Technical and Insight
Carillion: More questions than answers?

ACCA and Duff & Phelps have collaborated on a special Guide to Carillion.


The collapse of Carillion is likely to have a far-reaching impact in the UK and beyond. ACCA and Duff & Phelps have collaborated on a special guide, which analyses the events leading up to its collapse and what has happened since. 

 

Many ACCA members act for, or are employed by, businesses that supply Carillion and which are now left potentially out of pocket with resultant cash flow difficulties of their own. Our guide sets out points to consider on what action to take and where to get further help.

 

Download our Guide To... Carillion now.

Top five most popular self-assessment questions

HMRC has revealed the most popular questions - and answers.


HMRC has revealed the most popular questions - and answers.

 

  1. Do I need to fill in a tax return? 

You’ll need to send a tax return if any of the following apply, in the last tax year:

  • you were self-employed - you can deduct allowable expenses
  • you got £2,500 or more in untaxed income, for example from tips or renting out a property - contact the helpline if it was less than £2,500
  • your income from savings or investments was £10,000 or more before tax
  • your income from dividends from shares was £10,000 or more before tax
  • you made profits from selling things like shares, a second home or other chargeable assets and need to pay Capital Gains Tax
  • you were a company director - unless it was for a non-profit organisation (such as a charity) and you didn’t get any pay or benefits, like a company car
  • your income (or your partner’s) was over £50,000 and one of you claimed Child Benefit
  • you had income from abroad that you needed to pay tax on
  • you lived abroad and had a UK income
  • your taxable income was over £100,000
  • you were a trustee of a trust or registered pension scheme
  • you had a P800 from HMRC saying you didn’t pay enough tax last year - and you didn’t pay what you owe through your tax code or with a voluntary payment
  • your State Pension was more than your Personal Allowance and was your only source of income - unless you started getting your pension on or after 6 April 2016.


Certain other people may need to send a return (for example ministers of religion or Lloyd’s underwriters) - you can check whether you need to. You usually won’t need to send a return if your only income is from your wages or pension.

 

  1. How do I know how much tax I owe?

When you fill in a tax return online, it automatically works out and displays how much tax and Class 4 National Insurance contributions you owe. It will also allow you to print your calculation.

 

  1. How do I register to send my return online?

You can register on GOV.UK. During registration, you’ll be given a User ID and will be asked to choose a password - naturally, you’ll need these when you login again.

 

We’ll then send you an activation code by text. Once you’ve activated the service, you can fill in your return.

 

  1. I’ve lost my User ID and password, what do I do?

It happens to the best of us! If you have problems signing in, there a number of ways to reset and gain access to your tax account. Watch our YouTube tutorial to find out more.

 

  1. When does my 2016/17 return need to be completed?

Your online Self Assessment tax return needs to be in by 31 January 2018, otherwise you will receive a £100 fine.

The latest changes to FRS 102

A summary of the latest incremental improvements and clarifications to (FRS) 102.


A summary of the latest incremental improvements and clarifications to (FRS) 102.

 

As part of continuous improvement and simplification, on 14 December 2017 the Financial Reporting Council (FRC) published incremental improvements and clarifications to (FRS) 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ from their triennial review.

 

The FRC review takes place every three years to ensure that the implementation of the standards has achieved their aim as well as to make any improvement and provide clarity.

 

Mandatory effective date

The effective date of all the amendments is for accounting period starting on or after:

  • Amendments to FRS 102 and FRS 105 – 1 January 2019.
  • FRS 105 disclosures changes – 1 January 2017.

 

Early adoption is permitted, provided that all the amendments are applied at the same time. The only exceptions are in respect of the amendments relating to directors’ loans and the gift aid payment amendments for which early adoption was permitted separately as explained here.

 

Major FRS 102 amendments that will impact on financial statements are:

 

Investment property in a group       

An accounting policy option is included in Section 16 Investment property in paragraph 16.4A. This option allows groups which let property out to other group members to account either at fair value through profit or loss or under the cost model in Section 17 Property, Plant and Equipment. This option should ease the burden and expense of getting the fair value of such investment properties and brings back the same accounting treatment as under the old FRSSE if a majority of the group go for the latter option.

 

Directors’ loans

In May 2017, the FRC granted an interim relief for small companies whose director-shareholders (or a close member of the family of that person) have provided the company with a loan at below market rates of interest or at zero rates of interest. The relief is not available if the loans are provided by the small company to a director-shareholder. Additionally this relief is not available on intra-group loans from one group entity to another. Once the entity is out of the small companies’ regime, ie becomes medium-sized, the entity re-measures the liability to present value prospectively from the first reporting date after it ceases to be a small entity.

 

Intangible assets recognition

Recognition criteria of intangible assets changed from those proposed in FRED 67 by introducing three conditions which have to be met in paragraph 18.8 of FRS 102. Companies will be able to recognise fewer intangible assets that are acquired in a business combination separately from goodwill. These conditions are as follows:

    1. the recognition criteria set out in paragraph 18.4 are met (ie probable expected future benefits and the cost/value of the asset can be reliably measured);
    2. the intangible asset arises from contractual or other legal rights; and
    3. the intangible asset is separable (ie capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged either individually or together with a related contract, asset or liability).

When the reporting entity chooses to recognise additional intangible assets by complying with the conditions, the accounting policy must be applied consistently to all intangible assets in the same class.

 

Clarity on financial instruments

The FRC has introduced a new clause to paragraph 11.9 to support the definition of basic financial instrument. According to this when a financial instrument does not meet the condition in paragraph 11.9, the instrument is still basic if it gives rise to cash flows on specified dates which constitute repayment of capital together with reasonable compensation for the time value of money, credit risk and other basic lending risks and costs such as liquidity risk, administrative costs and lender’s profit margin.

 

Financial instruments which contain terms that introduce exposure to unrelated risks or volatility such as commodity prices or changes in equity prices would be inconsistent with this description and will fall out of basic financial instrument definition.

 

Removal of undue cost or effort exemptions

As the concept of ‘undue cost or effort’ was always to have a balance between benefit and cost, it was mistakenly used by users as an alternative accounting policy to avoid the need to measure certain assets such as investment property at fair value. The following sections included this description in the original standard

    1. Investments in associates (section 14)
    2. Investments in joint ventures (section 15)
    3. Investment properties (section 16)

It is the later section where this was mainly used an accounting policy in error. As it was never the intention of the FRC for this concept to be misinterpreted as an alternative it is removed now to avoid any further confusion.

 

Changes to FRS 105

The amendments to FRS 105 include the following:

Two additional disclosures are required at the foot of the micro-entity’s balance sheet for UK micro-entities:

    • information about employee numbers as required by s411 of the Act; and
    • information about off-balance sheet arrangements as required by s410A of the Act.

 

A new paragraph 3.13A is inserted to provide more information about the UK Company as follows:

 

  • The disclosures required by s396(A1) of the Companies Act 2006 are required which require a micro-entity to disclose
    • the part of the UK in which it is registered
    • the micro-entity’s registered number
    • that the micro-entity is a private company (the law refers to both public and private entities but public companies are excluded from the micro-entities’ regime) and whether it is limited by shares or guarantee
    • the address of the micro-entity’s registered office; and
    • where appropriate, the fact that the micro-entity is being wound up.

 

A similar disclosure is required for micro-entities in the Republic of Ireland as per paragraph 3.13B with section 291(3A) of the Companies Act 2014. Irish micro-entities are not required to include the notes to the financial statements at the foot of the statement of financial position.

 

While speaking to members, certain leading software providers have already incorporated these changes in their software; members are advised to keep an eye on the updates of the systems they use and maintain a constant assessment/discussion with clients if the early adoption is a better option for them.

 

The FRC is in the process of revising standards which will be issued in the due course. Until then full details of all amendments can be found here.

 

 

Disclosure of tax avoidance schemes

The changes from 1 January 2018 and penalties for non-compliance.


The changes from 1 January 2018 and penalties for non-compliance.

 

For a number of years there have been rules governing the disclosure of tax avoidance schemes. HMRC requires information about the relevant scheme which assists them to:

  • get early information about schemes and how they claim to work
  • find out quickly who has used a scheme

 

Two issues that are worth reviewing are the changes in the categories of the schemes from 1 January 2018 and also the penalties surrounding non-disclosure/involvement with such schemes.

