Technical and Insight
Changes to AML regulations: practitioners must act now

Changes to AML regulations mean you may be required to comply with new requirements in June.


Changes to anti-money laundering regulations mean that relevant firms and sole practitioners must comply with new requirements before 26 June 2018.

 

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

 

To achieve this, ACCA will send a communication to all practitioners before the end of May including an electronic form to provide the required information. Relevant firms and sole practitioners should start taking all the necessary steps to obtain this information and not wait for ACCA forms to arrive. 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 HM Revenue and Customs (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 beneficial owners, officers and managers (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. 

It is the relevant firm 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 BOOMs. To ensure that all forms are adequately submitted by 26 June 2018, relevant firms and sole practitioners should not wait for the application forms to be sent by ACCA and start taking any necessary steps to ensure that their BOOMs are fit and proper and have not been convicted of any relevant offence.

 

We have formally communicated to OPBAS our approach to complying with Regulation 26 of the MLRs, Extracts of the communication are included below.

 

‘We assume that HM Treasury’s intention is that proportionate and effective measures are taken to address the risk that individuals with relevant criminal convictions will hold positions as BOOMs within firms, which might, in turn, increase the ML/TF risk assessment of such firms.’

 

‘HM Treasury states that “law enforcement agencies report that the new requirement in the MLRs to check key personnel for relevant criminal convictions will further strengthen compliance and mitigate risks in the accountancy and legal sectors”. Not only does this make assumptions concerning risk (which cannot be applied across the whole of the accountancy sector or the legal sector), but it is incorrect in referring to a requirement in the MLRs to check key personnel for relevant criminal convictions”. There is, of course, no such requirement.’

 

‘Discussions among AAG members indicate that some PBSs are prepared to require all BOOMs within their firms to be subject to criminality checks. For other PBSs, criminality checks will only be required based on a risk assessment and this demonstrates an approach consistent with the AAG risk matrix and in the spirit of the 2017 Regulations. ACCA will undertake criminality checks on a sample basis following a risk based approach.’

 

“It is reasonable to gain a level of assurance that newly identified BOOMs are fit and proper, and have not been convicted of any relevant offences. Having gathered that data, it would be reasonable to require a sample of firms (on a risk basis) to obtain criminality checks, which would all be reviewed by ACCA. This approach is preferable to one that requires all firms to obtain criminality checks, even though only a sample will be reviewed by ACCA.’

 

Forms must be completed electronically to ensure that information is processed accurately and timely to meet the legal requirements under the mandated timescales. The completion of electronic forms will allow us to acknowledge receipt of applications promptly for the benefit of your AML records. Only under exceptional circumstances will submissions using paper forms be permitted. If electronic submission will present you with difficulties, you should contact ACCA as soon as possible using the email address: AML@accaglobal.com

 

 

 

ACCA takes major step forward on probate

ACCA is pleased to announce that we are now licensing our practitioners to conduct probate work.


ACCA is pleased to announce that we are now licensing our practitioners to conduct probate work.

 

Join us for a webinar at 12.30pm on Friday 27 April when Shan Cole of Kaplans will use a case study to provide a brief overview of the probate process in the UK. Register for the webinar now .

 

Practitioners wishing to apply for authorisation for probate are required to hold a legal activities qualification.  Members of ACCA must hold a practising certificate and have successfully completed a relevant course and assessment covering specific areas of probate work.

 

Individuals who are not members of ACCA can also apply for probate authorisation and must hold (or be eligible to hold) probate authorisation with another approved regulator, or have completed a relevant course and assessment covering specific areas of probate work, or be otherwise entitled to carry on probate activities under the Legal Services Act 2007.

 

Firms wishing to apply for probate authorisation must apply for a Firm’s Legal Activities Certificate (FLAC). Individuals are not eligible to undertake probate work through ACCA unless the firm(s) in which they practise holds a FLAC.

 

Court case examines charges during probate

In March the High Court ruled on the case Mussell and another v Patience that an executor who obtains legal advice during estate administration need not provide details of the reasons for charges in the estate accounts, other than the basic voucher stating the fees charged.

 

The case concerned the estate of Louise Patience, who died in 1997 leaving her property among her four adult children. The executors of the estate were named as her daughter and her solicitor. On her death, they applied for and obtained a grant of probate and proceeded to administration of the estate.

 

However, before the assets were distributed, a dispute arose in which two of the four beneficiaries objected to the legal fees incurred by the executors. The executors did not wish to distribute the estate until it was clear that the accounts were accepted. The defendants did not agree that those accounts were correct. This was really a claim by the executors, seeking the court's approval of their estate accounts and a direction that the estate should be distributed accordingly.

 

The beneficiaries challenged 26 payments made to two law firms relating to invoices for legal services on the basis that insufficient information was provided to demonstrate the reasonableness of the solicitors' charges.

 

They insisted that they were entitled to this information in order to assess whether the charges made by the executors' solicitors were or were not reasonable. Some of the bills, they pointed out, merely identified the estate, the addressee of the invoice, the statement that the charge made consisted of professional charges, and the amount of the charge.

 

The judge, Matthews HHJ, looked for guidance in other sources including s.31 and s.35 of the Trustee Act 2000 which states that a trustee is entitled to be reimbursed from the trust funds, or may pay out of the trust funds, expenses properly incurred by him when acting on behalf of the trust.

 

The judge concluded that the information required to be provided by way of ‘voucher’ to support an entry in the estate accounts need not exceed the basic information contained in the solicitors' invoices. It was not necessary for the voucher to disclose the number of hours worked or the hourly rate, or to give a detailed breakdown of exactly what work was done. All that is needed is to show that the executors have spent the estate's money on proper estate business. Moreover, in a case where the estate administration has been carried on through solicitors, there would be no need to add words to the effect that the charges were incurred in the administration of the estate, as this would be obvious to all concerned.

GDPR is getting closer

Two part article answers basic questions and looks at GDPR and cybercrime.


Two part article answers basic questions and looks at GDPR and cybercrime.

 

(Important notice: ACCA will be issuing the revised Engagement Letters on 30 April.)

