Monday, 31 March 2008
Welcome to our March newswire, a little later than usual due to the pressures of the Budget followed by the long Easter weekend.
Many of the announcements made in the Budget were expected but there were one or two surprises such as the deferral of the rules for income shifting. There was also more detail regarding the new Entrepreneurs’ Relief and on Residence and Domicile. Both of these topics have generated a few calls from clients and if you want to know more why not attend our Budget 2008 course mentioned in last month’s newswire. The High Wycombe course is now full but there are still places on the London (8 April) and Leicester (11 April) courses. If you haven't the time to attend a course Mark Morton has prepared a very quick review of the key points and this can be found under tax issues below.
The 6 April 2008 is almost upon us and whilst most sections of the Companies Act 2006 that relate to accounts and reports and audits come into effect for accounting periods beginning on or after 6 April others are with immediate effect from that date! To ease any confusion over what applies and when, we have prepared a quick reference summary for you so make sure you look at A and A Issues below.
Nicola Hurley
Director
nicola-hurley@mercia-group.co.uk
CIS Contractor's Return - Online submission of Returns
Help your clients comply with the CIS scheme. Successfully launched last year, this software takes you through the process of preparing and reporting monthly returns.
The software has been developed in conjunction with QMS which has been producing tax return software for over 10 years.
Prices start from £195 plus VAT. For further information, including a demonstration and sample output, or to place an order click here.
Tax Rates 2008/09
Did you order any tax cards for 2008/09 or were you just too busy before the run up to the Budget? Our printed tax cards are now available until June 2008. For further information click here or call the Marketing Support Team on 0116 258 1242.
Audit and Accountancy Issues
Companies Act 2006 update
With the sections of the new Act that relate to accounts and reports and audits coming into effect for accounting periods beginning on or after 6 April 2008 we will soon start to see some changes in procedures coming into effect. A number of related statutory instruments have now been finalised and issued and we recently summarised these for our audit and audit exemption manual subscribers. If you would like to see a copy of this summary, along with an update on the current status of the implementation of the new Act and a reminder of the forthcoming changes in respect of reports and accounts and audits click here
Revised Audit Regulations and Guidance
The ICAEW, ICAS and ICAI have recently issued revised Audit Regulations and Guidance. The revisions are mainly as a result of the Companies Act 2006 and come into effect on 6 April 2008, in line with the relevant provisions of the new Act. However, the new regulations do not currently apply in the Republic of Ireland (RoI), as there are different timetables in the UK and RoI for transposing the EU’s audit directive, which is the source of many of the new requirements in the Companies Act and hence changes to the regulations.
You can find a copy of the new Regulations on the relevant Institute’s website at:
More detailed information can also be found in the March 2008 edition of Audit News, again available from the relevant Institute’s website.
Techinical round up
At the time of finalising this month’s newswire we were still eagerly awaiting practical guidance on some important changes that take effect on 6 April 2008. These include auditor liability limitation agreements and procedures for allowing access to working papers for successor auditors. We’ll keep you up to date with news on these in future editions of newswire but in the meantime the following have been issued this month:
- an amendment to FRS 20, Share-based Payment - Vesting Conditions and Cancellations by the ASB. The amendment clarifies the treatment of certain cancellations of options granted to employees, following similar amendments issued in January 2008 by the IASB. The amendment will apply for accounting periods beginning on or after 1 January 2009, with earlier application permitted; and
- an update to Practice Note 12 (Revised), Money Laundering - Interim guidance for auditors in the United Kingdom by the APB, which replaces the version issued in January 2007. The guidance has been updated to reflect the implementation of the Money Laundering Regulations 2007 and a recent update to the Proceeds of Crime Act 2002.
You can find out more on the FRC's website at http://www.frc.org.uk/index.cfm
Technical manuals update
Earlier this month we sent out updates to our audit and audit exemption manuals and an update to the solicitors' accounts rules specialist assignment manual will be with subscribers next week. You can keep up to date with the latest version of our manuals on our website at http://www.mercia-group.co.uk/technical_manuals/updates.htm
Tax Issues
Budget 2008
On 12 March 2008, Chancellor Alistair Darling gave his first Budget speech. The speech itself was a bit like watching paint dry but, as ever, the devil was in the detail. For a quick review of the major points taken from our Budget summary prepared on the night, please click here.
Changes to the PAYE regulations to deal with issues highlighted in the Demibourne case
Regulations have been issued to extend the limited circumstances where a PAYE liability can be transferred from and employer to an employee. If you would like to read more visit www.hmrc.gov.uk/employers/demibourne.htm
Publication of Entrepreneur’s Relief draft legislation
Following the Chancellor’s announcement proposing a new Entrepreneurs’ Relief in January, the draft legislation is now available at www.hmrc.gov.uk/cgt/#8. The link also includes draft explanatory notes and FAQs.