 

What has changed?

There are three different disclosure regimes:

  • VAT disclosure regime (VADR)
  • Disclosure of Tax Avoidance Schemes: VAT and other indirect taxes (DASVOIT)
  • Direct taxes and National Insurance contributions (DOTAS).

 

The changes relate to the first two categories. From 1 January 2018, DASVOIT came into force. The disclosure regime for VADR now applies to arrangements entered into before 1 January 2018.

 

DASVOIT applies to arrangements which are used on or after 1 January 2018. However, there is an exclusion from this for arrangements which were marketed or made available by a promoter, or where a promoter knew about arrangements being implemented, before 1 January 2018.

 

DASVOIT applies to the following taxes, levies and duties (so for most members the emphasis will be on VAT):

  • VAT
  • Insurance Premium Tax
  • General Betting Duty
  • Pool Betting Duty
  • Remote Gaming Duty
  • Machine Games Duty
  • Gaming Duty
  • Lottery Duty
  • Bingo Duty
  • Air Passenger Duty
  • Hydrocarbon Oils Duty
  • Tobacco Products Duty
  • duties on spirits, beer, wine, made-wine and cider
  • Soft Drinks Industry Levy
  • Aggregates Levy
  • Landfill Tax
  • Climate Change Levy
  • customs duties

 

Who is responsible for disclosure

The main duty to disclose under DASVOIT falls on the promoter of the arrangements. However there are circumstances where the person using the arrangements must disclose. They are:

  • if there’s a non-UK promoter who hasn’t disclosed
  • if a lawyer is unable to disclose due to legal professional privilege
  • if there is no promoter – for example, it’s an in-house scheme

 

Penalties

There are penalties for failing to disclose any type of scheme and these apply to promoters, employers and users of avoidance schemes.

 

Just as importantly, there are also penalties for ‘enablers’ of schemes which are defeated. An ‘enabler’ is defined as:

  • any person who is responsible, to any extent, for the design, marketing or otherwise facilitating another person to enter into abusive tax arrangements

 

This may well include the client’s accountant if they are seen to be involved with or advise on a tax scheme. HMRC has issued full guidance on the application of penalties relating to defeated schemes which include examples of when /how various advisers become ‘enablers’ (see link below)

 

Further information

HMRC guidance on the tax avoidance scheme changes

 

HMRC detailed guidance on the new DASVOIT disclosure scheme

 

HMRC guidance on penalties for defeated schemes

 

ACCA approved to authorise and regulate probate activities

ACCA has been approved to authorise individuals and firms to carry out probate work.


ACCA has been approved to authorise individuals and firms to carry out probate work.

 

ACCA was one of the first professional accountancy bodies to be designated an approved regulator for probate activities in 2009, and has since successfully applied to the Legal Services Board to authorise practitioners to undertake probate work across England and Wales.

 

‘This is an important development for practitioners who will soon be able to provide highly valued and comprehensive support to their clients following a bereavement,’ says Ian Waters, head of standards at ACCA.

 

‘Accountants already do a great deal of work in assessing and valuing a client’s business, and helping them to arrange their financial and taxation affairs. The ability to offer legal services, including the reserved activity of probate, complements the professional services that firms already provide to clients such as inheritance tax planning, estate management and wealth management. Our members are already the most trusted advisers to businesses across the country.’

 

Mark Gold FCCA, senior partner at Silver Levene, says: ‘We are delighted that ACCA has taken this step. This is will allow us to provide another service that our clients have told us they wish to have from their accountant. It strengthens our business leadership role with our clients and other stakeholders.’

 

ACCA will proceed to implementing regulatory arrangements for probate activities that are proportionate and in the public interest. The Legal Activities Regulations 2018 will be contained within the ACCA Rulebook and will form part of the UK annex to the Chartered Certified Accountants’ Global Practising Regulations 2003 (GPRs).

 

The Regulations will only apply to the reserved legal activity of probate and the grant of probate or letters of administration in England and Wales, extending to non-contentious probate business only.

 

ACCA members seeking to become probate practitioners will be required to achieve and maintain competence to undertake probate activities. ACCA will provide the relevant skills training and support for members.

 

Car fuel and mileage allowance

Understanding allowances for employees who use a company car.


Understanding allowances for employees who use a company car.

 

Tax is chargeable on the cash equivalent of the benefit of provision of free fuel for private motoring in a company car.

 

If the employee is required to make good to his employer the cost of all company fuel used for private purposes, and in fact does so, the charge is reduced to nil. For 2017/18 onwards the payment for private use must be made on or before 6 July following the tax year for which the charge arises. Previously it had to be made in the tax year in question or without unreasonable delay thereafter.

 

HMRC will accept that there is no fuel charge where the employer uses the appropriate rate per mile from the table below to work out the cost of fuel used for private travel that the employee must make good or to reimburse the employee for business travel in his company car. These advisory rates are not binding where the employer can demonstrate that employees cover the full cost of private fuel by making good at a lower rate per mile.

 

The employer can reimburse business mileage at rates higher than the advisory rates if they can demonstrate that the fuel cost per mile is higher. If the employer cannot demonstrate that fact, there is no fuel benefit charge if the payments are solely for business mileage, but the excess will not be an allowable deduction in computing the employer’s profits.

 

View HMRC’s advisory fuel rates

 

Employee uses his/her car for business travel

If an employee (including office holders) uses his/her own car for ‘business travel’ then the employer can make mileage allowance payments up to the ‘approved amount’ and these payments will not be taxable on the employee.

 

The ‘approved amount’ for this purpose is obtained from the formula: M x R

 

Where M is the number of business miles travelled by the employee (other than as a passenger) using the kind of vehicle in question, in the tax year; and

R is the rate applicable for that kind of vehicle. The rates are as follows:

 

                                                Per each of the first             Per each mile over 10,000

                                                   10,000 miles

Cars and vans                                  45p                                         25p

Motor cycles                                      24p                                         24p

Cycles                                                20p                                         20p

 

The 10,000 mile limit is applied by reference to business travel by car or van in all ‘associated employments’ (broadly defined as where the employments are under the same employer or the employers are under common control). These rates may alter in the future.

 

It is advisable to check allowances paid as some employers pay passenger payments. This is not reportable to HMRC. The allowance is available where an employee carries another employee in their own car or van on a business journey. The passenger payment is up to 5p per mile tax-free.

 

If the employer makes mileage allowance payments of less than the amounts shown above to the employee, then the employee (or office holder) is entitled to ‘mileage allowance relief’. The amount of the relief is the excess of the approved amount over any mileage allowance payments. The employee (or office holder) would normally claim this ‘mileage allowance relief’ on his/her self-assessment tax return in the relevant tax year.

 

Paying a self-assessment liability via PAYE code

It could pay to get the details right.


It could pay to get the details right.

 

Despite all of the tax administration changes which have come in (and are planned) – such as personal tax accounts and tax return pre-population measures – the old option of paying a self-assessment liability via the PAYE code still exists.

 

However, there have been a number of changes to the policy over recent years. This article sums up the key points and will help ensure you and your clients are fully aware of how it now works.

 

Recap

Essentials – the option can only be used if:

  • the tax owed is less than £3,000
  • the taxpayer already pays tax through PAYE, for example as an employee or in receipt of a company pension. (Note that the online tax return must have been submitted by 30 December and be very careful if the client’s tax return has not yet been submitted as the payment option is now not available.)

The amount of income received/PAYE paid is relevant to whether the option can be used. The PAYE code option can’t be used if:

  •      there is not enough PAYE income for HMRC to collect the tax owing
  •      using the option would mean that the taxpayer would pay more than 50% of their PAYE income in tax
  •      the taxpayer would end up paying more than twice as much tax as they normally do
  • Class 2 NIC contributions can only be paid through the PAYE code if they were necessary starting before April 2015.

 

Useful links:

 

Self-assessment payment methods

 

ACCA’s self-assessment edition of In Practice (December 2017) 

 

 

 

Offline options for paying HMRC

 Fewer options available for those who choose not to pay online.


Fewer options available for those who choose not to pay online.