 

ACCA – together with other professional bodies – recently asked the ICO (Information Commissioner's Office) a number of questions about GDPR (General Data Protection Regulation) including:

  1. What is GDPR?
  2. How is GDPR different from the old Data Protection Act?
  3. Why does it apply to members?
  4. What do firms need to do now?
  5. What records should firms retain for their clients?
  6. How long should firms hold client data under the GDPR?
  7. What are the suggested secure ways to communicate personal data?
  8. What records need to be kept to be GDPR compliant?
  9. Do firms have to issue new engagement letters and privacy policies?
  10. What are the penalties for non-compliance with GDPR?

View these questions and answers on our website now, while you can also check guidance on the ICO website and understand the fees charged by the ICO.

 

GDPR and cybercrime

The NCSC (National Cyber Security Centre) guidance on cybersecurity 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:

The Small Business Guide has the following sections, each with five areas to consider and tips:

  • backing up your data
  • protecting your organisation from malware
  • keeping your smartphones (and tablets) safe
  • using passwords to protect your data
  • avoiding phishing attacks. 

The specific guidance on phishing, where we have seen a dramatic increase over the last 12 months, is aimed at organisations of all sizes, in all sectors.

 

NCSC state that the guidance issued is not a set of hard rules but is ‘the starting point to help you decide your approach’. However, it also states that if ‘you can't implement all of our recommendations, try to address at least some of the mitigations from within each of the layers of defence …. As a result, you'll be in a much better place to minimise the damage from those phishing attacks that do get through.’

 

The guidance splits the mitigations into the following four layers to help build defences for a business, which would be useful when pulling together a business’s cyber policy:

  • make it difficult for attackers to reach your users
  • help users identify and report suspected phishing emails
  • protect your organisation from the effects of undetected phishing emails
  • respond quickly to incidents.

Under each of the headings the problem/issue is stated and the guidance explains how this can be resolved.

GDPR cybersecurity – browser exploitation and malvertising

Advice for practitioners – and your clients – on how to protect your web browsers.


Advice for practitioners – and your clients – on how to protect your web browsers.

 

In Agent Update 65 HMRC highlights the vulnerability of web browsers. It states that ‘web browsers and associated software (eg plug-ins like Flash) enable users to enjoy a wealth of digital content, in a range of different data formats. There is a lot of complexity behind the scenes in these programs, and security researchers and criminals work hard to find mistakes made by software developers that maintain them. These mistakes often relate to how the web browser processes data within a web page; by crafting the right content, an attacker can get the browser to mistakenly run the attacker’s code. When these vulnerabilities are discovered or reported, the software developers hurry to release software ‘patches’ (updates) to plug the holes.

 

'Not everyone applies these updates though, or they may even use older versions of web browsers that updates are no longer provided for. This presents an opportunity for criminals, who use “exploit kits” – a collection of specially crafted code, on a website that will target a wide range of vulnerabilities. Their only challenge is to get potential victims to visit their site – once they do, criminals are able to gain entry and install or run their malicious software. This includes sending out emails with links to these websites, littering social media sites with links, or paying for online adverts, which direct victims to the malicious site.

 

'The latter technique is referred to as malvertising (derived from malware and advertising), and criminals use a range of techniques to sneak their adverts past the checks of online marketing companies to appear on popular websites. Many legitimate sites have unknowingly hosted malvertising, including household names.

 

'Applying software updates is an important part of keeping your IT systems secure, and generally keeps you safe from this method of attack.

 

'Applying security patches to ensure the secure configuration of systems forms part of the National Cyber Security Centre (NCSC) 10 Steps to Cyber Security.

 

'Further information on the 10 Steps and other useful guidance can be found on the NCSC website.’

MTD hasn’t gone away – where are we now?

MTD for VAT is coming. Help your clients prepare now.


MTD for VAT is coming. Help your clients prepare now.

 

Since mainstream Making Tax Digital (MTD) was delayed, time has passed quickly and many accountants’ thoughts have passed to more pleasant things like tax returns and GDPR!

 

But MTD is back on the horizon and it will impact on VAT shortly.

 

What changes does MTD for VAT bring in?

  • VAT returns will be compiled by pulling data from digital records
  • VAT returns will be sent to HMRC via API-enabled products and not through VAT portal.

What won’t change?

  • The VAT return will still be a nine box form
  • The VAT return frequency and payment deadlines
  • The eligibility for VAT Special Schemes.

 

What is the timetable?

 

Date

Status

   

February 2018

Technical consultation on the regulations closed

   

March 2018

Regulations made

   

April 2018

VAT pilot –Live testing of MTD begins

   

April 2019

Businesses trading above the VAT threshold are mandated to use MTD

   

 

So what does this mean to accountants and your clients?

MTD for VAT is literally less than one year away – you should be talking to clients about it now and planning ahead by considering:

  • what software will be used?
  • does this require a change from the current software?
  • who will prepare/submit the VAT returns?
  • does this require further software training?

The scope for disruption caused by the shift to fully digital record keeping should not be underestimated. By addressing these issues now you will be better prepared when other parts of MTD are implemented. With less than a year to go, we will watch the outcome of the pilot scheme very carefully and share regular updates with our practitioners.

 

In the meantime, take a look at our views on the MTD for VAT consultation and listen to HMRCs recent webinar on API

Sole shareholder-directors: issues for the personal representative

Court case means you may wish to revisit and revise your articles.


Court case means you may wish to revisit and revise your articles.

 

One year ago a High Court ruling highlighted the difficulties that a company with Table A articles can face upon the death of a sole shareholder-director. Where a sole shareholder-director dies, the personal representatives are likely to need to appoint a new director to manage the company and to register the transfer of the deceased's shares.

 

Those who have adopted default model articles under the Companies Act 2006 should, if unaltered, have these provisions in their articles. The following is the provision included in the model articles, which allows a personal representative to appoint a person to be a director:

 

17. Methods of appointing directors

 (2) In any case where, as a result of death, the company has no shareholders and no directors, the personal representatives of the last shareholder to have died have the right, by notice in writing, to appoint a person to be a director.

(3) For the purposes of paragraph (2), where two or more shareholders die in circumstances rendering it uncertain who was the last to die, a younger shareholder is deemed to have survived an older shareholder.

