Audit / EU audit reform part 4: avoiding the non-audit services blacklist

In part 4 of the EU audit reform series, Alex Barnes, partner at Moore Stephens LLP, highlights contractual issues firms must grapple with due to services prohibited by the controversial blacklist under the clampdown on non-audit services

Accounting / Charity Commission investigates missing £70k at charity

The Charity Commission has opened a statutory inquiry into poverty relief and Islamic faith advancement charity, Peacetrail – which names Cherie Blair’s sister Sara Jane Booth as a trustee – over concerns of poor governance and lack of financial controls at the charity, which has failed to supply annual accounts two years running and is unable to account for some £70,000 of spending

Audit / Snapshot: FRC revises ISAs to reflect EU Audit Directive rules

The Financial Reporting Council (FRC) has issued final drafts of revised International Standards on Auditing (ISAs) covering audit requirements and amendments in light of the imminent implementation of the EU Audit Regulations and Directive (ARD) in the UK this June, affecting two thirds of existing standards 

Practice Development / Kevin Ellis appointed head of PwC UK and EMEA

PwC has elected Kevin Ellis as its new chairman and senior partner in the UK and Middle East for a four-year term, succeeding Ian Powell with effect from 1 July 2016

Tax / Cafe owner's takeway VAT penalty after accountant’s error

Two partners in a cafe who sought to overturn a demand for some £30,000 in under-declared VAT and a late registration penalty notice, which they claimed was down to incorrect information from their accountant, have lost their appeal to the First Tier Tribunal (FTT), but HMRC was instructed to re-calculate the amount owing, which was then halved

Audit / FRC increases levy to plug funding gap for ARD compliance monitoring

The Financial Reporting Council (FRC) has published its budget and levy rates for 2016/17, announcing a 14% rise in annual levies for financial institutions and listed companies to meet increased costs to fund its new role as competent authority for audit regulation under the EU Audit Regulation and Directive (ARD)

Insight / People in the news: Barr & Ford, KPMG, RSM, Withers, Carpenter Box, Wilkins Kennedy

In the latest accountancy career moves, Barr & Ford boosts tax expertise, new head of KPMG Scotland as Catherine Burnet takes up top post, Wilkins Kennedy hires tax partner and Highways England has a new finance chief

Insight / Shipleys LLP and Smith Pearman merge accounting firms

Shipleys LLP, the London and Surrey-based accountancy and business advisory firm is to merge with Smith Pearman, effective from  1 May 2016, bringing the current team on-board as part of the move 

Insight / MPs announce inquiry over BHS collapse

The Business, Innovation and Skills (BIS) parliamentary committee is to investigate the sale and acquisition of BHS, which has collapsed putting 11,000 jobs at risk a little over a year after being sold by previous owners Arcadia to Retail Acquisitions Ltd (RAL) for the sum of £1, and will be calling for evidence from auditors among its witnesses

Insight / Insolvency figures maintain downward trend overall

Latest figures from the Insolvency Service show that an estimated 3,694 companies entered insolvency in Q1 2016, which was 5.4% more than Q4 2015 but 3.6% lower than Q1 2015

Audit / KPMG wins St Modwen audit from Deloitte

FTSE 250 St Modwen, a specialist brownfield developer, has announced plans to hire KPMG as its external auditor for the financial year ending 30 November 2017, ending its 10-year association with Deloitte

Tax / Charities call for faster action on public beneficial ownership registers

The chief executives of 17 charities and campaign groups are calling on the PM to speed up plans to launch a public register of beneficial ownership to encourage greater transparency and shed a light on complex offshore ownership structures 

Practice Development / PwC’s US firm faces age discrimination claim

PwC’s US arm is facing a federal class action which accuses the firm of engaging in ‘systemic and pervasive’ discrimination against older job applicants, by adopting ‘a pattern and practice of age discrimination’ against accounting job applicants that are 40 years of age and older

Insight / Coleclough given suspended sentence over child porn abuse

Tax adviser Stephen Coleclough, and a former president of the Chartered Institute of Taxation (CIOT), has been given a suspended prison sentence over possession of child porn images

Technical Alerts

28 Apr 2016

Accounting / IFRS 16 Leases: reporting impact on automotive fleets

Changes to lease accounting under the new IFRS 16 Leases will create more balance sheet transparency in the automotive sector, but there will be significant upheaval in terms of reporting practice, say Armaghan Haq, head of accounting policy, retail, Lloyds Banking Group and Paul Lippitt, principal consultant, fleet, Lex Autolease

Tax / MEPs want member states to give EC full access to CBCR data

MEPs want the European Commission to have full access to country-by-country (CBCR) data - part of anti-tax avoidance proposals - in a bid to ensure that competition is not distorted in the single market by advantageous national tax deals with multinationals

Tax / Dodwell: EU country-by-country reporting highlights potential pitfalls

Initial proposals to launch EU wide country-by-country reporting requirements for multinationals with turnover in excess of €750m raise concerns for big business as they will have to report corporation tax in isolation to their wider tax liability, says Bill Dodwell, head of tax policy at Deloitte 

Accounting / Marshall: how big is material in financial statements?