 

There have been many changes for taxpayers in the ways they can pay tax owed to HMRC. Most of these have reduced the non-online options that are available. We have seen payslips only available online (unless you filed a paper return), the option to pay at the Post Office withdrawn and that HMRC will no longer be accepting credit card payments. This is because of the payment services directive that means HMRC can no longer pass on the fee a bank charges for processing a personal credit card payment.

 

Taxpayers who filed online will need to ensure they pay online or have printed their payslip from their digital account. The only option remaining for those without a payslip is by making a payment by printing a blank payslip from HMRC’s website. This can is then sent to HMRC with a cheque. HMRC stress that it can’t be used for online payment and taxpayers are required to allow three working days for the payment to reach them – proof of posting may be advisable!

 

Taxpayers in financial difficulty

The Business Payment Support Service (0300 200 3835) can be contacted by the taxpayer who will need to supply the following information: 

  • UTR
  • the amount of the tax bill and the reasons why the tax payer is finding it difficult to pay
  • what they have done to try to get the money to pay the bill
  • how much they can pay immediately and how long they may need to pay the rest
  • their bank account details.

 

HMRC will question them about:

  • their income and expenditure
  • their assets
  • how they plan to get their tax payments back in order.
Loans to participators

How to handle written off payments to participators, directors and employees.


How to handle written off payments to participators, directors and employees.

 

If an ‘employment-related loan’ is released or written off the amount written off will be charged as taxable earnings of the borrower, unless otherwise taxable as income.

 

It would be otherwise taxable as income if:

  1. It was taxable under ITEPA 2003 s403 (compensation for loss of employment); or
  2. The loan was a capital sum within ITTOIA 2005 s633 (relating to settlements); or
  3. Where the lender is a close company in which the borrower is a director or an employee who is a participator (or an associate of a participator) under CTA 2010 s455. In this case the borrower is taxable based on the amount written off as if it were a dividend or other distributions (ITTOIA 2005 s415). Although the director or participator may be taxable instead of the borrower depending on the circumstances.

 

The term ‘participator’ is defined in CTA 2010 s454, subsections (1) and (2) of which state the following:

  1. For the purpose of this Part, ‘participator’, in relation to a company, means a person having a share or interest in the capital or income of the company.
  2. In particular, ‘participator’ includes:
  1. A person who possesses, or is entitled to acquire, share capital or voting rights in the company,
  2. A loan creditor of the company,
  3. A person who possesses a right to receive or participate in distributions of the company or any amounts payable by the company (in cash or in kind) to loan creditors by way of premium on redemption,
  4. A person who is entitled to acquire such a right as is mentioned in paragraph (c), and
  5. A person who is entitled to secure that income or assets (whether present or future) of the company will be applied directly or indirectly for the person’s benefit. 
Changes to ACCA’s Rulebook 2018

A summary of the changes to ACCA’s Rulebook regulations.


A summary of the changes to ACCA’s Rulebook regulations.

 

As you will be aware, changes to our bye-laws were agreed by members at our Annual General Meeting, in November, to enable a future vision for ACCA’s governance, and to modernise our AGM arrangements. More details on the bye-law changes can be found on the ACCA website.

 

The purpose of this article is to explain the most significant changes to the other sections of the ACCA Rulebook, which will take effect from 1 January 2018.

 

The ACCA Qualification

Changes to the Membership Regulations and the Global Practising Regulations have been made to reflect the upcoming changes to the ACCA Qualification. As part of these changes, all four appendices to the Membership Regulations have been removed, in order to improve agility concerning the examinations structure and practical experience requirements.

 

Implementing the requirements of the EU Audit Regulation (537/2014) and Directive (2014/56/EU)

In 2016, EU Member States were required to implement the requirements of the EU Audit Regulation and Directive. At that time, the Global Practising Regulations were amended to incorporate the requirements of the Statutory Auditors and Third Country Auditors Regulations 2016 (SATCAR) and the Delegation Order of the Financial Reporting Council (FRC). Changes have now been made to incorporate the requirements of the SATCAR and the Delegation Order into the regulatory and disciplinary regulations. These include:

  • satisfying the publicity requirements of the SATCAR, where a relevant requirement (as defined in the SATCAR) has been contravened
  • ensuring that the sanctioning powers set out within the SATCAR are available to ACCA’s Disciplinary Committee, where necessary; and
  • clarifying that ACCA will (in accordance with the Delegation Order) refer to the FRC any complaint or issue relating to an audit of a public interest entity.

 

Other changes

It is sometimes desirable to amend regulations in order to provide greater transparency and consistency throughout the Rulebook, to improve clarity, or to allow practical amendments to our regulatory and disciplinary processes. Changes to legislation also give rise to the need for regulation changes. For example, the changes to the 2018 Rulebook include references to the new Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

 

In 2018, transparency and consistency are being enhanced by:

  • simplifying the requirements for private hearings (justified by the interests of any party, a third party or by the public interest)
  • clarifying pre-and post-hearing publicity provisions (limited to the extent that the hearing was conducted in private, in which case private reasons are to be served on the parties)
  • setting out clearly and consistently the matters to be included in notices of hearings, the short notice provisions, the information to be provided by the relevant person, and the provisions for proceeding in absence
  • achieving greater consistency in the grounds of appeal from the decisions of each Committee; and
  • aligning appeal periods with regard to those unusual circumstances in which ACCA is the appellant (ie 21 days).

 

Other areas of improved clarity or simplification of the regulations include:

  • clarifying who may attend a case management meeting (which may be conducted via telephone or video link)
  • allowing the Admissions and Licensing Committee to reconstitute itself as an Interim Orders Committee where it has decided to withdraw or suspend a certificate; and
  • clarifying that, where an appellant has requested that the Chairman’s decision be reconsidered by the Appeal Committee, the respondent may submit grounds of opposition.

 

Further changes have been made to reflect practical changes to ACCA’s regulatory processes, for example:

  • there may be some flexibility where non-payment of a fine or costs by the due date would otherwise result in an individual being automatically removed from the relevant register
  • a provision has been introduced to allow concessions to be made during the permission to appeal process
  • the practising certificate eligibility requirements in Zimbabwe have been more closely aligned with the global requirements; and
  • the Chairman of the Interim Orders Committee may be permitted to review an interim order without a hearing, if both parties agree.

 

A detailed explanation of all the changes is available at accaglobal.com/rulebook, and ACCA members and students, and others bound by the ACCA Rulebook are required to be aware of the Rulebook’s contents at any point in time.

Self assessment updates from HMRC

HMRC has issued an Agent Update  self assessment special.


HMRC has issued an Agent update SA special.

 

It includes details of talking point sessions, links to HMRC toolkits for 2016/17 returns, SA videos including ‘Help with on-line security’ and how to contact HMRC.

Rollover relief

A 60 second refresher and worked examples.


A 60 second refresher and worked examples.

 

Rollover relief allows a trader to defer the payment of capital gains tax where the disposal proceeds of a business asset are reinvested in a new business asset. The deferral is achieved by deducting the chargeable gain from the cost of the new asset. It can be where proceeds are fully or partially reinvested.

 

Example 1 – proceeds fully reinvested

David sold a factory on 1January 2010 for £300,000 and this resulted in a chargeable gain of £80,000.

 

If David is replacing the old factory with a new factory costing £350,000, he can make a claim to defer the gain he has made.

 

The amount deferred (in this case £80,000) is rolled over and reduces the base cost of the new asset purchased. So the base cost of the new factory will be £270,000 (being cost of £350,000 less rolled over gain of £80,000).

 

Example 2 – proceeds not fully reinvested

Eve sells a business asset for £500,000 realising a capital gain of £100,000.

 

Eve uses the money to buy an office block used for the purpose of her trade which costs £480,000.

 

As Eve has not spent the entire sale proceeds, the cash retained of £20,000 (£500,000 less £480,000) is immediately chargeable to capital gains tax.

 

The remainder of the gain (£80,000) is rolled over into the base cost of the replacement asset. The base cost of the new asset is £400,000 (being amount paid £480,000 less gain rolled over £80,000).

 

Conditions for relief 

Individual/partnership

Rollover relief can only be claimed by persons who are carrying on a trade as a sole trader or within a partnership.

