Monday, 29 September 2008
If you have visited our website this month you'll have already noticed our new look but it isn't just the look we have improved - it's the service too. Accessing information, booking on courses and ordering what you need has never been easier.
Improvements to our booking processes mean that whether you book your courses online, by telephone, fax or post the courses you have already attended or pre booked are now recorded and retained for you to access 24/7. It also creates a training record for the whole firm or individuals (if you provide delegate names) for you to download or leave archived. Obviously all this information is in a protected area and can only be accessed by your user name and password.
Users of our audit and audit exemption manuals have been able to download the latest version form our website for some time. From 1 October we are extending this to cover all our specialist assignment and compliance manuals.
Our new shopping basket means you can now buy more than one product at a time. Over the last couple of weeks many of you have already taken advantage of this new, easier to use facility which will be extended next month to cover our personalised marketing support products.
All of these changes haven't prevented the technical team keeping abreast of the latest developments and our usual round-up is included below along with a summary of the Dragonfly case, an IR35 case, which Mark Morton has been watching with interest.
Nicola Hurley
Director
nicola.hurley@mercia-group.co.uk
Where is your nearest training venue?
Are you using the most convenient location for your practice? Are you thinking of using Mercia for training but are unsure if we run courses in your area? With over 50 venues nationwide you can now see at a glance where our courses are held and download the training programme for each location. To find out more visit http://www.mercia-group.co.uk/training/locations.htm.
Hospitality Sector Conference - 26 November 2008, Castle Donington
Our one day hospitality conference has been specifically introduced for partners and managers acting for a number of clients in the hospitality industry including hotels, restaurants, bars and pubs. It is a specialist conference looking at a wide range of practical issues affecting businesses in this sector and will enable those attending to provide their clients with the best possible advice. Details will be sent to you in early October but if you would like find out more now click here.
Audit and Accountancy Issues
Companies Act 2006 - the next stage
This week will see the next key implementation date for the Companies Act 2006 pass. You may recall that initially 1 October 2008 was the date intended for final implementation, however, towards the end of 2007 the government announced that this would be delayed until October 2009.
The sections of the new Act that come into force on 1 October include:
- 155 to 159 - corporate directors and underage directors. A company will have to have at least one natural person as a director (there is a period of grace for many existing companies that are affected by this change, until October 2010) and the minimum age for a director will be 16.
- 175 to 177 - the remaining general duties of directors. The duties of directors to avoid conflicts of interest, not to accept benefits from third parties and to declare interests in proposed transactions or arrangements take effect.
- 641 to 644 - share capital reduction through the solvency statement route. This is a new option for private companies.
Changes affecting the Companies Act 1985 will also come into force:
- the repeal of the restrictions on financial assistance for acquisition of shares in private companies; and
- changes in the requirements of annual returns affecting details of members, depending on whether a company is traded on a regulated market or not.
The audit and accounts provisions of the new Act are also applied to Limited Liability Partnerships from this date.
Audit reports under the new Companies Act
Earlier this month the APB issued Bulletin 2008/8, Auditor's Reports for Short Accounting Periods in Compliance with the United Kingdom Companies Act 2006.
This Bulletin has been issued in advance of a fully revised version of Bulletin 2006/6 (Auditor's Reports on Financial Statements in the United Kingdom) being issued. This itself will follow the finalisation of a revision to ISA+ 700.
Bulletin 2008/8 includes marked up versions of three of the example reports from Bulletin 2006/6, edited to show how the reports should be amended for (short) accounting periods beginning on or after 6 April 2008 under the Companies Act 2006.
You can find a copy of the Bulletin here.
Tax Issues
IR35 - a testing case
Many of you will have heard about the case of Dragonfly, an IR35 case. Although the taxpayer had the protection of not only his own company but also an agency interposed between himself and the end user, the High Court found that a 'deemed' employment relationship existed. This was despite a contract and terms being put in place which seemed to meet most of the tests of self-employment.
This case will give HMRC more ammunition to attack IR35 type arrangements. If you would like expert advice in this area, please contact Mark Morton on 0116 258 1200. To read a summary of the case, please click here.