 

The issue companies face is that some will be using earlier 'default' model articles, for example Table A from the Companies Act 1985. This and other model tables do not contain such a provision. This will mean that the personal representatives will be unable to appoint a new director.

 

The High Court case of Kings Court Trust Limited & Ors v Lancashire Cleaning Services Limited considered whether the court was able to exercise its power under section 125 of the Act to order rectification of the register of members following the death of a sole shareholder-director, where the company had adopted articles based on Table A.

 

The sole shareholder and director died and the company continued to trade. The personal representatives were unable to appoint a director to take control of the company as there was no provision within the articles which would permit the personal representatives to appoint a director. The company's bankers, as is common with these types of cases, froze the company's bank accounts.

 

The judge stated ‘In my judgement, in the exceptional circumstances of this case, it does seem to me that unnecessary delay is taking place in entering the names of the named executors on the company's register of members. The company is presently completely directionless, with no officer capable of acting on its behalf. It is only the court that can rectify that situation by ordering rectification of the register. Normally the company should await the grant of probate; but, in this case, it may be too late for the company if it does… In the circumstances of this case, which I repeat are wholly exceptional, and in order to ensure the survival of the company, I am satisfied that the court can and should exercise its power under section 125 of the 2006 Act to order rectification of the register.’

 

Clearly, the judgement was beneficial but the cost of the delay and potential loss of business highlights that sole shareholder-directors may wish to revisit the articles and if operating under Table A or similar may wish to revise these articles.  

 

Option to tax and recovery of input tax

HMRC dispels some common myths.


HMRC dispels some common myths.

 

The option to tax and its effects has always been a very complicated subject. As property is usually valuable, an error or a misunderstanding can be costly.

 

The legislation

How the option to tax works is specified in VAT Act 1994, Schedule 10 Part 1.

 

What is the point of the option?

To allow a taxpayer to reclaim input tax incurred on the property which would otherwise relate to an exempt use of the property and would not normally be recoverable. Some of the main points to remember are covered below.

 

Basics on opting

  • Residence – you cannot opt a property outside the UK
  • The decision to opt must be notified in writing to HMRC within 30 days of the taxpayer making their initial decision to opt. Note the use of the words ‘decision to opt’ which is different to, say, the date of purchase.

The process of making an ordinary option to tax is  two stage. The first stage is making the decision to opt, the second is notifying that decision in writing to HMRC to give it legal effect. Both stages are necessary for there to be a legally valid option to tax. Note that the law does not prescribe how the decision to opt (the first stage) should be made.

  • Get the option date right – you can opt to tax from any date within 30 days of making your decision or any date in the future.

Belated and retrospective applications

There is a difference between the two so it’s important to get the details correct. Timing is everything and the clock can’t be turned back. Belated notification is when a decision was made but the notification was not.

 

The law does not allow a person to make a retrospective option to tax (in other words, a person cannot decide today to opt with effect from an earlier date) so getting the timing wrong could jeopardise – for instance – a transfer of a going concern which can’t be applied retrospectively as a valid option to tax was not in place on or before the relevant date.

 

Recovering input tax

Your entitlement to recover any input tax you incur will depend on the liability of the supplies you make or intend to make. This can be affected by opting to tax, but you cannot assume that an option to tax will allow full input tax recovery. You must still consider what supplies you will make and their liability:

 

If the following is made

Then you will normally be

 

 

Taxable supplies of the land and buildings

Able to recover any input tax relating to those supplies

Wholly exempt supplies of the land or buildings

Unable to recover any input tax relating to the taxable supplies

Supplies that are both taxable and exempt, for example an option to tax on a building that is to be used both commercially and residentially

Able to recover only the input tax relating to taxable supplies – see VAT notice 706 (partial exemption)

 

 

 

Option to tax – how does it affect transfer of a business as a going concern?

This is a vital area as many businesses are sold in this manner. Where they involve property the timing/notification of the option is crucial and HMRC have plenty of anti-avoidance legislation they can use if relevant.

 

TOGC allows the sale to be treated as neither a supply of goods nor a supply of services. Note that the vendor is ultimately responsible for applying the correct VAT treatment. Where property is concerned they must be satisfied that:

  • the purchaser’s option to tax is in place by the relevant date
  • that the purchaser’s option will not disapply.

The above needs to be looked at in more detail – in order for the transfer to be treated as a VAT free TOGC you must meet all conditions specified in VAT Notice 700/9: transfer of business as a going concern. In addition, however, you must meet two further conditions where you:

  • have opted to tax the land or buildings being transferred and the option is not disapplied in relation to the transfer
  • are transferring the freehold of a ‘new’ building and the supply, but for the TOGC, would be subject to the standard rate of VAT.

The additional conditions are that the purchaser must have:

  • opted to tax or made a real estate election (these must have been both notified to HMRC and effective on or before the relevant date - paragraph 14.8 explains how to notify a real estate election)
  • notified you that their option to tax will not be disapplied under the anti-avoidance provision set out in VATA 1994, Schedule 10, paragraph 12 in respect of supplies they intend to make of the land or building (see section 13).

So what does notification mean? By ‘notified to HMRC’ it means that the purchaser has properly addressed, pre-paid and posted (or faxed) the appropriate form or letter. The declaration that the option will not be disapplied must also be made by the relevant date.

 

Further information

As evidence of the importance of getting the details right, in a recent webinar HMRC provided six pages of links to the legislation, guides and their own internal manuals.  These are reproduced here

 

 

 

 

 

Myths about ATED returns

Dispelling myths around Annual Tax on Enveloped Dwelling (ATED) rules.


Dispelling myths around Annual Tax on Enveloped Dwelling (ATED) rules.

 

Annual Tax on Enveloped Dwelling (ATED) rules have been around for more than five years but some still find them confusing for basic questions like:

  • why a return is required if there is no ATED to pay?
  • which events could trigger a new valuation date?
  • how to calculate capital gain on disposals or does the chargeable persons pay capital gain or corporation tax? 

A brief on ATED rules

All the chargeable persons (which are non-natural persons) explained in section 3 of the ATED technical guidance must submit an ATED return for any property (single-dwelling interest) that’s within the scope of ATED for the relevant chargeable period.

