Technical and Insight
Discovery assessments

Understanding the time limits for discovery assessments.

Understanding the time limits for discovery assessments.


The legislation that gives the power to HMRC to make a discovery assessment is section 29 Tax Management Act (TMA) 1970.


Requirements for a discovery assessment

HMRC cannot generally raise a discovery assessment if the taxpayer has filed a tax return unless HMRC has evidence to suggest that there is a loss of tax due to careless or deliberate errors (s29(4)).


Please note that HMRC has the right to make a formal ‘enquiry’ into every tax return submitted to them under section 9A of TMA 1970. The time limit for commencing an enquiry is 12 months after the day on which the return is delivered. As the period for enquiry is quite short, the other option is a discovery assessment.


A discovery assessment can only be raised if:

  1. There is an incorrect or incomplete return due to fraudulent or negligent conduct that resulted in:
    – income or gains which have not been assessed; or
    – a tax assessment which has become insufficient; or
    – excessive relief having been given.
  2. The notice to enquiry window under s9A (12 months from the filling date) has passed but, based on the information provided in the tax return, an HMRC officer could not have been expected to realise that the return was incomplete or incorrect.

The only requirement appears to be that if a ‘new’ HMRC officer, acting honestly and reasonably, arrives at the conclusion that there was an insufficiency in an assessment of tax, a discovery assessment can be raised to recover the tax lost. Such a view of the provisions (of a hypothetical ‘new’ HMRC officer) is almost undefeatable and follows the Court of Appeal’s judgement in Langham v Veltema (2004).

In theory, discovery can be avoided by including suitable disclosures and making available all the relevant information in either the return and/or the ‘white space’.


The discovery assessment discussion was recently highlighted in the Commissioners for HMRC v Raymond Tooth: [2018] UKUT0038 (TCC). It concerned if a discovery assessment was valid and taxpayers' actions had resulted in a deliberate inaccuracy. HMRC had raised the assessment on the basis that:

  1. An officer of the Board or the Board had discovered, as regards Mr Tooth and the year of assessment 2007-2008, that an assessment to tax was or had become insufficient within section 29(1)(b) TMA.
  2. Mr Tooth had made and delivered a return within section 29(3) which satisfied the condition within section 29(4) TMA, namely that the insufficiency of the assessment had been brought about deliberately by Mr Tooth or a person acting on his behalf.

Mr Tooth contended that these requirements of section 29 TMA were not met in two regards:

  1. First, because there had been no 'discovery' within the meaning of section 29(1) TMA.
  2. Secondly, because the situation within section 29(1) TMA (ie that the assessment to tax was or had become insufficient) had not been brought about deliberately by Mr Tooth or a person acting on his behalf.


The FTT found that the situation had ‘not been brought about deliberately so that section 29(4) TMA was not satisfied’; accordingly the section 29 assessment was not valid. HMRC appealed.


The Commissioners when considering the appeal focused on a number of areas. In paragraph 66 it is stated that ‘The mere insertion of a figure into a document that is inaccurate may be a deliberate act, but it is not, necessarily, a deliberate inaccuracy. In this case, we do not consider that the inaccuracies alleged by HMRC can be said to be deliberate, because Mr Tooth took steps to draw the (putative) inaccuracies to the attention of HMRC.’


It was then stated that ‘accordingly, we find that Mr Tooth did not act deliberately within the meaning of section 29(4) TMA (as elucidated by section 118(7) TMA), and that HMRC’s appeal must fail on this ground also. There is no evidence of any intent on the part of Mr Tooth to bring about an insufficient assessment of tax or give to HMRC a deliberately inaccurate document. (Obviously, Mr Tooth wished to pay as little tax as was legally permissible, but that is not paying an insufficient amount of tax). HMRC contended that the FTT had wrongly distinguished the decision in Moore v HMRC[2011] UKUT 239 (TCC). We disagree with HMRC’s contention and agree with the reasoning of the FTT for, essentially, the reason given by the FTT. Moore was concerned with an alleged negligent insufficiency of tax which, we consider, involves very different considerations to where the insufficiency is said to have been brought about deliberately.’


The Commissioners concluded that the ‘burden of showing that the requirements of section 29 TMA are met is on HMRC. We consider that there is no sufficient basis – given the facts found by the FTT – to justify the conclusion that there was, properly speaking, a discovery. Had this been the only point in issue, we would have allowed the appeal, and remitted the matter for further evidence and argument to the FTT. As it is, given our conclusions on the question of deliberate inaccuracy, this course is unnecessary.’


‘Made available’

Information is treated as having been made available to the officer if:

  • it is contained in the tax return for the relevant period (or the two preceding periods) or in any of the accounts, statements or documents supplied with the tax return, or
  • it is contained in any claim made for the relevant period (or the two preceding periods) or in any of the accounts, statements or documents supplied with the claim, or
  • it is contained in any documents, accounts or particulars supplied in connection with an enquiry into a tax return or claim, or
  • it is information which could reasonably be expected to be inferred from any of the above, or
  • it is information that was notified to the officer in writing by the taxpayer.

So, a change of opinion on information that has previously been made available to HMRC is not grounds for a discovery.


There is clearly an onus on the taxpayer to draw HMRC’s attention to any important information relevant to a tax liability, particularly if there is some doubt as to the interpretation that can be placed on that information. It is not sufficient just to provide that information if it is hidden away or obscure.


Time limits for discovery assessments

Section 34(1)

In any case of incomplete disclosure without careless or deliberate conduct, the time limit for a discovery assessment is not later than four years after the end of the tax year to which it relates.


Section 36(1) and (1A)

In any case involving a loss of tax brought about carelessly, the time limit for making a discovery assessment is not later than six years after the end of tax year to which the assessment relates.


The time limit for making a discovery assessment is not later than 20 years after the end of the tax year to which it relates where the loss of tax is:

  • brought about deliberately by the person
  • attributable to a failure to notify liability under section 7 of TMA 1970, or
  • attributable to a tax avoidance scheme which is a notifiable arrangement or a listed or hallmarked scheme and the user of the scheme failed to disclose details to HMRC at the proper time.


Payment of tax

The due date for tax charged by a discovery assessment is 30 days after the notice of the assessment is given (delivered).

Anti-money laundering guidance for the accountancy sector

New CCAB guidance and comment from ACCA on Regulation 26 and ‘fit and proper’.

New CCAB guidance and comment from ACCA on Regulation 26 and ‘fit and proper’.


CCAB (The Consultative Committee of Accounting Bodies) has published new guidance for all entities providing audit, accountancy, tax advisory, insolvency or related services such as trust and company services, by way of business.


The guidance has been updated for the 2017 Anti-Money Laundering (AML) Regulations and is approved by HM Treasury. It has also been adopted by the UK accountancy AML supervisory bodies. The guidance covers the prevention of money laundering and the countering of terrorist financing.


Regulation 26 and ‘fit and proper’

Regulation 26 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLRs) sets out the responsibilities of ‘relevant firms’ and supervisory authorities to ensure that no individual may be a beneficial owner, officer or manager (BOOM) of a relevant firm (which would include an accountancy firm), unless:

  • he or she has been approved as such by the relevant supervisory authority, and approval by the supervisory authority has not ceased to be valid; and
  • the individual has not been convicted of a relevant offence (as set out in Schedule 3 of MLRs).


The Treasury has stated it believes ‘BOOMs’ in relevant firms should be required to undergo ‘criminal record checks’.


ACCA believes that Regulation 26(7) does not prescribe criminality checks. Nor does it believe that criminality checks are the most effective means of achieving the required outcome.


Clearly, ACCA practising certificate holders, as part of their declaration, state that they are a fit and proper person. Accountancy firms also check on the fit and proper status of staff and contractors with many using the ACCA ‘fit and proper’ forms.


