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Wednesday 30 June 2010

Everyone at Mercia is always busy around Budget time and never more so than before, during and after this month's Emergency Budget. With a 'normal' Budget we are usually able to make preparations in advance but whilst some of the content of the Budget was known before the day, implementation dates were unknown. Would any announcements include changes for the current year's tax rates or would the announcements outline what was to come in the next tax year? Needless to say the tax team have been busy updating many of our marketing support products and relevant course notes since the Budget and were busy on the night digesting the press releases to prepare a summary.

The morning after the night before our exhausted tax team received quite a few call from clients who had purchased a summary of the Budget querying the statement in our booklets that the rate for employers NIC in 2011/12 would be 13.8%. Many were ''horrified that this was the case despite the election pledges that the "jobs tax" would be dropped and quite a few callers were concerned we had got it wrong.......! For a split second we wondered the same but after an hour's debate having taken place the night before we were able to refer callers to the Treasury press release which confirmed that this indeed was the case but the level at which employers start to pay NIC was to be increased by £21 per week above indexation from next April.

The Budget also kept the audit and accounts team busy prior to the Budget as many of you questioned if you should change the registered wording on your Budget products following the EU Provision of Services Regulations Directive. You may remember that one aspect of the regulations is that registered providers of a professional service need to disclose the member state in which title has been granted. Some firms chose to change the registered wording on their Budget products to 'ABC & Co, registered to carry out audit work in the UK, by the ICAEW' and sought advice from the A & A team for clarity.

Just in case you were too busy watching football, cricket or tennis and missed the Budget we have include a brief summary in tax issues below and of course all the detail will be covered in forthcoming courses and webinars.

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

Tax Webinars in July

Each webinar costs £75 plus VAT per participant or £225 plus VAT for three or more participants* (25% discount for national and local members). If you can't make the date you can purchase a recording of the live event. To find out more and to book your place visit http://www.mercia-group.co.uk/webinars

An Introduction to Bookkeeping - new online course

Our popular bookkeeping courses are held in September/October at various locations throughout the UK however, if you can't make it to an open course or you need it to be sooner or later or just nearer to your office - we have the solution.

An Introduction to Bookkeeping covers the material from both of our Principles of Bookkeeping and Bookkeeping the Next Stage one day courses, together with tuition from the case study days. This online solution gives your staff access from their desk. The course can be worked through in one sitting or done in parts giving flexibility in working around their other commitments. It includes an audio presentation, PowerPoint slides and case studies. A set of comprehensive notes are included and can be downloaded at any time.

For more information and to watch a demo click here.

Audit and Accountancy Issues

Amendments to SSAP 25, FRS 8 and FRS 29 proposed by ASB

The ASB have published FRED: Improvements to Financial Reporting Standards. This proposes changes to the following standards:

The amendments are the result of the ASB's annual review of standards which is driven principally from the amendments made to IFRS. Comments are required by 30 August 2010 and the changes are proposed for accounting periods beginning on or after 1 January 2011.

The ASB comment that they have sought to make minimal amendments to FRS given its current proposals on the future of UKGAAP.

Audit of Insurers

The APB have published a consultation draft of a revision of PN20 'The audit of insurers in the UK'. When finalised, the revisions will apply to the audit of insurers for periods ending on or after 15 December 2010. The changes arise due to the new ISAs and changes in the legislative and regulatory framework.

Charities - trustees' expenses

The Charities Commission have issued a Q&A pack addressing some of the common issues arising relating to the disclosure of trustees' expenses in SORP compliant accounts. This follows the Independent Expert Group's report on expenses.

To reflect developments and challenges arising from the current economic climate the Charities Commission have also updated four sets of financial guidance for charities and their advisers:

Tax Issues

Budget news

And so George Osborne presented his first Budget on Tuesday 22 June 2010.

For the first time, forecasts were published in advance of the Budget. The Office for Budget Responsibility was formed in May 2010 to make an independent assessment of the public finances and the economy in advance of each Budget and Pre-Budget Report.

Within the framework of these forecasts George Osborne stated that a tough but fair Budget was needed. Many fundamental announcements have been made which affect the taxation of most individuals. These are in addition to changes already made by the previous government, such as the 50% tax rate and changes to the tax relief available for pension contributions.

The main thing to note is that, apart from the changes to CGT, there were no immediate changes...but lots of announcements for next year. You may have already read many Budget articles and summaries but if you would like a quick reminder of the main points click here.

End of period of grace

HMRC have announced the end of Extra Statutory Concession B46, which gives a period of grace from automatic penalties for late company and employers' and contractors' end-of-year returns. It will be withdrawn from 1 April 2011. To read the full statement, please click here

Single Agent Dedicated Line telephone number

Agents can now call one telephone number for all queries relating to their PAYE and SA clients (individuals). This number will provide a quicker service, have shorter recorded announcements, more experienced staff, and access to technical help. To read more, please click here.

Lease Premium initiative

HMRC have announced a time-limited opportunity to resolve a long-standing dispute over a scheme designed to reduce income tax and national insurance liabilities on employer-provided accommodation, as well as some FAQs. For further information on the announcement please click here.

Income tax when arriving in the UK

From 1 June 2010 individuals no longer need to complete form P86 Arrival in the UK to tell HMRC that they've come to the UK, according to HMRC's website.

Entrepreneurs' Relief and share-for-share exchange - HMRC response to CIOT query

In response to a query submitted by the CIOT, HMRC Capital Taxes have accepted in principle that is possible to 'look through' a share-for-share exchange, under certain circumstances, for the purposes of the 12-month ownership requirement for CGT Entrepreneurs' Relief. To read the detail, please click here.

HMRC make agreement on hotel billback

Following changes to the Tour Operators' Margin Scheme (TOMS), HMRC have set out details of an agreement with representative bodies of the business travel sector about invoicing for supplies under the arrangement known as 'hotel billback'.

Under the arrangement, hotel booking agents reserve accommodation on behalf of a business client. The hotel issues a VAT invoice for the accommodation to the booking agents, who recover the tax charged and then issue a VAT invoice to the business traveller, charging the tax on both the accommodation and the commission.

A number of changes were made to the TOMS with effect from 1 January 2010, including the withdrawal of the business to business opt out, to comply with EU law. Revenue & Customs Brief 21/10 confirms that hotel billback transactions should be declared through TOMS. However, there would appear to be an error in the Brief in that the hotel booking agents who receive invoices in their own name for hotel accommodation are unable to recover VAT charged when making onward supplies under the TOMS.

Under certain circumstances the agent can avoid TOMS and mitigate the VAT. For further information please contact 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!

The Mercia Team Communications Day - Thursday 22 July 2010

You may (or may not) recall that we hold an annual communications day for the whole of the Mercia team. We use the day to share financial results and plans for the coming year, followed by a few 'fun' activities that usually create moments to remember (or forget for some individuals) and keep the office gossip machine well oiled for a few weeks following! We will all be away from the office for some of the day but if you need to contact us on that day there will be phone cover and we will return any urgent calls.

Emergency Budget Night Supper

In our March Newswire we included a rundown of Budget Day at Mercia and our fish and chip suppers from the local chippy run by Gok's parents. The Emergency Budget was held on a Tuesday which happens to be the night Gok's TV programme is broadcast to the nation and as you would expect from any proud parent - they were watching whilst working!