 

An ATED chargeable period runs from 1 April to 31 March. Normally an ATED return must be made within 30 days of the date on which the property first comes within the charge to ATED for any chargeable period. Where the single-dwelling interest is held on the first day of the chargeable period, that is 1 April, the return must be filed by 30 April in the year of charge.

 

However, ‘new dwellings’ and ‘dwellings produced from other dwellings’ have been provided with a grace period ie 90-day filing the ATED return.

 

HMRC made it clear some time ago that all ATED returns will be filed online only from 1 April 2018 which was already highlighted in an ACCA article in January 2018.

 

As this year's ATED charge is based on the valuation of 1 April 2017, members are advised to pick up the correct banding for this new valuation for the related ATED charge payable. Companies may not have filed an ATED return to date because none of the dwellings they own were valued over £500,000 at the last valuation date but may wish to consider revaluing dwellings before the filing date for the next ATED year (30 April 2018) where the value of the dwelling at 1 April 2017 might cause the dwelling to enter the regime or a higher tax band.

 

Relief and exemptions

An ATED return should be submitted to HMRC annually whether tax is payable or relief is claimed. There are reliefs available which may reduce the liability in part or to zero. Generally you may be able to claim relief for your property if it is:

  • let to a third party on a commercial basis and isn’t, at any time, occupied (or available for occupation) by anyone connected with the owner
  • open to the public for at least 28 days a year
  • being developed for resale by a property developer
  • owned by a property trader as the stock of the business for the sole purpose of resale
  • repossessed by a financial institution as a result of its business of lending money
  • acquired under a regulated Home Reversion Plan
  • being used by a trading business to provide living accommodation to certain qualifying employees
  • a farmhouse occupied by a farm worker or a former long-serving farm worker
  • owned by a registered provider of social housing.

Follow sections 30 to 41 of the ATED technical guidance to meet the criteria on these reliefs.

 

Watch out for following situations that may lead to ATED charge:

  • Empty rental properties – HMRC enphasises that the chargeable person should take necessary steps without delay to find a tenant when property gets vacated. Reliefs are possible if a newly acquired property requires some refurbishment in order to bring it up to the standard required for letting, subject to requirements of the relief
  • Dwelling occupied by a non-qualifying person – Occupation by a non-qualifying person will preclude the rental relief applying and will also affect the availability of many of the other ATED reliefs. This is the case even if that occupier is paying a full market rent for the property.

A non-qualifying person is someone who is connected with the settlor, the trust or the company. ‘Connected’ would include settlor of the trust, his/her relatives and spouses/civil partners of those relatives. ‘Relative’ includes brothers, sisters, grandparents, children and grandchildren.

 

There are a number of exemptions from ATED for charitable companies, public bodies and bodies established for national purpose. They do not need to file an ATED if they meet all of the conditions mentioned in section 42 -44 of the ATED technical guidance.

 

Events that may trigger a new valuation date

An initial statutory valuation date set by HMRC was 1 April 2012 and each five years thereafter ie 1 April 2017 and 1 April 2022 onwards. The amount of tax due for each chargeable period depends on the value of the property owned on these dates. The following events happening in between statutory valuation dates may prompt a new valuation:

  • Sale of any substantial part of the dwelling
    If a company disposes of part of a property for more than £40,000 then this will also trigger a new valuation date. This may result in a lower valuation for ATED purposes, subject to the value of the rest of the dwelling not increasing much since previous valuation date. Otherwise the company could end up in a higher ATED charge if the value has increased.
  • A new acquisition which links to the existing property subject to ATED
    If a company acquires an interest which is more than £40,000 in relation to a property which is subject to ATED, it will trigger a new valuation date for that property. A new valuation would be required if, for a leasehold property, more than £40,000 is paid for a lease extension. 

HMRC communications

All ATEDs have to be filed online, but contact HM Revenue and Customs if you cannot access the online service or you need to file a return for a year before 1 April 2015.

 

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.
Landlords: tax relief restrictions and incorporation

The tax implications regarding property are one of the most common areas raised by practitioners.


The tax implications regarding property are one of the most common areas raised by practitioners.

 

We covered these issues in a recent webinar Practical implications of incorporating a property portfolio – which you can still listen to and watch the slides from – while here we take an in-depth look at some of the key issues discussed.

 

Finance interest payable on loans for the purchase of land or property in a rental business, is deductible in computing the profits or losses of the rental business. Interest can also be deductible in computing the profits or losses of the rental business where the loan is to fund repairs, improvements or alterations.

 

From 6 April 2017 onwards landlords will no longer be able to deduct all of their finance costs from their property income to arrive at their property profits. They will instead receive a basic rate reduction from their income tax liability for their finance costs.

 

Relevant interest and finance costs 

These include:

  • interest and other finance costs on loans taken out for a property business which involves the letting of residential properties. But loans which are wholly for commercial properties, or furnished holiday letting businesses, are not affected
  • any payments in connection with a relevant loan which are equivalent to interest in the hands of the recipient 
  • any incidental costs incurred in obtaining the loan. This includes items such as fees or commission payments, legal expenses for negotiating drafting loan agreements or valuation fees required to provide security for a loan. 

Phasing in the restriction

The change is being phased in over three years. The restriction applies as follows:

 

Year

Deductible

Reducer

2017/18

75%

25%

2018/19

50%

50%

2019/20

25%

75%

2020/21

0%

100%

 

These changes only apply to individuals, joint owners and partners but not limited companies. Any client with gearing will be affected by the changes.

 

The set-off and how the tax reduction is worked out

  • initially add back disallowed finance charges (ie  25% for 2017/18)
  • work out the total tax liability of the taxpayer
  • set off the lower of 20% of:
    – disallowed property finance costs
    – profits of the property letting business (post losses)

– adjusted total income, this is the total income less savings income, dividends and personal allowance.

  • excess is carried forward.

The following examples are reproduced by kind permission of Dean Wootten, who presented our recent webinar:

 

Example 1
Lily has employment income of £50,000 in 2017/18. The property income before interest is £12,000 and mortgage interest is £3,000. The non-deductible interest is 25% of £3,000 ie £750.