ACCA is of the opinion that firms need to have appropriate procedures to ensure individuals are ‘fit and proper’ but is unconvinced on the position of the Treasury for all firms being required to undertake checks. Clarification from the Treasury is being sought.


We will update members over the coming months.





Tax treatment of termination payments

New rules for the tax treatment of termination payments of PILON.

New rules for the tax treatment of termination payments of PILON.


New rules for the tax treatment of termination payments of payments in lieu of notice (PILON) are being introduced from 6 April 2018.


General tax law for termination payments

In general, payments made to a director or employee by way of reward for services, past, present or future, is within the general earnings rules. In the case of Mairs v Haughey HL 1993, 66 TC 273 it was held that a non-statutory redundancy payment would not be within the general earnings charge, being compensation for the employee’s not being able to receive emoluments from the employment rather than emoluments from the employment itself.


HMRC Statement of Practice SP 1/94 provides further details on this matter:


Treatment before 6 April 2018

These ‘termination payment rules’ apply to payments and other benefits which are received directly or indirectly in consideration or in consequence of, or otherwise in connection with:

  1. the termination of a person’s employment
  2. a change in the duties of a person’s employment
  3. a change in the earnings from a person’s employment.

The payment or benefit may be received by the person, or the person’s spouse, civil partner, blood relative, dependant or personal representative, or provided on the employee’s behalf or to his order. A payment taxable under any other tax legislation is not within these provisions.


Termination payments which come within section 403 ITEPA 2003 are tax free up to £30,000 with the excess being subject to tax at the taxpayers’ marginal rate.


Amendments from 2018/19 onwards

Whether or not the employee is entitled to a contractual payment in lieu of notice, employees will pay tax and Class 1 NICs on the amount of basic pay that they would have received if they had worked their notice in full.


The new legislation in sections 402A to 402E ITEPA 2003 applies to termination payments and benefits that meet all of the following criteria.

  1. the payments or benefits fall under section 401(1)(a) ITEPA 2003 (ie they are received directly, or indirectly in consideration or in consequence of, or otherwise in connection with the termination of a person’s employment)
  2. the payment or benefits are made on or after 6 April 2018
  3. the employment was terminated on or after 6 April 2018, and
  4. the payments or benefits are not redundancy payments, or contractual payments, which are exempt under section 309 ITEPA 2003

Termination payments and benefits which meet all of the above criteria are ‘relevant termination awards’. These are split into two elements:

  1. Post-employment notice pay (PENP)

This is chargeable to tax as general earnings and does not benefit from the £30,000 tax-free threshold in section 403 ITEPA 2003. Post-employment notice pay is calculated by applying the PENP formula to the total amount of all relevant termination awards received.

  1. Termination awards subject to section 403 ITEPA 2003

These are chargeable to tax as specific employment income and benefit from the £30,000 tax-free threshold (EIM13505). These termination awards are calculated by subtracting the amount of PENP from the total amount of all relevant termination awards received.


Example 1

Step 1 is to calculate the employee’s basic pay ignoring overtime, commission and bonuses for the 12 months before the last day of employment (say £24,000 pa)

Step 2 is to calculate the number of days in the notice period which the employee should have worked if the employment was not terminated by the employer (say 20 days).


The taxable Payment in Lieu of Notice (PILON) is £24,000 x 20/365 = £1,315

This amount of £1,315 is treated as general earnings, in the normal way, and PAYE and employer's and employee's National Insurance is due on this amount.


If the actual compensation awarded to the employee by the employer was say £4,000, then the remainder of £2,685 (£4,000 - £1,315) is treated as a termination payment under section 403 ITEPA 2003. As this is less than £30,000 that amount of £2,685 would be paid tax free to the employee.


Some employee remuneration packages are more complex and may include salary sacrifice arrangements long notice periods etc. The new legislation includes a formula which is designed to cover all situations. This formula applies to the simple situations demonstrated in example 1 above and to the more complex situation illustrated in example 2 below.


Example 2

Mr Smith is a monthly paid employee on a salary of £90,000 per annum (£7,500 per month). On 7 June 2018 his employer tells Mr Smith that his employment will be terminated and he is given three months' notice as required by his employment contract, and the employer agrees to pay Mr Smith £40,000 compensation. On 1 August 2018 the employer tells Mr Smith that his services will not be required with immediate effect and Mr Smith is paid £16,000 as a Payment in Lieu of Notice (PILON) which was not required under the contract of employment. Mr Smith was not entitled to a statutory redundancy payment.


Calculate the Post-Employment Notice Pay = [(BP x D)/P] – T

BP = the employee’s ‘basic pay’ from the employment in respect of the last ‘pay

            period’ to end before the ‘trigger date’.

P = the number of days in that pay period

D = the number of days in the ‘post-employment notice period’

T = the total amount of any payments or benefits received in connection with the termination which are already taxable as earnings apart from these provisions, but not including any bonus payable for the termination or any pay in respect of holiday entitlement for a period before the employment ends.

BP = £7,500 (basic pay for the last monthly pay period ended before 7 June 2018

P = 31 = number of days in that pay period

D = 36 = number of dates from 2 August 2018 to 6 September 2018 inclusive

T = Nil


Salary covering the period 7 June to 1 August taxed in the normal way.

Post-Employment Notice Pay = £7,500 x 36/31 – 0 = £8,710


The Post-Employment Notice Pay of £8,710 is less than the total termination awards of £56,000 (£40,000 plus £16,000), therefore £8,710 is treated as taken out of the special provisions and into the charge on general earnings. The balance of the termination awards is £47,290 (£56,000 less £8,710) and this is taxable under the special provisions and subject to the £30,000 exemption.


Therefore £8,710 is taxable as earnings and £17,290 (£47,290 - £30,000) is taxable under the special provisions.


£8,710 is liable to employer and employee Class 1 NICs

£17,290 is liable to employer Class 1A NICs

Trigger date is 7 July 2018


HMRC Employment Income Manual EIM12800 contains details on ‘termination payments and benefits’.


The new rules effective from 6 April 2018 are due to be in EIM12982 to EIM12992 although at the time of writing this article these were not available.


National insurance contributions

An amount of payments and benefits within the charge to income tax under the special provisions (disregarding the £30,000 threshold) is not currently subject to either employer NICs. From 6 April 2019 onwards, under legislation to be included in a 2018 National Insurance Contributions Bill, any excess over the £30,000 threshold will be liable to employer Class 1A NICs. The exemption for employer NICs on the first £30,000 and the exemption that this Class 1A charge will be payable to HMRC in ‘real-time’ (rather than after the end of the tax year) by being included as part of the employer’s standard payroll returns and remittances.


With effect from 6 April 2018 the rules should apply as detailed here


ACCA factsheets

ACCA has a suite of employment factsheets including these two:




Settlement Offers

Major differences between UK and International GAAP

How IFRS 16 is impacting on the treatment of assets.

How IFRS 16 is impacting on the treatment of assets.


ACCAs technical advisory helpline has received a number of calls about important changes to the treatment of assets on lease brought about by IFRS 16.


Many UK members deal with both IFRS and UK GAAP and so will be affected by the new treatment under IFRS 16 and also the fact that there are some important differences to finance/operating leases between UK GAAP and IFRS.


For those members who only deal with UK GAAP, don’t think IFRS 16 will not affect you! Although the FRC agrees that further evidence-gathering and analysis needs to be undertaken before any proposals to reflect the principles of IFRS 16 in FRS 102 could be made, the existing policy of convergence of standards will most likely continue. So IFRS 16 will most likely be part of UK GAAP in the future.


