Friday, 29 May 2009
If you read last month’s newswire you may be one of the many firms who expressed an interest in the client letter we prepared on Furnished Holiday Lettings. Many of you have been chasing us for the letter as you are keen to communicate with your clients as soon as possible. Whilst there is still uncertainty surrounding the 'deadline' referred to of 31 July this year we have issued the letter and provided an option for you to decide to include reference to the ‘deadline’ or not. You’ll find more details below.
The very day we sent out the April newswire the Finance Bill was published. This news was music to the ears of the tax team who got straight to work preparing notes for our Finance Bill courses. Many of you may have already benefited from the fruits of their labour and attended one of their presentations? If you haven’t attended a course Mark Morton has written a short review on some of the content that caught his eye! As it has been written with his unique style of interpretation and straight forward commentary you may wish to read it even if you have already attended a course! You’ll find a copy of ‘Robbin’ the rich’ under tax issues below.
Whilst tax changes have been the focus for the last month, our audit team have been raising awareness on audit update courses about the impact of the new style audit reports and the importance of getting them right! More on the APB guidance is included below.
Nicola Hurley
Director
nicola.hurley@mercia-group.co.uk
Furnished Holiday Lettings – New client letter
On Budget Day HMRC announced a significant change to the rules on furnished holiday lettings, which extends the treatment to all properties in the EEA. The change also gives a one-off opportunity to re-visit the past treatment of foreign property and possibly obtain income, capital or corporation tax repayments.
To help you keep your clients informed, we have written a letter detailing the changes and possible consequences. The letter costs £40 (£35 for members) plus VAT for unlimited usage. To order a copy click here.
Course for Accountants in Industry
In the past we have received requests from many of you asking if your clients can attend our courses. The answer has always been yes they can but the whole course is not always relevant; so last year we introduced courses specifically for accountants in industry. The next courses are on Monday 22 June 2009 - Holiday Inn Coventry and cost £299 for a full day (with lunch) or £175 for a half day. The morning session will cover financial reporting issues and the afternoon a tax update. The next course will be held on Monday 7 December 2009. A summary of the courses available is detailed below. If you feel your clients would benefit from attending any of the sessions you can download a circular here or email Liz Coates at liz.coates@mercia-group.co.uk and she will send information to them.
Financial Reporting Update: 9.30am - 12.30pm Speaker: John Welsford FCA
This session will review Accounting Standards and other pronouncements issued in the last 12 months and consider their impact on a company’s report and accounts. The material will be based upon UK GAAP and will not deal with changes to International Standards.
Tax Update: 1.30pm - 4.30pm Speaker: Pat Nown ACA CTA ATT
This session will provide a review of developments in direct taxes in 2009, focussing on those issues most relevant to accountants working in industry and commerce.
Audit and Accountancy Issues
Further guidance on audit reports
At the end of April the APB issued Bulletin 2009/2 - Auditor's Reports on Financial Statements in the United Kingdom. The Bulletin follows the publication of ISA+ 700 (Revised) in March 2009, which set out the new style, more concise audit report. You may recall from our April newswire that this now includes a choice to set out the scope of the audit in the report itself, elsewhere in the annual report, or to refer the reader of the report to the 'Statement of the Scope of an Audit' on the APB's website.
The new Bulletin provides examples of both unmodified and modified auditor’s reports on financial statements of companies incorporated in the United Kingdom for years ending on or after 5 April 2009 (Companies Act 2006), as well as an example statement of Directors' Responsibilities. You can access a copy of the Bulletin here.
The APB has also published the draft clarified ISAs (UK and Ireland). Once finalised, the new standards will replace the existing ISAs (UK and Ireland) and ISQC (UK and Ireland) 1 with effect for audits of financial statements for periods ending on or after 15 December 2010.
We will be working on the drafts over the summer to consider how they will affect our audit manuals and we will keep you posted on how the update is progressing after the clarified ISAs (UK and Ireland) have been finalised.
If you would like to comment on the drafts, the period for comment ends on 22 July 2009.
FRS 29 amendments
The ASB has issued amendments to FRS 29 - Improving Disclosures about Financial Instruments. As is now customary, the amendments are based on those issued recently by the International Accounting Standards Board. The package of amendments is part of the standard setting response to the credit crisis by improving the quality of information disclosed in financial statements about financial instruments.
The amendments themselves require enhanced disclosures about fair value measurements and liquidity risk. The ASB has also taken the opportunity to incorporate credit risk disclosures for loans and receivable as this requirement in IFRS 7 had not previously been adopted into UK GAAP. Entities are required to apply the amendments to annual periods beginning on or after 1 January 2009.
You can find a copy of the amendments here.
ICAEW guidance on auditor cessation
The ICAEW has issued the fifth version of its guidance on auditor cessation statements. The guidance has been revised (section 11) to take account of two special situations; audit exemption and circumstances where a company ceases to exist. You can find a copy of the guidance on the ICAEW website.
