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Thursday 22nd December 2011

As this is the season of goodwill, this month we are giving away a FREE webinar - Principal Private Residence Relief. This was first shown in July 2010 but as this core relief can affect many of your clients, this webinar may serve as a useful refresher. You can also download the notes too. If you are new to webinars, it will give you an opportunity to experience one first hand. Click here to view.

Once the festivities are over, the self-assessment deadline will be even nearer, but it won't just be your tax teams that are feeling the pressure! Early December saw the issue of draft clauses and explanatory notes for the Finance Bill 2012 and the printed version extends to more than 1000 pages. Our tax team is now firmly of the belief that this is a conspiracy to ensure that their January is as stressful for them as it is for you! However, the good news is that they will produce summaries of the key elements ready for 2012 courses and other publications so you don't have to.

One area already receiving their attention is the 46 pages of draft clauses covering the new proposals on the Seed Enterprise Investment Scheme which we flagged up last month. We have already been asked if we will be producing a summary for you to keep your clients up to date so we have started to draft both a client letter and a more detailed briefing. See below for more details.

Finally we would like to wish you all a happy and healthy 2012.

Nicola Hurley
Director
nicola.hurley@mercia-group.co.uk

short for time links
FREE Webinar
Seed Enterprise Investment Scheme - Client letter
Charities Conference 2012
Audit and Accountancy Issues
Tax Issues
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Seed Enterprise Investment Scheme - new client communications

A new relief is to be introduced from 6 April 2012 - the Seed Enterprise Investment Scheme (SEIS). The aim of SEIS is to encourage individuals to invest in small companies by providing income and capital gains tax incentives. Whilst these incentives are generous, there are many qualifying conditions attached to the scheme for it to successfully operate for company and investor alike. Some of the key questions that need to be considered by clients planning to take advantage of the scheme include:

  • what the qualifying criteria are for an eligible company
  • which particular investors will qualify
  • what constitutes a qualifying investment and
  • how the income tax relief and CGT incentives will operate.

We will therefore be offering a useful summary of these proposals which can be sent to your clients in advance of the scheme starting in April 2012. A client letter will available before the end of January 2012 and you can pre order here. A more detailed two page briefing (in printed or digital formats) is available to order now for delivery in February.

Charities Conference

Next year's conference will cover Recent Trends in the Sector, Gift Aid - Ups and Downs, A Legal Update, Trading, What is Important to Us? - Hear from a Charity and an Audit and Accounts Update. The Conference will be taking place in -

  • London, De Vere Holborn Bars on 28 February 2012, and
  • The Midlands, Hilton Hotel Castle Donington on 15 March 2012

For the full course outline please click here. If you have any questions, or need further information, email emily.bailey@mercia-group.co.uk. The Charities conference is also running in Scotland, to view the brochure please click here.

Audit and Accountancy Issues

EC micro-entity proposals

The European Parliament has voted to agree proposals allowing Member States to significantly reduce the reporting requirements of micro-entities. The EC proposals will pave the way for future UK legislation in this area and define a micro-entity as a company not exceeding two out of three of the following criteria:

Total assets:€350,000
Turnover:€700,000
Employees:10

Though proposals include certain exemptions from the EU Accounting Directives, they will not permit the full removal of accruals accounting as had been proposed by the joint BIS and FRC discussion paper earlier this year. For further details of the EU proposals click here.

These proposals, once formally approved by the Council, will be complementary to legislative proposals made in October to amend the Accounting Directives to further reduce the reporting requirements of other small companies. It is expected that the UK government will consult on UK implementation. Watch this space for further updates!

Charities legislation

The Charities Act 2011 has received royal assent and will come into force in March 2012. The Act consolidates existing legislation, repealing and replacing the Recreational Charities Act 1958 and the Charities Act 1993 as amended by the Charities Act 2006. The fundraising provisions of the Charities Act 1992 and Charities Act 2006 will continue to apply.

We will be in touch with our Charities and Academies Specialist Assignment Manual subscribers in the New Year to outline how the legislation will affect reporting requirements.

Hot off the press today (21 December), the Charity Commission have amended their guidance on public benefit. This follows the outcome of the Upper Tribunal's ruling on private schools which we reported in our October newswire. All trustees are legally required to have regard to this guidance. As a temporary measure, whilst they are working on revised sections, the Commission have marked up the existing guidance with the sections that have been withdrawn. For further details click here.

