Tag: ACCOUNTING

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Positioning Compliance as the Distinction

As the threat landscape has become more perilous and complex, regulators have imposed a wide array of mandates designed to protect sensitive personal information. For most organisations, compliance is seen as the cost of doing business. However, if executed strategically it can not only improve a company’s overall security posture but shortens sales cycles and open the business to new markets.

In order to turn compliance from a check-the-box line item into a valued business initiative, businesses need to identify all global, local and industry regulations that apply to their business and, also, strategically implement the processes and technologies that keep them compliant. Whether you’re targeting specific industry or going after international customers, entering new markets requires continuous education about the latest in compliance and regulatory standards as they relate to data privacy and security.

A good way to get started is to put together a roadmap for how you will get, and stay, compliant with the regulations relevant to your business. What follows is an outline of such roadmap.

Start with the Basics

When you are building a house, a foundation is the key to a safe structure. This holds true for building a compliance roadmap.

Once the foundation has been set, it’s then time for the compliance, IT and security teams to determine which regulations apply to their business. This is the backbone of the compliance roadmap. The good news is that many of these regulations overlap so businesses can complete requirements for multiple regulations at the same time

The Roadmap Focal Point: GDPR

The General Data Protection Regulation (GDPR) brought compliance into the mainstream. When GDPR passed, it established strict regulations for how organisations must handle customer data. The regulation is so broad, stringent and complicated that it has motivated many companies to create new job titles to ensure compliance.

However, while there have been strict compliance regulations before, it’s the high financial stakes attached to GDPR that set it apart. A business can be fined up to 4% of its global revenue if it’s found to be non-compliant. Very few organisations can afford to take that kind of hit which is why so many make it the centre piece to their compliance strategy.

The privacy implications of GDPR are extensive but one of the most important and challenging requirements is the data breach notification. Organisations must notify authorities or specific data subjects within 72 hours of a breach. Most organisations are unable to locate sensitive consumer information within their environment, making this requirement near impossible. However, if the organisation puts data controls into its systems and enacts continuous monitoring and real time intrusion detection, it not only becomes achievable but improves internal processes. 

Compliance can be a powerful differentiator and business driver that inspire trust and confidence amongst prospects, customers and external partners. Although the above standards and regulations require extensive resources, non-compliance can result in fines and other punishment that can cripple a company. It’s important to remember that these compliance standards and regulations may have to be revisited, but once put into place and assigned to a dedicated compliance team; the once daunting task pays for itself.

For more information on how to meet your business compliance obligation get in touch with us on 08702281999 or contact us via info@stanleycarter.co.uk or further details on our website www.stanleycarter.co.uk.

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What should you consider when preparing tax accounts and corporation tax returns under the new rules.

November’s last year the Finance Act introduced two major changes to the use of corporation tax losses both of which were effective from 1 April 2017.

Tax return. HMRC, self employed
Preparing tax accounts and corporations tax returns

A restriction on the amount of brought forward losses which can be offset in any one year

A relaxation allowing carried forward losses to be used more flexibly. The restriction should only impact the largest companies and groups – an annual deduction allowance enables up to £5m of profits per company or group to be offset by brought forward losses each year before any restriction. By contrast, the relaxation applies equally to all sizes of company. This represents a win-win scenario for small companies and groups, who can benefit from increased flexibility as to the use of their losses going forward without suffering from the restriction.

We will look here at some of the practical things to consider when it comes to preparing tax accounts and corporation tax returns under the new rules. It should be noted that the measures set out here apply to corporation tax losses only; there are no corresponding changes to the treatment of income tax losses for the self-employed.

New relaxed carry forward rules

From 1 April 2017:

Trade losses can be carried forward against total profits of the company, and not just profits of the same trade.

Non-trading loan relationship deficits (NTLRDs) can be carried forward against total profits of the company, and not just non-trading profits.

Certain carried forward losses may be available for group relief, including trading losses, non-trading losses on intangible fixed assets, management expenses, NTLRDs and property business losses. There are however some terms and conditions to be aware of. Importantly all of these relaxations only apply to losses arising on or after 1 April 2017 (“post-April 2017 losses”). Losses arising before this date (“pre-April 2017 losses”) continue to be subject to the previous rules for relief. There are a number of conditions which must be met for post-April 2017 trade losses to be set off against total profits, including:

The company must continue to carry on the trade in all subsequent accounting periods up to and including the one in which the losses are offset.

The trade must not have become small or negligible in the loss making period.

