Technical and Insight
Anti-money laundering requirements deadline

Has your firm complied with the BOOM and TCSP requirements?


Has your firm complied with the BOOM and TCSP requirements?

Changes to anti-money laundering (AML) regulations mean that relevant firms and sole practitioners must comply with the following requirements before 26 June 2018.

 

ACCA sent a communication to all practitioners on 18 May including an electronic form to provide the required information. It is the relevant firm’s and sole practitioner’s responsibility to ensure that only fit and proper individuals who have not been convicted of a relevant offence are submitted for approval as beneficial owners, officers and managers (BOOMs). To ensure that all forms are adequately submitted by 26 June 2018, relevant firms and sole practitioners should ensure that their BOOMs are fit and proper and have not been convicted of any relevant offence.

 

Information is required to cover the following two areas:

  • Under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLRs) all relevant persons acting as Trust or Company Service Providers (TCSPs) must be registered with HMRC. HMRC has asked Professional Body Supervisors to provide a list of their supervised relevant persons that act as TCSPs before 26 June 2018. As part of the 2018 practising certificate (PC) annual renewal ACCA asked PC holders to confirm whether their firms provide any services that fall within the definition of a TCSP. Due to the low response rate and the importance of this regulatory requirement, we are asking all ACCA practitioners to include in the form details of all businesses providing TCSP services, whether or not previously notified to ACCA. 

 

Please consider that practitioners providing accountancy services which fall outside the meaning of public practice (for example book-keeping or TCSP services) may not have previously registered their businesses providing these services with ACCA but will, nevertheless, be subject to supervision. Practitioners must ensure that details of these businesses are included in the form.  

  • The MLRs require that all BOOMs of relevant firms must be approved by the relevant supervisory authority. This also includes sole practitioners and any officers and managers working for them. To comply with this requirement, relevant firms and sole practitioners must submit an application including all BOOMs before 26 June 2018. Once the application has been submitted ACCA can process the application after 26 June 2018. As ACCA already has the details of existing practitioners, applications should only include individuals who don’t currently hold an ACCA PC. Details must include the full name of the individual BOOM, the role/title and confirmation that the BOOM is fit and proper. 
GDPR – a summary of resources

As the deadline draws nearer, review our handy range of resources.


As the deadline draws nearer, review our handy range of resources.

 

We know that many practitioners – and your clients – are striving to prepare for the new Regulation before its introduction on 25 May. We’ve pulled together a wide variety of resources we have issued over recent months to help you prepare. Browse these below.

 

Webinars

ACCA has developed a range of resources to help practitioners prepare for the GDPR, including a series of webinars hosted in partnership with Haines Watts (available to watch on demand now) and a special two-part guidance document.

 

Engagement letters

A GDPR update to ACCA UK’s Engagement Letters product was released on 30 April and sent free of charge to anybody who had purchased the current version of the product which was launched in May 2016. We have also updated our free factsheet Engagement Letters for Tax Practitioners for GDPR. or, you can purchase our full Engagement Letters product for just £30 + VAT.

 

 

Q&A factsheet with the ICO

Browse this factsheet here

 

Employment Law Factsheets

Our suite of factsheets has been updated to include new GDPR policies.

 

 

Data safety guidance

Three guides, including client guides, are also available:

 

Keeping your data safe

 

IT security

 

GDPR data protection responsibilities

 

 

 

Other resources

 

ICO fee information 

 

ICO GDPR tools

 

Previous article on preparing for GDPR

 

Previous article on GDPR and payroll bureau

 

Previous article on GDPR and cybercrime

 

 

GDPR Auditing - workbook

ACCA member Bob Edwards has developed a workbook to help practitioners prepare. Find out more now

 

 

 

 

 

 

Non-taxable payments and benefits

A handy summary of ten common non-taxable payments and benefits.


A handy summary of ten common non-taxable payments and benefits.

 

The following is a summary of ten common expenses payments and benefits that are non-taxable as a benefit in kind.

 

  1. Late-night taxis. The cost of a late-night taxi provided by an employer to an employee for a journey from home to work will be exempt if the employee is required to work later than usual and until at least 9pm, this occurs irregularly, and by the time the employee stops work, either public transport has ceased or it wouldn’t be reasonable to expect the employee to use it. If an employee’s journey home requires taking two or more forms of public transport and one of those has stopped by the time of the journey home, the condition is satisfied for the whole journey so the expense would be exempt.

  2. Free or subsidised meals provided on the employer’s business premises, or in any canteen, are exempt on condition that meals are on reasonable scale, are provided for the staff generally and  either all employees may obtain free or subsidised meals or the employer provides free or subsidised meal vouchers for staff for whom meals aren’t provided. 

  3. Mobile phones and smartphones provided by the employer for solely business use, with insignificant private use, is tax exempt. The contract needs to be in the employer’s name. However, money paid by an employer to an employee to use their own mobile phone is taxable. The exemption applies to mobile phones and smartphones and it does not extend to iPads, PDAs and tablets.
  4. Home working allowance up to £4 per week, £18 per month/ £216 per year is automatically exempt and no supporting evidence of the cost is required. If the employer pays more, then they must either retain supporting evidence to show that the payment is in respect of additional household expenses or seek an arrangement with HMRC whereby they can pay a higher amount without a need to retain supporting evidence.
  5. Pensions (and others) expenses provided on retirement or death. Expenses incurred in the provision of any pension, annuity, lump sum, gratuity or similar benefit to the employee or to any member of the employee’s family or household on the employee’s retirement or death are exempt. Also the provision of pensions’ advice to the employee up to £500 is exempt. This includes general financial and tax issues advice provided that the advice is available to all employees generally. Employers can limit provision of the advice to employees who are nearing retirement or who are about to retire on ill-health grounds as long as the advice is available to all employees in the same situation.
  6. Trivial benefits - any benefit costing less than £50 will be exempt provided that: the benefit is not in the form of cash or a cash voucher, the employee is not entitled to the benefit as part of a contractual obligation (including under salary sacrifice) and the benefit isn’t provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services).
    For a close company the benefit provided to an individual who is a director or other office holder of the company (or to a member of their family or household) the exemption is capped at a total cost of £300 in the tax year. See our article on PAYE Settlement Agreements
  7. Work-related training expenses - training delivered as full-time or part-time and either provided internally by an employer or run externally by a third party are exempt. The tax exemption also covers related costs such as: travel and subsistence expenses, incidental overnight expenses, additional childcare expenses, costs that relate to examinations and registration of qualifications, costs of distance learning aids such as practical course materials and books.
  8. Travelling and subsistence expenses following strike disruption -
    reasonable travelling and subsistence expenses owing to the dislocation of public transport by strikes or other industrial action are exempt. The exemptions apply to hotel costs or other overnight accommodation cost or extra expenses incurred in travelling to and from work.
  9. Incidental overnight expenses - payments for personal expenditure, on incidental overnight expenses during a business journey, up to certain limits may be paid tax free. The maximum amount that an employer may pay tax free are £5 per night for overnight stays anywhere within the UK, and £10 per night for overnight stays outside the UK
  10. Health screening and medical check-ups - the expenses incurred in providing employees with one health screening and one medical check-up per year are an exempt benefit. Eye tests are exempt if they are required by health and safety legislation for employees who use a computer or other screen. The exemption also covers glasses or contact lenses if employee uses a visual display unit (VDU) for their work.


