Friday, 25 January 2008
We hope our first newswire of 2008 finds you well and dry! Being based in the middle of England we rarely get exposed to severe weather conditions but this month has been an exception. If you want to find out more make sure you catch up on office gossip below.
The long awaited update on the capital gains tax reform hit our desks yesterday and if you purchased our client letter last year you should have already received a summary of the announcement. Just in case the news passed you by (or you didn't purchase the letter) we have included an update for you in Tax Issues below.
Changes to capital gains tax have once more added pressure on the tax team as they update the notes (yet again) for the run of courses in February. However, it's not just the tax team who have been busy. Our audit and accounts team have spent the month updating our Money Laundering manual and adding the finishing touches to the Practice Assurance manual and these should be with subscribers next week. Without time for drawing breath they will move on to updating our audit and audit exemption manuals and pensions and solicitors specialist assignment manuals as these are scheduled for release next month.
This year's puzzles take on a coffee break theme with a mix of Sudoku (getting progressively harder throughout the year) and word search puzzles and conundrums. We start the year with an easy Sudoku puzzle and hopefully you will find the time to take a short break to complete it. As usual the solution is at the end of our newswire.
Nicola Hurley
Director
nicola.hurley@mercia-group.co.uk
New product - Interactive version of our accounts disclosure checklists
We are pleased to announce the launch of a new and exciting disclosure checklist product for corporate, charity and pension scheme accounts.
Along with our long standing software partner Credence Software (exclusive UK distributors of Caseware software), we have developed an interactive version of our accounts disclosure checklists. This will allow you to complete accounts disclosure checklists on screen for corporate, charity and pension scheme accounts.
Prices start from £99 per user per year.
More information on this product, click here.
Charities Conference 2008
Do you have charity clients? If so, have you booked your place on our 2008 Charities Conference? The conference is being held on:
- 28 February 2008 - Jury's Hotel, Great Russel Street, London
- 18 March 2008 - Hilton East Midlands, Castle Donington
For full details of the 2008 Charities Conference programme, please click here.
Audit and Accountancy Issues
Companies Act 2006 - the fifth commencement order
If you saw last month’s newswire you’ll know that news of the issue of the fifth Commencement Order under the new Companies Act had just reached us. A copy of the final statutory instrument is now available at SI 2007/3495, The Companies Act 2006 (Commencement No. 5, Transitional Provisions and Savings) Order 2007
The legislation brings a number of the Acts provisions into force on 6 April 2008 and 1 October 2008, including from 6 April 2008 the provisions relating to reports and accounts and audit. On 1 October 2008 the repeal of the restrictions under the Companies Act 1985 on financial assistance for acquisition of shares in private companies, including the ‘whitewash’ procedure will also come into force.
There’s no need to panic as yet with regard to the presentation of statutory accounts - the key provisions in respect of reports and accounts come into force for accounting periods beginning on or after 6 April 2008. That’s April 2009 year ends for most. Clearly we’ll be sending out updated proforma accounts and disclosure checklists to our manual subscribers later this year and no doubt your accounts software providers will be doing the same.
The Enhanced Business Review
The ASB has issued a reminder to UK quoted companies of the requirements to follow the enhanced business review reporting requirements in section 417 of the Companies Act 2006 for years beginning on or after 1 October 2007.
The ASB is of the opinion that all of the enhanced business review requirements found in the new Act are already included in its Reporting Statement (RS) on Operating and Financial Review and in order to further assist UK companies in preparing their business review, the ASB has issued a table which illustrates the link between the OFR reporting statement and the latest legislative requirements. You can access a copy here.
Charities Act 2006 - where are we now?
Towards the end of last year we emailed our charities specialist assignment manual subscribers with an update on the implementation of the new Charities Act, as the Office of the Third Sector (OTS) had revised its implementation timetable. In particular, whilst there was a second Commencement Order as promised in the second half of 2007 (it was made on 21 November) it contained much less detail than was previously anticipated. The majority of the provisions have now been moved into 2008 and are expected to be implemented some time in February.
The OTS and the Charity Commission have also consulted with charities on changes to the audit, accounting and reporting rules and it is likely that the relevant changes will be made by updating the Charities (Accounts and Reports) Regulations 2005. The proposed changes include those to the rules for small incorporated charities replacing the reporting accountant regime with that of an independent examination. These changes are expected to take effect for accounting periods starting on or after a date late in March 2008.
Technical manuals update
Money Laundering - Following the issue of the final CCAB guidance for the accountancy sector and the new (Proceeds of Crime Act 2002) provisions on ‘tipping off’ we’ve completed another update to our Money Laundering Compliance Manual, which is due to be sent out next week.
