By Katie Business News • Tax Advice 0 Comments

The tax man gets a round in

The festive season is upon us again and its time to party.

As a great employer we always treat all of our team to a bit of a do to say thank you for all their graft. This year we are off to the Hilton, Manchester ( pics to follow ).
The good news is that if we follow a few simple rules then we can not only claim all or some of the vat back but we can get tax relief against the business profits.  e.g. for up to £150 per head per employee we can claim back £25 vat and £25 corporation tax which means that the net cost is £100 i.e the tax man contributes a third.  However if you fall foul of the rules it could be costly.

A&C Chartered Accountants can help you have a great party too!

By Katie Tax Advice 0 Comments

Tax Avoidance News

The future of tax avoidance

HM Treasury this week published its report on whether a general anti-avoidance rule (“GAAR”) should be introduced into the UK tax system (the “Report”). The Report, written by a committee chaired by Graham Aaronson QC, concluded that a GAAR would benefit the UK tax system, provided it was limited in its scope.

It is hard to argue with the tone and conclusions reached by Aaronson. He recommends a moderate rule targeted solely at purely abusive arrangements and is unequivocal that the GAAR should not be broad enough to deter or counteract what he calls the centre ground of sensible and responsible tax planning; with the onus of proving that any planning was not reasonable falling on HMRC. Aaronson’s proposed GAAR would look to identify and counteract tax planning with abnormal features specifically designed to achieve a tax advantageous result.

On the basis that reasonable tax planning would not be targeted by the GAAR, the Report reasons, it should not be necessary for a comprehensive system of clearances (and the burden that they would place on HMRC’s resources).

The Report optimistically claims that, if introduced, the GAAR should ultimately lead to the simplification of the UK tax system, reducing the need for the mass provisions of specifically targeted anti-avoidance provisions that currently exist. These, as Aaronson accurately states, create serious traps for tax payers to fall into, even when they carry out transactions to which such provisions were not intended to apply.

However, it is still unclear how any GAAR would be implemented in practice without providing the  certainty that comes from a pre-transaction clearance regime. While Aaronson clearly envisages the extreme contrasting positions of the centre ground and the egregious tax avoidance schemes that the GAAR is intended to defeat, it does not appear to deal adequately with planning that might fall somewhere between the two and it is interesting to speculate how this gap might be filled.

The Report suggests that some certainty may be provided by the establishment of an advisory panel, independent from HMRC, which, it claims, could provide a quick and cost-effective way of helping tax-payers and HMRC identify the location of the outer-limit of this centre ground. The conclusions reached by this advisory panel could be published, offering a body of guidance helpful in determining where the line falls between acceptable and unacceptable tax planning. However, given that the Report suggests that the findings of the advisory panel will not be binding on the tax payer or HMRC, will its decisions really provide adequate piece of mind for the tax payer?

While the Report recommends that where there is any reasonable doubt as to which side of the line any arrangement falls on, then that doubt is to be resolved in favour of the tax payer, taxpayers are likely to be cautious to make assumptions as to how any GAAR will be applied, particularly in the earlier years of its implementation.

The biggest test for taxpayers, therefore, will be in achieving the certainty that they require as to tax treatment of any given transaction, prior to putting it into effect.  Whether tax payers turn to professional advice, opinions of tax Counsel or the tax insurance market to provide comfort is yet to be seen, but it certainly appears that, in the short term at least, this may represent a necessary additional cost for the prudent taxpayer.

The Government plans to respond fully to the Report as part of the Budget 2012.

reproduced by kind permisision of Law-Now

By Katie Business News 0 Comments

EU to simplify accounts

For small company’s ( currently with turnover less than £6.5million ) the Europeon Commiission has proposed measures to reduce the administration burden.   The proposals allow small firms to meet their statutory accounting requirements with a simpler profit and loss account, balance sheet and reduced accompanying notes.  Simplifying the preparation of the accounts would also make these more comparable, easier to understand.  Shareholders, banks and suppliers would be able to get a better understanding of a company’s performance and financial position.