ICAEW guidance on reporting to the Civil Aviation Authority
The Audit & Assurance Faculty of the ICAEW has published Technical Release AAF 02/09 - New Arrangements for Accountants Reporting to the Civil Aviation Authority (CAA).
You may recall that Audit Technical Release 02/03 was introduced in August 2003, following discussions with the CAA, to provide guidance for accountants reporting in this area. On 1 April 2008, the CAA introduced a reform to the existing Air Travel Organisers’ Licensing (ATOL) Scheme and as a result the guidance has been updated. If you do have clients in this area you can access a copy of the guidance via the ICAEW website.
Tax Issues
‘Robbin’ the rich’
Mark Morton reviews the Finance Bill - with his unique style of interpretation and straight forward commentary:
The Finance Bill was published at the end of April and, as ever, the devil is in the detail. Alistair (Robin Hood) Darling set out to tax the rich to give to the poor of the parish (banks?), with higher rates of tax from April 2010. In addition, a hugely complicated set of rules to restrict tax relief on pensions, some retro-active (otherwise known as retrospective), came out of nowhere. To read on click here.
Linked deposits for the purposes of the Financial Services Compensation Scheme (FSCS)
The Financial Services Authority (FSA) have provided a table listing the largest UK deposit takers, It shows how the FSCS limits would apply for most customers but is not a complete list of deposit takers covered by the FSCS.
If a bank or building society authorised by the FSA is unable to pay back deposits held with it, the FSCS can pay 100% of the first £50,000 of an eligible depositor's claim, per authorised institution. If a person holds accounts with two or more firms covered by a single authorisation, then the FSCS will only pay up to the maximum limit of £50,000 in total, regardless of how many different institutions a person holds accounts with and/or the number of accounts that they hold.
In the case of customers with joint accounts, FSCS will assume that the money in that account is split equally unless there is evidence to suggest otherwise. This means that each account-holder in a joint account would be eligible for compensation up to the maximum limit of £50,000.
www.moneymadeclear.fsa.gov.uk/pdfs/linked_deposits.pdf
Changes to car benefit rules in 2009/10 and later years
HMRC have released details of the various changes to the car benefit rules announced for 2009/10, 2010/11 and 2011/12. This can be found at www.hmrc.gov.uk/cars/rule-change-0910.htm
Non resident trusts - new guidance for beneficiaries
HMRC have released guidance explains the changes made by Part 2 Sch 7 to FA 2008 (Sch 7) to s87 and Sch 4C TCGA 1992 and the supporting provisions such as s90 TCGA 1992. To see a copy of the guidance visit http://www.hmrc.gov.uk/cnr/beneficiaries-non-resident.pdf
National Minimum Wage increases
The government has announced new National Minimum Wage rates to take effect in October 2009. The rates are as follows:
- aged 22 - £5.80 (£5.73) an hour;
- 18-21 year olds £4.83 (£4.77);
- 16 and 17 year olds £3.57 (£3.53).
The car scrappage scheme
HMRC have published their view on the tax implications of the car and van scrappage scheme. If you would like to know more visit www.hmrc.gov.uk/briefs/vat/brief3109.htm
ECJ delivers its verdict on VAT liability postal services
Postal services operator TNT had argued that they were entitled to exempt their postal services in line with the Royal Mail. This argument proved unsuccessful. However, the Court ruled that the exemption in place does not apply to supplies for which the prices were individually negotiated.
We believe that this decision may result in an opportunity for some businesses to recover input tax on postal services contracts.
The opportunity arises where the qualifying supplies received have been incorrectly treated as exempt. These services were actually standard rated and therefore the recipient of the supply should have been in a position to recover the VAT element of the prices charged. It may now be possible to submit a three year retrospective claim for the refund of this VAT element.
For further information 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!
Another sabbatical on the horizon…
You may recall that our technical team are lucky enough to have a three month fully paid sabbatical after 10 years of service. As you read this newswire John Sharkey is working his last few days before starting his sabbatical. He plans to visit Italy with his wife Jackie and then return home to collect his four daughters to embark on a six week tour of Canada, USA, Costa Rica and Guatemala. I’m sure he’ll be in touch to keep us updated on his adventures from various locations and we’ll make sure we share in future newswires.
New recruits
As mentioned in last month’s newswire, we have been busy recruiting and three new recruits have recently joined us. Our new IT assistant James Herrick started at the beginning of the month. Tecwyn Hughes joined us this week as a database developer and on the same day Hannah Howe became the latest addition to our technical team. Hannah joined from Deloitte and you may meet her soon as she will be conducting on site file reviews and teaching on our professional development courses.
Eggheads beware
Whilst Andrew Paul was visiting Finnieston Berry in Birmingham he found out that partner Elaine Berry had recently beaten the Eggheads (the world’s best quiz team!) on national TV and won a share of £29,000! Apparently Elaine had a spreadsheet running in the weeks before they appeared to track which Egghead was scoring well on certain subjects and also to try and work out the sequence of the subjects!