 

If an individual carries on two trades, the disposal and acquisition do not have to occur in the same trade. So it is possible to make a gain on a disposal of an asset used in trade A and buy an asset used in trade B. For rollover relief purposes, both trades are regarded as one single trade.

 

The relief is also available if the person:

  • carries on a business of furnished holiday lettings
  • is occupying commercial woodlands and managing them commercially to make a profit
  • carries on a profession, vocation, office or employment
  • is providing an asset to his personal company (a company in which he is able to exercise 5% or more of the voting rights) which has been used in its trade.

 

Company

Rollover relief can also be claimed by a company that sells an asset and reinvests the proceeds in a replacement asset.

 

The companies in a gains group are treated as a single entity for the purposes of rollover relief. This means that the gain on a qualifying business asset sold by a company in a gains group can be rolled over when a qualifying business asset is purchased by any company within the gains group within the qualifying period.

 

Time limits

The new asset must be acquired within 36 months after the disposal of the old asset, or up to 12 months before the sale. These time limits can be extended at the discretion of HMRC.


The rollover relief is not automatic and a claim should be made within four years of the end of the tax year in which the gain arises or the new asset is acquired (whichever is the later).

 

Example 3 – time limit claim

Patricia sold a factory on 1 January 2016 (so financial year 2015/16) and, in the absence of a claim, the CGT on that gain will be due by 31 January 2017.

A roll over claim should be made by no later than 5 April 2020.

 

If Patricia has not bought the replacement asset by 31 January 2017 but is intending to do so before the three year anniversary period has expired, HMRC will allow her to defer the gain.

 

The new asset must be immediately taken into use for trade purposes.

 

Qualifying assets

To qualify for rollover relief, both the old asset and the new asset must be qualifying assets. The list of qualifying assets can be found in s.155 TCGA 1992. The most relevant types of qualifying asset are:

  • land and buildings
  • fixed plant and machinery
  • goodwill.

 

It is not necessary for the old asset and the new asset to be in the same category.

‘Fixed’ means immovable. Therefore, whilst the sale of a printing press will be eligible for rollover relief, the disposal of assets such as tractors, lorries and vehicles will not.

 

Depreciating assets

A ‘depreciating asset’ is any fixed plant or machinery or any asset which will have a life of 60 years or less from the date of acquisition.

If the new assets acquired are depreciating assets, relief is given by freezing the gain of the old asset until the earliest of the following:

  • the disposal of the new assets
  • the date the new assets cease to be used in the trade
  • 10 years from the date of acquisition of the new assets

 

Example 4 – depreciating assets

Milana sold a building for £200,000 giving rise of a gain of £50,000. Milana immediately bought fixed plant and machinery for £180,000.

 

As Milana has not reinvested all of the proceeds in the new depreciable asset, she will have an immediate capital gain equal to the cash proceeds not reinvested of £20,000.

 

The remaining gain of £30,000 will be deferred. The gain is not rolled over against the base cost of the new asset, and so the base cost of the asset remains as £180,000. Instead, the gain of £30,000 is frozen.

 

Milana sells the new asset five years later for £195,000.

 

Her gain will be £15,000 (being £195,000 proceeds less cost of £180,000) plus the ‘frozen’ gain of £30,000, which crystallises on the disposal of the plant and machinery.

 

Depreciating assets and ‘parking’

If a gain is frozen on a depreciating asset and, before that gain crystallises, the trader purchases a non-depreciating asset, the frozen gain can be rolled over and set against the base cost of the new non-depreciating asset.

 

This relief allows the trader to ‘park’ the capital gain on a depreciating asset, until a non-depreciating asset is purchased.

 

Example 5 – Parking

Chris sold a building used in her trade in July 2000 for £300,000 giving rise to a gain of £50,000.

 

In March 2001, she reinvests £290,000 in a baking oven used for her cake making business.

 

As not all of the sale proceeds were reinvested, Chris will have an immediate capital gain tax on the cash retained of £10,000. The remaining gain of £40,000 is frozen.

 

This gain will crystallise either when the baking oven is sold, or in March 2011 (10 years from purchase).

 

In February 2010, Chris buys a factory for £500,000. Because the factory was acquired before the frozen gain became chargeable, the gain of £40,000 can be rolled over against the base cost of the factory. So the base cost of the factory is £460,000.

 

Accordingly Chris made a gain on the sale of a building in July 2000, and effectively rolled it over against a building that she bought in 2011 that is over 10 years since disposal.

 

More information

The legislation that covers rollover relief is Taxation of Capital Gains Act 1992 (TCGA) s.152-162.HMRC has guidance in helpsheets, toolkits and its manuals. The toolkits provide a useful checklist to run through with clients.

 

Has your client declared all of their income?

With HMRC targeting undeclared credit card income, ensure your clients receive this valuable advice.


With HMRC targeting undeclared credit card income, ensure your clients receive this valuable advice.

 

Obviously, disclosure of any undeclared income should be made to HMRC and Professional Conduct in Relation to Taxation contains guidance for members. When a disclosure is required it is worthwhile considering if it could be made under one of HMRC’s campaigns. 

 

HMRC is targeting undeclared credit card income as part of its drive to get businesses paying the correct amount of tax. It has updated guidance on disclosures of undeclared income relating to card and other alternative payments income. It has called this the ‘card transaction programme’.

 

Basic details

HMRC stresses that it believes the majority of businesses want to pay the right amount of tax. However, it equally stresses that there are those who don’t pay the right amount of tax and it wants to help them put that right.

 

The Card Transaction Programme (CTP) allows businesses that accept card and cash payments and haven’t reflected all transactions in a return, to bring their affairs up to date and take advantage of the best ‘possible terms’.

 

HMRC gives the following (fairly obvious) examples where CTP will apply:

  • accepting payments by card that might not have declared all of their income
  • accepting payments by alternative methods, including cash, online or telephone
  • that is trading and hasn’t registered with HMRC and accepts cards and cash as payment methods.

 

Using the CTP

The CTP can be used either when:

  • A taxpayer receives a letter from HMRC. HMRC legally receives data about card transactions from the companies that process those transactions. The data may suggest to HMRC that the taxpayer needs to check that they’ve correctly declared all of the income received. This includes income from:
  • face to face sales - by card and cash
  • online sales
  • telephone sales.
  • A taxpayer makes a voluntary disclosure. They don’t need a formal letter (as above) from HMRC to take part as long as the circumstances are covered by the bullet points above.

 

How does it work?

To take part in the Card Transaction Programme the taxpayer should:

  • tell HMRC they want to take part in the Card Transaction Programme (notify)
  • tell HMRC about all income, gains, tax and duties they haven’t previously told them about (disclose)
  • make a formal offer - a condition of using the Card Transaction Programme is that the taxpayer makes an offer to pay the full amount owed. The offer, together with HMRC’s acceptance letter, will create a legally binding contract between the taxpayer and HMRC. There’s a letter of offer included in the disclosure forms which should be completed
  • pay what is owed
  • help HMRC as much as they can if it asks for more information.

 

Normally there will be 90 days to calculate and pay what is owed.

 

The advantages of taking part

HMRC makes it clear that the CTP offers the best possible terms available for the client to get their tax affairs in order. In order to get these terms the taxpayer has to tell HMRC that they want to take advantage and wish to participate and make a full disclosure and payment.

 

As part of the programme the taxpayer must tell HMRC how much penalty they believe should be paid. What is actually paid will depend on why there was a failure to disclose. Where this was deliberate there may be a higher penalty payable than if a simple mistake was made but HMRC is happy that a lower penalty would be paid via CTP than if HMRC simply discovers that tax has been underpaid.

 

How to take part

The taxpayer must tell HMRC that they intend to make a disclosure. They should do this as soon as they become aware that tax is owed on undeclared income.

 

At this stage, HMRC only needs to know that a disclosure is being made and there is no need to provide any details of the undisclosed income or the tax the client believes is due. A disclosure can be made to HMRC about issues relating to:

  • a client’s own tax or partnership affairs (each partner will need to make their own disclosure)
  • a client’s company’s tax affairs (if they’re a director)
  • someone else on the client’s behalf (for example a tax adviser or personal representative).

