Mercia Newswire March 2010

Wednesday 31 March 2010

On 1 April 2009 the new legislation to enable HMRC to carry out compliance checks on taxpayers came into effect. The legislation covers the conduct of the check and the penalties that can be levied. The new rules are very different to the rules which have operated up to now. Following a call from a client Mark Morton investigated further and was ‘moved’ to express his views. These were first published in Vision, our quarterly technical newsletter, and it seems from the many like minded responses he received that he touched a nerve. If you would like to read his views see Tax Issues below.

As you would expect the Budget has kept us busy this month. Damp squib or not we’ll leave you to decide but many more technical changes are on the way, including close company loan write offs and more AIA. The really interesting thing is how many of these proposals will see the light of day if there is a change of government. We will, of course, keep you fully up to date over the next few months.

Another decision we will leave to you is whether you will be sharing the following with your clients. Earlier this month HMRC published a press release confirming that the ‘law for naming tax cheats goes live’ from 1 April 2010. Whilst you may not want to scare your clients witless with the threat of having their name and details published on HMRC website it may be worth noting they will publish details of taxpayers who have deliberately evaded tax of more than £25k in total. The experience of our tax team suggests that this is not a very high limit and whilst we are not implying that this will be of concern to your clients some of our clients have mentioned they may share this with their clients in passing!

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

Clarified ISAs

To help you get to grips with clarified ISAs we are running open courses, webinars and in house courses. We are also busy updating our Audit Manual, which will be available in July and Specialist Assignment Manuals which will follow in the autumn.

For details of our open courses you can download a copy of our specialist course spring 2010 programme at http://www.mercia-group.co.uk/training/pdfs/SpecialistSpring.pdf

To see our programme of one hour Webinars, including ‘Preparing for Clarified ISAs’ visit http://www.mercia-group.co.uk/training/webinars.htm

If you would like to book an in house course email liz.coates@mercia-group.co.uk

For details about our range of manuals visit http://www.mercia-group.co.uk/technical_manuals/index.htm

To request a free inspection copy of our audit manual visit http://www.mercia-group.co.uk/order_forms/order_free_tech_man.htm

Audit and Accountancy Issues

New ICAEW guidance on grant claims

The Audit & Assurance Faculty of the ICAEW has published Technical Release 01/10 - Framework Document for Accountant’s Reports on Grant Claims. The guidance aims to assist reporting accountants who are asked to provide reports on grant claims and also reflects good practice principles for grant paying bodies and grant recipients. The scope of the new framework is restricted to instances when grant funding is provided to organisations from government and charities and when grants require reports from independent accountants.

The implementation date for the new framework is 1 April 2010, for new grant schemes developed on or after this date. The guidance does not apply to existing grant schemes whose terms and conditions are already in place, including those for which the grant may be paid on a phased basis. Audit 3/03, Public Sector Special Reporting Engagements - Grant Claims remains extant for schemes in operation before 1 April 2010 and continuing after that date where the principles outlined in the new framework have not been adopted.

The new guidance includes:

Members of the ICAEW can access the guidance after log in at www.icaew.com. The guidance is also available for others to purchase.

Guidance on the Audit of Related Parties

The Audit & Assurance Faculty of the ICAEW has also produced practical guidance on the audit of related party relationships and transactions. The guidance is in the form of a five point action plan which covers:

Members of the Audit & Assurance Faculty can access the guidance after log in at www.icaew.com. The guidance is also available to non-members to purchase.

Charities SORP - Information Sheet on Heritage Assets

Earlier this year the Charities SORP Committee published a third Information Sheet on the Charities SORP. Information Sheets aim to clarify the application of the SORP or particular recommendations contained therein. They do not amend the SORP itself but are advisory in nature.

The third Information Sheet deals with Heritage Assets and follows the ASB’s publication of FRS 30: Heritage Assets, which is applicable for accounting periods beginning on or after 1st April 2010. The purpose of this Information Sheet is to identify the additional disclosures that are required by the standard and it deals with:

You can access a copy of the Information Sheet here.

Signing and filing accounts at Companies House

Regular readers of our monthly newswire will no doubt be familiar with one of last year’s hot topics - the 2009 Registrar’s Rules on the requirements applicable to documents delivered in paper form to Companies House, in particular the requirements on signing accounts and the reports therein. We continue to receive technical support queries on this subject and we often refer to callers to the latest guidance from Companies House, which now sets out the requirements. This can be especially useful if they do need to refer back to Companies House as regards a set of rejected accounts.

