EU accounting directive could be threat to UK economy

A radical new accounting regime set to shake-up the UK's small business reporting landscape could pose a risk to the British economy as an unplanned by-product of an attempt to slash red tape.

That's the stark warning from Nigel Sleigh-Johnson, the ICAEW's Financial Reporting Faculty head, as the government publishes its final recommendations on how the new EU Accounting Directive will be implemented in the UK.

Sleigh-Johnson said;

"Only time will tell whether the reduction in the information required in small company accounts is a sensible reduction in red tape or a source of risk to the UK economy.

“ICAEW for one has persistently warned against the potential risk that over-simplifying reporting requirements can have on the ability of small companies to secure credit."

What are EU Accounting Directive recommendations?

Under the BIS proposals, set to be enshrined in company law by July 2015 and become effective for financial years beginning on or after 1 January 2016, the most profound changes relate to small businesses.

A legal restriction will be placed on the amount of information required in small company accounts, while small businesses will be denied the option to file so-called abbreviated accounts at Companies House. But they may be allowed to both prepare and file a new simplified form of ‘abridged' 

accounts.

Accounting thresholds for SMEs due to rise

Accounting thresholds for small companies are also due to rise, meaning more businesses will have access to the simplified reporting regime.

Sleigh Johnson said he was encouraged that BIS had listened to some of its key concerns, especially that access to the proposed abridged accounts regime for small companies will be restricted to companies that have secured shareholder buy-in first.

But he expressed disappointment that the introduction of the new accounting regime for small companies, especially at an EU level "has overall been an exercise in damage limitation rather than one of well-considered, proportionate simplification, and that subsequently the time available for debate about UK implementation has been so restricted".

Small businesses, their advisers and lenders would be well advised to prepare for implementation of the new accounting regime, irrespective of the outcome, he added.

The Financial Reporting Council is expected to consult shortly on detailed proposals for revised accounting standards for small and micro companies, also due to come into force on 1 January 2016.

Have your say about the EU Accounting Directive proposals on Twitter @OmnitasTax or Facebook. Omni Chartered Accountants are here to help guide you and provide affordable accounting solutions for your company – contact us now or of course, you can request a free of charge call back.

Liberal Democrats to tax the wealthy

If the Liberal Democrats win the next General Election in May this year, they will be raising tax on higher earners.

This pledge has recently been announced by Nick Clegg on the Andrew Marr show, stating that the raise in taxes would be part of their plan to reduce the deficit.

Mr. Clegg said;

"[Liberal Democrats’ plans would involve] a mixture of the following components: clamping down on tax evasion and tax avoidance; significant additional savings in Whitehall".

"There need to be some additional savings but not nearly on the totally implausible scale the Conservatives have said in the welfare budget and there will need to be some tax increases as well which fall on the wealthiest in society."

The Liberal Democrats plan to recoup £197bn via a number of various measures to help fund the seemingly ever-growing need for tax credits, popular with both the middle-class and any working families that find themselves struggling to make ends meet.

US tax plans

Although this policy may be popular with the UK masses, over in the US, a similar proposal by President Barack Obama has been met with criticism from opponents.

Obama's plan includes changing the rate of capital gains tax at the top section to 28% from 23.8%. He also wants to close a loophole in the law that allows heirs of large estates to get away with paying the full rate.

In addition, the US's biggest finance companies, with more than $50bn in assets, also face new charges; however, congress is deeply torn on fiscal policy, so this is likely to be strongly opposed.

Your tax affairs

For advice on your own tax affairs, we are here to help you make the most of your money. In fact, we are confident that we can save you money – for a free consultation, call 01902 837 408 or contact us today.

10 ways to get the best value from your accountant

An accountant can sort out your tax return or your annual accounts and provide advice on a range of issues, but how do you get the best return on the fees you pay to an accountant? 

1.   Choose carefully

Look for accountants with experience of your type of business. Anyone can set up as 'an accountant', so look for chartered or certified accountants, whose qualified status is backed by membership of professional bodies. A large firm suggests reliability, but a smaller one may respond better to your needs. Ask prospective accountants how they can help your business.