Medical treatment provided to an employee working overseas is also exempt, provided that the employer has committed in advance to cover the cost.

Also if an employee was absent from work because of an injury and ill health for at least 28 consecutive days, the cost up to £500 of medical treatment to return to work is exempt.

 

P11D deadlines

The employer filing deadline of 6 July is approaching quickly.


The employer filing deadline of 6 July is approaching quickly.

 

The 2017/18 tax year will be the first tax year where the value and types of benefits that employers report on their 2017/18 forms P11D and P11D(b) can be affected by the introduction of ‘special rules’ to determine the amount of a benefit which is treated as earnings from the employment where the benefit is provided as part of an optional remuneration arrangement.  Optional remuneration arrangements (salary sacrifice) is where an employee gives up the right, or future right, to salary or the right to some other form of cash remuneration in return for the benefit.

 

Where a salary sacrifice arrangement existed before 6 April 2017 the benefit calculation can continue as before unless the arrangement was varied, renewed or modified (with exemptions for statutory sick pay, maternity, paternity, adoption or shared parental pay).

 

It is recognised that as a number of pre-6 April schemes will have been varied, renewed or modified, a large number of the existing arrangements set up before 6 April 2017 will automatically be subject to the new rules from 6 April 2018. HMRC provide the following simple illustration in its guidance:

 

‘An employer operates a flexible benefits scheme under which employees give up the right to receive salary in return for free car parking near their workplace. Employees have to sign up for 12 months’ car parking. An employee enters into a 12-month salary sacrifice arrangement starting on 1 January 2017. The benefit will continue to be exempt until the contract comes to an end on 31 December 2017. The contract starting on 1 January 2018 will fall within the new rules.’

 

More guidance is available here.

PAYE Settlement Agreement (PSA)

After 5 July 2018, you can’t apply for a PSA for the 2017 to 2018 tax year.


After 5 July 2018, you can’t apply for a PSA for the 2017 to 2018 tax year.

 

As a reminder, a PAYE Settlement Agreement (PSA) allows an employer to make one annual payment to cover all the tax and National Insurance due on minor, irregular or impracticable expenses or benefits.

 

HMRC highlights the benefits that an employer ‘won’t need to:

  • put them through your payroll to work out tax and National Insurance
  • include them in your end-of-year P11D forms
  • pay Class 1A National Insurance on them at the end of the tax year (you pay Class 1B National Insurance as part of your PSA instead)’.

 

It is important to remember that businesses do not need to pay tax on a benefit for an employee if all of the following apply and so are not required to be part of a PSA:

  • it cost you £50 or less to provide
  • it isn’t cash or a cash voucher
  • it isn’t a reward for their work or performance
  • it isn’t in the terms of their contract.

 

It is also worthwhile remembering that HMRC’s Employment Income Manual, in the section Particular benefits: exemption for trivial benefits – relationship with other exemptions (from 6 April 2016), states that ‘where a benefit is covered both by the trivial benefits exemption and also by another exemption, in applying the trivial benefits exemption, you should apply the outcome that is most favourable to the employee’.

 

The section includes the following examples:

 

‘Example S

Employer S provides its employees with two annual functions at Christmas and in the summer. The first function costs the employer £140 per head and the second costs £40. The first function is covered by the annual parties and functions exemption under section 264 ITEPA. The second function is not covered by that exemption because the financial limit of £150 has been exceeded by the combined total of the two events. However, the second function can be covered by the trivial benefits exemption because the cost did not exceed £50. If an existing exemption exempts only part of a benefit, even if the excess cost is less than the trivial benefit monetary limit, that excess is not exempt.

 

Example T

Employer T provides its employees with an annual function at Christmas that costs it £180. The benefit is not exempt under the annual parties and functions exemption under section 264 ITEPA because the cost of £180 exceeds the financial limit for the exemption of £150. Nor is the benefit covered by the trivial benefits exemption because the cost of £180 exceeds the trivial benefit financial limit of £50.’

 

Student loans payroll deductions - what plan are they on?

Reporting the correct student loan plan is essential.


Reporting the correct student loan plan is essential.

 

Payroll software will generally handle student loan deductions quite efficiently but it will always rely on human input of the correct student loan plan.  If this is wrong then the deductions may also be incorrect. Getting the deduction right is important for many reasons including that the Education (Student Loans) (Repayment) Regulations 2009 provide for penalties for error offences where an employer fraudulently or negligently:

  • makes incorrect deductions
  • makes an incorrect return of Student Loan deductions.

 

How do we know which plan the student is on?

Student Loan deductions should be made from the next available payday using the correct plan type However, how do you find out which plan is correct?

 

The reality is that you may have to rely on information from the student to tell you.  HMRC give the following guidance on the options to use:

  • your new employee’s P45 shows deductions should continue - ask your employee to confirm their plan type
  • your new employee tells you they’re repaying a Student Loan - ask your employee to confirm their plan type
  • your new employee fills in a starter checklist showing they have a Student Loan - the checklist should tell you which plan type to use
  • HMRC sends you form SL1 ‘Start Notice’ - this will tell you which plan type to use
  • you receive a Generic Notification Service student loan reminder - ask your employee to confirm their plan type.