In addition, the differences in treatment may mean that UK GAAP accounts will not be comparable to IFRS accounts for some issues.


So here is a quick summary of the changes IFRS 16 has brought in and also a recap on some other major differences between IFRS and UK GAAP.


IFRS 16 and how it affects lease accounting

The new standard applies to accounting periods starting on or after 1 January 2019, but an entity reporting under IFRS can (subject to some conditions) choose to apply the new standard before that date. So the changes can now be relevant.


With a very few exceptions IFRS 16 basically abolishes the distinction between an operating lease and a finance lease in the financial statements of lessees. So the major effect is that most leases, apart from short term leases (a short-term lease is a lease that, at the date of commencement, has a term of 12 months or less), will be recognised on the balance sheet as a right of use asset and an associated liability will also be shown at the inception of the lease. In effect ‘off balance sheet’ leases will now be recognised. A common example of this will be property leases.


IFRS 16 basically requires that the ‘right of use asset’ and the lease liability should initially be measured at the present value of the minimum lease payments. The discount rate used to determine present value should be the rate of interest implicit in the lease. The asset will also be subject to depreciation.


On first applying IFRS 16, entities need not reassess existing contracts to determine whether the contract contains a lease. The entity is allowed to apply IFRS 16 to contracts that were previously identified as leases under IAS 17 and not to apply IFRS 16 to contracts that were not previously accounted for under IAS 17. Thus the only initial costs that an entity should suffer are when it chooses to reassess contracts. 



Below is a brief summary of the differences between IFRS 16 and UK GAAP and also some other important differences between other IFRS/IAS and the equivalent UK GAAP.



Treatment under IFRS/IAS

Treatment under FRS 102



The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value.

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

IFRS 16 treatment will mean more assets being capitalised and the resultant finance liability also being included on the balance sheet.

Intangible assets

It is recognised that certain intangible assets could have an indefinite life and would not be amortised.  This is subject to an assessment for impairment.

All intangible assets shall be considered to have a finite useful life. If, in exceptional cases, an entity is unable to make a reliable estimate of the useful life of an intangible asset, the life shall not exceed 10 years.

Operating profits under FRS 102 could be lower due to higher amortisation charges


Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset form part of the cost of that asset and, therefore, should be capitalised.

An entity may adopt a policy of capitalising borrowing costs

There is a choice of treatment under FRS 102 between capitalising and expensing the costs.  Therefore results for the year may be different when compared to IFRS/IAS


Goodwill is not amortised under IFRS. This is subject to an assessment for impairment.

Goodwill shall be considered to have a finite useful life, and shall be amortised on a systematic basis over its life. If, in exceptional cases, an entity is unable to make a reliable estimate of the useful life of goodwill, the life shall not exceed 10 years.

Operating profits under FRS 102 could be lower due to higher amortisation charges




Reporting the gender pay gap

The steps businesses need to take to report on gender pay.

The steps businesses need to take to report on gender pay. 


The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 impose obligations on employers with 250 or more employees to publish information relating to the gender pay gap in their organisation by:

  • 31 March 2018 – for public sector organisations
  • 5 April 2018 – for other businesses and charities.


Reporting businesses should nominate someone to manage the reporting (e.g. an HR director) who needs to:


An employer must publish six calculations showing their:

  1. average gender pay gap as a mean average
  2. average gender pay gap as a median average
  3. average bonus gender pay gap as a mean average
  4. average bonus gender pay gap as a median average
  5. proportion of males receiving a bonus payment and proportion of females receiving a bonus payment
  6. proportion of males and females when divided into four groups ordered from lowest to highest pay.


An employer must comply with the regulations for any year where they have a 'headcount' of 250 or more employees on 5 April (where the private and voluntary sector regulations apply) and 31 March (where the public sector regulations apply), but employers of all sizes should consider the advantages. 


The definition of ‘employee’ for gender pay gap reporting includes:

  • people who have a contract of employment with your organisation
  • workers and agency workers (those with a contract to do work or provide services)
  • some self-employed people (where they must personally perform the work)


You will be able to find the reports by employers with 250 or more employees on their gender pay gap on the government’s online service

Relief available on losses on loans by traders

The how, when and by whom relief can be claimed on losses.

The how, when and by whom relief can be claimed on losses.


Who is eligible?

Relief is available where a loan:

  • is made to a UK-resident borrower
  • is wholly for the purposes of a trade or to set up a trade, as long as they start trading
  • has not been assigned by the lender any right to recover that amount
  • is between the lender and the borrower who are not spouses or civil partners or companies in the same group when the loan was made or at any subsequent time CG65951
  • becomes irrecoverable.


A trade includes ‘a profession or vocation’, but it does not include money lending. For example if a director lends the money to the company for the purchase of an investment property, this loan will be categorised as a non-qualifying loan for claim under s253 of TCGA 1992 and relief may not be available. The general rule of capital losses is that they can only be offset against capital gains.


Who can claim?

Capital loss relief can only be claimed by the taxpayer who made the loan. It was decided in HMRC v Execs of Mr Jeffrey Leadley [2017] UKUT 0111  by the Upper Tribunal (UT). Where UT overturned the original decision of the First-Tier Tribunal (FTT) and established that executors of the deceased taxpayer were not entitled to make a claim under section 253 if the loan was already irrecoverable before the death of the lender.


Is your loan actually irrecoverable?

Relief is only due if the loan has become irrecoverable. HMRC looks closely at this type of relationship to ensure it meets the criteria for the relief. To satisfy the criteria, the claimant must be able to demonstrate:

  • that the borrower cannot repay the loan at the date the claim is made
  • that there was no reasonable prospect of the loan ever being repaid. If the borrower continues to trade this test is unlikely to be satisfied
  • that there was no indication at the time of lending the money that this would not be recovered
  • that the purpose of the arrangement involving the loan was not to secure tax relief.


When can you claim relief?

The relief is given by treating the amount outstanding as an allowable loss. Normally, you cannot claim that only part of the amount outstanding on a loan has become irrecoverable. You can make a claim if:

  • the borrower has been placed in bankruptcy, receivership or liquidation
  • the receiver or liquidator has announced an anticipated dividend in respect of unsecured debts and has indicated that no further dividends are likely
  • the amount of loan has been written off or released by waiver.

After the loan has become irrecoverable there is no time limit in which to make the claim. The loss will arise:

  • at the time you make the claim or, if you want
  • at an earlier time you specify when you make your claim that falls in either of the two previous tax years, provided all the necessary conditions for relief are satisfied at the date you make the claim and at the earlier time.


Do you have to pay back if recovered in future?

If you recover any amount for which you have claimed relief the amount you receive is treated as a chargeable gain. The chargeable gain arises in the tax year the payment is received and at the time of recovery.


Full HMRC manual guidance can be accessed here for details.

How does intellectual property impact on you and your clients?

Understanding intellectual property (IP) and having conversations with clients about it will add value to your relationship with those clients.

Understanding intellectual property (IP) and having conversations with clients about it will add value to your relationship with those clients.


Every business will own or use intellectual property on a daily basis. Does your practice have an IP strategy? What about your clients? Should you protect your business name with a trade mark, who owns your business logo, your web site and what about the documents you produce for your clients, who owns the IP in those?


There are four main types of IP:

  • patents – protects new inventions: how they work, what they do, how they do it, what they are made of and how they are made 
  • designs – protects the overall look of a product including the colour, shape, texture and material
  • trade marks – protects brands, such as a business name, and can consist of a word, phrase, picture or a combination of all these
  • copyright - protects written, dramatic, musical and artistic works including photos, recordings, web sites, software and databases

So to answer a few questions, with copyright the creator owns, unless there is a written assignment in place. This means that if you have a website, a logo, photos on your website or text written by third parties they may own the copyright. 


