Friday 26 October 2007
The big news this month has to be the surprise announcements made in the Pre-Budget Report about IHT and CGT.
Internally the announcements caused a bit of a stir as the tax team quickly realised the news meant that many of our tax course notes and slides would need rewriting - all in time for courses happening less than a week following the PBR! The dust is still settling but the tax team seem to have survived the initial rush.
The Marketing Support team also went into overdrive as we received many requests from firms asking for information to send out to clients. In response to this we prepared a client letter on the CGT reform and changed the content of our winter client newsletter to include all the important news. Details of the client letter are included below.
Other important news released since our last newswire concerns all MLROs as the CCAB has issued draft guidance to the accountancy sector in respect of the new Money Laundering Regulations that come into force on 15 December. Also the APB has issued some specific guidance (at last!) on how the documentation requirements of the international auditing standards apply to the audit of smaller entities. You’ll find more details below.
Nicola Hurley
Director
nicola.hurley@mercia-group.co.uk
CGT Reform - client letter
As you may be aware, the Chancellor surprised everyone in his Pre Budget Report on the 9 October with major changes to the CGT regime from April 2008, including the abolition of taper relief. This change is fundamental to many of your clients.
To help you explain what has changed and the effect on your clients, we have written a standard letter for your use. It contains a summary of the changes and explains that the timing of disposals in the near future will become critical. The letter costs £34.95 (£30 for members) plus VAT for unlimited usage. To order a copy click here
Money Laundering Manual complete with Training CD
Our office procedures manual has been developed to enable both employees and the firm to comply with the legislation and regulations surrounding money laundering and the proceeds of crime. Compliance with the legislation is important because the penalties involved for non-compliance are serious. By following the guidance laid down within this manual and by completing appropriate training, both employees and the firm will be able to meet their obligations under the current legislation.
Training CD Included
Users of our money laundering manual also receive a seminar pack (on CD) that can be used to train staff in the requirements of the legislation, as well as a digital copy of our latest money laundering training course.
For further details about the manual click here
The CD of our money laundering update course can also be purchased individually. For further details click here
Audit and Accountancy Issues
Money Laundering - CCAB guidance issued
In our August newswire we alerted you to the new Money Laundering Regulations that were issued at the end of July and which come into force on 15 December 2007. The CCAB has this month issued draft guidance for the accountancy sector, which interprets the requirements of the new regulations, as well as the primary legislation relating to money laundering. The guidance is addressed to all of those who provide accountancy, tax advisory or insolvency related services in the UK by way of business, including bookkeepers and accountants who are not members of a recognised professional body.
The areas covered include:
- anti-money laundering systems and controls, including training
- the risk based approach to customer due diligence, including examples of risk based verification
- internal reporting
- the role of the MLRO and SAR reporting, including the privilege reporting exemption and to whom this applies
- consent.
Comments on the draft guidance are requested by 12 November and you can access a copy here http://www.ccab.org.uk/documents.php
We are now working on incorporating the new guidance into our Money Laundering Manual and we’ll have further news for our subscribers on the timing of the next update early next week.
Practice Note 26: Smaller Entity Audit Documentation
Two years after the introduction of ISAs the APB have issued some specific small entity guidance. Practice Note 26, which was issued at the end of September 2007, provides guidance on how the considerations of auditing the smaller entity impact on the audit working papers.
The practice note is primarily aimed at the auditors of companies which are exempt from audit, but voluntarily choose to be audited and other smaller entities, including charities. The guidance is also aimed at larger audit clients, where:
- the entity is an owner managed business, with few owners;
- operations are uncomplicated;
- there are few sources of income;
- business processes and accounting systems are simple;
- the entity has few internal controls and they are relatively informal.
The guidance enables auditors in the above circumstances, to reduce their documentation required to evidence their understanding of the entity, especially in relation to internal control. The practice note states that for smaller entities the audit documentation may be brief and simple.