 

Individuals and companies – these can notify HMRC by using the digital disclosure service. HMRC will write to give them a unique Disclosure Reference Number (DRN). There is also a Payment Reference Number (PRN) to use when making payment.

Agents – agents should use the digital disclosure service to notify HMRC of their client’s disclosure. HMRC will then send the agent a disclosure reference and a payment reference.

 

The disclosure should be made as soon as the DRN is issued, but disclosure must be made within 90 days of the date the notification acknowledgement is received.

 

Useful points

  1. Disclosures outside of CTP – there are a number of HMRC campaigns focused on underpaid tax so a disclosure may be possible under another relevant HMRC campaign. For all non CTP disclosures the disclosure service.is the same.
  1. HMRC factsheets on penalties for inaccuracies in returns and penalties for failure to notify have more information on the statutory range for penalties to be reduced. If HMRC thinks that the disclosure hasn’t included the right penalty, they may reject it.
  1. Acceptance of disclosure: when they receive a disclosure, HMRC will send an acknowledgment as soon as possible. HMRC will then consider the disclosure under the terms of the Card Transaction Programme. HMRC expects most disclosures to be self-explanatory but they may need more clarification and possibly evidence of the circumstances to satisfy HMRC that the disclosure is complete.

 

HMRC anticipates that the vast majority of disclosures will be accepted. If they are satisfied that a full disclosure has been made, they’ll accept it as quickly as possible.

Challenges surrounding agents’ authorisation

How should you respond to issues presented by personal tax accounts (PTA) and simple assessment?


How should you respond to issues presented by personal tax accounts (PTA) and simple assessment?

 

Recent developments from HMRC have resulted in new procedures for the personal tax account (PTA) and simple assessments, which affect both current and future tax returns.

 

Personal tax account

As a tax agent or adviser, you must be formally authorised by an individual or business to deal with HMRC on their behalf. HMRC is not able to send information or talk to you about your client without this formal authorisation. Many accountants obtain authorisation via the HMRC Online Services portal, with paper authorisation forms providing a useful alternative.

 

In 2015, with one eye on future developments linked to Making Tax Digital, HMRC heavily publicised the introduction of personal tax accounts (PTA). Taxpayers were encouraged to register via a Government Gateway account  or by sign in with GOV.UK Verify. These new accounts allow them to:

 

  • check income tax estimates and tax code
  • fill in, send and view a personal tax return
  • claim a tax refund
  • check and manage tax credits
  • check their state pension
  • track tax forms submitted online
  • check or update the marriage allowance
  • tell HMRC about a change of address
  • check or update benefits from work (eg company car details and medical insurance).

 

Confusion

This development led to confusion amongst accountants, who were left wondering which route should be used when handling clients’ tax returns and managing their tax affairs.

 

ACCA’s Technical Factsheet 166 – Professional conduct in relation to taxation makes it quite clear how our members should proceed:

 

3.36 Ideally a member will explicitly file in his capacity as agent. In some cases HMRC will issue a pin code to the client for the agent to use. A member is advised to use the facilities provided for agents and to avoid knowing or using the client’s personal access credentials wherever possible.

 

Therefore, accountants should continue to use the online access provided to them as agents by HMRC. Many have asked ACCA if they can also use a client’s PTA and our clear guidance is no.

 

HMRC advises agents not to use a client’s credentials to log in, with a desire to avoid security alerts cited as one reason.

 

So we now have two systems attempting to perform many of the same functions. Many members are concerned that the PTA is a means of driving a wedge between the client and their agent in order to reduce the level of agent’s advice.

 

Simple assessments

Another issue causing concern for our members is HMRC’s ‘simple assessments’ service. This automatically populates the assessment form with client information drawn from various sources. HMRC sees it as a path to ending the need for many taxpayers to submit a tax return.

 

While its impact on tax returns for 2016/17 will be limited, it will be increasingly relevant for the following tax years, with two key issues for accountants:

  • Who is now responsible for checking the simple assessment? Does the client expect you to do it and if so how will you charge (in the absence of a tax return being completed)?
  • The simple assessments may not include certain details – for instance dividends or rental income – so a tax return may be inevitable and this will need to be made clear to the client.

 

Conclusion

You should continue to use the current agent authorisation process and not use a client’s PTA log in.

 

Useful links

Full details of simple assessment are available here.

 

HMRC’s API ‘roadmap’ is set out here.

 

Changes to ATED reporting

Understanding the new rules from 1 April 2018.


Understanding the new rules from 1 April 2018

 

If you have clients affected by ATED the clock is now ticking in the countdown to the new reporting service that needs to be used.

 

What is changing?

For 2018/2019 returns need to be filed online from 1 April 2018 and the old forms will be withdrawn from 31 March 2018.

 

In the past, where the ATED online service was not used, the ATED return could be filed by post using the old ATED online return form or, where appropriate, an old online Relief Declaration Return form.

 

However, HMRC made it clear that these forms will be decommissioned sometime after April 2017 and it has now announced that from 1 April 2018 all ATED forms must be submitted using the new ATED digital service. The old online forms will be withdrawn on 31 March 2018.

 

HMRC has said that ‘taxpayers can prepare for the annual reporting period and appoint their agent if they haven’t already done so but should note that they will not be able to submit a return for the 2018/19 chargeable period until 1 April 2018'.

 

2018/2019 returns also see charges increase by 3%. The charges are:

 

Property value                                  Annual chargeable amount

                                                       2017 to 2018             2018 to 2019

£500,001 to £1,000,000                  £3,500                        £3,600

£1,000,001 to £2,000,000               £7,050                        £7,250

£2,000,001 to £5,000,000               £23,550                      £24,250

£5,000,001 to £10,000,000             £54,950                      £56,550

£10,000,001 to £20,000,000          £110,100                   £113,400

£20,000,0001 and over                   £220,350                   £226,950

 

Further information/links

To register for the ATED digital service follow this link.

 

ACCA's guidance on ATED and the new digital service

 

ACCA's guidance on the Autumn Budget 2017 increases to ATED

 

For technical guidance from HMRC on the ATED return follow this link.

 

Allowable expenses when using home as office

Tips to benefit from – and traps to avoid.


Tips to benefit from – and traps to avoid.

 

Working from home may be many people's dream come true. Whether it’s the employee of a forward thinking company in need of work flexibility, or a small business looking for a cash-flow head start through the reduction of overheads, working from home is likely to appeal to most. 

 

There are many non-tax pros and cons when considering working from home but if you have made the decision what allowances and reliefs can you claim?

 

This article provides a quick reminder of the detailed provisions applying to the deductibility of such expenses, and highlights some of the pitfalls taxpayers encountered in the past, as demonstrated by some tax cases. This article does not deal with travel expenses.

 

With regards to expenses associated with working from home, the ‘wholly, necessarily and exclusively’ mantra so pivotal in taxation applies uniformly to a self-employed, a director, or an employee, as it is included both in the legislation applicable to the self-employed and that applying to employees. In practice, however, various costs incurred may in fact serve both a business and a private purpose. Should these costs be approportioned or excluded altogether? Are those costs treated in the same way by a sole trader, an employee and a director?

 

In this issue, we are dealing with the position of the sole-trader

The legislation underpinning the deductibility of expenses associated with working from home for the self-employed is s34 of the Income Tax Trading and Other Income Act 2005 legislation, which can be summarised as follows:

  1. Expenses incurred wholly, necessarily and exclusively for the purposes of the business can be claimed in full.
  2. Expenses incurred solely for private purposes or for purposes incidental to business (so mostly private) cannot be claimed at all.
  3. Expenses incurred for a dual purpose (both business and private) can only be claimed if it is possible to identify a specific part used for business. If it is impossible to identify and measure the proportion of the cost incurred which relates only to business, no amounts can be claimed.

 

For example, the cost of smart business attire cannot be claimed against tax, as it is impossible to separate the business use from the private use of clothing. Whilst smart office clothes serve a business purpose, their private purpose (clothes are seen to be used for warmth and decency) is primary, ever-present, constant and simultaneous to the business purpose. It is not possible to separate the two, so condition 3 above is not met.