You can access a copy of the guidance, the Life of a Company - Part 1 Annual Requirements, at www.companieshouse.gov.uk. Questions 14 and 15 in chapter 5 and question 5 in chapter 11 are particularly useful.

Technical manuals update

Earlier this month we issued an update to our Money Laundering Compliance Manual. An update to our Practice Assurance Compliance Manual will be issued after Easter.

Remember that you check that you have the latest versions of our manuals here.

Tax Issues

64-8 Disgrace

Mark Morton wrote an article for Vision, our quarterly technical update newsletter, expressing his views on HMRC compliance checks. As it generated quite a few similar ‘grumpy old men’ responses from training group members we thought it would be worth sharing. To download a copy of Vision, with our compliments, and to read Mark’s article click here.

For more information on Vision and how to subscribe visit http://www.mercia-group.co.uk/technical_support/quarterly_update.htm (Members of our training groups receive Vision as part of their membership fee.)

VAT cheque payments by post 25 February 2010

From 1 April 2010 all cheque payments by post will be treated as being received by HMRC on the date when cleared funds reach HMRC’s bank account. This change does not affect any cheque payments made by Bank Giro. To read more, please click here.

National Insurance: New EU rules

HMRC have released new guidance for employers about forthcoming changes to EU rules regarding national insurance for people moving around Europe with work. The rules apply on or after 1st May 2010. To read the guidance in full, please click here.

Publishing details of deliberate defaulters

S94 FA 2009 authorises HMRC to publish the details of taxpayers where it is established that they have committed ‘deliberate’ tax offences. HMRC have confirmed that they will apply this provision for tax periods starting on or after 1 April 2010 and for offences which are committed on or after this date. You can find out more at www.hmrc.gov.uk/news/details-defaulters.htm

Official rate of interest

From 6 April 2010 the official rate of interest applying to interest-free or low interest loans made to employees will be 4% (4.75%). See www.hmrc.gov.uk/rates/interest-beneficial.htm for more details.

Revenue & Customs Brief 11/10 - Updated Brief on Rank

HMRC have issued Brief 11/10 entitled ‘The decision of the VAT Tribunal in respect of Rank (gaming machines) issued December 2009’. The Brief follows the January Tribunal decision in respect of the ‘gaming’ machines appeal. The Tribunal confirmed that there were comparative machines for the entire period of Rank’s claim. Although not mentioned in the Brief, the Tribunal also dismissed HMRC’s due diligence defence against the breach of fiscal neutrality. HMRC had argued that on becoming aware of different treatment they acted with due diligence to correct the unequal treatment.

Please contact Phil Crowther of Liam Caton on 0870 264 0080 if you would like further information.

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!

Budget Night at Mercia

We thought you may be interested in an insight to what happens at Mercia on Budget Day (and night!). As you may or may not be aware we offer Budget Summaries and tax cards for you to send to your clients. By the time the big day arrives the marketing support and design teams have been very busy producing the personalised covers for tax cards and Budget summaries and everything is organised for the technical team to take over.

On the morning of the Budget the tax team arrive in time to listen to the Chancellor’s speech in the Boardroom. Phil Williams is the editor and he organises the team to write on different topics. These are then technically checked by two other members of the team, typeset and proof read by our proofing team (made up from our audit team).

Whilst this is happening Mark Morton finalises the tax cards which have been checked and double checked over the last couple of months.

Although the press releases can be downloaded from the Internet we still arrange for the copies of the Budget press packs to be collected from London. These arrive at the office about 4.00pm and Andrew Burgess looks through them to make sure we include important announcements (including the ones buried in the detail).

This whole process finishes around midnight when the design team get to work creating printed summaries (which are printed throughout the night) and all the digital versions. They go home around 4.00am - 6.00am. From 6.00am the first printed copies arrive and the marketing support team send out the digital files.

Some of the team spend the following day at TNT to make sure the printed Budget summaries are safely despatched. The tax cards have also been sent to print during the night and these start to arrive with clients from Friday with all of them being delivered by Tuesday.

In the middle of all the above we stop for fish and chips (this has become a Budget night tradition). For those of you who are interested in trivia our local fish and chip shop is run by Gok Wan’s parents!! This year it seems they were a little suspicious of our order. We phoned through asking for 15 portions to be ready for collection at 8.15pm and after intense interrogation looking for reassurance that we really wanted them, they eventually took the order. They then called us back to make sure we were genuine! Perhaps they couldn’t believe we were all mad enough to be working at this time or to stop to eat fish and chips?!