, colours, designs and forms. As practitioners we would love to have a portfolio that is full of growing entrepreneurial businesses and one that could create a bottomless pit in terms of invoicing opportunities! 

However, in real life this rarely is the case as clients are often a mix, ranging from a self-employed start-up selling goods on Amazon to listed public companies with several subsidiaries abroad. 

By definition a challenging client is one that take up most of your time in terms of meetings, phone calls, emails, and who want as much as possible from you for free – while providing you with the lowest form of financial return.

With word-of-mouth referrals slowly giving way to internet-based reviews you risk negative internet reviews should you ignore such clients. On the other hand, given the heat generated on the price front by the unqualified lot masquerading as accountants, challenging clients are getting bolder and bolder by the day.

A classic example is IT contractors. As the 20th century drew to a close the number of ‘know all’ IT contractors and ‘one man band ltd’ companies blossomed. However, sensing revenue loss, HMRC countered with a press release (No IR35) in 1999 seeking to lift the corporate veil, and then followed it up with changes to the legislation.

The umbilical connection between contractors and the internet 24/7 means that IT contractors know everything about everything! So, typically their selection of an accountant follows the ancient tradition of a bride selecting the bridegroom from out of a range of suitors. Successful accountants will need to be Google-qualified and will be expected to pack a lot of free advice in to the quote. And yes, the quote must cover the cost of a few kilos of dividend vouchers as well!

Evidently highlighting the issues of challenging clients was a conversation where a client was heard fiercely arguing with an accountant that capital gains tax exemption of £50,000 (s.236B TCGA/92 - applicable to those giving up employment rights for shares) will apply to the gains made on normal sale of company shares! This explains how dangerous Google-knowledge can get!

So, how to deal with challenging clients? Here are a couple of suggestions: 

  • Apply a premium: given that these clients can eat into the professional hours of an accountant, apply a premium to the rate you charge; anything from 1.5 times upwards the fee charged to normal clients
  • maintain a strict professional relationship and enforce the professional code of conduct without bringing any sort of friendly or emotional elements into the equation.
Enterprise Finance Guarantee Scheme
The British Business Bank has published its report detailing the findings from its review of the Enterprise Finance Guarantee Scheme.
The British Business Bank has published its report detailing the findings from its review of the Enterprise Finance Guarantee Scheme.

ACCA - on behalf of its members - contributed to the report's reseach and our thoughts are reflected in the final report, particularly in recommendation 9.

View the full report now

NEWS
Accountex 2016: ACCA's lecture theatre
Find out who is speaking in ACCA's lecture theatre at Accountex.

Accountex is the only event which brings all parts of the sector together, from senior partners, practice managers and accountants to financial directors and managers across all enterprises. 
 

Download the showguide now


Come and say hello at our stand at A110 and make sure you stay for one or more of the following sessions in our lecture theatre opposite:

Wednesday 11 May
12.00 - 12.45: Making tax digital (Glenn Collins and Jason Piper, ACCA)
13.00 - 13.45: How to enter awards and why it's worth it (Mark Lee - speaker, mentor and author - and Kevin Reed - editor, AccountancyAge)
14.00 - 14.45: FRS 102: the reality of the new UK GAAP (Charles Gubbins, head of technical practice and professional development Kaplan)
15.00 - 15.45: Cybersecurity (Jason Piper, ACCA, and Graham Brand, business digital eagle, Barclays)
16.00 - 16.45: Current litigation and how to protect yourself (Calum MacLean, UK risk manager, Lockton)

Thursday 12 May
11.00 - 11.45: Making tax digital (Glenn Collins and Jason Piper, ACCA)
12.00 - 12.45: How to enter awards and why it's worth it (Mark Lee - speaker, mentor and author - and Kevin Reed - editor, AccountancyAge)
13.00 - 13.45: FRS 102: the reality of the new UK GAAP (Charles Gubbins, head of technical practice and professional development Kaplan)
14.00 - 14.45: How to survive in the challenging world of change(Margaret Zuppinger)
15.00 - 15.45: Cybersecurity (Jason Piper, ACCA, and Graham Brand, business digital eagle, Barclays)
16.00 - 16.45: Current litigation and how to protect yourself (Calum MacLean, UK risk manager, Lockton)


Attendance at any of these sessions is free and on a first come, first served basis. 

Other benefits of attending
The show has an unrivalled CPD accredited education programme, including tax, technology, cloud, pensions, pricing and every other subject relevant to the modern accountant. The show is a 'must attend' for all accountants and you'll be able to:
 

  • meet with nearly 200 leading suppliers, shaping today's business marketplace
  • be inspired by industry thought leaders, who'll predict future trends and lecture on how to improve your profitability
  • network with over 5000 industry colleagues in dedicated networking areas
  • CPD accreditation available on 150 certified seminars.