Is it worth your client reporting on their IP? Understanding intellectual property may help investors, lenders and the business itself identify and leverage income from its IP. The value and ownership of IP can have a major impact on your business and your clients' businesses - in particular if there is an M&A or business sale.


A Ltd company name may potentially infringe another party's trade mark so efforts should be made to do a trade mark search in addition to a Companies House search. These can be conducted free of charge of the IPO website but note that trade mark infringement can potentially impact through sound alike, look alikes etc.


Where is sensitive information kept, is the password ‘password 123’? Who has access to this information? Can junior members of staff have unnecessary access to highly confidential information?


So what’s it worth?

Business are not making the most of their ideas and innovations. They can do this by identifying and putting a value on their intellectual property. The IPO has recently published a report called The Hidden Value which looked to understand why companies do not consider the hidden financial value of their intangible assets on a more routine basis. 


The IPO website has lots of information and is worth a look. From the home page you can access a section entitled IP for Business. Within the section there are case studies, event listings and lots more including two free online tools. IP Equip is a free online training tool. It takes just over an hour to complete, can be done in 15 minute sections and can build your knowledge of IP.


There is also the IP Health Check tool which is a basic IP audit and covers a range of IP areas including copyright, trade marks, licensing and lots more.


David Hopkins – business engagement manager, Intellectual Property Office


Find out more about the four main areas of intellectual property and build your understanding of the free online tools available from the IPO by watching our free webinar on demand - register here.


Business intermediaries breakfast

If you are based in north west England, the IPO is holding a free event on 18 April in Preston which will help local businesses to grow through intellectual property, international trade and other funded support. This event is aimed at bank staff, bookkeepers, accountants, business advisers and those who play a role in helping businesses succeed. You will learn how intellectual property (IP) impacts on every business and the free tools available to help understand the subject – direct from the Intellectual Property Office.


Find out more, including how to book your place now. 

Auto-enrolment changes – employers get ready!

Changes are coming, including to minimum contributions.

Changes are coming, including to minimum contributions.


There are several changes on the horizon, with the most significant being the change in minimum contributions as well as the authentication process for the declaration of compliance.


This will impact on the 1,032,567 whose employers have automatically enrolled jobholders and the 9,285,000 jobholders enrolled into automatic enrolment pension schemes.



By law, on 6 April 2018, employers are required to increase the amount of their minimum contributions into their staff's automatic enrolment pension to at least  2% of qualifying earnings.


What do employers need to be aware of?

Employers need to start thinking about the increases early, and plan ahead for when they come into effect from 6 April 2018 and also later increases from 6 April 2019.


Make sure employees are aware

Staff should know what is happening. When a member of staff was first automatically enrolled, the letter they received from the employer will have set out that contribution levels will increase over time.


There are no additional duties under automatic enrolment for your clients to advise staff about the increases, but most employers will find this useful in order to help their employees and minimise queries or misunderstandings. For instance:

  • employees may have forgotten about the increases and not may not be able to afford the increase
  • workers might think there is no other option but to leave the scheme if the increases cause them hardship.


The Pensions Regulator has provided a suggested letter for employers to use in letting their staff know about the increases.  This should be amended to the employers’ circumstances.


Check your calculations

An obvious point to mention is to check your payroll systems. The Regulator says:

  • we recommend that your client checks with their payroll provider to make sure that they're ready to calculate and deduct the increased contributions when they rise from 6 April 2018 and 6 April 2019 – if they're not prepared for the increases, the right amount may not be paid across to the scheme on time. It's very important that the workplace pension schemes and payroll software can support the contribution increases, otherwise the right contributions might not be deducted at the right time, and the schemes used by your clients may no longer be qualifying schemes for automatic enrolment.


Check the terms of the scheme

  • remember that the employer can choose to pay the full amount of the total minimum contribution. This may mean staff do not have to pay in at all, unless the scheme's rules say that they have to make contributions
  • your client and their staff can choose to pay more than the minimum contributions if they wish.


Check you are receiving the correct information

The Pensions Regulator (TPR) sends out letters to employers to support them with their automatic enrolment duties. Letters sent regarding the minimum contribution increases can be found below.


What are the minimum contributions?

The table below shows the minimum contributions that employers who set up a defined contribution scheme for automatic enrolment must pay, and the date when they must increase. This is calculated based on earnings between £5,876 to £45,000 per year (£490 to £3,750 per month, or £113 to £866 per week), and including certain elements of pay.


Date effective

Employer minimum contribution

Staff contribution

Total minimum contribution

Currently until 5 April 2018




6 April 2018 to 5 April 2019




6 April 2019 onwards





If changes to the scheme are needed as a result of the increase in the minimum contributions required by law, then the scheme's trustees and providers will let your clients know whether existing scheme members need to be consulted about the change to their contribution rates.


It is advisable to check to make sure that the payroll has been set up to reflect the scheme – whether it's a ‘relief at source’ scheme or a ‘net pay arrangement’.


Declaration of compliance

Towards the end of March The Pensions Regulator will no longer be using Government Gateway as the authentication process for the declaration of compliance portal. Instead, employers and advisers will login to the portal via TPR’s own system. The key changes are:


  • employers will require a passcode, which is obtained by creating an account from the main landing page
  • a ‘guest account’ has been introduced to help employers get started on their declaration without the need to set up a passcode
  • helpful warning/reminder messages will appear in red if an employer is close to their duties start date, in order to prompt employers to complete their declaration of compliance
  • those who are completing declarations of compliance for multiple employers will be able to view the progress for each on a ‘multi-employer dashboard’. This includes the option to search for employers and sort by declaration deadline. An example of how this page will look is also attached.
How your cybersecurity might help you win business

Some companies may see it as a drag on time and resource, but improved cybersecurity could help you to win clients.

Some companies may see it as a drag on time and resource, but improved cybersecurity could help you to win clients.


Instead of being seen as a purely defensive measure, cybersecurity might also be seen as a business enabler. In future, some companies might even see their own cybersecurity as a profit centre.


Cybersecurity is a ‘core’ part of the selection and contract process for 40% of companies, found Lockton’s UK Cyber Security Survey 2017. Conversely, 89% of companies said they ‘always or at least sometimes’ factor cyber risks into the creation or launch of new products and services.


Put simply, many companies are mindful of the importance of cybersecurity when choosing suppliers, or when trying to sell products or services. They appreciate the systemic nature of cybersecurity, and that their own cybersecurity cannot be optimised by just looking inward.


There are many high-profile demonstrations of this corporate reality. For instance, the data breach of US retailer Target in late 2013 was caused by cyber attackers accessing Target’s gateway server through credentials stolen from a third-party vendor. The breach resulted in around 40m customers’ data being compromised, and cost a total of $202m.


Safe pair of hands

A reputation for robust cyber security could make you more attractive as a vendor to other companies – particularly for more strategic, data-rich relationships and projects. Failure to demonstrate robust cyber security, on the other hand, could instantly disqualify you from some tender processes.


Medium-sized businesses that work with large companies could soon face a cybersecurity hurdle that prevents them from competing for business. Larger companies, in particular, are beginning to incorporate IT security requirements into their standard RFPs and bidding processes. Many companies are also stipulating that suppliers have a standalone cyber insurance policy, which covers not just financial loss but also data breach response services.


The concerns that companies have about prospective vendors’ cybersecurity will be magnified by the forthcoming General Data Protection Regulation (GDPR) – set to become effective on 25 May 2018 – which will impose more stringent regulatory requirements and raise the possibility of greatly enlarged fines.


