Thursday 27 August 2009
On 7 August, after weeks of speculation, HMRC finally announced their second 'one-off' tax amnesty. The process is very similar to the first one, which begs the question what was the point of responding to the first one? But HMRC are definite that this is their final, final offer. After this, they won't play nice any more! To read more, see Tax Issues below.
Also busy on 7 August was Companies House with an announcement that as a part of their Companies Act 2006 customer communications, they will be writing to every company to advise about the final implementation on 1 October 2009. Be prepared as it may prompt calls from concerned clients, but there again will they just ignore it! For more information see Audit and Accountancy Issues below.
Andrew Burgess and Mark Morton have been taking advantage of the summer break from lecturing to look more closely at the surprise announcement on Budget Day of an unexpected tax rise, namely the intention to restrict, to the basic rate of income tax, relief on pension contributions. The Chancellor said that this change would take effect from 6 April 2011 for individuals with taxable income of £150,000 or more. Of course, this left the intriguing possibility that taxpayers could invest large amounts into pensions over the next two years to circumvent the new rules. However, HMRC were ahead of the game. Andrew and Mark have written an article looking at the new rules in detail - see 'That's your lot!' under Tax Issues.
Nicola Hurley
Director
nicola.hurley@mercia-group.co.uk
VAT changes ahead for cross-border supplies - new client letter
As you may be aware, in the Budget the Chancellor announced a series of changes known as the 'VAT package' to be implemented from 1 January 2010. These are changes to VAT law which aim to modernise and simplify the current rules relating to cross-border supplies of services and the recovery of VAT on purchases made in other EU countries. Now that these changes have become law, we have prepared a client letter for you to update your clients and give them an idea of what this might mean for their own business.
The letter costs £40 (£35 for members) plus VAT for unlimited usage. To order a copy click here.
We are also running a course on VAT: Cross Border Trading; for further details please click here.
Specialist CPD Courses
Our autumn specialist course programme starts soon. By now you should have received a printed copy of the brochures but if not you can download a pdf by clicking on the covers below.
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Audit and Accountancy Issues
Companies House announcements
Companies House have made two recent important announcements concerning the final implementation of the Companies Act 2006 on 1 October 2009.
In July they announced that draft forms and guidance were now available on their website. They are currently only in draft format and are subject to change, but will give interested parties an idea of the final versions which will be ready for 1 October 2009. Copies of the new Model Articles and Registrars Rules are also now available on the website, as well as a draft price list for October.
In early August they then announced that as a part of their Companies Act 2006 customer communications, Companies House will be writing to companies to advise about the final implementation on 1 October 2009. A letter and brief guide will be sent to every registered office address during August and September.
APB Bulletin 2009/3 - Example charity audit reports
If you subscribe to our Charities Specialist Assignment Manual (SAM) you may be forgiven for thinking that the last thing we need are even more examples of charity audit reports! However, publication of this Bulletin is good news as it provides example reports that are in accordance with the Companies Act 2006, ie. for accounting periods beginning on or after 6 April 2008. Examples for charities that are registered in:
- England and Wales;
- Scotland; and
- both jurisdictions
are included. An update to our Charities SAM will be issued later in September, taking account of the changes made in the new Bulletin. In the meantime, a copy of the Bulletin can be accessed on the APB's website.
Consultations
A number of important consultation documents have been published recently, which when finalised, are likely to appear on our 2010 agendas:
APB consultation on smaller entity audits
You are no doubt aware that the APB's clarified ISAs, once finalised, will be effective for accounting periods ending on or after 15 December 2010. Following the release of exposure drafts of the clarified standards earlier this year, the APB has also now announced that it is planning to finalise an update to Practice Note (PN) 26, Guidance on smaller entity audit documentation, at about the same time that it finalises the changes to the revised ISAs. An exposure draft of the revised PN has therefore been issued, comments on which are requested by the end of September.
You can find a copy of the exposure draft on the APB's website.
A new LLP SORP
The CCAB has issued an exposure draft of a revised LLP SORP. The SORP was last revised in 2006. Since then, FRS 25, Financial Instruments: Presentation, has been amended to require certain amounts that would otherwise have been presented as liabilities to be reclassified, in limited circumstances, as equity. The proposed revisions to the SORP review these new requirements and provide guidance on how they may affect LLPs.
Comments are invited by 3 November 2009.
The future of UK GAAP?
