Friday, 29 January 2010
Even if, for one reason or another, you are a little tired of tax allowances and calculations there may be no time to rest in February as HMRC are warning that some of the current batch of new tax codes are wrong and your clients may be on the phone! The new computer system for processing PAYE, the National Insurance and PAYE Service (NPS) is missing some information. It appears that the error, following on from an IT upgrade, includes employees' records from former employers along with current records. The new system then assumes that they have more than one job and calculates tax codes based on falsely high earnings. Although they are reassuring taxpayers that they will get the codes corrected before the start of the new tax year you may want to make your clients aware there could be errors. It might save a few of those calls?
Another HMRC announcement, the Tax Health Plan (THP), detailed their intention to target doctors in the same way they have previously run 'disclosure opportunities' in respect of offshore bank accounts. These opportunities have generally allowed those with undeclared income linked to offshore accounts to disclose these arrears under terms which impose a reduced penalty. The THP is a similar offer aimed at those registered with the General Medical Council and is the first initiative in an HMRC campaign focused on professionals. We know HMRC plan to meet with General Dental Council and British Dental Association with a view to including dentists within the THP. We wonder if these opportunities will eventually extend to accountants? Enough said! If you would like to read more detail on this issue from IVC, our specialist consultants in this field, please click here.
If you are not involved in tax returns you may have had a more quiet start to the New Year? That said, there is always something to up date you on regarding audit and accountancy issues and this month is no exception.
Nicola Hurley
Director
nicola.hurley@mercia-group.co.uk
Charities Conference 2010
The 2010 Charities Conference will be held on:
- 2 March 2010 - The Bloomsbury Hotel, London
- 18 March 2010 - Hilton East Midlands, Castle Donington
Topics covered include: Tax Efficient Fundraising; Making the Most of Cash and Investments; Regulatory Review; Auditing and Independent Examinations; Charities and Trading; Public Benefit Update and Feedback on Inquiries; and Charity Property - Acquisitions and Disposals.
For full details of the 2010 Charities Conference programme, please click here.
Courses on your doorstep
We plan CPD programmes at over 52 venues nationwide. To see a copy of the programme most local to you visit http://www.mercia-group.co.uk/training/locations.htm
Our Course Directory lists all the courses and conferences available in all locations and our 2010 edition has just been published. A copy will be sent to members of our training groups in the next few days. If you are not a member but would like to receive a copy please email michelle.hammond@mercia-group.co.uk alternatively you can download a copy here.
Don't forget you can also search for a course online by topic, date and location at http://bookings.mercia-group.co.uk/bookingindex.php
Audit and Accountancy Issues
Amendment to FRS 25 - Financial Instruments
The Accounting Standards Board (ASB) has issued an amendment to FRS 25, Financial Instruments: Presentation - Classification of Rights Issues. The amendment requires a rights issue involving the exchange of a fixed number of an entity's own equity instruments for a fixed amount of cash denominated in a foreign currency to be classified as an equity instrument and applies to rights, options or warrants issued pro rata to all existing owners of the same class of shares.
The amendment is applicable for accounting periods beginning on or after 1 February 2010, with early application allowed.
You can find a copy of the amendment on the ASB's website.
News of forthcoming APB Practice Note updates
In publishing an exposure draft of Practice Note (PN) 10, The Audit of Financial Statements of Public Sector Bodies in the UK, the Auditing Practices Board (APB) has commented on the need to update their industry-specific PNs in issue for the 'clarified' International Standards on Auditing (UK and Ireland). We can expect therefore see a number of consultation drafts of revised PNs published over the next six months.
As a reminder, the 'clarified' ISAs are effective for audits of financial statements ending on or after 15 December 2010.
You can view the APB's press release here.
LLP SORP update
You may recall from our August 2009 newswire that the Consultative Committee of Accountancy Bodies (CCAB) had published an exposure draft of a revised LLP SORP. The proposed review of the SORP centred around amendments made to FRS 25, Financial Instruments: Presentation (which require certain amounts that would otherwise have been presented as liabilities to be reclassified, in limited circumstances, as equity) and how the amendments might affect LLPs.
The consultation period ended in November and the CCAB has now commented that:
- the proposals in the draft SORP are not expected to be modified substantially; and
- the ASB has agreed to consider the revised draft SORP in early February 2010. Publication will therefore take place as soon as possible thereafter.