Tender process

As well as the various certifications that companies can acquire to help them to demonstrate robust cybersecurity (such as Cyber Essentials and Cyber Essentials Plus, or ISO 27001), having the right personnel can also make a critical difference when credentialling your company’s cybersecurity during a tender process.


This can be a particular challenge for medium-sized companies, who have less in-house IT resource. Such companies do not need a CISO (chief information security officer) in order to satisfy the needs of larger companies. It does help, however, if they have someone who is dedicated to IT security and able to:

  • understand the cyber risks their company faces
  • understand how to protect their company against these risks
  • articulate these matters internally and externally.


Even in today’s cyber-aware marketplace, smaller companies can work strategically with larger companies on data-centric projects – if they understand what big businesses are looking for and how they view cybersecurity. They do not need to have a similar amount of IT resource, and nor will larger companies expect this of them; they do, however, need to be able to speak a similar language.


Peter Erceg – senior vice president, Global Cyber & Technology, Lockton


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

Members’ voluntary liquidation

The Secret Accountant on… HMRC’s changing policy around MVLs.

The Secret Accountant on… HMRC’s changing policy around MVLs.


A Members Voluntary Liquidation (MVL) is often considered a legitimate mechanism to reduce tax liabilities for shareholders by way of entrepreneurs’ relief subject to certain conditions.


A criteria for entering MVL is that the company must pay all of its debts, together with statutory interest from the commencement of the liquidation, within 12 months, with any taxation liabilities being payable on the due date.


Following the principles arising out of the Lehman Brothers case, HMRC has altered its position. It is now requesting statutory interest at the rate of 8% from the date of liquidation to be paid, even if the corporation tax has not yet fallen due. This is further defined under Rule 14.23 Insolvency Rules 2016 (IR16). This states that interest is payable from the relevant date, the commencement of the liquidation, where a debt is provable in insolvency proceedings, albeit this is a solvent liquidation!  


Rule 14.44 IR16 states where the debt for example HMRC has been proved and is payable in the future time may be reduced by using a formula X/1.05n where X is the value of the admitted proof and n is the period from the relevant date to the date the creditor’s payment is due expressed in years or part thereof.


At present R3, the Professional Body representing insolvency practitioners, is liaising with HMRC Policy Section for clarification as to whether there has been a change in policy and will update members in due course.


Another potential change relates to overdrawn directors’ loan accounts which are distributed in specie, as opposed to being repaid prior to liquidation and paid as a cash distribution. HMRC is trying to re-classify this as income by way of a stand-alone case. Similarly, it is unknown if this is a policy change.


As a result of this change, when advising directors it would be prudent for them to pay the corporation tax or any other tax prior to the liquidation and for the liquidator to recover any overpayment from HMRC once their final claim is agreed.


The Secret Accountant is practising at a firm somewhere in the UK

The secret to succession planning

Why many practices are grappling with issues around their future.

Why many practices are grappling with issues around their future.


It’s not uncommon to hear accounting practices described as great at looking after clients, not so great at looking after themselves.


On that theme, a big topic of discussion among ACCA members during our practice roundtables last year was succession planning.


Bringing together practice owners and stakeholders with the next generation of leaders – be they from within the practice or from outside - has proved a difficult task for many. An evolution in working patterns, seemingly less desire to take an equity stake in a practice, along with digitisation and automation of traditional number-crunching work, are contributing to difficulties in moving new owners into the practice.


And when the endgame is a sale process, gauging valuation and finding a suitable merger partner is fraught with difficulty.


Many accountants’ clients go through similar issues, of course. Andrew Gray FCCA, chairman of accountants and business advisers Kirkpatrick & Hopes, decided to set out his thoughts on succession planning in a book: Do More of What You Love, and a blog covering its key aspects.


The book sets out, in Gray’s words, to help do the things they really want to do, whether in business or their personal life. This is achieved through income and share ownership planning (ISOP). The aim of ISOP is to go ‘deeper into the psychology of succession planning, helping business-owners face up to the need to plan for the future and their ultimate exit from the business’.


First, let’s hear what Gray has to say about ISOP.


There are four key stages that a business owner will have to push through to achieve their goal. These are:

  • clarify
  • plan
  • implement
  • manage


The first stage is, effectively, gaining an understanding of where you are, and where you want to head. This includes setting out your financial position and reviewing business performance. Then, personal goals must be understood – it is crucial to do this early on, as it will shape and define the next stage: setting your business goals. ‘For example, there is no point killing yourself to create a company valued at £10m if your personal income needs are very modest,’ states Gray in his blog.


‘Meaningful targets’ for a business will not be rocket science to an accountant – but that doesn’t mean it’s always undertaken with diligence, or performance analysed. But understanding your personal goals and ambitions will make this process more straightforward: ‘You can then strive for these targets knowing that they are meaningful; they are capable of delivering the financial means to meet your personal goals,’ explains Gray.


The second stage sets out the strategy for success, and how it will be followed through. This involves more technical discussions: namely, how can the business be structured and how will income be extracted. Gray says that an important part of this discussion will be identifying and analysing potential tax-efficient ways of making the business work.


The final aspects of planning include aligning business development with the succession planning process, and then setting out financial reporting systems and processes.


‘Every business should do forecasts of profit and loss and cash flow, but when going through a period of change like ISOP, it is even more important to have a firm grip on your finances,’ says Gray.


The third stage involves implementing the plan – in other words, reconfiguring the business. ‘Having worked through the clarification and planning processes above, we then create a recommendation for the detailed steps that need to be taken next,’ says Gray.


‘The most common method here is to create a new company, owned by shareholder employees, and to pass the shares in the old company to the new one.’


The complexities of change invariably mean other professionals are required to help, and this is the point at which they are brought in to help. For an accountancy practice helping clients through this process, the practice remains in situ as ‘lead adviser’ or project manager.


The fourth and final stage focuses on managing and running the business. Importantly, it involves the adviser working closely with their client to make sure they stay on track, and to be able to flex as circumstances change and evolve. This will include keeping pace with tax, accounting and legal developments.


‘Because a typical ISOP project takes five years to see through, during that time, we need to closely monitor the changing circumstances of the business and the relevant tax, accounting and legal changes that may affect the original ISOP plans,’ says Gray.


Related issues: employee ownership

‘If you’re new to the concept of employee ownership, I realise it may all sound a bit utopian,’ says Andrew Gray. In another of his blogs, Gray outlines the advantages of the employee ownership model.


Employees who have a stake in the business are more engaged and more productive, he believes. They are also more likely to help drive innovation and more entrepreneurial.


‘Employees who feel like they are an integral part of the business are the best possible ambassadors for a brand or business,’ states Andrew Gray.


He points to the Esop Index, which has tracked employee-owned companies since 2003, and has shown they consistently outperform their competitors.


‘Employee ownership provides a smooth exit route for the business owner,’ he says.


‘With an outright sale, if certain performance conditions are not met, you may not receive the full value of the business. But, in this method, employees buy into the company with cash or by sacrificing future income to buy out the shares – meaning you’re more likely to receive the full, fair value of the business (albeit over a longer period of time, rather than in a lump sum).’


Related issue: valuation

When considering how much a business is worth, Andrew Gray suggests asking yourself ‘what does it need to be worth?’ Whether considering an external or internal sale (employee ownership), these questions must be answered before undertaking any calculations.


Gray sets outs gauging profits by adjusting for non-commercial and exceptional items. Next is the tricky bit – multiplying that profit by a price/earning (P/E) ratio.


‘The P/E for most small businesses is typically between three and seven, depending on factors like how independent it is of the business owner, the quality of the systems, and the lifespan of its products or services. A P/E of five is typical for good, small, privately owned businesses,’ he explains.