 

 

£

Employment income

50,000

Rental income (12,000-2,250)

 9,750

 

59,750

Personal allowances

(11,500)

Taxable income

48,250

 

 

Basic rate tax

6,700

Tax at 40%

5,900

 

12,600

 

Less interest relief at 20% on £750*

  (150)

Net tax liability

12,450

 

 

 

* Lower of: rental income (£9,750), adjusted total income (£48,250) and disallowed property finance cost (£750)

 

Example 2 –Losses

George has employment income of £20,000 in 2017/18. The property income before interest is £2,800 and mortgage interest is £3,500. Property losses brought forward total £3,000. The non-deductible interest is 25% of £3,500 ie £875.

 

 

£

Employment income

20,000

Rental income (2,800-2,625-175 (loss relief))

0

 

20,000

Personal allowances

(11,500)

Taxable income

8,500

 

 

Basic rate tax

1,700

 

 

Less interest relief at 20% on £0*

(0)

Net tax liability

1,700

 

* Lower of: rental income (£0), adjusted total income (£8,500) and disallowed property finance cost (£875) ie £0.

 

-Interest carried forward to 2018/19 is £875 (£875-£0)
-Property losses carried forward to 2018/19 £3,000-£175 ie £2,825.


Clients with high gearing could be looking to incorporate as a means of minimising the impact of the new legislation.

 

  1. Tax implication for clients who rely on rental surplus for income 

Example 3

Paul, a higher rate taxpayer, has a property portfolio with a market value of £900,000 and borrowings of £675,000 at 2%. Net rental yield is 4% and he relies on the rental surplus for income.

 

Individual

 

2016/17

2017/18

2018/19

2019/20

2020/21

Net rental income (4%)

36,000

36,000

36,000

36,000

36,000

Finance costs allowed (100%,/75%/50%/25%)

(13,500)

(10,125)

(6,750)

(3,375)

Nil

Rental profit

22,500

25,875

29,250

32,625

36,000

Tax at 40%

(9,000)

(10,350)

(11,700)

(13,050)

(14,400)

Tax reducer

0

675

1,350

2,025

2,700

Post tax income

13,500

12,825

12,150

11,475

10,800

 

Corporate

 

2016/17

2017/18

2018/19

2019/20

2020/21

Net rental income (4%)

36,000

36,000

36,000

36,000

36,000

Finance costs

(13,500)

(13,500)

(13,500)

(13,500)

(13,500)

Rental profit

22,500

22,500

22,500

22,500

22,500

Corporation tax

(4,500)

(4,275)

(4,275)

(4,275)

(3,825)

Dividend

18,000

18,225

18,225

18,225

18,675

Post tax dividend

12,150

12,302

12,302

12,302

12,605

Corporate saving

(1,350)

(523)

152

827

1,806

 

Example 4

Peter, a higher rate taxpayer, has a property portfolio with a market value of £2,000,000. Borrowings are £1,500,000 at 2%. Net rental yield 4.25% and again he relies on the rental surplus for income.

 

Individual

 

2016/17

2017/18

2018/19

2019/20

2020/21

Net rental income (4%)

85,000

85,000

85,000

85,000

85,000

Finance costs allowed (100%,/75%/50%/25%)

(30,000)

(22,500)

(15,000)

(7,500)

Nil

Rental profit

55,000

62,500

70,000

77,500

85,000

Tax at 40%

(22,000)

(25,000)

(28,000)

(31,000)

(34,000)

Tax reducer

0

1,500

3,000

4,500

6,000

Post tax income

33,000

31,500

30,000

28,500

27,000

 

Corporate

 

2016/17

2017/18

2018/19

2019/20

2020/21

Net rental income (4%)

85,000

85,000

85,000

85,000

85,000

Finance costs

(30,000)

(30,000)

(30,000)

(30,000)

(30,000)

Rental profit

55,000

55,000

55,000

55,000

55,000

Corporation tax

(11,000)

(10,450)

(10,450)

(10,450)

(9,350)

Dividend

44,000

44,450

44,550

44,450

45,650

Post tax dividend

29,700

30,071

30,071

30,071

30,814

Corporate saving

(3,300)

(1,429)

71

1,571

3,814

 

  1. Tax implication for clients that invest for capital growth reasons

Gordon and Mavis are married and together run a sizeable rental property business. They each spend 35 hours a week managing the business.

 

2016-17

2020-21

Gross rents

500,000

500,00

Repairs and other tax deductible costs

150,000

150,000

Interest on mortgage

300,000

0

Net rental profit

50,000

350,000

Personal allowances (x2)

22,000

0

Taxable income

28,000

350,000

 

 

 

Basic rate tax (2 taxpayers)

5,600

15,000

Tax at 40%

0

90,000

Tax at 45%

0

22,500

 

 

127,500

Less interest relief at 20% on £300,000

 

(60,000)

Net tax liability on rental income

5,600

 67,500

 

 

 

Tax increase

 

61,900

Effective rate on 'real' rental profit

11.2%

135%

 

Conclusions

Transferring an existing rental business to a limited company might not be a solution for Peter or even Paul although Gordon and Mavis should consider it.

 

Free technical webinars for practitioners

We covered this subject in one of our growing list of free webinars. Browse our listings to listen to current webinars on demand or register for future webinars now.

Mitigating cyber-attacks on your computer network

The Secret Accountant reveals how their practice overcame a cyber-attack.


The Secret Accountant reveals how their practice overcame a cyber-attack.

 

If there is a good time to suffer a cyber-attack, I guess it is late on a Friday afternoon.

 

Within our practice a user’s remote login was hacked by brute force and was open for less than 30 seconds, that’s all it took. The hackers ran a small piece of software which started to encrypt the documents it could access, and while we would have picked it up later in the day, fortunately a member of the team picked it up when trying to access a document as it was beginning to run riot through our system.

 

Our IT manager identified it as ransom-ware and shut down the servers, which isolated us from all external contacts, so the firm ground to a complete halt. It brings into focus how much we rely on these systems and how we can no longer operate without them.

 

It took two full days to check all the servers in isolation and identify the extent of the damage and by Sunday evening our IT team had completely reconfigured our system and we were ready to go on Monday morning.