The International Accounting Standards Board has finally published the IFRSSME - the International Financial Reporting Standard for Small and Medium-sized Entities. It is a self-contained standard and at around 230 pages, is tailored for the needs of smaller entities. The ASB has subsequently launched a consultation that considers the future of UK GAAP, in which a three tiered approach is proposed:
- Tier 1 - publicly accountable entities would apply IFRS as adopted by the EU ('EU-adopted' IFRS).
- Tier 2 - all other UK entities other than those who can apply the FRSSE could apply the IFRS for SMEs.
- Tier 3 - small entities could choose to continue to apply the FRSSE.
Entities within Tier 2 and Tier 3 would have the option of using EU-adopted IFRS if they wished, and those in Tier 3 would have the option of using the IFRS for SMEs.
The consultation periods runs until 1 February 2010 - visit the ASB's website for details.
Tax Issues
That's your lot!
In a surprise announcement on Budget Day, the Chancellor announced an unexpected tax rise, namely the intention to restrict, to the basic rate of income tax, relief on pension contributions. The Chancellor said that this change would take effect from 6 April 2011 for individuals with taxable income of £150,000 or more.
Of course, this left the intriguing possibility that taxpayers could invest large amounts into pensions over the next two years to circumvent the new rules. However, HMRC were ahead of the game.
Andrew Burgess and Mark Morton have written an article looking at the new rules in detail. Whilst pensions will be covered in our forthcoming Finance Act courses, if you haven't booked a place on the course or would just like to find out more now, click here to read on.
New Disclosure Opportunity - 7 August 2009
HMRC have now confirmed details of the New Disclosure Opportunity (NDO). The NDO will allow people with unpaid taxes linked to offshore accounts or assets to settle their tax liabilities at a favourable penalty rate and will run from the 1 September 2009 until 12 March 2010.
The main features are as follows:
- to use the NDO a notification of the intention to disclose must be made to HMRC between 1 September and 30 November 2009;
- those notifying in paper can do so from 1 September to 30 November 2009;
- those notifying electronically can do so from 1 October to 30 November 2009;
- disclosures can then be made in paper from 1 September 2009 to 31 January 2010 and electronically from 1 October 2009 to 12 March 2010.
A penalty rate of 10% will apply to those who were not written to by HMRC under the original Offshore Disclosure Facility (ODF) in 2007. Those to whom HMRC wrote to in 2007 offering the 10% rate but did not complete the ODF procedure and now want to disclose will have an opportunity to do so but with a penalty of 20%.
Once this disclosure window closes on 12 March 2010, those taxpayers who have not come forward but are found to have unpaid tax liabilities will face penalties of at least 30% of the tax evaded and also a risk of criminal prosecution. For full details click here.
If you or your clients need help in this specialist area, whether it be the preparation of a full disclosure report or just a read through to make sure that you have covered all the bases, then Mercia can help. Please contact Mark Morton on 0116 258 1200 to discuss further the services that we can offer.
False self-employment in construction: taxation of workers
The government has concluded that the best way to address the issue of false self-employment in the construction industry for income tax and NICs purposes is to introduce legislation which deems workers within the construction industry to be in receipt of employment income unless one of three simple, clear and easy to apply criteria is met. Click here for further details.
Cross-border VAT changes 2010 - important updates with effect from 22 July 2009
HMRC have issued important updates on the changes in the place of supply of services rules from 1 January 2010.
Streamlining HMRC's interest rates
HMRC have announced a new minimum interest rate on tax repayments of 0.5% that means interest will still be payable even when the Bank of England base rate falls below 1.5%.
Guidance on dealing with historic VAT claims
HMRC have issued guidance on the three- year limitation period for repayment claims for overpaid VAT, the correction of errors and late claims to input tax following the Fleming case.
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.
Office Gossip and Idle Chat!
AAT Exam Success
It's a little quiet in the Mercia office at the moment due to that holiday time of year, however we do have some good news to share...
Many congratulations to Marie of our Accounts department who has passed her final exams... now she has a taste of studying perhaps we can convince her to train as a lecturer!
A return to the auditing world...?
This month Kris Taylor took up her green pen and returned (temporarily) to the world of auditing!
Kris took the opportunity offered by a Mercia client to join them on an Estate Agent's client money audit and thoroughly enjoyed her brush with the "real world". The experience should help us ensure that our Estate Agents SAM is as helpful as possible to clients working in this area, and makes us wonder if other specialist areas would benefit from the same treatment! Any offers considered...