‘The answer you arrive at is the theoretical value of your business. I emphasise theoretical because, just because that’s what it’s worth on paper, doesn’t mean that’s what buyers will be willing to pay!’

The importance of engagement letters

These letters offer vital protection for you and your clients.

These letters offer vital protection for you and your clients.


With your time in short supply, engagement letters may not seem a priority, but they should be. Here is why:


A signed engagement letter is:

  • the contract between you and your client
  • a requirement within ACCA’s Rulebook.


Disputes with clients

In a dispute between you and a client, a signed engagement letter offers protection to both. Many disputes arise from a misunderstanding about the extent of the accountant’s responsibilities. A well-drafted, signed engagement letter may head off such misunderstandings.


Complaints handling procedures:

Members in the UK and Ireland are required to implement adequate procedures to handle client complaints concerning fee, service and contractual disputes (Regulations 13-18, section B9 of ACCA’s Rulebook).


Rather than being a burden, these are in fact an opportunity for you to address client concerns directly, improving the level of client care and potentially avoiding complaints to ACCA. Many disputes could be resolved sooner through robust internal complaints-handling procedures.  It is best practice to include details of the procedures you have in place in your engagement letters.


Ensure that your complaints procedures are explained to clients and agreed in writing from the outset.


Complaints to ACCA

Should a client complaint escalate to ACCA, the signed engagement letter is likely to be requested. If you are able to provide it, the signed engagement letter should help ACCA to establish the respective responsibilities of you and your client and this can assist in resolving a complaint.


Legal claims

Not having an engagement letter may lead to unexpected liability. This is illustrated by the two contrasting cases briefly outlined below, which you may already be familiar with:


Burgess & Anor v Lejonvarn [2016] EWHC 40 (TCC)

The defendant (architect) performed some services free of charge in relation to her friends’ (claimants) gardening project. They claimed for the cost of remedying defective work carried out under her supervision. There was no contract. Nevertheless, the judge determined that:

  • the claimants would reasonably have had the impression that the defendant was professionally capable of project-managing the garden redevelopment and she assumed responsibility by holding herself out as project manager
  • the defendant could potentially be held liable for financial loss suffered by the claimants as a result of defective ground works she had supervised.


Mehjoo v Harben Barker [2013] EWHC 1500

The Court of Appeal considered whether Harben Barker (HB) had breached its duty. HB was a general practitioner in accountancy and the work HB said it would carry out on behalf of Mr Mehjoo in its engagement letter was that of a general practitioner. HB explained in its engagement letter that it could provide more ‘extensive’ tax advice if requested by Mr Mehjoo. However, he did not do so.


It was concluded that:

  • tax advice which HB had failed to give (about a bearer share warrant scheme) comprised specialist tax advice which one would not expect a reasonably competent general practitioner to know. Therefore HB had not breached its duty
  • it was sufficient for HB, as a general practitioner, to make reference to more ‘radical’ tax saving schemes and it was for Mr Mehjoo to request further information as per the terms of the engagement letter.


Be clear about exactly what work you will perform and agree this with your client in writing.


ACCA’s Rulebook

All members of ACCA are bound by ACCA’s Rulebook and you should be familiar with its contents. The Rulebook states that members in practice must obtain a signed engagement letter from every client and retain a copy. The detailed requirements are at Regulation 5, section B9 of ACCA’s Rulebook.


If you do not hold a copy of an engagement letter which has been signed by the client, it is a breach of this Regulation. This is something that ACCA’s Investigations department would investigate if it came to their attention.


Take the time to familiarise yourself with ACCA’s Regulations, review your procedures and make sure that you comply.


Further resources

ACCA’s engagement letter templates are available for members to purchase. These are currently being revised to reflect the General Data Protection Regulation (GDPR) and a revised version will automatically be sent to anyone who has previously purchased the current version of this product.


Technical factsheet: Engagement letters for tax practitioners


Technical factsheet 163: Audit Exempt Companies – ACCA Accounts Preparation Report (includes example of engagement letters)


Information about how ACCA deals with complaints


ACCA members can contact the UK’s technical advisory team for further advice, by telephone (020 7059 5920) or email (

Making Tax Digital has not gone away – actions required now

Accountants have just one year to prepare for MTD.

Accountants have just one year to prepare for MTD.


Last year MTD was being delayed. But from 1 April 2019 businesses with a turnover above the VAT threshold (currently £85,000) will have to:

  • keep their records digitally (for VAT purposes only)
  • provide their VAT return information to HMRC through Making Tax Digital (MTD) functional compatible software. 

Practices can prepare now by: 

  • Analysing their client base: Utilise this time early in the tax year to analyse your client list and see who is affected by MTD and summarise it for a dedicated team member to take action on.
  • Software testing: Speak to your current software provider to check if they are ready for it. Conduct market research of their competitors for costing and simplicity purposes. Also consider that:
    • HMRC has confirmed that it will not be providing any software
    • Excel spreadsheets can be used to keep digital records so long as these are able to meet all MTDfB requirements
    • HMRC will shortly issue an approved suppliers list on its website.
  • Knowledge: Ensure your employees understand what MTD means for the practice and its clients and check how well prepared your systems and processes are. If you foresee any problems, resolve these with your IT providers in good time.
  • Communicate with clients: Keep your clients informed about the changes and be ready to answer any questions they have.


VAT pilot

HMRC will be rolling out the MTD for VAT Pilot once the regulations are finalised. If you are interested in participating in the VAT Pilot Scheme please email at or


HMRC webinars

To help you prepare, sign up for HMRC’s series of webinars, which can be accessed here.



Changes in the pipeline for inheritance tax

IHT scoping document on the horizon.

IHT scoping document on the horizon.


The Chancellor wrote to the Office of Tax Simplification (OTS)  on 19 January 2018, to ask them to carry out a review of inheritance tax law.


Mr Hammond’s letter gives his view that inheritance tax, and the system within which it operates, is particularly ‘complex’. He would like to hear any proposals that the OTS may have to ensure that the system is fit for purpose and interaction with it is as smooth as possible.


Interestingly the Chancellor includes in the scope of the review ‘practical issues around estate planning and disclosure’. Does this herald increased interest from OTS/Mr Hammond in IHT mitigation schemes?


HMRC has said a scoping document for the review will be agreed and published in due course.

International supply opportunities for UK companies

How UK companies can supply the large infrastructure projects that UKEF supports internationally.

How UK companies can supply the large infrastructure projects that UKEF supports internationally.


In the December issue of In Practice, we introduced you to UK Export Finance (UKEF) and the wide range of support it provides to UK exporters, helping them to access working capital, to manage payment risks and to offer competitive terms to overseas buyers.


Here we highlight how UK companies can supply the large infrastructure projects that UKEF supports internationally. These opportunities primarily arise in very large projects in oil and gas, healthcare, petrochemicals, energy or construction (ie where UK Export Finance support is most often sought).


Since its first loan in 1919, UKEF has provided finance to global buyers on a simple condition: that they buy from the UK. This brings procurement opportunities to UK suppliers, enabling your clients to get involved in international projects backed by the government. UKEF has nearly £30bn of potential finance available to support international procurement from the UK, to add to the more than £20bn it has already committed.


Buyers are keen to source from the UK, but while the UK enjoys a reputation for quality, international buyers don’t always realise the depth and breadth of the potential UK supply chain. What’s more, many of the smaller suppliers can struggle for visibility in new markets, with limited time and resources for engagement.  


So when UKEF makes an offer of finance to an international buyer, it will also offer a comprehensive menu of potential UK supplies at the same time. It will then introduce suppliers to the project: not only large lead contractors, but companies of all sizes, including small specialist suppliers of niche products or services.


