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Monday, 1 September 2008

Welcome to our latest newswire. After months of non-stop tax headlines, the hot topic causing concern this month, seems to be the new rules for auditors on 'Ceasing to Act As Auditor'. We have received many technical queries on the impact of the new requirements introduced by the Companies Act and the Audit Regulations and you'll find the position summarised in Audit and Accountancy Issues below. We have also included a review of PN 16 which has been around for a while now, but few firms opted for early adoption. It's important to make sure you have all the information you need to send in your requests for December year end clients and our summary will remind you of the requirements.

You may have read that the big four have been preparing for the credit crunch by running summer schools for students covering the new auditing skills that will be required. We are planning to run a similar course in the autumn. If you think such a course would be of interest to your own team please contact liz.coates@mercia-group.co.uk so we can make sure we include the content you need.

Finally, Tax agents and advisers are being urged by HMRC to take part in a phone survey which will be conducted over the next few months. Apparently the survey, which will try to involve a representative sample of agents, will "involve a telephone discussion about the experiences you have had with us and how you felt about them". Judging by some of the issues reported to our technical support line some of the feedback should be interesting! HMRC expect to share their findings towards the end of the year. As the research is designed to guide HMRC's future improvements they hope you will be able to take part. As usual we'll keep you informed.

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

Technical Manuals

As you will read in our newswires keeping on top of changes to rules and regulations can be a full time job. Whether you are concerned about routine or specialist audits getting a clean bill of health from your governing body or worried about your internal money laundering procedures - we can help. Our range of tried and tested technical manuals for your client work and compliance manuals for your practice will save you hours of research and worry. To find out more visit http://www.mercia-group.co.uk/technical_manual.

Flexible Season Ticket

Our flexible season ticket costs £435 plus VAT for 10 CPD places. Any additional courses cost just £43.50 plus VAT per place even if they are subsequently booked later in the programme. The season ticket is very flexible, you can send one person on 10 courses, 10 people on one course or any other combination - the choice is yours. You can even attend any of our open courses in over 50 locations throughout the UK.

For a copy of your local programme please contact michelle.hammond@mercia-group.co.uk

Audit and Accountancy Issues

Access to Working Papers by Successor Auditors

In our May newswire we alerted you to the Audit and Assurance Faculty of the ICAEW draft technical release (AAF 01/08) on this subject, which provided guidance, as well as example letters requesting access to working papers and a response to this request for access. As a reminder, the requirement for a predecessor auditor to allow a successor auditor access to relevant information applies in respect of appointments for the auditors of financial years beginning on or after 6 April 2008. It applies to all statutory audits as defined by and listed in Section 1210 of the Companies Act 2006.

The final version of this guidance has now been issued and ICAEW members can obtain a copy here.

Ceasing to act as auditor - practical issues

The Companies Act is now beginning to feed through to the Audit Regulations. One area which will have an immediate impact for auditors is in the procedures required when the statutory auditor changes. The Act aims to provide clarity for all concerned, business entities, investors, creditors and their professional advisors. Kris Taylor of our audit and accounts technical team examines the two key aspects of the new Regulations. To read more click here.

Bank Reports for Audit Purposes - how will Practice Note 16 affect the auditor?

PN 16 has been around for a while now, but few firms have opted for early adoption. For accounting periods beginning on or after 26 December 2007, however, the new system is mandatory: - the banks are expected to be up and running and you should make sure you have all the information you need to send in your requests for December year end clients. What you should gain is an increase in the accuracy and speed of banks' responses to the requests they get, but some of the information that you have taken for granted in the past may not be automatically forthcoming in the future. To read more click here.

Money Laundering Update

Consultative Committee of Accountancy Bodies (CCAB) - Anti-money laundering guidance for the accountancy sector. You may recall that guidance was last issued by the CCAB in December 2007. This provided specific guidance on the application of the Money Laundering Regulations 2007 (MLR 2007) to the accountancy sector. The guidance has now received Treasury approval, which means that it is classed as 'relevant guidance' and therefore the courts must consider it when determining whether an accountant's conduct gives rise to certain offences under either the Proceeds of Crime Act 2002 or the MLR 2007. There have been a number of minor amendments to the December 2007 guidance and you can find a copy here.
ICAEW Tax Faculty Tax Guide 04/08 - Money Laundering: Supplementary guidance for the tax practitioner. This guidance, while it has not yet received Treasury approval, has been appended to the CCAB guidance discussed above. The guidance is designed to be read in conjunction with the main CCAB guidance and focuses on the interaction between anti-money laundering compliance and tax offences and covers the issues that a tax practitioner is most likely to encounter in practice. Treasury approval for this guidance is being sought.
HMRC - MLR 9 Registration Notice. This has been updated for Trust or Company Service Providers (TCSPs) and Accountancy Service Providers (ASPs) and deadline dates for their registration have been announced. You can find the guidance and details here.

Technical Manuals Update

We've recently sent out updates to our FSA Mortgage and General Insurance Intermediaries and Solicitors' Accounts Rules Specialist Assignment Manuals (SAMs). Updates to our Clubs and Friendly and Industrial and Provident Societies SAMs will also be sent out in September. Remember you can keep up to date with the latest versions of our technical manuals here on our website.

Tax Issues

VAT treatment of charity challenge events

HMRC have issued revised guidance on Charity Challenge Events, including those that qualify for the VAT Charity Fundraising Exemption.

Many charities use Charity Challenge Events, for example running, walking and cycling events, to raise funds through sponsorship of the participating individuals. HMRC have been working with the charity sector to produce revised guidance to assist charities to determine the correct VAT liability of such events. To read more visit VAT Business Brief 36/08.

More VAT news

If you would like to read more about recent tax investigation and VAT developments, please click here for this month's IVC news round-up.

Salary Sacrifice

HMRC have added some questions and answers to their website on the complex area of salary sacrifice. You can see them at HMRC Qs and As.

Some small pensions - still untaxed

HMRC will be contacting some individuals regarding their small private pensions which are paid either by their former employer or insurance companies. Certain pensions, which should have been taxed under PAYE, have in some cases not been taxed. HMRC had originally intended to bring these pensions into the PAYE system of tax for 2008/09. They had also stated that they would collect any arrears from 2007/08 in 2009/10, through a coding notice adjustment. HMRC have now decided not to collect the 2007/08 arrears.

Such pensions are taxable for 2008/09 although no changes will now be made during the tax year. Instead any tax due for 2008/09 will be collected through the 2010/2011 coding notice adjustment. Correct PAYE codes should be issued to tax the pensions correctly from 2009/10 onwards. You'll find the detail at HMRC guidance.

Office Gossip and Idle Chat!

Hellos and goodbyes

Last month we welcomed Christina Campbell to our tax team. With a busy diary already planned, we're sure many of you will meet her on our autumn series of professional development tax courses.

Mark Morton returns to work after his three-month sabbatical.

After 11 years, Sarah Cooper left us to help her husband run the family business. After starting life at Mercia as our receptionist she moved to the training admin team and then on to our IT team. We wish her all the best in her new venture.

The Mercia - team day out in Stratford upon Avon

It would be true to say a good time was had by all. After a miserable start to the day with torrential rain the sun came out to play in the afternoon. After a morning of communication and team games we all did our own thing before meeting in the evening for a farewell meal and a few drinks.