 

On the other hand, costs of computer repairs carried out on equipment used for eight hours a day by a sole trader to build websites for clients, and two hours in the evening to watch movies in private time, can be time-approportioned and the business part deducted for tax purposes, as condition 3 is satisfied.

 

The following are examples of costs usually expected to be approportioned, before being deducted for tax purposes:

  • rent if home is rented, or mortgage interest if owned
  • council tax
  • water rates, only if metered
  • light and heat
  • telephone line rental, internet, and cost of calls
  • home insurance
  • house repairs
  • business equipment repairs
  • cleaning
  • revenue expenditure in connection with converting part of home into office
  • capital allowances for tools in connection with the above
  • capital allowances for business equipment and business fixtures and fittings.

 

It should be pointed out that approportioning a private expense in a sole trader’s tax accounts does not mean that the business incurs a liability that will be discharged by refunding cash. There is no separation between the sole trade and the individual running the trade, in the same way the director as an individual and his company are separate. A sole trader therefore can deduct rent in proportion to his home used as business premises, but cannot charge and refund himself rent.

 

There are various methods to approportion expenses, all valid as long they can be justified and based on evidence. Rent or mortgage interest, council tax, light and heat, home insurance, repairs to common parts of the building and cleaning can be approportioned based on the number of rooms or floor space used for business.

 

Costs should be further restricted if there is a significant, not incidental, element of private use. In instances where a fixed charge is incurred irrespective of consumption, for example in case of unmetered water rates, no claim is possible.

 

An element of judgement is involved when calculating business part, and this may vary depending on which cost is approportioned. For example:

 

Every day, Tina’s lounge is used for 10 hours for business purposes and 3 hours for private purposes. For 11 hours the room is unoccupied. The lounge represents 20% of the size of the property. The total annual cost of light is £1,100. Total annual mortgage interest is £900.

  • As the room is not lit or heated for 11 hours when it is unoccupied , there is a case for deducting 10/13 of the 20% of total light and heat costs to business, therefore £1.1k x 20% x 10/13 = £169
  • As mortgage interest is payable whether the room is occupied or not, there is a case for charging only 10/24 of mortgage interest to business attributable to the 20%, so £900 x 20% x 10/24 = £75

 

Approportioned amounts should:

  1. Be reasonable and not excessive
  2. Reflect the characteristics of real expenses - you should be able to demonstrate that you have actually spent the money in the period when the amounts are deducted. For example, if you deduct repairs and renewals, there needs to be evidence of the money actually spent by you.  In addition, in relation to relevant expenses, HMRC may expect to see year or year fluctuations, as use of home may differ year on year depending on business activity
  3. Paid by the self-employed and not someone else, for example a relative.

 

HMRC includes examples of work from home expense approportionment at BIM47825  and also question 7 in the Private and Personal Expenditure Toolkit .

 

Complications in real life

What is reasonable and not excessive

 

In Gazelle v Servini [ 1995 ] STC 324, an accountant working from home who charged 50% of rent to business had this allocation reduced to 20% as proposed by HMRC.

 

He used his house to work frequently, sometimes during the day (to avoid office interruption), as well as during evenings and weekends. The house consisted of:

  • Kitchen
  • Living room 1 – used for client meetings, meeting prospective clients (30-40 clients a year), and mostly evening work
  • Living room 2 – no business use
  • Bedroom 1 - 1/7 of total house space, used exclusively as library
  • Bedroom 2 (small) – storage of practice files
  • Bedroom 3 – no business use
  • Garage – no business use.

 

The judge ruled in favour of HMRC on the basis that the use of the house for business was limited: the accountant received a client on average less than once a week, the bedrooms used for business were relatively small, and there was a lack of evidence from the taxpayer to support a higher than 20% proportion of claim suggested by HMRC: ‘It was for G to show what percentage of the expense of maintaining, heating and lighting his home was deductible. On the very limited evidence adduced the figure of 50% was too high. The Revenue's figure of 20% was not unreasonable.’

 

The case shows how important it is to be able to present records evidencing the level of activity carried out from home. It is up to the taxpayer to demonstrate how he arrived at the amounts. Workings should be kept on file. If there is no record of how amounts are approportioned, HMRC may propose an allocation much harsher than would be expected. Information such as numbers of clients visiting premises, diaries documenting time spent working, meter readings and itemised telephone bills may be required to support approportionment. Maintaining this information is time consuming but may mean a difference between a 50% and a 20% cost approportionment and tax liability.

 

What if the home is owned jointly?

Some complications may arise when assets used by a sole trader are owned jointly by the sole trader and someone else.

For example mortgage interest proportion in relation to home office in a house owned jointly by a married couple needs to be restricted to amounts in relation to the other co-owner’s part being used by the sole trader (as the sole trader cannot charge himself for part of an asset he owns himself).

 

What if bills are in joint names?

There is uncertainty in how costs billed to another person living in the household, such as a husband, may be treated for business tax purposes. A factual analysis may be necessary to persuade HMRC in this case. In real life expenses can be paid by either spouse or both in equal or varying proportions. If the self-employed wife pays 70% towards a bill issued in their joint names and her husband 30% some adjustments may be required if amounts are material, but it has also been reported that HMRC may ignore the unequal split in settling the expense when assessing a relevant business proportion, and revert to the more basic fact finding – ie whether the expense was incurred in the first place and paid (in any proportion) by the self-employed.

 

Let’s simplify it

If the business is rarely run from home, it may be more convenient to claim a fixed rate deduction, instead of actual costs. The amounts that can be tax deducted are very modest, but it does allow them to escape the burden of keeping detailed records and receipts.

 

The rate applicable is based on the calculation of the number of hours that you work at your home/homes ‘wholly and exclusively’ for the purposes of the trade:

 

25-40 hours - £10 per month
51-100 hours – £18 per month
101 hours or more - £26.

 

Someone working 23.3 hours a week or more will be able to claim £312 per year towards use of home as office. If this amount does not fairly represent the value your business benefits from by operating from your home, taking into account the actual expenditure and maintaining sufficient records will be necessary. This is particularly worth the time involved if the sole trader works at home on a regular and frequent basis, rather than simply carrying out ad hoc administrative tasks. If you have dedicated office space in a room, even if sharing it with private household users or a separate office in an adapted room where private use is incidental, the tax saving made by deducting a clearly defined and reasonable proportion of home costs can make a noticeable difference to your bottom line over time.

Three ways to engage the multi-generational workforce

For the first time in the modern age, some companies will have five generations in their workplace.


For the first time in the modern age, some companies will have five generations in their workplace.

 

From 'Traditionalists' born before 1945 all the way up until Generation Z, the generational diversity present in many workplaces can create a range of challenges. It can also present a competitive advantage, if well managed.

 

Below are three key takeaways from our recent breakfast briefing on engaging the multi-generational workforce. There’s no substitute for actually asking employees what they need.

 

1. Presume less, listen more

Of course, employees are people, not generational identities. So don’t allow preconceptions or unconscious bias to influence your expectations of what different age groups may want and need. This will just lead to a culture of stereotypes. And while benchmarking can be useful for many things, it won’t actually tell you what employees want. In fact, if other companies’ practices are outdated or misinformed (and many may well be), then by aligning your benefits packages with theirs you may just end up perpetuating poor workplace practices. Ultimately, there’s no substitute for actually asking employees what they need.

 

To better understand what employees really want from their benefits package, we ran a number of tailored focus groups, using paired comparisons, to establish popularity levels of different benefits. (Explanations were provided on the nature of the various benefits to ensure that respondents’ choices were well-informed.)

 

Compelling employees to make direct choices between benefits grants you more insight into what they really value, as opposed to what they think they would like or feel they should cite as important. 

 

Our research provided some interesting results, including:

  • 40% of participants said non-cash benefits were important or very important when deciding on which employer to work for 
  • group income protection was very popular with every demographic. This was more apparent where there had been a pithy explanation of its function and application
  • while millennials generally lean more towards digitised content and communication, when it comes to financial advice they still very much appreciate traditional face-to-face financial consultation
  • giving employees a measure of choice over their benefits greatly improves their uptake
  • many millennials place a lot of value on low-cost benefits – such as buy/sell holiday options, and retail and leisure discounts
  • retirement doesn’t feature high on the radar for 16-24 year olds, with only 4% saying it was attractive when deciding which employer to work for. Despite this, 73% of all participants said they intend to retire below state pension age.  