With the drive to reduce the volume of irrelevant material in financial statements, Andrew Marshall FCA, senior technical partner at KPMG UK calls for a spring clean in lthe context of the concept of materiality

Insight / R3 calls for ‘business rescue moratorium’

Amidst the latest high profile retail collapses - including BHS and Austin Reed - insolvency trade body R3 is calling on the government to offer struggling companies a period of up to six weeks free from creditor pressure to plan a recovery or rescue, saying introducing a ‘business rescue moratorium’ would help save more companies under severe financial strain, preserving more jobs and improving returns for creditors

Tax / HMRC says flexible pension withdrawals top £4bn

HMRC has published figures showing that some 232,000 people have used the new pension freedoms introduced a year ago to withdraw more than £4bn but the Federation of Small Businesses (FSB) is warning that the self-employed are losing out since only 31% are saving into a private pension while 15% do not have retirement savings

Insight / Begbies Traynor kick off footballer’s bankruptcy

Begbies Traynor partners Gary Shankland and Jamie Taylor have been appointed as trustees to the bankruptcy of Australian footballer Lucas Neill, who had a 15-year career playing in England at clubs including Blackburn Rovers, West Ham United, and Everton and most recently played for Watford up to 2014

Accounting / Electronics specialist Cobham spots £9m accounting black hole

Electronics and aerospace engineering specialist Cobham has said that accounting issues have resulted in the company recording a one-off charge of £9m against profits, after problems were identified in the recording of revenues in its wireless division

Tax / Travel expenses guidance for intermediaries clarified to reflect drafting error

HMRC has issued a clarification on the revised guidance about the treatment of travel expenses for workers providing personal services to clients through employment intermediaries, reflecting a technical interpretation problem in the new rules, effective from April 2016

Technical Alerts

27 Apr 2016

Tax / Offshore companies: an end to island handshakes

Using offshore companies for UK property development is increasingly risky as tax rules tighten and the government plans to curb current planning in Finance (No.2) Bill 2016, cautions Simon Blum, senior tax consultant, OneE Group

Insight / Administrator appointed to 116-year-old Austin Reed

Cashflow problems amidst difficult trading conditions for the retail sector have triggered the appointment of administrators AlixPartners to 116-year-old executive fashion group Austin Reed Limited

Tax / File late self assessment tax returns now to avoid £10 per day fine

Daily self assessment filing penalties kick in on 1 May so any taxpayers who have failed to complete and submit a tax return should take immediate action to avoid receiving punitive penalties

Audit / FRC releases revised corporate governance code and audit committee guidance

The Financial Reporting Council (FRC) has issued final draft updates to the UK corporate governance code and the associated guidance on audit committees, as well as revised auditing and ethical standards, which have all been updated in the light of the changes required from the implementation of the EU’s audit regulation and directive (ARD), and which will take effect from 17 June 2016

Insight / Investors and CEOs ‘poles apart’ on bonus and business issues

Investment professionals and CEOs are poles apart in their attitudes to key issues such as bonuses, talent pools and value creation, according to a global survey by PwC which found the only point of agreement was on the threats from breaches of cyber security

Tax / MP challenges HMRC over costly software requirements for plans to make tax digital

The Treasury select committee has criticised HMRC’s plans to digitise tax due to the cost burden it will place on business, saying the project – which needs businesses to use prescribed software to file tax information quarterly – will likely add to their compliance costs and makes it ‘implausible’ that they will achieve the predicted administrative savings

Tax / Tax planning: offshore and local assets

Greater care with tax planning is essential for those holding offshore and local assets but who want to be based in the UK, says Robert Smeath, partner at New Quadrant Partners

Tax / Business investment relief: tax advantage for non doms

Taking advantage of business investment relief is a useful tool for non doms wanting to invest with offshore funds, but few realise the tax advantages, says Andy Wood, director at the Enterprise Tax Centre

Tax / Property trusts and inheritance tax (IHT) - tips and traps

Tax rules around property trusts are increasingly complex as the government attempts to curb their use, but there are a number of ways to contain the inheritance tax (IHT)exposure by careful tax planning and carefully manage the 10-year anniversary, says Janet Cavell, special counsel at Withers

Tax / HMRC updates charities guidance to clarify digital giving

HMRC has updated its detailed guidance for charities, with revisions to the chapter concerning applications for recognition as a charity for tax purposes, and a new section on digital and social giving

Tax / OECD warns of £2,200 ‘Brexit’ tax

UK citizens face paying a ‘Brexit’ tax equivalent to £2,200 per household if the UK votes to leave the EU, according to a study by the OECD which says a UK exit would result in GDP being 3% lower by 2020 in its most optimistic estimate

Tax / IFS calls for clear tax strategy as more tax paid by fewer people

The government is relying on receipts from a smaller number of income taxpayers as a result of a string of policy changes, with the top 1% now contributing over a quarter of the total, but there is a little evidence of a ‘clear and coherent overarching strategy’ to collecting tax revenues, according to analysis from the Institute of Fiscal Studies (IFS)

Tax / Centralised beneficial ownership registers may be ineffectual

The launch of centralised beneficial ownership registers of the kind to be implemented in the UK do not represent the only or even the best way of recording and making available secretive ownership information, according to an academic study

Audit / FRC issues revised Ethical Standard 2016 for auditors

The Financial Reporting Council (FRC) has issued a final draft of revised Ethical Standard 2016 to strengthen auditor independence by applying prohibitions to a range of audit engagements that could result in potential conflicts of interest for auditors

Technical Alerts