To date this approach has resulted in five UK supplier fairs, attended by over 600 UK companies, which are expected to add over £1bon in additional UK contracts, thanks to UKEF’s involvement.


To take advantage, UK-based companies that would like to be introduced to UKEF-supported buyers should register their interest with UKEF using this form.


Once registered, UKEF will:

  • keep them informed of the supplies required for UKEF-supported projects
  • invite them to relevant supplier fairs, where they can meet the procurement officials seeking UK supplies
  • keep them up-to-date on our trade finance facilities, which help UK companies win, fulfil and get paid when doing business internationally
  • connect them with other relevant sources of government trade support, either in overseas markets or locally in the UK.
Deemed domicile rules have changed for 2017/18

Why these changes are important for your clients.

Why these changes are important for your clients.


HMRC has updated its guidance on the deemed domicile rules and this includes the changes that came into force from 6 April 2017. You should be aware of the changes and how these might affect your clients in the current tax year.


The rules before 6 April 2017

Before 6 April 2017 if a person was resident but not domiciled in the UK under common law they:

  • were liable to UK tax on all income and capital gains which arose in the UK
  • could claim the remittance basis and only pay UK tax on their foreign income and capital gains when remitted to the UK
  • could claim tax relief on overseas workdays for the first three years they were resident in the UK


What are the changes?

From 6 April 2017 the rules for deemed domicile have been altered so that even if  they were not domiciled in the UK under common law they would still be deemed to be domiciled if either of two conditions are met:


Condition A

To meet this condition they must:

  • be born in the UK
  • have the UK as their domicile of origin
  • be resident in the UK for 2017 to 2018, or later years.


Condition B

Condition B is met when they have been UK resident for at least 15 of the 20 tax years immediately before the relevant tax year. (There is detailed guidance on which years count in HMRC’s guidance, see above.)


Why is this important?

The changes affect domicile status for all taxes. The major issue this causes is that a client who meets the new deemed domicile rules will no longer be able to claim the remittance basis of taxation and will be assessed on their worldwide income and gains on the arising basis.


This could result in higher taxes in the 2017/18 tax year and so as a planning issue clients will need to be fully advised of the changes in good time. Detailed guidance on all residency and domicile issues from HMRC can be found here.


Changes to carried-forward group loss relief

Finance Act 2017 introduced important changes in how losses can be group relieved.

Finance Act 2017 introduced important changes in how losses can be group relieved.


Finance (No 2) Act 2017 (ss 18-19 and Sch 4) introduced important changes in how losses can be group relieved. Whilst overall the loss relief reform claims to increase flexibility of how losses are offset in future accounting periods, the application of the new regime is complex due to a number of restrictions. 


What is changing? 

Previously only current year losses could be surrendered to a group company. 

Under the new rules, all losses accumulated from 1 April 2017 can be group relieved. This includes brought-forward losses. For example, if a company has a brought-forward loss of £2m as at y/e 31 December 2019, of which £700k arose from 1 April 2017, it will be able to surrender £700k of the total brought forward loss, to a group company.  


How it works  

Annual profit is first reduced by all 'in-year losses’ and then group relief which are allocated to pools of trading and non-trading profits in proportion to the relative size of those pools. Only 50% of annual profit in excess of £5m can be relieved by brought forward losses, even where these losses arose before 1 April 2017. The £5m annual allowance applies to the whole group, rather than to each company in the group. 



Companies B and C are in a group 

Company B: 

CY profit                                         £15m (of which trading profit: £10m, non-trading profit: £5m) 

Pre 01/04/17 c/f trading losses      £10m 

Pre 01/04/17 NTLR deficit              £7k 


Company C: 

CY trading loss         £22m, of which £10m to be surrendered to Company B 


Company B 

Trading profit 

Non-trading profit 










Allocate CY loss surrendered from group
(co C)  




Relevant total profits 




5m allowance* 




Excess over 5m allowance to be restricted 




No profits left to restrict 





Company B has no excess profits over £5m to restrict. After the group relief, its trading and non-trading profits are available to relieve its own trading and non-trading losses. Out of the £10m trading loss, £3.33m is relieved with £6.67m remaining to be carried forward, out of the £7m NLTR deficit, £1.67m is relieved with £5.33m remaining to be carried forward. 


Company C has relieved £10m of its £22m loss, with £12m remaining to be carried forward. 


Which post April 2017 carry forward losses can be group relieved 

The group-surrendered brought forward loss may include trading losses and non-trading deficits. The changes do not apply to capital losses. For accounting periods straddling 1 April 2017 cut off, losses need to be proportioned.  


Change of ownership restrictions

Losses arising up to 1 April 2017 are restricted and cannot be used by against the profit of the claimant company if, within three years of the change of ownership there have been major changes in the nature and conduct of trade of the loss making company.  


From 1 April 2017 this time limit is extended. Losses will not be available for group relief, if a major change in the nature or conduct of trade arose in the period from three years before to five years after a change in ownership, as long as both the events (change of ownership and the change to trade) occurred after 1 April 2017. If this condition is not met, the previous three years before and after time limit applies.  


Losses brought forward and arising from 1 April 2017 onwards cannot be group relieved against capital gains in another group company, if those gains arise as a result of an election to transfer the gain under section 171A TCGA or as a result of a no gain no loss transfer crystallising, if those events arose within five years of the change of ownership of the surrendering company.  


Other restrictions 

A group can benefit from a group loss surrender only if the surrendering company: 

  • carries on a commercial trade; losses arising from non-commercial, small, negligible or otherwise disallowed trades cannot be group surrendered 
  • is not dormant; losses are only available if the surrendering company has assets capable of producing income at the end of the period  
  • has used its available profits to offset the loss first; the relief is not available to the group if the surrendering company could use the losses against its own total profits first  
  • carries on trade in the UK; where the losses are attributable to a foreign establishment, such losses can only be used in the UK, once they have been relieved against any foreign profits first.


The claiming company needs to use its own losses before it can use losses surrendered by a group company. 


How to claim  

The government has simplified how carried-forward losses can be claimed by a group.  


Previously both the surrendering company and the claiming company had to make a claim and only large groups could agree a simplified arrangement with HMRC to make the administration of their group claims easier.  


Simplified arrangements for group relief for in-year losses which allowed an authorised group company to make group relief claims have been extended from 30 January 2018 and now apply also to carried forward group losses.  The authorised company should submit a written statement consolidating the group relief claims and surrenders, alongside information required to amend the relevant company tax returns. 


This is a welcome simplification measure reducing the administrative burden of filing separate amended tax returns but will mostly benefit large groups only and is unlikely to make up for the ever increasing complexity of corporate loss relief legislation.



Accounting Excellence 2018

ACCA and AccountingWEB have partnered to bring you the Accounting Excellence programme.

ACCA is partnering with AccountingWeb throughout 2018 to bring you the Accounting Excellence programme, recognising and celebrating excellence across the accounting profession.


Accounting Excellence talks

This year we are tackling some of the biggest topics affecting the accounting profession through our series of free, educational and topical, live, online broadcasts – Accounting Excellence Talks.


Each month leading experts from across the industry will discuss the latest and most relevant topics for accountants. These interactive broadcasts are designed to help empower and educate accountants from all walks of life. Online attendees will be equipped with practical ‘how to’ takeaways to put into action and help tackle the critical business challenges of today and the future. As part of the Accounting Excellence programme, the series provides insights and inspirational content for accountants backed up by real life accounting firm case studies.


In the first Accounting Excellence Talks session in February, host John Stokdyk was joined by tax lecturer Rebecca Benneyworth, practitioner Fiona Fraser and Intuit's Nick Williams, as they dissected the most challenging issues facing accountants in the world of digital tax.