Practice Assurance - Following the finalisation of the money laundering changes referred to above we are now finalising an update to the Practice Assurance Compliance Manual. The updated manual is also scheduled for release at the end of the month.
Other manuals - Updates to our audit and audit exemption manuals and pensions and solicitors specialist assignment manuals are scheduled for release in February 2008 and we’ll have more update news on other specialist assignment manuals in next month’s newswire.
Tax Issues
The new Entrepreneurs’ Relief
In the Pre Budget Report in October 2007, the Chancellor, Alistair Darling, announced a series of changes to the CGT regime for individuals and trustees. These changes included the abolition of taper relief and indexation relief and the introduction of a single rate of CGT of 18%.
On 24 January 2008, in response to pressure from the business community, the Chancellor announced a new ‘Entrepreneurs’ Relief’. The first £1m of gains qualifying for relief will be charged at an effective rate of 10%. To read our summary of the proposals, please click here.
More consultation!
In the run up to Christmas, HMRC issued two more consultation documents. The first, ‘Enhanced Capital Allowances: detailed proposals for new payable tax credit’, was a Technical Note containing detailed proposals and draft legislation for the new payable tax credit for enhanced capital allowances announced at Budget 2007.
www.hm-treasury.gov.uk/media/6/0/payableenhanced171207.pdf
The second, ‘Business tax reform: Capital Allowances changes technical note’, included draft legislation on the capital allowances changes announced at Budget 2007.
www.hmrc.gov.uk/legislation/pu451.pdf
HMRC pilot the new clearance process from January 2008
Further to our December newswire, HMRC have now issued further details of the new pilot clearance process, which applies to Large Business Service customers in the retail sector and business customers, across all sectors, whose tax affairs are handled by offices within the North West & Midlands group of Local Compliance.
www.hmrc.gov.uk/cap/clearance-pilot-update-dec07.htm
HMRC guidance on transferable nil rate band procedures
HMRC are giving provisional effect to these proposals and allowing applications for grants to proceed on the basis that the new rules will be made law in the Finance Act 2008. Where the new rules apply to a death on or after 9th October 2007, HMRC state that a claim to transfer any unused nil rate band (NRB) on form IHT216 will need to be made. The form can be ordered from the Probate and Inheritance Tax Helpline on 0845 30 20 900 or it can be downloaded from the HMRC Inheritance Tax website at www.hmrc.gov.uk/cto/forms1.htm
Although HMRC are giving provisional effect to the new rules they will not be able to settle any cases where unused NRB is transferred until after Finance Act 2008.
Offset VAT against direct tax
The case of Burton v Mellham Ltd, heard in the House of Lords, considered the right to offset overpayments of one tax against demands for another - equitable set off. Our first direct experience of the case came when HMRC quoted the case to justify non repayment of VAT to cover a potential corporation tax liability. Since then we have had considerable success in using the case to prevent demands for immediate payment of one tax when a repayment, or indeed potential repayment, of another exists. To quote from the judgment
"...set-off is a general principle founded in simple convenience and fairness... it should be taken to apply generally to all liquidated cross-claims unless excluded by statute or contract"
At times of cash flow problems the case may prove invaluable.
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.
Mercia support TaxAid
We first told you about this in November but here is a reminder that Mercia is supporting TaxAid, a registered charity, by providing all of the speakers for their conference next month. The conference is titled ‘The Taxman Cometh - direct tax enquiries and how to deal with them’. To read more about the conference or obtain a booking form, please click here.
Office Gossip and Idle Chat!
Andrew Paul sinks to a new low!
On driving back from a course, with 12 laptops in his boot and his own laptop on the passenger seat, Andrew decided to visit a friend. On route he drove into a ford (and we don't mean a Capri!) but having successfully negotiated the crossing several times before he didn't see this as a problem. However, it had been raining for days (a factor Andrew didn’t take into account) and his car came to a halt during the crossing when his engine cut out!
It took him a few minutes to gather his thoughts (whilst he watched as the water poured in through his heating vents) and as the water reached his waist he decided that the best thing to do would be to bail out. He climbed out through the window and stepped into the cold water and waded through the ford to call for help.
The laptops are beyond help and the last time Andrew saw his car (five days later when he went to the garage to collect a few personal belongings) water was still dripping from the engine!
We must say news travels faster than our newswire as Shan Hughes reported that a few delegates on a Birmingham course asked her how Andrew's car was!
New arrival
Many congratulations to Michelle Dawson and husband Alex on the safe arrival of their son Oliver James, born on 4 January 2008.