 

Registration to the event is FREE


Don't forget to invite your colleagues too!

 

Audit needs to respond more quickly to change, evolve or die
Roundtables point to concerns over audit in developed countries.

Roundtables point to concerns over audit in developed countries. 

A series of roundtables held by ACCA and Grant Thornton in seven countries across the world has revealed a series of highly diverse opinions on the current and future position of audit. 

The report, The Future of Audit, showed that in countries where audit is still developing, it was valued far more highly than in countries where it is has been long established. 

In developed countries there were strong views that while the audit and assurance process was important it was neither timely nor did it offer insights as to where businesses could have done better. 

Andrew Gambier, ACCA head of audit and assurance, says: ‘There is a definite feeling that the traditional audit process is not delivering enough. Investors want insights on how a company could have addressed risks better or where they could have maximised profits. Although enhanced auditor reporting has gone down well in the UK, and is now being rolled out elsewhere, there’s a belief that the audit should evolve to allow auditors to provide more valuable insights about a wider range of measures. 

‘While the traditional approach might reassure regulators and company bosses, its usefulness to investors is shrinking all the time, prompting questions over its future. Business leaders expect information in real time, so why do we expect investors to wait months for the audit reports?

‘Auditors need to look at how they can use technology to deliver a high quality audit in a more efficient and timely manner.’

The roundtables showed that while there are advantages to developing global rules, standard setters should be sensitive to the fact that countries are evolving at a different pace.

Nick Jeffrey, Director, Public Policy at Grant Thornton International, says: ‘We heard views from investors, companies, regulators and banks. While audit remains valued the world over, there was a striking message. Jurisdictions with a long history of audit said the future was in assurance on a broad range of data; which contrasted with those with a shorter audit history who want a stable body of rules to enable them to maximise benefits. The implication for global rule makers being that one pace of development will not suit all.’

The roundtables that informed The Future of Audit were held in China, the EU, Singapore, South Africa, the UAE, the UK and Ukraine. 

Building your employability
ACCA learning pathways in association with accountingcpd.net

ACCA learning pathways in association with accountingcpd.net 

We know that the role of the accountant is changing and that you will need to do more to ‘stand out from the crowd’. ACCA learning pathways will help you achieve your next career goal by providing a structured learning experience to really develop the core skills that employer’s value. 

With ACCA learning pathways you can: 

  • choose from over 30 hours of learning materials to tailor the course to meet your needs
  • experience a range of learning formats including webinars, online courses, guest lectures, articles and reports
  • expand your network and learn from your peers by working alongside a group of fellow ACCA professionals
  • fit around your priorities by studying one hour per week for 20 weeks
  • complete your verifiable CPD requirement for 2016
  • stay on track with support from our pathway facilitator.


Enrol before 30 April, using code ACCAPATHWAY to claim the 10% early bird discount. The course will start on 1 June.

 

 

CPD
CPD events for practitioners
Details of face-to-face CPD events across the UK.

Find the right CPD event for you from the listing below and book your place now.

Practice workshops

Guide to practical audit compliance for partners and managers

17-18 May, London

20-21 September, London

12-13 October, London

13-14 December, Manchester


Practical guide to ISQC 1 for partners and managers

22 September, London

8 December, London

 

Residential conference for practitioners

1-2 July, Derby

 

Saturdy CPD conference for practitioners

Conference two

07 May, Manchester

14 May, Bristol

21 May, Glasgow

04 June, Swansea

18 June, Birmingham

25 June, Sheffield

09 July, London


Conference three 

08 October, Glasgow

15 October, Birmingham

22 October, Bristol

29 October, Manchester

05 November, London

12 November, Swansea

26 November, Sheffield

03 December, London

  

Summer and autumn update conferences for practitioners

Accounting conference

18 June, London

1 October, London

 

Business advice conference

12 November, London

 

Taxation conference

9 July, London

3 December, London

 

Aberdeen conferences

Saturday CPD Conference Two

25 June, Aberdeen

 

Saturday CPD Conference Three

19 November, Aberdeen

 

Channel Islands Conference

15-17 June, Guernsey

Residential

Non-residential

 

East Kent Friday Conferences

General tax update for accountants

10 June, Ashford
 

Commercial, employment and company law update

16 September, Ashford

 

Isle of Man One Day Conferences

Accounting standards for accountants In industry and practice

16 November, Douglas

 

UK and Isle of Man tax update

8 December, Douglas

 

Isle of Man Seminars for Practitioners

Cybercrime in the 21st century

11 May 2016, Douglas

 

Business law update

22 June 2016, Douglas

 

Inheritance tax and trusts

20 September 2016, Douglas

 

Financial crime: anti-bribery and corruption/anti-money laundering

20 October 2016, Douglas

 

Accounting and auditing refresher

27 October 2016, Douglas

 

VAT refresher

22 November 2016, Douglas

Webinars in partnership with 2020 Innovation
Our partnership with 2020 Group allows practitioners to benefit from a suite of CPD webinars at a 50% discount.