 

2. Prescribe less, empower more
Less prescription, and more employee choice, equals more empowerment – the key ingredient for higher employee wellbeing. Our research indicated that giving employees a measure of choice over their benefits greatly improves their uptake. (It’s vital to remember, however, that just as too little choice can diminish engagement, too much choice can have the same effect.) 


Wellness funds can be an effective way to transfer ownership to employees and were found to be more popular than specific wellness initiatives. Our survey found that 88% of employees prefer a wellness fund – to spend on a range of options – over an annual company health screen or wearable devices.

 

Older workers are now often the ‘sandwich generation’.

 

3. Consider the needs of older workers
The older workforce is an increasingly important group that receives relatively little attention. Many older workers have much more to offer the business. Moreover, their transition into retirement should not be viewed as an abrupt cliff-edge, but as something that can be smoothly managed through flexible working.

 

Older workers have more care responsibilities than previous generations, owing to increasing longevity. They are now often the ‘sandwich generation’ – with care responsibilities for young children and ageing parents. While employers are typically mindful of the need to accommodate employees’ childcare responsibilities, care duties towards ageing parents should also be considered. This consideration should extend beyond material factors, such as flexible working, and include the financial, emotional and psychological implications of caring for ageing parents.

 

Of course, employees must never be viewed purely in terms of the generation they belong to. In any case, many generational groups – such as the 19–36 years ‘millennial’ age group – are very broad and actually comprise various sub-groups.

 

Many other discrete factors, such as a company's geography, sector and so on, will influence employees’ needs and preferences. What is true across the board, however, is the value businesses will find in asking and listening to their employees.

 

Chris Rofe – senior vice president, Lockton Benefits

 

For more information, please contact Chris Rofe on:

 

chris.rofe@uk.lockton.com

020 7933 2876

 

Professional Accountants – The Future

As part of ACCA’s research into Professional Accountants – The Future we have published a report Generation Next – managing talent in small and medium sized practices This includes the following insights from a survey of nearly 1,300 younger professionals working in SMPs:

  • working for an SMP is recognised as a platform towards building a successful long-term career
  • pay and prospects for career progression are important but work life balance, interest in the subject matter and flexible working arrangements also matter
  • job satisfaction is holding up with 48% of those working for SMPs being satisfied in their current role
  • learning works best when it's personal and practical – on-the-job training and mentoring are the most used learning activities across the SMP sector, and encouragingly, are also seen by Generation Next in SMP as the most effective as well.

 

Costs and benefits to small companies of digital reporting

Research reveals accountants’ views on digital reporting.


Research reveals accountants’ views on digital reporting.

 

Brunel University, with support from ACCA members, conducted the first UK survey since digital reporting to HMRC became compulsory for small companies and joint filing for small private companies was introduced. The report makes some key recommendations:

  • accountants working in small companies and those in practice are in the best position to advise on the adoption of digital filing and financial reporting. In doing so, they increase awareness of the joint filing facility and the free HMRC corporation tax filing software
  • principal directors of small companies should be aware that technical knowledge and skills are not needed and that costs can be very low. Support from top management is important for overcoming any obstacles to digital filing (which makes data transfer between different information systems easier than with paper filing)
  • HMRC and Companies House should take steps to increase awareness of the benefits of the joint filing facility by publishing a business case for joint filing by small companies. Software suppliers should organise seminars, webinars and other training workshops on digital filing
  • policy makers seeking to reduce the regulatory burdens on smaller entities should find ways of extending the scope to medium-sized companies and releasing the data obtained from joint filing to other government agencies.

 

Find out more by reading the full report now.

Tools to help your business grow

Investing in value creation tools can help your business grow.


Investing in value creation tools can help your business grow.

 

The business journey of many SMEs is often characterised by a gradual change in internal management practices which develop as the firm’s operations grow. The subsequent recognition of the business’s value creation - across all of its operations - tends to emerge slowly but surely alongside this process.

 

Whilst this may be suitable for some small firms, if you have higher growth ambitions, achieving this at the early stages of your business journey could be hugely beneficial.

 

There are many reasons for this. As well as improving trust and relationships between customers and those along your supply chain, this information can be used to attract new clients, establish commercial partnerships and access external finance to help your business expand.

 

Gaining an understanding of ongoing value creation can be challenging. This is because smaller firms tend not to have access to simple and understandable data sets on everything which is and isn’t contributing to value across the business.

 

For example, intellectual property, human capital and customer and supplier relationships are all common examples of activities where SMEs often experience difficulties in determining the real contribution to the business's overall value, and is not something picked up by financial reports.

 

Key actions to consider when capturing the value within your business include the following:

  • Use cloud and data analytics technology to support growth
  • Create a business strategy which incorporates the whole business
  • Allow staff to use new technologies to innovate
  • Appreciate the importance of technology in attracting external finance.

These actions will help you succeed in developing a successful business strategy.

 

Use cloud and data analytics technology to support growth

Purchasing relevant software packages could help you access the data you need to understand where and when value is being created. Cloud and data analytics technology can provide a real-time flow of information, offering detailed measures across workflows, whilst also complementing existing reporting processes.

 

More long term, this technology can provide you with greater flexibility when anticipating future periods of growth. For example, when the time comes to up-scale your business operations, it could help your finance function adapt more easily to any additional demands being placed upon it and mitigate the risk of disruption towards ongoing operations.

 

At the same time investing in this technology doesn’t have to happen overnight. Software packages can be purchased in stages and tailored to meet the specific needs of your business.

 

Create a business strategy which incorporates everything

Business success will often be determined by how effectively you can combine the value of ongoing operations into the development of a single, overarching business strategy.

 

In terms of future growth, this integration can support planning processes. By taking a short, medium and long term view on how value creation might change across the business, you will be in a much better place to identify upcoming risks and opportunities towards your growth ambitions.

 

The practical delivery of this might involve regular integrated reporting across your business’s operations. The more data that is involved in this process, the more helpful it will be towards informing your management decisions.

 

Allow staff to use new technologies to innovate

You might also want to consider some areas where staff could come up with new ideas to support your business’s growth, and learning from possible failures without the personal risks that entrepreneurship entails.

 

Allowing staff to use new technologies could help to reduce costs and offer new revenue opportunities as your business expands. It could also help you fully communicate your business’s value to potential clients and commercial partners.

 

Appreciate the importance of technology in attracting external finance

Investing in technology at an early stage can help attract external investors as well as reducing the cost of raising growth finance. Such investors need to be able to understand the broader strategy of your business.

 

Lenders are increasingly using data to build up a broad perspective on the growth potential of SMEs. If you are able to provide real-time information - rather than just historical data – of your business’s performance, this could greatly increase the chances of obtaining the finance you need to grow.

HMRC’s ‘talking points’ virtual meetings

Register now for HMRC’s popular virtual meetings.


Register now for HMRC’s popular virtual meetings.

 

HMRC's regular Talking Points meetings provide information, guidance and tips for accountants. They are free to participate in and you can register for any of the following events now.


Basis periods - looking at commencement years, changes to accounting date and overlapping periods: Focusing on basis periods, in particular, looking at the different rules that apply to commencement years, changing of accounting date and overlapping periods. We will also look at some pointers when dealing with a change from sole trader to partnership and vice versa.

Fr‌id‌ay 2 Fe‌br‌ua‌ry - 11a‌m to midday                          Register now


 

Trade losses: Looking at the different ways trade losses may be relieved.

Fr‌id‌ay 2 Fe‌br‌ua‌ry - 1p‌m to 2p‌m                                Register now


 

Income from property - minimising the risk for individuals: This meeting will be dealing specifically with expenses and deductions, allowances and reliefs. Including repairs, the relief for the replacement of domestic items and the restrictions to income tax relief for finance costs.

 

We‌dn‌esd‌ay 31 Ja‌nu‌ar‌y - 11a‌m to 12.15pm             Register now

We‌dn‌esd‌ay 31 Ja‌nu‌ar‌y - 2p‌m to 3.15p‌m                 Register now


 

The Requirement to Correct, and other offshore tax developments: Find out how HMRC is planning to reduce offshore non-compliance and get taxpayers to disclose more information.