 

Why is the plan type important?

The two plans have different thresholds so using the wrong plan will make a big difference. The difference is:

 

With effect from April 2018, the thresholds for making Student Loan deductions are:

Plan 1 - £18,330 annually (£1527.50 a month or £352.50 a week)

 

This generally applies to:

  • an English or Welsh student who started your undergraduate course before 1 September 2012
  • a Scottish or Northern Irish student.

 

Plan 2 – £25,000 annually (£2083.33 a month or £480.76 a week)

 

Plan 2 applies to English or Welsh students who started undergraduate courses on or after 1 September 2012.

 

Remember that the figure to use for deductions is the same gross pay amount that you would use to calculate your employer’s secondary Class 1 National Insurance contributions (NICs).

 

If your employee doesn’t know which plan type they’re on, ask them to check the Student Loan Company (SLC). If they’re still unable to confirm their plan type, start making deductions using Plan type 1 until you receive further instructions from HMRC.

Directors – removing your home address from public records

It’s now much easier, but be aware of these practical considerations.


Recent changes to the Companies Act 2006 through The Companies (Disclosure of Address) (Amendment) Regulations 2018 have made it much simpler now to remove the home address from public record. This applies to company directors and others such as secretaries, people with significant control (PSC) and LLP members, whose home address is publicly available on company documents. A record will still be held but will not be on public record.

 

The legislation

Section 1088 of the Companies Act 2006, and regulations 9 to 11 of The Companies (Disclosure of Address) Regulations 2009 (as amended by The Companies (Disclosure of Address) (Amendment) Regulations 2018), allows the registrar of companies to remove an address which has been placed on the register from public inspection.

 

What has changed?

Initially, The Companies (Disclosure of Address) Regulations 2009 outlined the criteria and process of how an individual may apply for his residential address to be removed from public records. Regulations 2018, effective from 25 April 2018, has amended the previous regulations by:

 

  • providing more individual categories the opportunity to make an application for the removal of their home address:
    - as a proposed member or member of a Societas Europaea
    - as a member or former member. Prior to this, members could apply only for the documents delivered on or after 1 January 2003.
  • removing a statement of the grounds on which application could be made and supporting evidence.  Previously individuals had to provide the evidence with their application, stating why their residential address should be removed from the public records; and
  • the fact that the registrar will no longer be making a determination on certain applications.

 

An application can be made by:

  • an individual to remove an address from the register
  • a company to remove the addresses of its members or former members
  • a person who registers a charge to remove an address delivered for the purpose of registering the charge.

 

Practical considerations

Since the launch of Companies’ House beta service from 2015, it is very easy to access any UK company and its related people information. Some practical thoughts should be considered before applying:

  • Section 1088 is for the removal of the address which is placed on the register in the individual’s capacity. Hence if the company has/had its registered office at a director’s home address, it will be still visible on public records in filing history.  So, the change might sound tempting to apply for straightaway, but is it actually for you?
  • There is an application fee of £55 for each document to be suppressed.
  • An alternative address will have to be provided to Companies House for current appointments for correspondence purposes. This will replace the home address on the public register.

 

For detailed Companies House guidance, click here.

 

Defend against money laundering

Practical guidance in spotting suspicious activity.


Practical guidance in spotting suspicious activity.

 

The National Crime Agency (NCA) has issued SARS Regime Good Practice Frequently Asked Questions: Defence Against Money Laundering (DAML), which highlights good practice and interpretations provided by experienced money laundering reporting officers (MLROs) from across the UK suspicious activity reports (SARs) regime.

 

The NCA states that 'the ambition of these core answers is therefore to help a large cross section of the SAR reporting community and improve the quality of DAML disclosures. The aim will be to regularly review the content as it is anticipated that this product will evolve into further editions following the introduction of new legislation, regulations and crime trends.'

 

The NCA has also stated that the benefits of the DAML FAQ include:

  • It offers good practical guidance and should help improve DAML quality.
  • Time should be saved for the UK Financial Intelligence Unit (UKFIU) in sending requests for further information and for reporters replying to such requests.
  • It signposts SAR regime AML guidance in one place.
  • AML help desk facilities now have a common framework to start from and can provide their colleagues with examples that relate to their work environments.

 

 

GDPR and cyber-crime

Are you prepared for a cyber-attack?


Are you prepared for a cyber-attack?

 

The National Cyber Security Centre (NCSC)  ‘Would You Be Ready?’ online test asks questions to help SMEs assess if they are prepared for various incidents and it also provides tips on how to safeguard assets. NCSC highlights staggering statistics that ‘just under half (46%) of all businesses have identified at least one cyber security breach or attack in the last 12 months (38% micro-firms, 52% small firms and 66% medium firms)’.

 

Action Fraud’s 24/7 live hotline on 0300 123 2040 is also highlighted and this can be used where there is a live attack. Action Fraud state that ‘A live attack is one that is ongoing, that is still affecting your system and your ability to work and there is an opportunity for law enforcement to stop the attack and/or secure evidence that will assist an investigation.

 

For example:

  • cyber criminals have accessed your network and stolen personal information about your customers and are demanding payment for its safe return. This is also known as hacking extortion. 
  • your website is being flooded with traffic – customers are not able to access it as a result. This is called a distributed denial of service (DDOS) attack.’

 

As highlighted previously, guidance on cyber-security is an essential element of protecting data. Many businesses have sought certification under the  Cyber Essentials scheme. The scheme has the additional benefit of demonstrating to clients (or prospective clients) that you take the protection of their data seriously. 

 

NCSC guidance includes the following:

 

VAT special schemes

Clients could benefit from considering these special schemes.


Clients could benefit from considering these special schemes.

 

As the Making Tax Digital (MTD) for VAT April 2019 date looms large (coupled with delays to HMRC's digital projects) it is worthwhile looking at VAT special schemes and discussing them with clients.

 

A number of special schemes are available to VAT registered businesses, which, subject to meeting the conditions, businesses can choose to use if they so decide. These include the following:

  1. cash accounting scheme
  2. annual accounting scheme
  3. flat rate scheme for small businesses
  4. flat rate scheme for farmers
  5. retail schemes
  6. second-hand schemes
  7. tour operators’ margin scheme.