 

The problem was in one folder where we access Sage backups and this was completely replaced. We take a complete image of the system each night and so were able to restore it back to the uninfected state and the work lost was minimal.

 

A scan was run on each machine before connecting it to the network.

 

We were extremely lucky in that the primary function of the infected PC was for remote access. The malware started to encrypt files it could access but these were not system files, and because of the way our systems are set up, it couldn’t reach client files, and very little work was lost. The fact that it happened on a Friday gave us a whole weekend to check everything.

 

We have made changes as a result of the attack. All external access to our system now requires Two Factor Authentication (2FA). This consists of something you know, username and password and a 2FA key supplied by an external security provider.

 

Logins are now disabled if failed password attempts per minute exceed a set limit.

 

We have doubled the frequency with which all computers do quick scans in working hours. They should see files being accessed by malicious code immediately and it picks up anything lurking in the computer’s memory.

 

Our team is regularly trained on what to do if they see something suspicious. After all, they are part of the front line in keeping us safe.

 

I cannot stress how much you should take IT security seriously. We believed it would never happen to us and our story has an ending with minimal distress apart from a lost weekend for our IT manager, who was the hero of the hour.

 

It could have been so much worse – and given the potential consequences to us commercially and under the new GDPR rules, I can only implore everyone to review their systems regularly.

 

The Secret Accountant is in practice somewhere in the heart of the UK.

Competition law – understanding the do’s and don’ts

Businesses fined £1.7m for breaching competition law.


Businesses fined £1.7m for breaching competition law.

 

The Competition and Markets Authority (CMA) has highlighted a recent case which resulted in the businesses concerned being fined £1.7m. It has published Competition Law: Do’s and Don’ts to increase awareness that what may start as a joint venture or agreement between two parties could breach competition law. The two businesses broke the law by market sharing (e.g. agreeing not to compete in each other’s territory) under the umbrella of their joint venture agreement.

 

The CMA highlights its support for collaboration between rival firms that delivers tangible benefits for customers. It then comments broadly that firms entering into these types of arrangements need to:

  • check they are compliant with competition law at the outset
  • keep joint venture arrangements under regular review to check their compliance with the law.

Joint venture arrangements may be an area which comes under increased scrutiny and FDs, auditors and those involved in due diligence will need to consider the CMA guidance and seek legal opinion where necessary.

 

What is clear is that any existing arrangements should be checked against the CMA advice. One of the clear recommendations is that businesses define the true purpose of any collaboration and are precise about what it aims to achieve. They are also clear that businesses need to be clear, specific and honest about their goals and the limits of the collaboration.

 

Further guidance is available from the CMA, while you can read a summary of the case or watch video content discussing it.

Automatic enrolment – enforcement spot checks

Spot checks to ensure employers are complying with their automatic enrolment (AE) duties.


The Pensions Regulator carries out spot checks around the country to ensure employers are complying with their automatic enrolment (AE) duties.

 

These spots checks form part of an ongoing nationwide enforcement campaign to ensure that employers are meeting their automatic duties correctly.

 

In the last month inspection teams have visited more than a dozen businesses in towns and cities across the north east of England – including Newcastle, Middlesbrough, Hartlepool, North Shields, South Shields, Bishop Auckland and Stockton-on-Tees – to check that qualifying staff are being given the workplace pensions they are entitled to.

 

It is part of a nationwide enforcement campaign which began in London last year, ensuring employers are meeting their automatic enrolment duties correctly.

 

Short-notice inspections have already begun in Northern Ireland, South Wales, Edinburgh, Glasgow, Greater Manchester, Sheffield and Birmingham, among others.

 

Make sure your clients know what they need to do to meet their on-going duties and that their records are kept up to date.

 

In the coming months TPR will be conducting more spot checks in towns and cities across the UK, and will help employers with their duties or take further action as appropriate.

Mortgages and loans – will your client’s lender accept your SA 302?

Find out which mortgage providers and lenders accept printed tax summaries.


Find out which mortgage providers and lenders accept printed tax summaries.

 

Background

When a client applies for a mortgage the lender will normally ask their accountant for various earnings details which include the self assessment (SA) 302 summary. This summary gives details of the figures for a selected tax year.

 

Most accountants use commercial tax software to file tax returns online.  The SA 302 is generated by this software and therefore not by HMRC’s system. The issue in recent years is that many lenders have not accepted the accountant's generated SA 302 and have insisted that the taxpayer obtains one from HMRC directly. 

 

In some cases this caused friction between the accountant and their client as the client unfortunately was left with the incorrect impression that the accountant is the problem and not the lender.  It also means the taxpayer may have to contact HMRC or set up a personal tax account themselves which causes delays to their application.

 

Solution

To solve this problem HMRC has said it listened to the criticism and improved its self assessment online documentation so that ‘lenders may consider them as evidence of income declared to HMRC and to meet the Financial Conduct Authority challenge over the robustness of the tax calculation’. This has involved discussions with the Council of Mortgage Lenders.

 

There is now an official list of lenders that will accept either:

  • a copy of the client's tax calculation (SA302) printed from the HMRC online account
  • a tax calculation printed from commercial software used to submit returns.

The lenders on this list have agreed to accept tax calculations and tax year overviews that clients, or their agents or accountants, have printed themselves. The list is updated regularly but there may still be issues if the client is using an agent to find mortgages or if they are arranging a mortgage with a lender that has not signed up to HMRC’s list.

 

As with anything , timing is the main issue so if a client is attempting to obtain a mortgage or re-mortgage they should be encouraged to contact their accountants as soon as possible and not leave a request for financial details until the last minute.

Extending tax relief for SME training

SMEs are being consulted on changes which will encourage further training of staff.


SMEs are being consulted on changes which will encourage further training of staff.

 

The government has published Taxation of self-funded work-related training: Consultation on the extension of tax relief for training by employees and the self-employed.

 

Changes proposed in the consultation include extending training to upskill, retrain, or gain an approved qualification. The consultation is also a good reminder of the current rules.

 

Current rules

The meaning of work-related training is defined in s251 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003). 

 

Work related training is defined as training to ‘impart, instill, improve or reinforce any knowledge, skills or personal qualities which are likely to prove useful or better qualify the employee to perform his job or participate in charitable or voluntary activities which are relevant to the employment’.