To help you keep your clients up to date on the new Entrepreneurs’ Relief we have prepared a client letter. Alternatively if you would like a more detailed summary we have written a client briefing which can be purchased as a two-page A4 printed document or as a digital file. Details on both products will be sent to you early in April but are available now on our website.
Minimum wage rises
The National Minimum Wage will rise to £5.73 (£5.52) an hour in October 2008. The hourly rate for 18 to 21 year olds will increase to £4.77 (£4.60 for 16 and 17 year olds to £3.53 (£3.40) an hour.
Notifying HMRC if no PAYE/NIC or CIS deductions payment is due
Even if no PAYE/NICs or CIS deductions payment are due for a given month or quarter, businesses are still generally required to notify HMRC of that; for example, if no CIS deductions are made in a particular month, a nil return still generally needs to be submitted.
In order to help with these requirements, HMRC can be notified by completing an online form. This can be used to tell HMRC about a previous, current or future month/quarter where no payment is due.
This form must still be completed even if businesses have told the CIS helpline that they will not be paying any subcontractors for the coming months.
www.hmrc.gov.uk/new-cis/nil-payments-note.htm
www.hmrc.gov.uk/howtopay/paye_nil.htm
New deadlines for filing returns and paying tax online
There are a number of important deadlines for switching to online filing and payment coming up and HMRC have provided a summary of them. This can be viewed at www.hmrc.gov.uk/onlinechanges/index.htm
Fleming Claims - Transitional period to 31 March 2009
Following the Fleming and Conde Nast judgment, HMRC has announced a transitional period to 31 March 2009, during which eligible businesses can make VAT claims for VAT overpaid or under claimed between 1973-1997. If you have not already made a claim this must be submitted before 31 March 2009.
HMRC have also amended officer’s powers of assessment to recover any amounts paid which are subsequently found to have been incorrectly claimed by businesses.
Over-paid output tax (Section 80 (4A) - Assessments to recover amounts incorrectly paid by HMRC to businesses who claim under s80 (over-paid output tax) must be made within two years of HMRC having acquired evidence of facts, sufficient to justify the making of the assessment. This new measure will add a two-year time limit from the end of the accounting period in which an erroneous payment is made.
Input tax claims (s73 (2)) - The current rules require assessments to recover amounts incorrectly paid by HMRC to be made within two years of the end of the accounting period in which the claim was made. The new measure will extend this limit to two years from the end of the accounting period in which the claim was paid. This will ensure that HMRC are able recover amounts paid out where it is later discovered the repayment was a mistake.
It is likely that HMRC will pay Fleming claims fairly quickly. However, they will have a two year time limit from the end of the accounting period in which the erroneous payment was made in which to verify the Fleming claims and assess businesses whose claim is not valid.
Advisers should also consider any potential issues that could arise if their accounts review/audit check of the VAT account fails to identify any required VAT adjustment and the potential for HMRC to use these extended VAT assessment powers.
IVC would be happy to review any Fleming claims to ensure that the extended assessment powers will not affect your client’s claims.
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 morning after the night before...
We thought we would share a little light relief that we enjoyed at 7.00am the morning after the Budget night that brought a smile to even those that had been up all night!
If you were to visit our offices on the day following any spring Budget you would witness a military style operation of timed deliveries and despatches. A team of us arrive at the office to be on hand to help load and unload and make sure the right booklets are on the right delivery route. Wayne, head of IT also comes in early to access the server to make sure that all the digital files have been successfully sent.
This year one of the couriers turned up and jumped out of his car to start loading the booklets. He had recently acquired a new puppy, that he brought along for the ride, and he left him in the car whilst we sorted the paperwork. Anxious to see where his new master had gone the puppy jumped around and inadvertently locked the car with the keys inside!
That’s when the fun started. We had plenty of packing tape to try and unlock the door (worryingly we all seemed to know that this was the best tool for the job) but it didn’t work and we needed a wire coat hanger. Having looked around the office in vain, a true lateral thinker, Wayne had a ‘light bulb’moment and he stripped the wire required from an old screen destined for recycling. After a few minutes and slight of hand Wayne triumphed and took a bow (or is that bow wow!).
Wayne is being very coy about where he learned this skill and insists it was beginner’s luck. We're not too sure but the whole thing certainly made us smile and relieved some of the stress. The puppy was pleased too!