 

Let’s take a closer look at how we account for VAT under each of these.

 

Cash accounting scheme

If a business is already registered for VAT and eligible to use this scheme, then this scheme may be used from the start of the next VAT period. There is no need to apply to use the scheme. Output tax must be accounted for in the return for the VAT period in which payment or other consideration is received.

 

Input tax can be reclaimed in the return for the VAT period in which payment is made or other consideration is given or in a later period as may be agreed with HMRC.

Subject to some exceptions, where the cash accounting scheme is used, it must be used for the whole of the VAT registered business. The exemptions include goods bought on hire purchase or lease purchase and some other items.

 

The amounts of VAT due and VAT deductible are based on payments received and made, not on invoices issued. Similarly, the boxes for values of output and inputs must be completed on the basis of payments received and made (exclusive of VAT). Subject to specific conditions, the scheme is available if taxable supplies will be no more than £1,350,000 in the next year. The entity will need to leave the scheme if its taxable sales (excluding VAT) exceed £1,600,000 for the year.

 

These are explained in VAT Notice 731 on Cash Accounting

 

 

Annual Accounting Scheme

The Annual Accounting Scheme allows you to complete just one VAT return each year, instead of four. VAT is paid by instalments, either three quarterly instalments or nine monthly instalments. These must be paid by direct debit, standing order or other electronic means. After joining the scheme, HMRC calculates and notifies the business of the instalment amounts and the dates they are due. The business can pay additional voluntary payments. 

 

At the end of the year the business submits its VAT return and any balance outstanding. If too much money has been paid throughout the year, HMRC will refund the excess. The due date for annual returns is normally two months after the end of the annual accounting year. Both the dates for the start and end of the VAT period and the due dates will be shown on the VAT return.

 

The eligibility conditions are similar to the ‘cash accounting scheme’ in that the scheme is available if taxable supplies will be no more than £1,350,000 in the next year. The entity will need to leave the scheme if its taxable sales (excluding VAT) exceed £1,600,000 for the year.

 

These are explained in VAT Notice 732 on Cash Accounting

 

 

Flat rate scheme for small businesses

The scheme allows a business to apply a fixed flat-rate percentage to the gross turnover to arrive at the VAT due. Fixed-rate percentages vary depending on the type of business.

 

Subject to certain conditions, the scheme is for businesses with turnover of no more than £150,000 a year, excluding VAT. The business will cease to be eligible to use the scheme if the total value of income for the year ending is more than £230,000.

 

View the flat rate percentages for different businesses while VAT Notice 733 deals with the flat rate scheme.

 

 

Flat rate scheme for farmers

Farmers who are certified under the flat-rate scheme do not account for VAT, or submit returns, on sales of goods and services within the designated activities to other VAT-registered customers. This means that they cannot reclaim the related input tax.

 

However, on sales of designated goods and services to VAT-registered persons, farmers may charge a fixed flat-rate addition of 4% on top of the sales price. This also applies if some of the goods would otherwise be zero-rated. The farmer would retain the 4% addition and the VAT–registered person is able to recover it as if it were VAT.

 

The flat-rate addition is not charged on sales of goods and services which are not designated (eg machinery sales) or on sales to non-registered persons (eg the general public or other flat-rate farmers).

 

If the taxable turnover of non-farming activities is less than the VAT registration threshold, a farmer can still be a flat-rate farmer. He would not charge VAT or the flat-rate addition on the non-farming activities. Common examples of non-farming activities include ‘bed and breakfast’ and ‘provision of storage facilities’.

 

If the taxable turnover of non-farming activities is above the VAT threshold, a farmer must register for VAT. If that farmer is already in the flat-rate scheme for farmers he should arrange for that certificate to be cancelled and register for VAT. The farmer will not be eligible to join the flat-rate scheme unless:

  • the non-farming activities are zero-rated, in which case the farmer may ask for exemption from registration and join the scheme; or
  • the non-farming business is run as a separate business by a different legal entity (eg a person could run his farming activities as a sole proprietor and a bed and breakfast business in partnership with another person).

 

The scheme is available to farmers and others involved in agriculture, a full definition can be found in VAT Notice 700/46

 

 

Retail schemes

These schemes are intended for businesses who cannot reasonably be expected to account for VAT in the normal way. For businesses in the scheme there is no requirement to issue a tax invoice to customers. The scheme is often used by supermarkets and other shops with a large number of customers.

 

There is no upper limit to the value of sales a business can have and be eligible to use the scheme. Although if annual VAT exclusive turnover exceeds £130,000,000 then a bespoke scheme will need to be agreed with the local VAT Business Advice Centre, whereas if turnover is less than this amount then one of the standard schemes can be used.

 

VAT Notice 727 deals with the retail schemes

 

 

Second-hand Schemes

The margin scheme can be used for the supplies of second-hand goods, works of art, antiques and collectors’ items. Using the margin scheme allows the entity to account for VAT on the difference between the price paid for an item and the price it was sold for. Without the scheme VAT would be accounted for on the full selling price and there may not have been any VAT on the purchase of the item.

 

The trader has the choice of using the margin scheme or accounting for VAT in the normal way. If some sales come within the margin scheme and some do not then the margin scheme can be used for some sales and the normal rules for others. VAT can be reclaimed on business overheads as usual (such as accountancy fees, repairs, stationery etc.).

 

Sales invoices should show the total price including VAT at the standard rate, although the invoice must not show VAT as a separate item.

 

VAT Notice 718 deals with the margin scheme

 

 

Tour Operator’s Margin Scheme

As an intermediary, the value of the supply on which VAT may be due will be the amount of commission due from the principal or the fee charged (excluding VAT).

Input tax incurred by the intermediary in general would be reclaimed in the normal way.

 

Complications can arise on issues such as determining the place of supply of the services, also whether the travel agent is acting as an intermediary, an agent acting in own name or as principal. These matters are dealt with in VAT Notice 709/6.

 

VAT Notice 709/6 deals with the travel agents and tour operators’ scheme

 

 

Can these special schemes be used together?

  • The cash accounting scheme and the annual accounting scheme can be used together.
  • The annual accounting scheme and flat-rate scheme can be used together.
  • The cash accounting scheme cannot be used with the flat-rate scheme as the flat-rate scheme has its own version of cash accounting.
Changes in the taxation of overseas pensions

Rules have changed for your clients with overseas pensions.