Entrepreneurs' Relief - HMRC guidance now published
The Capital Gains manual was updated on 23 September 2008. This now includes HMRC guidance on the operation of Entrepreneurs' Relief. To read more visit http://www.hmrc.gov.uk/manuals/cg4manual/CG63950+.htm.
Temporary exemption on Stamp Duty Land Tax (SDLT)
In a surprise move, the Chancellor of the Exchequer has announced that from 3 September 2008 a temporary exemption from SDLT for acquisitions of residential property worth not more than £175,000 is introduced.
The exemption will be available for the acquisition of major interests in land (other than grants of leases for less than 21 years or the assignment of leases with less than 21 years to run).
In order for the exemption to apply the acquisition must consist entirely of residential property and be made for a chargeable consideration of not more than £175,000. The exemption will be available where the effective date of the land transaction (normally the date of completion) is on or after 3 September 2008 and before 3 September 2009. To read the detail visit www.hmrc.gov.uk/so/temp-exempt-sdlt.htm.
HMRC reminder about changes to basic personal income tax allowance
HMRC has issued a reminder about this month's change to the 2008/09 basic personal income tax allowance. The change will mean most people under 65 who pay tax at the basic rate will receive an extra £60 in their first pay packet on or after 7 September, and a £10 increase in their pay each month after that until April 2009.
For most people the change is straightforward. Their employer/pension provider will make the necessary changes to their tax code. For others, the following applies:
- anyone who only pays tax through self assessment, such as the self-employed, will have the new allowance taken into account in their tax calculation for 2008/09;
- individuals where HMRC does not have full information on their tax affairs will get a weekly or monthly increase from September and will get the benefit of the backdated increase once they are taxed on a normal basis or when their tax liability for 2008/09 is finally calculated after April 2009;
- higher rate taxpayers will continue to pay the same amount of tax;
The new tax codes must be applied by employers on the first pay day on or after 7 September 2008. The majority of the codes will be changed automatically by employers who will only get a small number of individual notifications of changed codes and most people will not get a revised notice of coding (P2).
Service companies - 5 September 2008
HMRC have updated the 2007/08 tax return guide in respect of the service company question. The question will be revised for 2008/09.
HMRC acknowledge that the question on the tax return and original guidance were unclear, for which they apologise. HMRC state that if the 2007/08 tax return has been submitted, no further action need be taken as a result of these changes. There will be no adverse consequences simply because the return was completed (or left blank) in a return filed prior to 5 September 2008. To read more visit www.hmrc.gov.uk/sa/service-companies-question.htm.
National Minimum Wage rates
National Minimum Wage rates are set to rise again from 1 October 2008. The increased rates will be as follows:
- Adult rate (workers aged 22 and over) will increase to £5.73 (from £5.52)
- Development rate for 18-21 year olds will increase to £4.77 (from £4.60)
- Development rate for 16-17 year olds will increase to £3.53 (from £3.40)
VAT - house builders letting property
In light of the current slowing down of the residential housing market, HMRC has published guidance concerning the way clawback operates where a house builder temporarily lets dwelling before selling them. Any house builder who has deferred their intended sales of dwellings and are temporarily letting instead will lead to them becoming partially exempt.
A partially exempt builder might have to:
- adjust the VAT previously recovered on his submitted VAT returns ('clawback');
- restrict the VAT to be recovered on current and future VAT returns;
- both adjust VAT previously recovered, and restrict current and future VAT recovery.
Any partial exemption calculations that are made will be subject to 'de minimis' limits and based upon the economic life of the dwelling. Please contact IVC for 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!
A new recruit
Earlier this month we welcomed Julie Bowles to our technical team. She will be working within the audit and accounts team as a technical consultant primarily performing practice assurance and file reviews.
Julie qualified as a chartered certified accountant with Haines Watts in 2000 and before joining Mercia she was an Audit Manager for PwC.
A welcome return
Welcome back to Michelle Dawson and Michelle Hammond who have returned back from maternity leave. As both decided not to return to a full time role we have used the opportunity to make some changes within our training admin department.
We are delighted that Michelle Dawson will be returning for four days a week and will be the team supervisor supporting Liz, Kay and John in managing our many training groups.
Making the best use of her wealth of experience, Michelle Hammond will be returning two days a week in a new role dealing with potential/new clients within the training department. She will also be looking at how we can make further improvements to the service we provide to all our clients.