The practice note gives illustrative examples of documentation that are applicable for smaller entity audits. This should enable auditors of the above type of audit client to apply auditing standards in an effective manner, without unnecessary form filling.
To view the practice note visit http://www.frc.org.uk/apb/press/pub1404.html
Financial Reporting Review Panel - Directors’ reports
For accounting periods beginning on or after 1 April 2008, the FRRP will review the directors’ reports (including the business review) of public and large private companies.
Where the FRRP review directors’ reports, they will consider whether the business review is consistent with the published accounts and any other material included in the Annual Report. They will also consider whether the business review deals evenly with the positive and negative aspects of the development, performance and position of the business.
To read the detail visit http://www.frc.org.uk/frrp/press/pub1397.html
Tax Issues
Construction Industry Scheme Penalties
The Construction Industry Scheme (CIS) was significantly changed from 6 April this year when monthly returns were introduced for contractors. The CIS300 return details the payments made to subcontractors and any tax deducted from those payments. The returns have to be submitted to HMRC by 19th of the month.
Since the new CIS was introduced in April, HMRC have not been imposing penalties for the late submission of the monthly returns but have advised that they will charge penalties for late returns from October 2007.
The penalties will apply not only to returns submitted late from October onwards but also to any outstanding returns for previous month’s which have not been received by HMRC by ‘close of business’ on 19 October 2007. HMRC have confirmed that they will not be issuing retrospective penalties for returns which although made late were received by 19 October 2007.
HMRC guidance states that where a contractor missed the filing their return for May 2007 no penalty will be issued for missing the monthly deadlines in June, July, August and September, but a penalty will be charged for the return not being filed by 19 October and will continue each month until such time as it is received by them.
The automatic, interim, penalty of £100 will be issued for each return that HMRC have not received by 19 October 2007. Further automatic penalties will be issued for each subsequent month until the return is received.
Further penalty notices may be issued to contractors with more than 50 subcontractors when the returns are eventually submitted to HMRC.
www.hmrc.gov.uk/new-cis/faqs-penalties.htm
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.
Changes to the Initial Payment of IHT
On 5th November 2007, HMRC will be changing the process for making the initial payment of IHT where the payment is made by cheque. From 5th November, the cheque, together with a bank approved payslip carrying an IHT reference, will need to be sent to the Cashiers in Nottingham. This means that HMRC will need to be contacted to obtain an IHT reference and payslip before submitting form IHT200. A reference number should also be obtained before using the Direct Payment Scheme.
www.hmrc.gov.uk/cto/payment-iht.pdf
National Minimum Wage - Targeted Enforcement
HMRC’s programme of targeted enforcement, which is now in its third year, was introduced to work with employers and workers to address issues and concerns around the NMW and to produce guidance in order to assist employers in meeting their obligations.
For the third programme HMRC are working with representatives of the hotel sector, where a high number of migrant workers are employed. This programme will run for twelve months with targeted enforcement beginning in November 2007.
Landmark National Minimum Wage case heard
In August 2007, a children’s nursery owner was fined £2,500 and ordered to pay £500 costs in the first National Minimum Wage criminal prosecution case.
The owner of the day nursery in Walthamstow, pleaded guilty to a charge of obstruction at Waltham Forest Magistrates’ Court, having prevented compliance officers from looking at employee records to find out whether nursery workers were being paid the correct amount under the National Minimum Wage.
Judge Gott commented that the owner had "demonstrated a clear and deliberate intent to obstruct officers and this was a scandalous breach of the National Minimum Wage legislation."
www.hmrc.gov.uk/employers-bulletin/index.htm
Office Gossip and Idle Chat!
Baby news
As she has worked here for 18 years I‘m sure many of you will know Michelle Hammond, one of our training group supervisors. We are delighted to tell you that Michelle gave birth to baby Molly on 11 October.
Team news
We have two new members to the team Zoë Canham is our new Marketing Executive and Nilesh Parmar who has joined our expanding graphic design team.
The answer to this month’s sports trivia question is 145-by the All Blacks against Japan in 1995.