Rules have changed for your clients with overseas pensions.

 

Members preparing 2017/18 tax returns for their clients need to remember that the taxation rules changed from April 2017. 

 

What has changed?

Before April 2017 the rule was that only 90% of a UK resident’s foreign pension was taxed.  HMRC introduced this to reflect the additional expenses incurred in earning that pension. However, the government announced in 2017 that  it ‘isn’t convinced’ that this 10% deduction is justified given that there is no similar deduction for UK accrued pensions that did not receive tax relief.

 

So from April 2017 the full amount of any foreign pension received by a UK resident will be fully taxable where no UK tax relief was given on the pension savings.  This now replaces the previous 90% limit.

 

The change includes any income from a qualifying recognised overseas pension scheme (QROPS), which will also be taxable in the UK in the normal way.

 

Lump sums

If the client is UK resident, the new rules apply to lump sums paid out of funds built up in overseas employer-financed retirement benefits schemes (EFRBS) while working overseas since 6 April 2017. Lump sums they are entitled to receive out of funds built up before that date will receive their former tax treatment. This has been clarified in the Finance Act 2017 Schedule 4

 

Section 615 schemes - favourable tax treatment will no longer apply in respect of benefits built up in a s615 scheme on or after 6 April 2017 but the changes will allow for limited increases after that date.

 

The limit will be the annual amount of increase in the pension previously allowed under the scheme rules or the rate of the consumer prices index.

 

Payments to a scheme solely to fund a deficit in respect of entitlement built up before 6 April 2017 will not lead to a loss of favourable tax treatment. Nor will they be considered additional benefit build up.

 

However, schemes providing only replacement rights for those built up before 5 April 2017 in a s615 scheme will be able to keep the same favourable tax treatment under the new scheme.

 

Benefits built up before April 2017 - Favourable tax treatment for specialist foreign service pension schemes will continue to apply to essential payments to those schemes made on or after 6 April 2017 in respect of entitlement to benefits that built up before that date.

 

Where all the lump sum was earned overseas prior to 6 April 2017, the relief is relatively straightforward to calculate and the taxpayer will generally find that the same relief applies that would have been obtained had the sum been taken prior to the introduction of FA 2017.

 

Where sums are from before and after 6 April 2017, the calculations may produce different results. FA 2017 highlights the formulae to calculate the amount of relief available for the foreign service. However, a different formula applies depending on the type of non-UK pension scheme.

HMRC changes its digital tax priorities

Brexit implications will delay HMRC projects.


Brexit implications will delay HMRC projects.

 

HMRC has confirmed to ACCA and other professional bodies that various projects currently in operation will either stop or be paused due to BREXIT ‘challenges’.

The confirmations came after the issues were discussed at a Public Accounts Committee meeting on 30 April 2018 which examined HMRC on their progress on various matters.

 

The main points of interest to ACCA members (especially those in practice) are:

 

1          HMRC intends to delay its plans to introduce further digital services for individuals. Areas affected will be:

  • Simple assessment
  • Real time tax code changes
  • Digitising services for inheritance tax, tax advantaged venture capital schemes and PAYE Settlement Agreements (PSAs).


So for taxpayers already in the simple assessment system there should be no changes but clearly no further taxpayers will be included in the future. HMRC continues to encourage use of Personal Tax Accounts and it will ‘revisit’ the above projects at some stage in the future.

 

2          Conversely HMRC has indicated that MTD for VAT is still on track for 2019 but there will be no further MTD obligations before 2020 at the earliest.

The evidence given to the committee makes interesting reading and covers HMRC’s responses on a number of areas. Witnesses to the committee were Jon Thompson, Permanent Secretary, HMRC, and Jim Harra, Second Permanent Secretary, HMRC.

 

MTD and VAT 

As highlighted above, in its recent Public Accounts Committee outing and following communication, HMRC has provided some clarity around the future of Making Tax Digital (MTD)  for Business. While the non-VAT parts are not mandated for business changes before 2020 at the earliest, it is clear that MTD will be mandated for VAT for those businesses with income above the VAT threshold from April 2019.

 

ACCA has partnered with Bloomsbury Professional and will provide members with free practical guidance on MTD VAT implementation from the summer of 2018. Future publications will highlight when it is available.

Agent Account Managers – how and when they help

If you can’t resolve an issue with HMRC, help is at hand.


If you can’t resolve an issue with HMRC, help is at hand.

 

ACCA members often need to help their clients resolve a tax dispute with HMRC. The dispute may be settled very quickly and efficiently. But in some cases the accountant and their client reach deadlock with HMRC and there appears to be no obvious way of moving the case on. The answer may be to use the Agent Account Managers (AAMs) service.

 

AAMs are an HMRC initiative to help resolve client-specific issues. The AAMs act as an intermediary between agents and HMRC where the normal communication channels have broken down.

 

To use this service there is a fairly straightforward process. To register for the AAM there is an online registration form. The benefits are:

  • you can do this before you even have a tax issue
  • you only need to register once, and only one representative needs to register for everyone in the firm to be able use the service. If you have more than one branch or office, one representative from each branch will need to register, but then everyone in that branch will be able to use the service.

 

When HMRC receives your form, an automatic acknowledgment will be sent to your nominated email address.

 

How and when does AAM help in solving your client’s problems?

The first point to remember is that before you use the AAM service, you must first contact the HMRC office you’ve been dealing with or contact HMRC to attempt to resolve your issue. So the AAM service doesn’t replace HMRC’s process for formal complaints nor does it replace attempting to resolve the issue through ‘normal’ HMRC methods.

 

Unfortunately an accountant’s view of whether they have exhausted the normal methods may differ from HMRC’s view.

 

An online form should be completed for each issue. The form collects some details to demonstrate that you have already attempted to resolve the dispute by other means.

 

What happens after submission?

Once the form is sent you’ll receive an automatic email acknowledgment including a reference number specific to your query. Then HMRC states that a member of the AAM team will contact you within three working days. 

 

Note that the AAMs don’t give advice on technical matters or the interpretation of tax legislation and guidance. However, as a last resort to resolve a dispute the service should be useful to accountants and their clients.

ATED – a potted history

Annual tax on enveloped dwellings – what you need to know.