The effective date of the revised SORP will be accounting periods beginning on or after 1 January 2010, with some early adoption considerations.
If you would like to see marked up and clean copies of the exposure draft you can access them from the CCAB's website.
We'll have news on how the new SORP will affect our LLP Specialist Assignment Manual in a future edition of newswire.
Revised JMLSG Anti-money laundering guidance for the UK financial sector
Those of you who refer to this guidance in support of our own anti-money laundering guidance for the accountancy sector will be interested to know that the Joint Money Laundering Steering Group (JMLSG) has published final amendments to its December 2007 guidance. The guidance has been approved by the JMLSG Board and has been submitted to the Treasury for Ministerial approval.
You can access a copy here.
Technical Manuals News
If you subscribe to our Clubs or Friendly and Industrial and Provident Societies Specialist Assignment Manuals please look out for updates which will be issued next week.
Remember that you check that you have the latest versions of our manuals here.
Tax Issues
Prime Minister outlines plans for childcare vouchers
The Prime Minister has outlined plans for childcare vouchers in a letter to two MPs.
He has confirmed that all families who currently receive vouchers will continue to get the same support and that tax relief will be retained for any new childcare vouchers that are issued in the future.
However, from April 2011 all new recipients of childcare vouchers will get the same income tax relief as basic rate taxpayers in order to ensure that the system does not disproportionately benefit higher rate taxpayers.
The Prime Minister wrote:
'I have already made clear that no family currently in receipt of tax relief for their childcare vouchers will see any change in the support they receive. But following our discussions I can now also say that we will retain tax relief for new childcare vouchers issued in the future. However, there still remains a concern that a disproportionate benefit is accruing to higher rate taxpayers. So in order to ensure that this tax relief is given on a fairer basis to all families, we will ensure that all taxpayers get the same income tax relief as basic rate taxpayers do currently. This will take place from April 2011 and will not affect those receiving vouchers issued before that date.'
Charities and gift aid claims - changing time limits
Gift Aid is a very important component of the finances of many charities. Provided that they have clear evidence of the donations, it is currently possible for charities to claim tax on gift aided donation for up to six back years. Some charities word gift aid declarations to this effect.
Widespread changes are being made to all tax time limits on 1 April 2010 and this will affect gift aid claims. The basic time limit for gift aid claims will now be four years after the end of the tax year in which the donation was received. The change will happen immediately on 1 April and will directly affect two tax years where charities may think they have more time to make claims.
- Under the old rule claims for 2004/05 would have had a time limit of 31 January 2011. Under the new rule the time limit for that year will run out on 31 March 2010 because from 1 April 2010 any claim would be out of date because the new time limit (four years from the end of the tax year) would have expired on 5 April 2009.)
- Similarly under the old rule claims for 2005/06 could have been made until 31 January 2012. The new time limit means that four years from the end of the tax year will be 5 April 2010 and that is the date by which claims need to be made.
Salary sacrifice arrangements involving cycles and bus passes
Some employers have implemented salary sacrifice arrangements for cycles and for bus passes with the expectation that the benefits are tax and NI free.
HMRC have issued a note which explains the approach that they will take for past and current periods where the conditions for the relevant tax exemptions are not satisfied. If you feel this would be relevant to your clients you can find more at http://www.hmrc.gov.uk/specialist/cycles_bus_passes.pdf
Dispensations - new online application form
HMRC have introduced the facility to apply for dispensations online. To see the details visit http://www.hmrc.gov.uk/paye/exb/schemes/dispensation.htm
Input tax and white goods
A complex legal argument has arisen that might allow recovery of input tax on white goods installed in dwellings. Although this could be a lengthy process, we are currently coordinating proactive claims and appeals on behalf of a number of clients and recommend that all developers take protective action.
If you would like further help, please contact a member of the VAT services team at IVC on 0870 264 0080.
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!
At last - updated team photos are now on our website
Every year on 23 December (except when it falls on a Saturday or Sunday) we close the office for the festive break. It is one of the few days when the majority of the lecturing team is in the office so we decided to take advantage of this and organised a professional photographer to come and take new photographs for the website.
There is an open offer for updating pictures at any time but as you can imagine it isn't taken up very often and some of the original pictures were taken 9 years ago! Not everyone made it into the office that day but if you're not buried under a mountain of tax returns and are interested to see how much we have aged, or even what we look like, you can do so at http://www.mercia-group.co.uk/company/team.htm