The trade must be commercial or carried on for statutory functions (e.g. a marketing board created by statute) in both the loss making period and period of set off. If these conditions are not met, it may still be possible to set the trade losses off against profits of the same trade under the old loss relief rules, or, where the trade has ceased, claim terminal loss relief. There are also a number of terms and conditions around group relief for carried forward losses, including:

A company can only surrender carried forward losses as group relief if they cannot be deducted from its own profits in the accounting period.

A company cannot claim carried forward losses as group relief if it has its own carried forward losses which it could set off. As with any relaxation in tax, the new rules on carried forward losses are accompanied by a host of new and updated anti-avoidance provisions, including:

  • A new Targeted Anti-Avoidance Rule (TAAR).
  • New and strengthened rules to preventloss-buying.

Practical considerations

The application of the new rules is relatively straightforward if a company had no carried forward losses at 31 March 2017. Any losses incurred after this date can potentially be relieved against total profits or group relieved, subject to the restrictions noted above.

However, if a company had losses carried forward at 31 March 2017 these will continue to fall under the old loss relief rules, and will therefore have to be tracked separately to any later losses.

Where a company has an accounting period which straddles 1 April 2017 then the periods falling before and after that date are treated as two separate accounting periods. Special commencement and apportionment rules apply, which are described in detail in HMRC’s draft guidance. There are also changes in the way claims for carried forward losses operate under the new rules, including:

If trade losses are carried forward against profits of the same trade (typically because they are pre-April 2017 losses) then relief is automatic, but a claim can be made to dis-apply this.

Where carried forward losses are set against total profits, the company must make a claim for the relief. It should be noted that, although the restriction on the set off of carried forward losses will only affect the largest companies, new compliance rules require all companies to specify the amount of their annual deduction in their corporation tax return and groups to nominate the member responsible for allocating the deduction. Finally, the new relaxed rules may provide an opportunity for companies to recognise more deferred tax assets. For example, before April 2017, a deferred tax asset may not have been recognised in respect of carried forward trading losses if the company had no prospect of making future trading profits against which it could be utilised. There may now be the potential to recognise a deferred tax asset for post-April 2017 losses if the company has other income or is a member of a group.

If you need help preparing your tax return or corporation tax contact us 01612056655 or send us an email info@stanleycarter.co.uk or check our website for further details www.stanleycarter.co.uk 

 

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Diversity in the accounting sector

Diversity in accounting, accountancy firms. accountants

The accountancy industry is trying to push back against accusations that it is old-fashioned and stuck in its ways. It is embracing technology and digitisation, and it is working hard to improve diversity in the profession.

The UK’s future prosperity depends on the expansion of professions, and part of this is about recruiting bright new talent to develop into the business leaders of tomorrow. The accountancy profession needs to become more representative, at all levels, of the wider socio-economic development of society.

Social mobility in accounting has decreased in recent years. In fact, the profession has had the largest decline of all in social mobility between the 1958 and 1970 cohorts. If this continues, then the future accountant will come from a family richer than seven in ten of families in the UK.

Some accountancy firms have already introduced some useful initiatives. To ensure that the best young candidates are coming into the sector,  some firms are improving their targeting and widening their outreach and work experience programmes.

Focus on the progression of students on these various schemes into more permanent roles in the firms has also increased.

Recruitment methods have started to change as well. Some firms have scrapped A-Level requirement in certain roles, and others have introduced contextualised recruitment, in which candidates’ backgrounds will play a part in the final choice.

Many firms are already publishing in-depth reviews of their workforce, which will allow them to look at the extent to which they are adopting best practice around diversity, and make any necessary improvements.

Here at Stanley Carter we are always looking for fresh talent to come into the sector

send us an email  info@stanleycarter.co.uk or check our website for further details www.stanleycarter.co.uk

 

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Accounting and Banking for small businesses

What would you do if your business bank account was your accounting software.  This is the concept of an accounting bank and this combination of accounting and banking is set to revolutionise how millions of entrepreneurs run their small business. It will simplify your business administration duties.

With the advent of cloud accounting software and API bank feeds, many small businesses increasingly use the bank statement as the primary source of their bookkeeping records. A bookkeeper typically imports all bank transactions into cloud accounting software and then goes through transaction by transaction explaining the account code, VAT rate and contact information.

This is a duplication of effort that is inefficient. For example, when you set up a payee in your bank account and make a payment out, you then repeat the same task in your accounting software, setting up a supplier and explaining the payment out.

For startups, setting up a new business current account takes time. In most cases it’s several long paper forms and about a month of back and forth with different bank reps. Even then the account may not be approved. The lack of a bank account when a business starts trading often creates a mess as personal accounts are used instead.