Annual tax on enveloped dwellings – what you need to know.

 

ATED charges increased again in 2018 as those filing returns in April will know. The increase amounts to some 3% on prior year ATED charges.

 

With the regular annual increases since the tax was introduced in 2013 and more and more properties being caught by the charge due to the decreasing bands (luckily no lower than £500k ATED bands have been introduced), if, since 2013, a company has owned six properties, one in each of the ATED value brackets, the amount of ATED payable in 2019 will have increased from £260k for 2013-14 to £432k for 2018-19, unless reliefs were claimed.

 

 

2013-2014

2014-2015

2015-2016

2016-2017

2017-2018

2018-2019

More than £500,000 to £1m

 

 

 

£3,500

£3,500

£3,600

More than £1m to £2m

 

 

£7,000*

£7,000

£7,050

£7,250

More than £2m to £5m

£15,000

£15,400

£23,350

£23,350

£23,550

£24,250

More than £5m to £10m 

£35,000

£35,900

£54,450

£54,450

£54,950

£56,550

More than £10m to £20m

£70,000

£71,850

£109,050

£109,050

£110,100

£113,400

More than £20m

£140,000

£143,750

£218,200

£218,200

£220,350

£226,950

Relief declaration submission by or ATED return and payment by

Return due by 1 Oct 2013. Payment due by 30 Oct 2013

 

*30 April 2015 - for properties at more than £1m to £2m

 

For properties in bands other than £1-2m - 1 October 2015, payment due by 30 Oct 2015

 

 

30 April 2018

Which value to report on return

Value at 1 April 2012

Value at 1 April 2012

Value at 1 April 2012

Value at 1 April 2012

Value at 1 April 2012

Value at 1 April 2017

 

 

To claim relief, ATED Relief Declaration Return (RDR) must be filed. If RDR is not filed, HMRC may open a discovery inspection and enforce ATED payment as relief was not claimed, even if the company may have qualified for it. Suddenly forgetting to file a return has become very costly.

 

Buy-to-let investors purchasing properties though limited companies to escape the restricted mortgage interest deductions affecting individual landlords may find themselves caught by a much higher ATED charge instead. Monitoring property values in the market place as well as any value added to property as part of refurbishments is necessary to ensure ATED is reported correctly.

 

When to value and how to report

Normal returns

ATED is an unusual return, as it requires companies to look ahead into a period which has not yet happened to see whether relief can be claimed, whilst property is shown at a valuation carried out in the past. In returns for 2013-14 to 2017-18, properties were shown at valuations obtained at 1 April 2012.

 

As valuations must be done every five years, starting from 1 April 2012 when a valuation was first required, the most recent valuation to be used in returns from 2018-19 is now a valuation carried out on 1 April 2017.

 

For chargeable period 2018/19 ATED return and tax payment or relief declaration return should have been submitted by 30 April 2018, if at the beginning of the chargeable period (1 April 2018) the company owned a property which was valued on 1 April 2017 (or based on cost if it was purchased after 1 April 2017) at any of the ATED brackets applicable to 2018-19. The company is expected to know at 1 April 2018 that it will or will not meet conditions for a relief from 1 April 2018 - 31 March 2019 or through part of the 12 month chargeable period for the relief to be approportioned.

 

A valuation also has to be done if a major part of the property held is sold or a property is acquired. For example, if a plot of land held from 2012 is sold in October 2015, the remaining land must be valued at the point of sale, in October 2015.

If property valuation comes within a 10% margin of an ATED band, for example directors value the property at £480k, which is within 10% of the first £500k (between £450k and £500k) HMRC may query the valuation. It is now possible to confirm the correct property value with HMRC by submitting a pre-return banding check (PRBC).

 

Following PRBC, HMRC may agree to the valuation, may ask for more information, or may advise the correct band. Considering the amounts of tax involved, it may be beneficial to carry out a professional valuation instead if a property comes within 10% of the value that could trigger or increase ATED charge, as HMRC has said that it accepts professional valuations.

 

Adjusted returns

Complications arise when an investment company demolishes an old building before starting the construction of a new one, which is subsequently valued at more than the value of the building it replaced. ATED needs to be submitted for the chargeable period at the end of which no building exists following demolition, and subsequently an additional return needs to be submitted for the uplift in value between the old and the new building, in addition to normal ATED return for the next period.

 

Consider this scenario applying to an investor developing replacing an old building with a new development.

 

 

Demolition and extension work Q&A

 

A few real-life examples may help clarify some ATED compliance requirements that property companies may face:

 

Q1. I am a developer operating via a limited company and currently constructing a new building. When does the new building need to be valued for ATED?

A1. The building needs to be valued when it first comes into existence for council tax or when it is first occupied, whichever is earlier.

 

Q2. I am a developer operating through a limited company and currently converting an old house to a house of multiple occupancy. Do I declare the value of the old house on ATED return or the value of the HMO after conversion and when is the ATED return due?

A2. For ATED purposes converting a house into HMO means that the old dwelling ceases to exist and a new dwelling comes into existence. The valuation is done when the new HMO comes into existence and the conversion is completed. A conversion is deemed to be completed when it is first occupied or when it becomes chargeable to council tax, whichever is earlier.  The return is due 90 days after that date. For example if a conversion is completed on 15 September, return must be submitted by 13 December.

 

Q3. A property company is changing a residential building within ATED to a non-residential building. Does ATED still apply?

A3. ATED applies until the time the use of the building changes. This is until planning permission is obtained (if required) and actual changes to the building made which make the building unsuitable for residential use as a dwelling.

 

Q4. A building within ATED charge suffered a fire and is unsuitable for occupation. Can I reclaim ATED paid?

A4. As fire is both accidental and beyond the control of the company, ATED does not apply from the moment when the building is expected to be unsuitable for occupation, if the period during which it is unsuitable is at least 90 consecutive days. You need to wait 90 days after the event which has made the property unsuitable for occupation before an amended return reclaiming ATED paid is made.

 

The next ATED return needs to be filed 30 days after the building becomes suitable for occupation again. This is when sufficient remedial work is completed to bring the building back to a state suitable for occupation, and not necessarily when all work is done to bring the building to its exact previous state.

 

 

Self-assessment filing problems continue

HMRC issues updated guidance on the exclusion list.