 

Examples of work related training include courses to update knowledge and skills, company team building training, CPD training.

 

Tax treatment differs for employees and the self-employed as different criteria determine whether the costs are tax deductible:

  • employee training costs – whether wholly and necessarily for business
  • self-employed training costs – whether expense is capital or revenue.

 

Below we summarise the current rules:

 

Employees

 

Who pays

What training

For employer

For employee

Employer

  • directly
  • by reimbursement to employee
  • Work related for employee; wholly, necessarily for purpose of business, for an employer
  • An identifiable part is for purpose of business

Tax deductible

 

Employer

  • Retraining of employee anticipated to leave to take new employment
  • Training must be designed to improve or teach new skills which will help the employee find new work

Tax deductible if

  • Employee was employed for at least two years before the course begins, or employment ceases.
  • Retraining lasts no more than two years
  • Employee must leave the employment within two years of finishing the course

 

Not taxable on employee

Employee pays

(not reimbursed by employer)

 

Not wholly and necessarily for business

Not tax deductible

Not tax deductible for employee, unless proven that the expense was incurred wholly, necessarily and exclusively in performance of his duties

 

 

Company-funded training for a sole director may be allowable, if the company pays for it, or reimburses the director. If the training relates to gaining a new skill, it is necessary for the company to demonstrate that the skill is relevant to the business already in existence.

 

Training is not work related when:

  • it funds activities which are of fun, recreational, not related to employment, or entertainment nature
  • it is to reward an employee, usually for achieved performance
  • it is limited to owner-manager and employed family members and not extended to other employees.  

Case study

An employed sole director-shareholder attends a training course on property investment carried out by a newly incorporated property investment company.

 

Is there a business?

Any combination of the below circumstances could indicate the business has started before the purchase of the first property:

  • directors have carried out market research, solicitors, accountants, advisers have been consulted, company has been incorporated and:
  • marketing to source properties is being carried out
  • estate agents have been contacted
  • contact with potential sellers has been established and leads are being followed up
  • quotes have been requested or obtained
  • funding has been secured
  • viewings have taken place.

 

Subsequent to property purchase:

  • planning permits and licences have been applied for / obtained
  • building contractors have been selected (in case of planned refurbishment, conversion)
  • property is being refurbished, extended, cleaned, and prepared for letting
  • property is put on the market and advertised to tenants
  • viewings are taking place and tenancies secured.

 

Facts will determine whether a business already exists, therefore the number of hours worked on the business, frequency of the activities, availability of resources and timescales within which those activities have taken place in relation to the timing of the training are likely to have an impact.

 

Whilst pre-letting expenses are treated as incurred when the letting starts, self-funded training which takes place a long time before the business commences is likely to be too remotely linked to the subsequent business purpose to be deductible in the same way, and instead be considered as incurred for individual benefit. No relief for training expenses incurred is therefore likely.

 

Is the training exclusively necessarily for business?

Deductibility of training expenses incurred once property is purchased and let is unlikely to be challenged. In this instance any training, as long as there is relevance to specific business needs, is likely to be tax deductible. For example:

  • lease option training for an investor who to date used buy-to-let mortgages as a funding strategy
  • plumbing training for a business owner manager who demonstrates that plumbing skills are necessary to self-manage owned properties and who previously used external contractors
  • interior design training to improve design of existing and future properties, enhance their letting potential and improve return on investment.

The consultation: anticipated changes

Following the conclusion of the consultation in June 2018, tax relief may be extended to training to upskill, retrain, or gain an approved qualification. This is a significant change for the self-employed where such expenditure is currently considered capital in nature and not allowable.

 

Options currently being considered by the government are:

  • retraining costs for new employments or trades would be carried forwards and could be set against the new income, where earned within a certain timeframe
  • upskilling for self-employed would be changed, such that it is not capital expenditure, or that relief is given for that capital expenditure
  • upskilling for employed would be reviewed to ensure genuine training costs get some form of relief for employees when the cost is not reimbursed.

 

HMRC talking points

Registration open for seven digital meetings hosted by HMRC.

 


HMRC Talking points

The latest updates are:


A guide to tax reliefs for the creative industry sector: An overview of the Corporation Tax reliefs available to production companies in the creative industry sector. Concentrating on eligibility, the calculation of the relief itself and importantly, how to claim and what information to supply to ensure a complete claim that HMRC can review promptly.

Tu‌esd‌ay 24 A‌pril - midday to 1p‌m                             Register now


Making Tax Digital (MTD) – Signing up to the Income Tax Pilot: This webinar explains how to sign up for your Agent Services Account, sign up your client for the pilot and submit quarterly updates for income tax using MTD Software.

Thur‌sd‌ay 26 A‌pril - midday to 1p‌m                           Register now

Thur‌sd‌ay 26 A‌pril - 2.30p‌m to 3.30p‌m                      Register now

Fr‌id‌ay 27 A‌pril - 10a‌m to 11a‌m                                  Register now

Fr‌id‌ay 27 A‌pril - 12.30p‌m to 1.30p‌m                          Register now


Disguised Remuneration - Addressing common issues: This webinar will address some of the common issues that have been raised relating to Disguised Remuneration and the loan charge, including settlement with HMRC.

Tu‌esd‌ay 1 M‌a‌y - midday to 1p‌m                              Register now


Statutory Maternity and Paternity Pay: This webinar has been designed to provide guidance on what payments can be made and how to work them out. HMRC subject matter experts will be online during the meeting to take your questions.

Fr‌id‌ay 4 M‌a‌y - midday to 1p‌m                                 Register now


Corporation Tax loss reform: We will be covering the reform of Corporation Tax loss relief that applied from 1 April 2017. The focus is on the relaxation of relief for carried-forward losses, which can affect companies of any size. We'll talk about what companies can and can't do with carried-forward losses under the new rules, with some worked examples and a question and answer session at the end.

We‌dn‌esd‌ay 9 M‌a‌y - 1.30p‌m to 2.30p‌m                     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 10 M‌a‌y - 11a‌m to midday                           Register now

NEWS
News and CPD round-up

Details of the latest webinars for practitioners, Accountex 2018, your chance to enter the Accounting Excellence Awards, register for the next Accounting Excellence Talk and the latest CPD courses.