At a&c chartered accountants we will keep you informed all the way to implementaiton. ( call us on 0161 962 1855 )

By Katie Tax Advice 0 Comments

Importance of the substitution clause

In HMRC v Talentcore, (2011 UKUT 423 TCC), the upper tier tribunal have made a very important decision by ruling in favour of the taxpayer on the employment status of its agency workers. They upheld the decision of the first-tier tribunal who decided that the consultants were not employees because there was no personal service”.and there was a full right of substitution between workers which meant that they were not employees. If the person contracted to do the work did not need to turn up as long as a replacement is provided, then there was no contract of service and PAYE does not apply.

In our opinion the whole issue of self employment status should be put out to consultation with a view to getting it sorted once and for all. There is enough case law and expert opinion to form a set of rules and tests to put it into statute so everyone can move forward with confidence. The business world needs certainty to allow it to trade out of this recession. The hardest hit industry is the construction industry and if this country is to recover this sector needs to move forward with confidence, with fair competition and without the threat of financial uncertainty.

If you want to discuss this case further, please call paul at a&c chartered accountants on 0161 962 1855

By Katie Business News 0 Comments

The Government wants to invest in you

The Government steps in – about time!

The banks have not delivered so the Chancellor of the Exchequer, George Osborne, used his speech to the Conservative Party Conference to announce proposals for a scheme of ‘credit easing’ designed to ensure small businesses can access much-needed credit.

The funding for credit easing will come from the Treasury, but details on how the scheme will operate are at an early stage. It’s believed the scheme would see small business loans being packaged together and guaranteed by the Government.

It is believed that the Bank of England will be tasked with running the credit easing programme.

By circumventing the banks, it’s hoped that the rates of interest charged on loans will fall significantly, and better reflect the current rock-bottom Bank of England base rate.

By Katie Business News 0 Comments

Audits to be put out to tender

Competition Commission to investigate audits of large UK companies

FTSE 350 companies may be forced to have part of their audit work done by a non-Big Four firm, and to put their audit work out to tender on a regular basis, as part of a package of measures designed to broaden the UK market for audit services and to improve competition between firms. These and other measures will be considered by the Competition Commission over the next 18 months or so, after the Office of Fair Trading (OFT) last week referred to the Competition Commission the market for the supply of statutory audit services to large companies in the UK.

For nearly ten years, the OFT has had a “watching brief” over the UK audit market, and has finally decided to ask the Competition Commission to carry out a full investigation of the market and of the potential measures that could be taken to improve competition. The OFT is particularly concerned that the audit market for large (i.e. FTSE 350) companies is very concentrated (nearly all FTSE 350 companies are audited by one of the Big Four); that such companies only switch auditor very infrequently (FTSE 100 companies are calculated to switch auditors every 43 years on average, and FTSE 250 companies every 24 years), and put their audit work out to tender only infrequently; and that there are substantial barriers preventing other firms entering the market for large audits.

Features of the market identified by the OFT as preventing, restricting or distorting competition include:

•             There is little incentive for companies to switch auditor. In part, this is because it can be difficult for clients to discern differences in the technical quality of audit work.

•             Substantial management and audit committee time is required to tender for and select a new auditor and to bring a new auditor up to speed. There is also the potentially higher risk of a new auditor making mistakes.

•             It is difficult for mid-tier and smaller firms to develop the necessary attributes such as reputation, experience, expertise and resources to undertake large audits because of the difficulty of securing large audit contracts in the first place – a potential vicious circle.

•             It is difficult for mid-tier and smaller firms to raise capital to expand. This is partly because firms are required to be majority-controlled by chartered accountants, and because firms are almost invariably structured as general partnerships or limited liability partnerships, which cannot have their shares admitted to trading on a UK market.

•             Banks sometimes require borrowing companies to use a Big Four auditor – either by means of an express contractual requirement or implicit, softer encouragement.