The panel covered a range of topics, discussing everything that accountants need to know, along with some personal tips and tricks on how to tackle these challenges, such as incorporation, accounting and expenses options, VAT and Making Tax Digital. Viewers' questions were coming in thick and fast, proving to be an extremely concerning subject for accountants and their clients.


The second session – on 15 March – covered VAT reclaim and practical guidance on VAT recovery of expenses, how accountants in finance roles can lower costs and help their bottom line.


You can register for these talks on the Accounting Excellence website at – if you can’t make the live stream you can catch up on the sessions you are most interested in on demand.


You can also claim one hour of verifiable CPD for each talk you attend where it is relevant to your job role and you will apply the learning in the workplace.


The insight doesn’t stop there. The key themes which come out of each webcast will be expanded on in further articles and podcasts on


Accounting Excellence awards

The Awards, now in their 8th year, celebrate the achievements of ambitious growth-oriented firms and technology suppliers. The 2018 awards will be presented during an evening of celebration on 20 September at London’s Intercontinental, Park Lane Hotel.


This year there are three categories where hopefuls can submit their entry.


Practice Awards

The Practice category looks for those accounting firms who are leading the way with forward-thinking, innovative ways to grow and are pushing the standards of excellence in the profession.


Software Awards

The Software category is about celebrating the technology providers who go above and beyond in supporting accounting firms on their path of growth.


Finance Awards
Brand new for 2018, this category has been added to recognise the contribution business finance teams are making across the UK.


In 2017 over 30 ACCA members and or firms were short-listed for awards. If your practice – or employees – deserve a little recognition, take a look now and start plotting your entry before the deadline of 20 April 2018. Find out more at




Accountex 2018: free registration

Free registration open for Accountex 2018 in London on 23-24 May.

In such a competitive industry it is essential to keep your finger on the pulse of accounting, including staying up to date with all the latest news, products, services and technology. Accountex will have all of this under one roof at ExCeL, London on 23-24 May. This is the UK’s largest industry-defining exhibition and conference dedicated to the accountancy and finance profession, that covers everything from accountancy, finance, tax, regulations, marketing, and of course technology.


You can build your own agenda at the show, whether it’s attending the 180 CPD accredited seminar sessions in the unrivalled education programme, networking with 7,000+ professionals or seeking new technology providers from over 200 industry-leading exhibitors – meaning that in just two days you could revolutionise the success of your business this year.


This year, Accountex is also giving away a FREE virtual goodie bag when you register, packed with insightful content including e-books from leading names such as Steve Pipe, Rudi Jansen and Amanda Watts.


For more information and to register, visit the event website now and use code ACCA103. Please note that the event is free to attend if you register online in advance, otherwise you will be charged £25 on the door.

Free technical webinars

ACCA is hosting a series of free webinars for practitioners.

ACCA is hosting a series of free webinars for practitioners in 2018.


FRS 102 and recent changes Available on demand

Speaker: Steve Collings, Audit & Technical Partner, Leavitt Walmsley Associates Ltd


Practical implications of incorporating a property portfolio Available on demand

Speaker: Dean Wootten, Wootten Consultants Limited


Charitable Incorporated Organisations Available on demand

Speaker: Don Bawtree, Business Assurance Partner, BDO


IR35 and employment status – the end of the personal service company 9 March (12:30)

Speaker: Louise Dunford, LD Consultancy Limited


Reliefs and claims on personal taxes 23 March (12:30)

Speaker: Paul Soper, tax lecturer and consultant


Please register for individual sessions using the above links – or register for all of the sessions in one go by using this link. Each webinar will count for one unit of verifiable CPD where it is relevant to the work that you do.

Saturday CPD Conferences

High quality CPD with our Saturday conferences.

ACCA's popular Saturday CPD Conferences are filling up fast!


Taking place in seven locations across the UK, these provide a great way for you - or your team - to refresh technical knowledge and complete your 2018 CPD.


Why not take advantage of our multiple booking discount on the Saturday CPD conferences and pay from just £129 per conference when you book three or more?



Saturday CPD conference one

Saturday CPD conference two

Saturday CPD conference three





Accounting and auditing conference

Taxation conference




Guide to practical audit compliance for partners and managers

Practical guide to ISQC 1 for partners and managers




General tax update



Our partnership with 2020 Innovation allows practitioners to benefit from the suite of CPD webinars listed below at a 50% discount.

Visit the dedicated 2020 Innovation/ACCA webpages or email


GDPR webinars

Free webinars will help you prepare for GDPR.

ACCA and Haines Watts have produced a number of free webinars on the General Data Protection Regulation which is due to come into force in a few months’ time on 25 May 2018.


An overview webinar was held in October and now a series of eight short webinars looks at key elements from the Regulation and affected business functions. We recommend that you listen to the Key Elements webinars first – in particular, the Key Principles webinar.  


The webinars are presented by Mike Hughes, Steve Connors and Vincent Mulligan. Mike and Steve are partners at Haines Watts, while Vincent is an ACCA member and IT Audit Consultant at Eisteoir Consulting Ltd.


You can pick and choose the topics of greatest relevance to you to watch ‘on demand’ – please register for any of these webinars including the overview webinar from October.

20% off BPP tax courses

Benefit from special offer for ACCA members before 28 March.

Watch BPP Professional Development's free Spring Statement 2018 webinar on 14 March and claim a 20% discount on one of BPP's online tax courses before 28 March (use code 'tax20' at checkout).


Reporting duties of auditors and independent examiners

Register for 16 March webinar.

New webinar

Reporting duties of auditors and independent examiners


Following the recent publication of the Charity Commission review on the reporting of matters of material significance by auditors, this webinar will provide an essential update on the current guidance, the shortcomings identified by the Charity Commission with reporting, and the essential next steps for all auditors and independent examiners. It will also set out how ACCA is working with the charity regulator to address poor professional practice.


This webinar will be presented by Nigel Davies FCCA, Head of Accountancy Services at the Charity Commission. Nigel oversees the work of a team of accountants who cover all accountancy aspects of operational and inquiry activities for the Commission. He leads for the Commission on accountancy related collaborations with umbrella organisations, professional accountancy bodies, technical panels and working parties.


“Please register here for this webinar.

Engagement letters for tax practitioners

GDPR to be incorporated into engagement letters product.

GDPR to be incorporated into engagement letters product.


ACCA – together with other members of the Joint Profession Engagement Letter working party (AAT, ATT, CIOT and STEP) – is revising our engagement letters for tax practitioners to reflect legislative changes such as those to the EU General Data Protection Regulation (GDPR). 


The working party says:


‘Members may like to be aware that engagement letters for tax practitioners are currently being worked on jointly by the professional bodies noted. A number of changes are required to reflect legislative changes such as the EU General Data Protection Regulation (GDPR). The engagement letters are in final draft and legal counsel has been contacted and asked for an opinion. The working party is aiming to issue updated guidance and template letters in April 2018. Should there be any delay the working party will issue draft letters.’


The revised letters include a privacy notice, revised schedules (including those for payroll), revised terms and conditions, and guidance.


We will let all practitioners know as soon as these are available.


Employment law

Download our suite of factsheets now.

Download our suite of factsheets now.


ACCA’s suite of employment law factsheets were updated in January, with a new factsheet on ‘workers’ also added to the suite. The factsheets are:

  • the contract of employment
  • the probationary employee
  • working time
  • age discrimination
  • dealing with sickness
  • managing performance
  • disciplinary, dismissal and grievance procedures
  • unlawful discrimination
  • redundancy
  • settlement offers
  • family-friendly rights
  • employment status: workers
  • standard terms computer use policy.


The factsheets are currently being updated to include GDPR requirements and are due to be made available to members in April.