Our partnership with 2020 Group allows practitioners to benefit from a suite of CPD webinars at a 50% discount. 

Upcoming webinars include: 

  • Spring audit and accounts update – 5 May
  • PAYE and NIC hot topics – 19 May
  • Practical advice on tax enquiries and investigations – 8 June
  • FCA update – 24 June


Get ahead… book your webinars now

Visit the dedicated 2020 Group webpages to find the right webinar for your needs. Further information is also available from the 2020Group via email or telephone 0121 314 1234.

CPD skills webinar programme
ACCA’s new flexible and bite-sized approach to CPD.

ACCA’s new flexible and bite-sized approach to CPD. 
Through our research and insights, we have identified core business skills recognised throughout the profession as the fundamental skillset for the future accountant. 

Each free 60 minute webinar will explore each topic in more detail, giving you an understanding of the skill and some key learning takeaways for you to apply to your day-to-day role.

This fantastic new initiative provides you with a flexible and bite-sized approach to develop your expertise, enhance your employability for the future and gain some free verifiable CPD.


Find out more and register to attend CPD skills webinars

Webinars: lean finance
Register now for the next two An introduction to winning KPIs webinars with David Parmenter.

David Parmenter’s lean finance webinar programme
David Parmenter, author and international presenter, has been helping finance teams around the world embrace swift month-end and year-end reporting, adopt 21st century applications, and replicate better practice report formats for fifteen years. He has written over 15 articles for AB Magazine and throughout 2016 will be presenting a series of lean finance webinars for ACCA members, available both live and on-demand.

Find out more about the programme and register to attend


Key performance indicators: An introduction to winning KPIs – part one

10 May 2016 | 09.00-10.30 BST | 1.5 CPD units | £50
During this webinar, David will cover what KPIs are, how to find them in your organization, and why finding your organisation’s critical success factors (CSFs) is often the missing link. Finding your CSFs will have a profound impact on the performance measures you choose, how you convey to staff what really is important and the streamlining of reporting.

Find out more and register to attend


Key performance indicators: An introduction to winning KPIs – part two
17 May 2016 | 09.00-10.30 BST | 1.5 CPD units | £50


In this webinar, following on from 'Key performance indicators part one', David will cover why measures should be sourced from the organisation’s critical success factors (CSFs), how you find your organization’s CSFs, how to ascertain measures from a CSF, the six stage process to implementing winning KPIs from his best-selling KPI book and more useful tips to set your organisation and career on the path to success.

Find out more and register to attend

CAREERS
Engagement letters – new guidance issued
New guidance for practices about engagement letters for tax work.

New guidance for tax practitioners about engagement letters for tax work. 

ACCA, CIOT, ATT, AAT and STEP have released the new professional bodies’ guidance on tax engagement letters. Engagement Letters for Tax Professionals replaces Technical Factsheets 173 and 174 issued in 2013 and 2012. 

Along with guidance, fee and other letters, and model terms and conditions it includes the tax letters for the following services: 

  • personal tax – individuals, sole traders and couples
  • trusts and estates
  • partnerships
  • limited liability partnerships
  • companies and associations liable to corporation tax- pre-tagged accounts
  • companies and associations liable to corporation tax - tagging services
  • payroll services
  • payroll services – Auto enrolment
  • benefits in kind returns and Class 1A NIC
  • VAT returns
  • HMRC tax investigations
  • tax credit claims
  • specialist tax advisory services.


These free member letters can be found on our technical advisory website

PAYE: starter checklist
New starter checklist now available in print and online formats.

The online new starter checklist is available as a printable form in addition to the online tool. 

This follows discussions with HMRC’s Employment and Payroll Group  


Download the forms now

 

 

 

Stay up to date with IFRS
Staying up to date with IFRS is easy with the improved IFRS Fundamentals.

Staying up to date with IFRS is easy with the improved IFRS Fundamentals. 

Based on user feedback W Consulting has introduced dynamic improvements to the IFRS Fundamentals knowledge management application. Its new features allow you to learn at your own pace, whilst staying up –to-date with the development in IFRS.

Benefits of using IFRS Fundamentals:

  • you can now access the licenced IFRS standards from IASB; searchable both on and offline
  • get verifiable CPD from the increased library of e-learning modules and live webinars
  • stay up-to-date with notification on updates, monthly news and videos
  • save time on searches with access to materials in as little as two clicks.


There is no additional cost to already subscribed members.  

 

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