2.   Explain your expectations

Your accountant will summarise terms and conditions in a letter of engagement. Put your expectations in writing, too. Describe the level of service you require, for example, how quickly you need queries to be answered. Ask to deal with a specific contact, to help build a close professional relationship.

3.   Ask questions

Check what other services your accountant can offer. These could include guidance on setting up your business, preparation of financial forecasts, help with loan applications, audits, investment advice and other suggestions for minimising your tax liability.

4.   Use your accountants’ contacts

Accountants specialising in your type of business can often suggest good trade contacts. Perhaps your accountant knows a supplier who can offer you a great deal or maybe they know of a potential investor.

5.   Keep talking

Communicate regularly with your accountant to get the best possible value from the relationship. Schedule quarterly meetings to review your firm’s performance; this will help you plan better for the future. Be sure to meet before producing your end-of-year accounts or tax return.

6.   Keep user-friendly records

If necessary, ask your accountant for advice about how best to maintain your financial records. If your books are easier to read, you will save them time, which should mean a lower bill. 

7.   Do the easy jobs yourself

To reduce your outgoings, take care of simple bookkeeping tasks yourself, possibly by using accounting software. You could then better focus your accountants’ efforts where they best serve your business.

8.   Delegate

If your time would be better spent concentrating on sales or product development, you could ask an accountant to take greater responsibility for your bookkeeping and payroll. This would free you up to make more profitable use of your time.

9.   Shop around

Armed with recommendations of good accountants, get a full breakdown of an accountant's charges and services. Work out which one offers you best value for money (and that's not necessarily the cheapest, of course). And, at least once a year, review the value for money you receive. If you believe you can get better advice and value elsewhere, go elsewhere.

10.   Seek advice

An experienced accountant can offer sound advice in a number of areas. For example, they could help with your business plan, help you estimate the cost of new projects or advise on the levels of investment needed to achieve your business development goals.

We understand that all clients are individual and as such have different needs – our cost effective but personal approach gets results and ensures that customers always get the best out of their accountant if they choose Omni.

For more information, call 01902 837 408 today, request a call-back or contact us.

Top 10 worst excuses for not filing or paying tax returns

HM Revenue and Customs have released their latest list of the 10 worst excuses people have given for filing or paying their tax return late (yes, seriously):

1.      My pet dog ate my tax return…and all the reminders

2.      I was up a mountain in Wales, and couldn’t find a post box or get an internet signal

3.      I fell in with the wrong crowd

4.      I’ve been travelling the world, trying to escape from a foreign intelligence agency

5.      Barack Obama is in charge of my finances

6.      I’ve been busy looking after a flock of escaped parrots and some fox cubs

7.      A work colleague borrowed my tax return, to photocopy it, and didn’t give it back

8.      I live in a camper van in a supermarket car park

9.      My girlfriend’s pregnant

10.  I was in Australia

Whilst it is possible to appeal the late filing penalty that HMRC will automatically levy for filing or paying late, unsurprisingly, none of the above led to a successful appeal.

Given the above exactly what does count as a ‘reasonable excuse’?

A “good” reason for consideration has to be something unexpected or outside of your control.

For example, if your partner died shortly before the tax return or payment deadline, or if you had an unexpected health issue resulting in a stay in hospital that prevented you from dealing with your tax affairs, it is likely that this would be considered.

Excuses such as bounced payments, a general lack of funds, difficulty using the HMRC online system or the lack of a reminder letter would not be allowed as reasonable excuses.

Clearly, the best way of avoiding a late filing penalty is to submit your tax return, and pay any tax due, by the 31 January. No surprises, really.

If you need assistance with your tax return, give Omni Chartered Accountants a call now on 01902 837 408 or contact us.

PwC dropped by Sainsbury’s after 20 years of representation

After 20 years of being their auditor, PwC – one of “the Big Four” accountancy firms – have been dropped like a hot potato by Sainsbury’s, after facing an investigation into the £263m Tesco accounting outrage.

It has been confirmed that EY will now be appointed as auditors for Sainsbury’s from March 2015 following a formal tender process in 2014 and as stated in their accounts.

Sainsbury's decided to de-instruct PwC after recommendations by its audit committee and also as a result of increased audit rotation. A spokesman for the supermarket giant also stated that the company highlighted its intention to review its auditors last year and confirmed the decision was not related to events over at Tesco.