Tu‌esd‌ay 23 Ja‌nu‌ar‌y - 1p‌m to 2p‌m                           Register now


 

Capital allowances and vehicles: This meeting mainly covers the special rules for cars.

We‌dn‌esd‌ay 24 Ja‌nu‌ar‌y - 11a‌m to midday               Register now

We‌dn‌esd‌ay 24 Ja‌nu‌ar‌y - 1p‌m to 2p‌m                      Register now


 

Negligible value claims and share loss relief: Looking at certain conditions that must be met for your clients to claim that an asset has become of negligible value. Also an overview of share loss relief.

 

Th‌ur‌sd‌ay 25 Ja‌nu‌ar‌y - midday to 1p‌m                   Register now


Disguised remuneration: How to settle your tax affairs if you are an employer: Following

the publication of the settlement terms for disguised remuneration schemes, using case studies, this webinar talks through how to settle your tax affairs and pay what you owe before the new loan charge applies. The short presentation will be followed by a Q&A with a team of experts involved in settling tax avoidance cases.  

 

Tu‌esd‌ay 30 Ja‌nu‌ar‌y - midday to 1p‌m                     Register now

Tu‌esd‌ay 6 Fe‌br‌ua‌ry - midday to 1p‌m                     Register now


Construction Industry Scheme: This meeting will provide an overview of the HMRC online portal, including record keeping, verifications, reporting and repayments.

 

Th‌ur‌sd‌ay 8 Fe‌br‌ua‌ry - midday to 1p‌m                   Register now

Credit and debit card fees abolished

Advice for clients who take payments by card.


Advice for clients who take payments by card.

 

As we enter 2018 it is worth remembering that from 13 January 2018 onwards consumers are no longer subject to surcharges when using their debit or credit cards to buy goods or services.

 

These are being abolished following the implementation of the revised EU Payment Service Directive II, which will remain applicable post-Brexit as it is to be transposed into UK law.

 

However, while this might appear to be a victory for consumers, it's not all good news. Consumers may still end up bearing the cost of debit and credit card transactions, because:

  • businesses might choose to increase their selling prices, or add arbitrary service charges to all transactions, in order to pass on the costs to their customers
  • businesses might increase the minimum amount that consumers need to spend when using a credit or debit card
  • businesses might refuse to accept payments using a credit card altogether.

 

Businesses choosing to pass on the costs to their customers – ie by increasing their selling prices – will need to carefully consider such increases as if the majority of their customer base pays in cash this might negatively impact their sales figures and might even cause reputational damage. 

 

Find out more here: UK government consultation on the Revised EU Payment Services Directive

 

Employment law factsheets updated

Our suite of employment law factsheets has been updated, with a new one on ‘workers’ also added.


Our suite of employment law factsheets has been updated, with a new one on ‘workers’ also added.

 

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.

 

View all of these factsheets now

NEWS
ACCA in the UK

Join this webinar and get an insight into our priorities for supporting you during 2018.


Join us on Wednesday 7 February (13:00-13.30) when we will provide an insight into our wider activities across the UK.

 

Jason Piper, Senior Manager, Tax and Business Law – Professional Insights, ACCA, will also provide a timely update on key issues around tax, MTD and technology.

 

There will be plenty of time for questions – on these or any other aspect of being an ACCA member.

Register for this webinar now. If you are unable to join us live, you will automatically receive a message with details of how you can watch the webinar on demand afterwards.

SMP/SME Exports Project

Could you support our research into the export market?


Could you support our research into the export market?

 

ACCA is currently undertaking a global research project into how to encourage more small businesses to export and participate in international trade. The research will also consider the role professional accountants currently (and could potentially) play in helping to advise, support and shape small businesses’ export journeys.

 

The objectives of this project will be to twofold:

  • it will seek to provide practical guidance to small businesses on relevant strategies and support towards exporting themselves
  • it will consider where small and medium sized practices (SMPs) already provide relevant advisory services and support to small businesses in this area.

 

We are therefore very keen to speak to both finance professionals working in small businesses and those working for SMPs who are able to provide their own insights and perspective on this topic. In particular we want to identify your views on the opportunities and challenges towards exporting today – you do not have to be actively involved in exporting/international trade to participate in the study.

 

If you are interested in participating in a 30 minute phone interview as part of this research please email ACCA’s Head of SME Policy ben.baruch@accaglobal.com

CPD
High quality CPD

Start planning your 2018 CPD.


ACCA's popular Professional Courses programme of high quality CPD events is open for booking in 2018. Start planning your - or your team's - CPD requirements now.

 

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 CONFERENCES

Saturday CPD conference one

Saturday CPD conference two

Saturday CPD conference three

Accounting and auditing conference

Taxation conference

 

 

PRACTICE WORKSHOPS

Guide to practical audit compliance for partners and managers

Practical guide to ISQC 1 for partners and managers

 

 

ONE DAY COURSES

General tax update

 

CPD WEBINARS IN PARTNERSHIP WITH 2020 INNOVATION

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 acca@the2020group.com.

   

Accountex Summit North

Big name speakers confirmed.


Big name speakers confirmed at Accountex Summit North 2018!

 

In just under four months nearly 1,000 accountancy professionals from across the north of England will be attending the first ever Accountex Summit North. Taking place on 6 March 2018, at Manchester Central, this new industry-defining conference and exhibition will play host to a full line-up of CPD accredited keynotes, seminars, panel sessions and interactive workshops.

 

The main auditorium will feature keynote sessions from Glenn Collins, head of technical advisory, ACCA who will host a panel debate on the Changing Face of Accountancy Practices, and Gordon Gilchrist and Ian Fletcher from 2020 Innovation speaking about how to become the Firm of the Future.

 

Innovation and the latest products from leading accountancy suppliers
The event will also feature an innovative exhibition area, where leading suppliers will showcase accountancy products and services from cloud computing to financial software, recruitment and training to branding and PR. Companies already signed up include Sage, Intuit, Xero, IRIS, OCREX, FreeAgent, FUTRLI, Rollpay Bureau, Premier Capital, Reciept Bank, Octopus Blue, Enterprise Tax Consultants, Spotcap, Compleat Software and many more…

 

Three dedicated break-out theatres
In addition to keynote sessions, there will be three dedicated break-out theatres covering the latest trends and hot topics in more interactive sessions for visitors. Topics will include making tax digital, technology, cloud, pensions, pricing, plus every other subject relevant to the modern accountant. 

 

Speakers already include Ed Molyneux, CEO and Founder of FreeAgent, speaking about the Rise of the Robots: Accountancy at the Crossroads, Mark Wickersham talking about Effective Pricing and a session presented by My Firms App. View the full programme line-up now.

 

Who attends?
Accountex Summit North
is free to attend and expected to attract around 1,000 accountancy professionals. Places at all keynotes and seminars will be allocated on a first come, first served basis – tickets can be pre-ordered for free when registering.

 

A FREE delegate place includes:

  • keynote speaker programme – taking place in the main auditorium, the programme will feature high profile speakers offering the latest industry insights
  • 100 top suppliers in the networking & break out area – who are helping to change the future of your industry
  • three dedicated break out theatres – covering the latest trends and hot topics for more interactive sessions
  • eight hours of CPD accreditation
  • complimentary refreshments – all refreshments and a light lunch will be included free of charge.

 

Visit the Accountex North 2018 website now for more information or to apply for your FREE place.

 

CAREERS
GDPR webinars – are you ready yet?

Get ready for GDPR with our free webinars.


Get ready for GDPR with our free webinars.

 

ACCA and Haines Watts have produced a number of free webinars on the General Data Protection Regulation which is due to come into force 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, whilst 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.

 

Free technical webinars

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


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

 

Join us during February and March for the following webinars:

 

FRS 102 and recent changes

8 February (12:30)

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

 

Practical implications of incorporating a property portfolio

14 February (12:30)

Speaker: Dean Wootten, Wootten Consultants Limited

 

Charitable Incorporated Organisations

22 February (12:30)

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

 

Click on the title of the webinar to register now. If you are unable to join us for the live webinars, you will be able to watch them on demand at your convenience.

 

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