Accounting Excellence Talks - the road ahead on MTD

 

Accounting Excellence Awards - entry deadline extended to 12 May

 

Accountex 2018 - got your free ticket yet?

 

GDPR webinars - get up to speed now

 

Free technical webinars - live and on demand

 

Saturday CPD Conferences and other Professional Courses events

 

 

Accounting Excellence Talks - what's ahead on the road to MTD?

Thursday 17 May, 11am
In the second Accounting Excellence Talks session on digital compliance the panel digs more deeply into preparations for the transition to Making Tax Digital. As well as dealing with the technical and technology aspects of MTD, the session will delve into awareness levels of MTD within small businesses and what accountants will need to do to bring their clients up to speed.

Register here now

 

Accounting Excellence Awards - entry deadline extended to 13 May

Now in its eighth year, the Accounting Excellence Awards continue to recognise the firms and individuals who are making great contributions to the profession.

This year there are 26 awards spread over three categories:

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

  • Software
    The software category is about celebrating the technology providers who go above and beyond in supporting accounting firms on their path of growth. ACCA firms use a variety of software providers and you are invited to help assess these awards by completing this survey to find the best accounting software providers.

  • Finance
    This year, we’ve added a new dimension to our awards programme to include accountants in business. This category will celebrate the vital contribution that finance teams and leaders make to businesses across the UK.

In 2017 ACCA members and their firms were well represented across shortlisted categories. Winning brings recognition for your practice, its staff and the high levels of service you provide your clients. Awards host Rachel Riley recently interviewed ACCA's Glenn Collins and asked why firms and individuals benefit from entering. Watch now.  

Find out more and start your application now; you can return to complete it before the deadline of 13 May 2018.

 

 

Accountex 2018 - got your free ticket yet?

Accountex is the UK’s largest industry-defining exhibition and conference dedicated to the accountancy and finance profession, that covers everything from accountancy, finance, tax, regulations, marketing, and of course technology. It will take place at London's ExCeL on 23-24 May. You can build your own agenda at the show, whether it’s attending the 180 CPD accredited seminar sessions in the unrivalled education programme, networking with 7,000+ professionals or seeking new technology providers from over 200 industry-leading exhibitors – meaning that in just two days you could revolutionise the success of your business this year. Make sure your first stop is ACCA's stand and check out the line up of expert speakers in our lecture theatre. 

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

 

 

GDPR webinars - get up to speed now

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. There are nine short webinars in total and you can listen to them at anytime 'on demand'. Listen to the Key Elements webinars first – in particular, the Key Principles webinar. The webinars are presented by Mike Hughes, Steve Connors and Vincent Mulligan. Mike and Steve are partners at Haines Watts, while Vincent is an ACCA member and IT Audit Consultant at Eisteoir Consulting Ltd.

Access all webinars now

 

 

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.)

 

 

Saturday CPD Conferences and other Professional Courses events

ACCA's popular Saturday CPD Conferences are filling up fast! Taking place in seven locations across the UK, these provide a great way for you - or your team - to refresh technical knowledge and complete your 2018 CPD. Why not take advantage of our multiple booking discount on the Saturday CPD conferences and pay from just £129 per conference when you book three or more?

 

 

Other CPD for practitioners

 

Practice workshops

Download our latest factsheets now

Free guidance for practitioners on three areas.


ACCA has recently issued the following three new technical factsheets, which are all available free of charge to our practitioners:

 

Technical factsheet: Matters of Material Significance Reportable to Charity Regulators is available for those members undertaking independent examinations, auditors and trustees of charities. It details the requirements in England and Wales, Scotland, and Northern Ireland.

 

Technical factsheet: FRS 102 – small company reporting and Technical factsheet: FRS 102 – reporting for medium-sized and large entities have been revised and replace the earlier factsheets

 

The small company factsheet has been updated to incorporate the results of the triennial review carried out by the FRC in 2017. It also includes a ‘Frequently Asked Questions’ section relating to small entities which member firms may find helpful. 

 

The medium and large entity factsheet has amendments made to FRS 102 which are likely to affect those entities.

 

Technical factsheet: Company purchase of own shares explains how a company can buy back shares from shareholders. It is aimed at private companies who decide to purchase their own shares from shareholders and also provides an overview of a reduction of capital which involves no payments being made by the company to shareholders.

Stop press - extra apprenticeship funding for small employers

Important news from the government regarding additional apprenticeship funding for small employers.


We are very pleased to bring you news from the government regarding additional apprenticeship funding for small employers.

 

Transfers are being introduced to give bigger levy-paying employers more flexibility in how they spend their apprenticeship service funds. Big employers will be able to use their own levy pot to fund apprenticeships in another organisation. This is excellent news for smaller businesses and we feel SMPs will benefit from this change greatly.

 

As an SMP, you’ll be able to use the additional funds available to you to recruit new talent, training and moulding apprentices to your own business. What’s even better for small businesses who employ fewer than 50 people is that the government will fund all of the apprenticeship training costs, up to the maximum value of the funding band for the apprenticeship. ACCA is fully supportive of this initiative; we believe it will enable you to unlock the real potential of your business as well as develop your workforce to drive growth and competition.    

 

To summarise - levy-paying employers can work with another employer to help them take on apprentices, thereby increasing the skills base in their supply chain, sector or local area. We have outlined the key timings for you on this beneficial change below. Please contact us to discuss your options fully.  

 

Key timings

 

End of April 2018

●       Levy-paying employers will be able to see their transfers allowance in their apprenticeship service account.

●       A new transfers estimator tool will help employers to plan the apprenticeships they could fund with a transfer.

●       There’ll be more support videos online to help you register on, and use, the apprenticeship service, including how to make and receive transfers.

 

May 2018

●       Employers that do not pay the levy will be able to register for an apprenticeship service account enabling them to receive a transfer.

●       Levy-paying employers will be able to agree to fund apprenticeships in one other organisation through a transfer.

●       Receiving employers will be able to start adding details of their apprenticeships to the service.

 

Click here to find out more information on ACCA’s apprenticeship offer.