It is the businesses run on spreadsheets who are set to gain the most from an accounting bank. Making Tax Digital, HMRC’s transformation of tax, is set to cause these business owners a significant amount of pain over the next few years as they are forced to adopt digital systems to do online quarterly MTD filings for VAT, income tax and corporation tax.

So how does an accounting bank help solve all these problems?

With an accounting bank a small business can go about its day to day banking, a task they want to do. The accounting bank comes complete with a UK bank account number and sort code that can be opened within five minutes and not 30 days. Contactless Mastercard, faster payments, direct debits and BACS are all included.

The accounting is automated with transactions being automatically categorised as sales, travel, legal fees etc. No longer is there the need for back and forth between you and your accountant over a messy spreadsheet. In fact the bookkeeping is no longer a task that you need to do.

Accounting banks have MTD built in to let the business owner carry on with their banking as you always have done, for their accountant to make the MTD submissions seamlessly from the application.

You can create an invoice and when it’s paid it will automatically reconcile. You can view a profit and loss report or submit a VAT return. An accounting bank does everything you need to run your business.

Steve Jobs described creativity as connecting things and you need look no further than Tesla connecting cars and batteries or Sellotape connecting glue and cellophane to see how simple but obvious these solutions are. Think of an accounting bank as HSBC and Sage connected as one.

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Accounting reforms and post – Brexit

The International Accounting Standards Board (IASB) has instructed its staff to prioritise the development of new type of financial performance measure to be included in IFRS statements.

The board expressed a preference for a measure based on earnings before interest and tax (EBIT) over parallel plans to include a management-defined measure of performance.

The IASB also signalled a preference for a modified version of EBIT over any off-the-shelf definition.

The decisions came during the board’s latest discussions on its Primary Financial Statements project.

The body that advises the European Union on accounting matters, EFRAG, has published a draft comment letter in support of an IASB draft statement on materiality.

In a webcast to introduce the proposals, IASB member Francoise Flores said: “The definition of materiality is easy to understand but difficult to apply. It is a totally company-specific notion that requires the exercise of judgement tailored to a company’s circumstances.”

In the context of financial reporting, material information is data that is either significant or relevant.

Flores added: “Currently, there is little if any guidance in IFRS on how to make materiality judgements. This lack of guidance can be regarded as partly responsible for IFRS disclosure requirements not being sufficiently challenged in practice from a materiality perspective and rather being used as a checklist.”

The IASB’s practice statement is non-mandatory. Interested parties have until 5 January 2018 to comment on the EFRAG draft.

UK should maintain international standards post-Brexit

The Institute of Chartered Accountants in England and Wales (ICAEW) has warned that the UK has failed to give sufficient thought to the implications of its vote to leave the EU.

In a policy discussion paper on the implications of Brexit for financial reporting, the institute said it supported a UK-specific endorsement mechanism for new international standards.

The report’s authors argued: “[A] new national mechanism could function more smoothly and far more quickly than the EU’s, and indeed this should be regarded as a key prize available to the UK from the change in endorsement arrangements.”

The paper also considered the option of accepting all international financial reporting standards (IFRS) as issued by the IASB with no modifications, as well as continuing to participate in the EU’s current endorsement mechanism.

Finally, the ICAEW also called for the UK to join the IFRS Foundation’s Monitoring Board and the Accounting Standards Advisory Forum.

Under the rules governing membership of the two bodies, there is no current basis for UK membership of either body.

IPE has learned that UK government officials are considering separate proposals for a UK endorsement mechanism – possibly modelled on the Australian model.

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New month, new blog!

Hello! Welcome to the Stanley Carter blog,  Stanley Carter are corporate services providers, providing day to day company secretarial services support to accountants, solicitors, leaseholders, entrepreneurs and various other clients in the United Kingdom. Our client base is worldwide with particular emphasis on those clients that operate with United Kingdom Corporate entities.

We have skilled, experienced advisors who will be able to keep you abreast of changes in company law and practice, attend to the formalities required to keep good corporate governance and ensure that you have a complete set of statutory records for your company. We will take an active concern in the well being of your company and help you to meet deadlines set by the Companies Act and government regulations for the filing of documents, without the risk of prosecution or penalties. We work hard to deliver a quality service and to provide you, our client, with fast and efficient support. As your company secretary, regulatory compliance is one of our main duties. We need to ensure that your organisation complies with all relevant legislation. This is done by ensuring that the necessary policies are in place, raising awareness of the policies, monitoring compliance and giving advice as and when necessary.

 

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