Ethical Standards amendments

The APB has amended Ethical Standards 1 and 5 with immediate effect. The amendments extend the transitional arrangement for tax services provided on a contingency fee basis (where contracts were entered into prior to 31 December 2010) until 31 December 2014 and also provide a simplified template for communicating information on audit and non-audit services. For further details click here.

The good news is that no changes to the checklists in our Audit and Specialist Assignment Manuals (SAMs) are required as a result of these amendments.

Proposed revisions to social housing accounting requirements

The Tenant Services Authority has proposed changes to the accounting requirements for private registered providers of social housing in England, building upon the current General Determination through the issue of a new Accounting Direction effective for periods commencing on or after 1 April 2012. The consultation closes on 6 March 2012. To see the proposals in full click here.

News for Mercia technical manual subscribers

Earlier in December we released updates to our FSA (Mortgage and General Insurance Intermediaries) and (Mortgage and General Insurance Intermediaries) SAMs. The updates take account of APB Bulletin 2011/2 - Providing Assurance on Client Assets to the Financial Services Authority.

We also released an update to the DPB Compliance Manual.

If you are a subscriber and have any administrative queries about the updates please contact karina@mercia-group.co.uk or call her on 0116 258 1200.

Tax Issues

Certificate of residence - new online form available

HMRC have created a new online form to apply for a certificate of residence to support claims for tax relief or exemption from foreign tax under a double taxation agreement. To read more, please click here.

Tax Agreement between the UK and Switzerland: FAQs

Frequently Asked Questions (FAQs) about the Tax Agreement between the UK and Switzerland have now been published. To read more, please click here.

New forms for partnerships and partners

HMRC have introduced some new online forms to make it easier to register new business partnerships and partners for Self Assessment. They can be used to register for Class 2 NIC. To read more, please click here.

Changes to the advisory fuel rates from 1 December 2011

The advisory fuel rates have been changed with effect for all journeys undertaken on or after 1 December 2011. To read more, please click here.

Advisory Fuel Rates

Independent study on General Anti-Avoidance Rule published

In December 2010, Graham Aaronson QC was commissioned to lead a study into a General Anti-Avoidance Rule (GAAR). He has set out his recommendation for the introduction to the UK tax system of a narrowly focused General Anti-Abuse Rule. He has concluded that introducing a narrowly-focused GAAR would:

  • deter abusive tax avoidance schemes;
  • contribute to providing a more level playing field for business;
  • reduce legal uncertainty around tax avoidance schemes;
  • help build trust between taxpayers and HMRC; and
  • offer opportunities to simplify the tax system.

However, the Report warns against the introduction of a broad GAAR and recommends that a GAAR should initially apply to the main direct taxes of income tax, capital gains tax and corporation tax, as well as national insurance.

The Government will consider the report in detail and respond fully at Budget 2012. To read the full report, please click here.

Successful challenge at HMRC's attempt to aggregate two separate businesses

In a Tribunal decision earlier this year, a farmer's wife running a B&B from the farmhouse won her case to overturn HMRC's decision that the B&B was part of an aggregated business. To read more click here.

Office Gossip and Idle Chat!

Team News

David Gallagher of our audit and accounts team will be leaving us at the end of the year, to join MacIntryre Hudson as Technical Director. We will all miss him and wish him all the best in his new role. In David's words; 'In January 1997, Alex Ferguson was in charge at Manchester United, politicians were arguing about Europe and the accountancy profession were talking about the merits of increasing audit exemption thresholds. Now, it's hard to imagine really. I can't really summarise how much the last 15 years at Mercia have meant to me so I won't try. But I would like to take this opportunity to say thank you to all the many faces, in all the many places that I have met over the years. Thank you all.'

We are delighted to announce that Chris Elliott will be joining us on 1 February 2012. Chris is Senior Training Manager from Grant Thornton and is well known in audit circles so some of you may recognise him when he starts presenting courses at your local venue!

£14,400 donated to charity

For the fourth year we have offered the creation and distribution of Christmas eCARDS for all firms using our website service. There was no additional charge for the service but there was the option to make a donation to charity. The great news is that £14,400 was generously donated to a variety of national and local charities!

Best House opening hours

Our office will be closed from midday on Friday 23 December until 8.45 on Tuesday 3 January 2012.

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Nicola Hurley
Mercia Group Ltd
Best House, Grange Business Park, Enderby Road, Whetstone, Leicester LE8 6EP.
Tel: 0116 2581200 Fax: 0116 2581250.
Email: nicola.hurley@mercia-group.co.uk Website: www.mercia-group.co.uk

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