PQ news
Crime levy ‘unacceptable’
PREM SIKKA Brexit deal still has a way to go
The long-awaited 1,246-page Trade and Cooperation Agreement (TCA) between the EU and UK provides the basis for future trading relationships. The TCA enacts trade barriers, reduces UK citizens’ mobility by requiring visas and restricts cultural exchanges among students by withdrawal from the Erasmus programme. A big concern is the end of mutual recognition of professional qualifications. Last February, PM Boris Johnson promised that mutual recognition of UK and EU qualifications would be to be part of the post-Brexit trade negotiations. However, that is not what has been delivered. The effect is that, for the time being, holders of UK professional qualifications will not be able to provide statutory services, such as external audits, to clients in the EU, and vice versa. In principle, those wishing to deliver services to EU customers may need additional EU-approved qualifications. This amounts to a trade barrier. The good news is that the TCA provides a framework for securing recognition without the need for additional qualifications, but with agreements on a profession-by-profession basis with each country. The conclusion is that Brexit has not yet been done. Accountancy bodies are already on the job as the value of their qualification depends on portability and mutual recognition. The UK government has promised to provide guidance to help them secure recognition. Prem Sikka is Emeritus Professor of Accounting at the University of Essex
The new £100 million Economic Crime Levy will burden UK accountants and their clients with ‘unacceptable’ fees, says the AAT. The government is proposing to raise around £100 million a year from organisations regulated for Anti-Money Laundering (AML) purposes – this includes accountants, tax advisers, insolvency practitioners, solicitors, and conveyancers. This new levy is in addition to AML fees already paid by 22 professional bodies to the Office
for Professional Body Anti-Money Laundering Supervision (OPBAS), which was established in 2018. AAT has stressed its support for tackling money laundering and economic crime, but opposes the idea of an annual £100m levy. It is worried that there appears to be disagreement about how best to collect the levy. Most professional bodies believe the best way to do this is through a single public agent – such as HMRC or OPBAS. However, the government appears to favour imposing responsibility
for collection on the professional bodies. Phil Hall (pictured), Head of Public Affairs & Public Policy, AAT, said: “An additional £100m of costs is simply unacceptable in the current climate, which sees businesses large and small having to contend with both the effects of the pandemic and Brexit. “There is also a disturbing lack of clarity from the Government about how it would calculate and collect such a levy fairly and reasonably, making this highly contentious and, AAT would argue, grossly unfair.”
Jenrick to tackle Notts council failings New measures to address the serious failures at Nottingham City Council, have been announced by Local Government Secretary Robert Jenrick. This follows a non-statutory review into the council’s finances in November last year. An Improvement and Assurance Board, made up of experts in governance and finance, appointed by the department, will be set up to help the council deliver the report’s recommendations on governance
and company ownership. The council must put forward their three-year recovery plan by
the end of January 2021. This will set out how they will improve their financial position and review their investments. They must submit progress reports to the department on a quarterly basis. The measures come in response to a rapid non-statutory review commissioned in November to examine serious governance and risk management issues, including those associated with the council’s private energy company Robin Hood Energy.
BDO has change of heart over Covid cash When BDO announced it was paying its partners £518,000 each, it thought it would be fine to keep the £4 million it had been given by the government to pay for furloughed staff. Well, the partners had taken a 14% hit on their pay – they were paid an average of £602,000 last year. The fall in salary is almost exactly in line with the 15% drop
in BDO’s profits. Managing partner Paul England had said the partners had debated internally about the morality of accepting taxpayers’ money, and felt it was justified because it helped preserve jobs. He said: “We agree there’s a moral debate, but we think we have more of a responsibility to invest in jobs.” That view didn’t last very long and a few days later BDO agreed to
the tax would raise £36 billion. The 5% WFH tax would equate to around £7 a day based on a salary of £35,000. Economist Luke Templeman said: “For years we have needed a tax on remote workers. Covid has just made it obvious.”
to account for the VAT paid on products sold on their platforms by third party sellers by deducting the tax at source. There were genuine worries that thousands of sellers were avoiding the tax by using fake VAT numbers and shell companies to sell their products in effect taxfree. Analysts have said the tax rule change has had an instant effect, with many items now 20% more expensive! HMRC had estimated that the online fraud could be losing the taxpayer over £1 billion a year.
pay back the money. The furlough money had been used to furlough first-year recruits (450 of them), and around 250 members of staff. BDO’s bigger rivals PwC and Deloitte took the decision early on not to take furlough monies. Mazars, a top 10 accountancy firm, then followed suit and confirmed it has repaid £1.1 million it received from the government.
Taxwatch Pap Time for a WFH tax? Those working from home should be taxed to help support those whose jobs are under threat, says Deutsche Bank in a new report. Economists at the bank have said an additional tax of 5% on workers’ salaries should be added to those who opt to WFH. Such a tax in the UK would generate a pot of £6.9 billion a year, which could be used to pay low-income workers and/or those under threat of redundancy with a grant of £2,000. In the US 8
Pap Amazon prices rise The cost of Chinese products sold on eBay and Amazon have risen following the introduction of tougher tax rules. From 1 January all online marketplaces have
Pap Taxing times at Christmas More than 2,700 customers filed their self-assessment tax return on Christmas Day, according to the latest stats from HMRC. The peak time for completing tax returns was 2pm to 2.59pm, with more than 200 customers pressing send on their online form. The self-assessment deadline is 31 January 2021, and HMRC has not heeded the call for it to extend the deadline for tax returns by the accountancy bodies. PQ Magazine February 2021