HMRC issues updated guidance on the exclusion list

 

The instances where the SA tax calculator is still not working continue. HMRC is working to resolve these but the Exclusion list is still being updated. This is to reflect fixes made, new issues resulting from those fixes and updated guidance. The latest has been updated for changes to 87 and 90.

 

Exclusion 87 for Pension Lump Sum and how an individual’s lump sum state pension payments are taxed relative to the way they make their personal pension payments. The outcome is to allow the extension of the basic/higher rate limits per s10(6) ITA 2007. The result is the SA tax calculator is correctly extending the basic rate band for 2017-18. However, the ‘income’ for the Pension Lump Sum should be determined without reference to the starting rate for savings, the savings nil rate (personal savings allowance), and dividend nil rate (dividend allowance).

 

Exclusion 90 criteria have been updated to ensure HMRC identify customers affected but do not identify those that are not.

 

See Exclusion 80 IT which is treated as paid and Exclusion 81 Top Slicing Relief for more information.

 

Exclusions 70, 79, 80 and 81 will be fixed for customers filing their 2018-19 Returns.

 

View the latest version of the exclusions

 

NEWS
News and tools for you

Details of a GDPR compliance solution for practitioners, how to become licensed to provide probate services, a free webinar about apprenticeships funding and entry details for the British Accountancy Awards 2018.


Accounting Excellence Talks - you've done cloud, now what?

 

A GDPR compliance solution for members

 

Engagement letters for tax practitioners factsheet

 

British Accountancy Awards 2018

 

Free technical webinars - live and on demand

 

Policy Matters

 

Are you willing to be a continuity partner?

 

Probate webinar and course registration

 

Free webinar - apprenticeship funding transfers for small employers

 

Accounting Excellence Talks - you've done cloud, now what?

Thursday 21 June, 11am

The clearest trend to emerge from the 2017 Excellence Awards was the arrival of cloud systems in the practice mainstream. This talk will examine how firms are adapting their cloud services to differentiate themselves. The panel will be looking at the factors behind the shift to cloud, how the adoption of cloud tools has driven cloud add-ons and how emerging technologies are changing the accounting landscape. 

Register here now for free

 

 

A GDPR compliance solution for practitioners

Members in practice will soon need to be compliant with the new data protection regulations.

 

After being approached by Bob Edwards FCCA – a long-serving member of the ACCA – we have also vetted a practical, hands-on solution designed to help practitioners and their clients prepare for the introduction of GDPR.

 

Bob has created in a joint venture with GDPR Auditing Ltd which has developed a Workbook that takes a practitioner through a number of distinct processes. When completed, you will have a permanent record of your steps to compliance and have created the changes you will need to make to privacy notices, employees’ contracts and your contractual terms and conditions.

 

The Workbook comes pre-populated with required information that is common to all UK practitioners. This should save you time and speed up your progress towards compliance.

If required, Bob and his colleagues can verify that the work you have done is adequate or undertake the entire process for you.

 

ACCA practitioners are eligible for a discount when purchasing the Workbook. To apply for the members’ discount include the discount code “ACCA5P” when you complete the order form. If you have any questions, contact Bob Edwards at bob@landmarkpd.co.uk or call 01723 363 133.

 

 

Engagement letters for tax practitioners factsheet

Our free Engagement Letters for Tax Practitioners factsheet has just been released and is available to download now.

 

 

British Accountancy Awards 2018

Entries to the British Accountancy Awards 2018 are now open! Taking place on 26 September at Grosvenor House in London, the awards will welcome over 1,000 guests from across the UK and celebrate the very best of the practice sector. Here are five top reasons to enter:

 

1. Benchmark your firm across the industry
2. Increase your firms credibility and differentiate from your competitors
3. Boost staff morale and improve motivation
4. Attract new talent to help drive your business forward
5. Celebrate your team's hard work across the year with an unforgettable night at one of London's finest hotels.

 

View the categories and then download the Entry Pack

 

 

Free technical webinars - live and on demand

The following free technical webinars are all available to watch 'on demand' now. You're welcome to share these with colleagues in your practice:

  • FRS 102 and recent changes (Speaker: Steve Collings, Audit & Technical Partner, Leavitt Walmsley Associates Ltd)
  • Practical implications of incorporating a property portfolio (Speaker: Dean Wootten, Wootten Consultants Limited)
  • Charitable Incorporated Organisations (Speaker: Don Bawtree, Business Assurance Partner, BDO)
  • IR35 and employment status – the end of the personal service company (Speaker: Louise Dunford, LD Consultancy Limited)
  • Reliefs and claims on personal taxes (Speaker: Paul Soper, tax lecturer and consultant)

Access any of these webinars on demand now (Each webinar will count for one unit of verifiable CPD where it is relevant to the work that you do.)

 

 

Policy Matters

Read the latest issue of ACCA’s newsletter highlighting our work to influence the government and policymakers on issues such as trade & investment, social mobility and Brexit.

 

 

Are you willing to be a continuity partner?

ACCA has a search tool to enable members in the UK and Ireland to find firms prepared to provide continuity of practice arrangements. 

 

The search tool is located in the Directory of Business Advisers section of ACCA’s website. At present we are focusing on building up a number of firms who are interested in participating.

 

To participate in the scheme and offer your firm as a potential continuity partner, your firm must contain at least one ACCA practising certificate holder. If you are willing to participate in the scheme please download this form, complete and return it to:

 

Authorisation, ACCA, 110 Queen Street, Glasgow G1 3BX
Email: authorisation@accaglobal.com

 

ACCA is unable to recommend specific firms and will not get involved in drawing up continuity of practice agreements, but guidance is available in this technical factsheet about continuity of practice arrangements, which also contains copies of ACCA's model agreements.

 

Members are strongly recommended to seek independent legal advice when drawing up a continuity agreement. The agreement will be legally enforceable upon the parties. It is, therefore, important that all parties are clear in their understanding of their responsibilities under the agreement, and that the document records accurately all matters agreed by the parties.

 

Further advice can be obtained from Technical Advisory on 020 7059 5920 or at advisory@accaglobal.com.