•             Some companies’ choice of auditor is constrained by other factors such as overseas regulation; rules on banking relationships; conflicts of interest; and internal policies of audit firms.

The Competition Commission will now conduct a public inquiry and reach its own conclusions about whether any feature of the audit market prevents, restricts or distorts competition and what remedies, if any, are appropriate based on a detailed assessment of the benefits and costs of the potential remedies.  It has a maximum statutory period of two years (until 20 October 2013) to complete its investigation.

The OFT’s Market Investigation Reference gives broad details of a number of possible remedies that the OFT has discussed with audit firms, companies and other stakeholders. Taking into account the OFT’s comments, and other issues that are likely to arise, we consider that the remedies most likely to be recommended by the Competition Commission are (in descending order of likelihood):

•             FTSE 350 companies will be required to put their audit work out to tender on a regular basis.

•             They will also have to make public (e.g. in their annual reports) more information about the process for tendering and appointing auditors.

•             Auditors’ professional bodies should work to standardise as far as possible the procedure for an outgoing firm to hand over to a new one, including the form and content of information that should be passed on.

•             Audit work for a large company should be split between auditors from different firms – either through a joint or split audit process. This could mean the audit of a FTSE 350 company being split between a Big Four and non-Big Four firm.

•             Banks should not be permitted to include covenants in facility agreements that require the borrower to use a Big Four firm.

•             The appointment of auditors to a FTSE 350 company should be made subject to shareholder approval, or perhaps an “advisory vote” like the directors’ remuneration report.

•             Rules should be changed to make it easier for audit firms to raise capital from external investors.

It does not appear likely that the Competition Commission will require audit firms to be split up, or will require mandatory rotation of auditors, although these measures cannot be ruled out, especially if they are proposed at a European level. The European Commission published a Green Paper on audit earlier this year, and is expected to make legislative proposals by the end of 2011, although it is not yet clear what form they will take. The Competition Commission will feed the results of its investigation into the European process.

Reproduced by kind permission of Law-Now – www.law-now.com

By Katie Business News 0 Comments

Tax Avoidance

Do as I say not as I do

The coalition government are right to tackle tax evasion and we at a&c chartered accountants fully support this. Perhaps the members of the government should check their own house is in order first before they preach. It has been reported in The Sun that the Business Secretary, Vince Cable, failed to register for VAT in respect of lucrative media work a number of years ago, which resulted in him paying a £500 penalty and thousands of pounds in under declared VAT to HM Revenue and Customs. Under Vat rules if your turnover for services or goods supplied exceeds £73,000 in a 12 month period then you have an obligation to register for VAT within 30days

Need any help? Please contact a&c chartered accountants

By Katie Business News 0 Comments

Entertaining HMRC

Q do you get tax relief if you take the tax man out to lunch?
A why not ask the head of HM Revenue and Customs , Dave Hartnett. A survey last year found that Hartnett was Whitehall’s most ‘wined and dined’ civil servant, treated by corporations 107 times in 3 years to top a survey of 172 senior civil servants.

discuss

By Katie Business News 0 Comments

Accountancy on-line

We at A&C Chartered Accountants have been working very hard behind the scenes to improve how we do business with the sole aim of providing you with a cutting edge service.   We list below some of the improvements which we know will benefit you:-

  • refurbished offices with a friendly reception area ( and TV! ) and additional meeting rooms.
  • All new computers and servers with improved capabilities
  • implemented of a secure offsite back up facility
  • paperless office implementation, to give you immediate access to data and to allow us to interact electronically with you
  • on-line accounting solutions, developed in-house for our clients ( all you need is basic spreadsheet knowledge )
  • remote access solutions – e.g remote training sessions on Sage, our on-line accounting systems etc.
  • extensive training provided onsite and by external leading training organisations to our team members so they can give you the best service possible.
  • new and improved website with Twitter, Facebook and Linked In and news articles

We are always looking to improve what we do and recognise that this is a fast changing world where we need to always look to keep ahead.  Ring A&C Chartered Accountants on 0161 962 1855 and see what we can do for you.