Chairman of Sainsbury's audit committee, Gary Hughes, said;

“We would like to thank PwC, and specifically the Sainsbury's audit partners, for their significant contribution as the company's auditors over many years. Going forward we expect an orderly transition and look forward to working with EY into the future.”

Tesco accounting scandal

In December, the FRC launched an investigation into Tesco's accounting ‘black hole’ and audit work that had been carried out by PwC - it is also being investigated separately by the SFO (Serious Fraud Office).

Going back further to September 2014, a team of Deloitte forensic accountants identified that the first half profit estimate that Tesco gave the City was falsely inflated.

Since this time, PwC has said that companies were changing auditors frequently as a result of new regulations and as a result, it had gained as well as lost clients.

What do you think about ‘the Big Four’ and the Tesco accounting scandal? Let us know your thoughts on Twitter and remember that we are here to provide honest, impartial advice for your company for whenever you need it.

Omni Chartered Accountants are here to save you money, time and hassle – call 01902 837408 today or click here to contact us by email. You can also request a call back by selecting the tab at the top of the page.

What are abbreviated accounts?

In accordance with UK Company Law (CA 2006), all companies (including dormant companies) and Limited Liability Partnerships (LLPs) are required to submit statutory accounts to Companies House. However, they do not necessarily need to be audited.

The statutory accounts must be in accordance with UK company law and appropriate GAAP (UK GAAP or IFRS – International Financial Reporting Standards).

Some small companies and LLPs don’t need to have their statutory accounts audited and are not required to appoint an auditor.

Do Abbreviated accounts & reduced disclosure apply to me?

Small companies and LLPs can benefit from relaxation of the general requirement to supply full statutory accounts to Companies House, allowing filing of abbreviated accounts and adoption of the Financial Reporting Standard for Smaller Entities (FRSSE).

Ø  Advantages of filing abbreviated accounts:

Ø  Reduced notes to the financial statements

Ø  Some information is kept secret from competitors

Ø  Protect commercial interests by not disclosing certain information such as margins

Ø  Directors details remains private

Ø  No Directors Report or Profit and Loss Account required.

So, if you are considering this approach or want advice or assistance give Omni Chartered Accountants a call now on 01902 837 408, request a call back at the top of the page, or contact us. 

Can KPMG really disrupt SME market and take on Google?

Well, you decide.

Recently, Big Four firm KPMG has declared its objective to dominate the SME market by putting the message out to small businesses that they can pay them the same as their current accountant but they will “give them more”.

KPMG want to take on high-street and mid-tier accountancy firms that focus on the UK SME market – but can they really?

KPMG's UK head of regions, Iain Moffatt, said;

"This is the biggest investment KPMG has made in the SME market in the past 30 years.

The small business accounting platform allows us to enter a market that we haven't previously had access to.

"It's a transformational change in our business. For the first time, a Big Four firm can offer services to start‐ups and small businesses for a similar price as high-street accountants."

Moffatt did continue to state that their involvement with larger organisations would continue – their investment of the “lower end” of the SME market was a decision to expand their ambitions with a new arm for their company.

He denied that the "Big Four are more interested in the HSBCs and BPs of this world", stating that;

"We operate in that space already and we do it well. Our upper middle market share is around 25%; our lower middle market share is around 10-15%. We want to push that latter figure up to 25%.

"We'll do that by saying to small businesses: ‘You can pay us the same as your current accountant but we'll give you more'. We want to work with companies all the way through their lifecycle. We're building a fully integrated business proposition."

Moffatt also imagines that within the next five years, Google or Amazon will be their biggest threat, rather than other big accountancy firms.

Could one of the “Big Four” represent your SME?

At Omni Chartered Accountants, we offer a personal yet convenient service. Our clients receive one-to-one consultation and advice that is tailored to suit their circumstances.

In addition to this, our prices are low – we would actually throw down a gauntlet to KPMG and ask if they could really offer the same level of service at the prices we currently offer.

Why not telephone us for an initial chat on 01902 837408? We are always on hand to offer advice on whatever accounting query you may have and will be happy to work out the perfect package for your accounting needs.