 

 

Probate webinar and course registration

ACCA has been approved to authorise individuals and firms to carry out probate work. A webinar providing a brief overview of the Probate process in England and Wales is now available on demand. Using a case study, it covers the following:


• Validity of Wills
• Intestacy
• Analysis of a Will
• Inheritance Tax
• Obtaining a Grant
• Oaths
• IHT forms
• Duties/ Powers of PRs
• Administration of the estate
• Completing the Administration
• Estate Accounts

 

Speaker
Shan Cole is a qualified solicitor and has worked in Eversheds during her time in the profession. She holds a Practising Certificate and is currently working part-time in a Conveyancing Practice. She has wide experience as a lecturer having taught at the University of South Wales for over 20 years on both undergraduate and professional courses – including being LPC Course Director.
Her areas of expertise are in Land/Property Law, Wills and Trusts. She is currently a part time tutor at Cardiff Law School teaching on both the LLB and LPC. Shan is also the Chief Examiner for CILEX (Chartered Institute of Legal Executives) in their Probate Practice and Elderly Client Law and Practice modules. She has also held posts as external examiner for the University of Law and a critical reader for the Open University.


You can register for this webinar 

 

Register for Probate Course

Register now for the Kaplan Altior ACCA Probate and Administration Skills course. The course authorises you to carry out probate work, enabling you to provide highly valued and comprehensive support to your clients following a bereavement and is delivered by an expert in land/property law, wills and trusts. The training sessions and assessment are all undertaken online with the aim to fit in with the working day, allowing you flexibility, the opportunity to save on travel costs and time, as well as the option to interact with both the trainer and other attendees from the comfort of your own home or office. Questions? Contact Kaplan Altior at altior@kaplan.co.uk

 

 

Free webinar - apprenticeship funding transfers for small employers 

We are pleased to bring you a live webinar in partnership with the National Apprenticeship Service on Wednesday 13 June @ 12.30pm - Apprenticeship funding transfers for small employers – practical guide

 

This is an exclusive opportunity for small employers to join us and learn about the government’s latest apprenticeship funding initiative, the transferring of apprenticeship funds to other employers. Apprenticeship transfers have been introduced to give levy-paying employers more flexibility in how they spend their apprenticeship funds. Those employers are now able to use funds in their apprenticeship service account to fund an apprenticeships in another organisation, and you could be on the receiving end. This is a fantastic opportunity for small businesses to use these additional funds to recruit new local talent, training and moulding apprentices to your own business culture.

 

It is excellent news for smaller businesses and we feel practitioners along with other SMEs will benefit from this change greatly so don’t miss out on your chance to receive a levy transfer.

 

Register here and join us for a full demonstration of the transfer process. You’ll find out exactly how it works and what you need to do to set yourself up to receive 100% apprenticeship programme funding.   

Consultation - off-payroll working in the private sector

We will need your help and evidence.


The government consultation Off-payroll working in the private sector runs until 10 August 2018. It reviews and evaluates the effectiveness of the April 2017 changes to the off-payroll working rules in the public sector, as well as considering options to increase compliance in the private sector.

 

HMRC states that the consultation explores ‘how best to tackle the continuing non-compliance with the rules in the private sector, including:

  • setting out the existing challenges faced in conducting compliance activity for the off-payroll working rules in the private sector; and
  • considering options to improve compliance, including seeking views on a possible next step of extending the public sector reform to the private sector and if so, how it might be adapted if this approach was pursued.’

 

This consultation considers a number of potential options it states ‘for tackling the high and growing levels of non-compliance with the off-payroll working rules in the private sector.’ The options listed in many cases are dismissed with HMRC stating ‘This option is out of scope’.

 

Please discuss these potential changes with your clients and consider the impact the change could have on their business models, on productivity, on growth, on investment, on R&D, and also if they have any experience of IR35 in the public sector.

 

Please send your comments on the consultation to advisory@accaglobal.com

 

Fantastic opportunities with ACCA at Accountex 2018

There are just five days to go until Accountex 2018 throws open its doors at London’s ExCeL!


Make ACCA’s stand at 110 your first stop when you arrive and explore our Practitioners’ Zone, Talent Zone and Insights Zone. Our Technical Advisory Service will be running an informal drop in surgery across both days to answer your technical queries.

 

We also look forward to talking with you about our comprehensive CPD programme and the many different ways you can complete your CPD requirements.

 

Recruitment is also a hot topic for those running a practice and we can share some insights from our research programme into what practices will look like in the future and why apprenticeships are so attractive to many firms today.

 

ACCA Theatre

The programme in our lecture theatre – located opposite our stand – offers thought-provoking updates across both days. The 60 spaces always go quickly. Avoid missing out by arriving in good time for your chosen session(s):

 

Wednesday 23 May

11:00-11.45: ACCA in 2018 and beyond (Jason Hinkle & Glenn Collins, ACCA)

12:00-12.45:  Making Tax Digital (Brian Palmer, Tax Policy Advice)

13:00-13.45: Cybersecurity – what you need to know! (Peter Erceg, Lockton)

14:00-14.45: Future proof your practice (Sharon Pocock, Kinder Pocock)

15:00-15.45: GDPR is live – what now?  (Annabel Kaye, Irenicon Ltd)

16:00-16.45: Initial Coin Offerings – real deal or token gesture? (Narayanan Vaidyanathan, ACCA)

 

Thursday 24 May

11:00-11.45: Future proof your practice (Sharon Pocock, Kinder Pocock)

12:00-12.45:  Making Tax Digital (Brian Palmer, Tax Policy Advice)

13:00-13.45: Start, Grow, Sell - the hardest parts of growing an accounting firm (Guy Pearson, Practice Ignition)

14:00-14.45: ACCA in 2018 and beyond (Jason Hinkle & Glenn Collins, ACCA)

15:00-15.45: GDPR is live – what now?  (Annabel Kaye, Irenicon Ltd)

16:00-16.45: Initial Coin Offerings – real deal or token gesture? (Narayanan Vaidyanathan, ACCA)

 

ACCA’s Glenn Collins (Head of Technical Advisory) will be hosting a session in the keynote theatre at 16:00 on Wednesday 23 May exploring the ‘Changing face of the accountancy profession’ with guests Sharon Pocock FCCA and Will Farnell FCCA.

 

Don’t forget to use #Accountex2018 and tag @ACCA_UK when talking about your visit to the show on social media.