A .C . M O L E & S O N S C H A R T E R E D A C C O U N TA N T S
Inside: More on Making Tax Digital
Award winners Audit partner Lexi Shore was awarded the ICAEW Diploma in Charity Accounting in February - you can read more on page 3. In January, tax partner Paul Aplin was presented with the Geneva Group International Global Excellence Award and named for the sixth year running in the Accountancy Age Financial Power list of the top 50 financial influencers. You can read more about Paul’s dual life as an A C Mole & Sons partner and as President of ICAEW on page 4.
Giving back We believe in giving back to the communities we serve and as part of that we choose a local charity to support each year. Last year our chosen charity was Love Musgrove, the official charity of Musgrove Park Hospital in Taunton. We wanted to help raise funds for a new MRI scanner at the hospital. Fundraising activities included a cake sale, performances by touring theatre company The Pantaloons, a quiz and a prize bingo evening. As a result, we raised £5,000 for the charity. This year our chosen charity is ARC (formerly Taunton Association for the Homeless).
Auto Enrolment & National Living Wage On 6 April 2019 the Auto Enrolment pension contribution limits changed. The minimum total contribution increased from 5% of pay to 8%. The minimum employer contributions increased from 2% to 3%. Employers and employees are free to pay more into the scheme if they wish. Compliance with the auto enrolment rules is a legal requirement and failing to apply the rules or to give effect to the increases can result in fines. The National Living Wage – the statutory minimum for workers aged 25 and over increased to £8.21 per hour from 1 April. There are other statutory minimum rates for apprentices and those aged between 18 and 25.
Digital On 13 March, the government confirmed that Making Tax Digital for VAT will proceed as planned. It will be mandatory for all VAT registered businesses with turnover above £85,000 with effect from their first VAT period starting on or after 1 April 2019 and will represent a major change for many thousands of businesses. MTD for VAT will require the use of MTD compliant software to maintain VAT records digitally and to file VAT returns. The existing online filing process will be withdrawn. HMRC’s aim is to improve the quality of record keeping and reduce errors by ensuring that transactions are recorded closer to real time. Ministers believe that record keeping errors cost the Treasury over £8 billion a year and that MTD for VAT will therefore increase the amount of tax HMRC collects.
The government says that HMRC will take a light touch approach to penalties in the first year of MTD for VAT where businesses are doing their best to comply. This pragmatic approach will give businesses a chance to adapt to the new requirements without fear of being penalised for making genuine mistakes. If you think you will be affected by MTD for VAT but have not yet taken advice, please contact us as soon as possible so that we can help you comply with the new rules. We have experience of using the new MTD for VAT system with several leading brands of software.
You can read more about MTD for VAT on page 3.
Spring Statement The Economy
Chancellor Philip Hammond delivered his second Spring Statement on Wednesday 13 March 2019. Last year we were promised that there would be no tax announcements in Spring Statements, moving away from the previous practice of having tax and spending announcements in both the Spring Budget and Autumn Statement. Mr Hammond kept to his word again this year.
Two papers were published on tax avoidance. The first was “tackling tax avoidance, evasion and other forms of non-compliance” and “offshore tax compliance strategy”. The papers set out the government’s approach and achievements in tackling tax avoidance and evasion and are a clear statement that more action will follow. Further announcements since the Spring Statement have reinforced this.
Inevitably, the Chancellor had the uncertainty of Brexit hanging over his plans. He was speaking the day after one critical Brexit vote and on the day of another. Throughout his speech, he qualified his comments with the words “if we leave the EU with a deal”. His assessment of the alternative was blunt: “I need to be straight with the House: a no-deal Brexit would deliver a significant short-to-medium-term reduction in the productive capacity of the British economy.”
While confirming the start date for Making Tax Digital for VAT as 1 April 2019, the government also announced that it will not be mandating MTD for any other taxes in 2020, suggesting that MTD for taxes other than VAT has been deferred to at least April 2021. The government had previously said that there would be no extension to other taxes until MTD for VAT has bedded down and is operating effectively.
The UK economy, Mr Hammond said, is remarkably robust, having grown for nine consecutive years, with the longest unbroken quarterly growth run of any G7 economy. It is forecast to continue growing in each of the next five years. The Office for Budget Responsibility (OBR) revised its growth predictions to 1.2% for this year, 1.4% next year and 1.6% for the following three years. The deficit – the amount by which the Government’s annual expenditure exceeds its income – for the current year is now expected to be £3 billion lower than forecast in the 2018 Autumn Budget. Looking forward, borrowing is expected to be £29.3 billion in 2019/20, then £21.2 billion in 2020/21, £17.6 billion in 2021/22, £14.4 billion in 2022/23 and finally £13.5 billion in 2023/24 (its lowest level in 22 years). No date has been set for achieving a surplus. As the Government is still borrowing, the national debt will continue to increase in absolute terms. It is forecast to reach £1.8 trillion this year and to continue growing, hitting £1.9 trillion in 2023/24. As a percentage of GDP however, debt is falling and will continue to fall, from 82.2% of GDP next year, to 73% in 2023/24. This shows that in the world of economics, the same thing – in this case the national debt – can be going both up and down at the same time, depending on the measure being used. Unsurprisingly perhaps, the Chancellor chose to focus on the measure which showed a reduction.
Final Word All of the Chancellor’s plans assume that the UK leaves the EU with a deal. The economic outlook and his plans could be very different if we do not. Whatever happens, we can expect some interesting announcements in the Autumn Budget.
our recent charities One of the sessions at Hotel in Taunton. seminar at the Castle
Charities Audit Partner Lexi Shore has been awarded the ICAEW Diploma in Charity Accounting. The diploma acknowledges expertise in charity accounting and financial management at the highest level, recognising individuals who make a real difference to organisations in the charity and voluntary sector. Lexi said: “I’m absolutely delighted to receive this award in recognition of my work with charitable organisations. As head of the ACM charities team it is a pleasure to support and advise local charities and for this to be formally recognised by ICAEW is a great compliment.” Lexi is actively involved in charitable work herself, having recently helped to train a Hearing Dog puppy – and later in the year she is doing a 90-mile run for charity!
Our specialist charity team provides wide ranging services to more than 75 charities and not-for-profit organisations across the South West. We have held a number of very successful seminars for charities, the last being The Essential Guide for Charities at Taunton’s Castle Hotel in December which we hosted jointly with Quilter Cheviot Investment Management and Tozers Solicitors. Topics covered included regulatory changes; governance, ethics and the role of a trustee; investment management, finance and taxation.
DIGITAL Making tax digital
As we have said elsewhere in this edition of Proactive, If your business is VAT registered and your sales exceed £85,000 a year, you will have to comply with the new Making Tax Digital for VAT (MTD) rules from the beginning of your first VAT period commencing on or after 1 April. MTD will require you to maintain your VAT records in digital form and to file your VAT returns using MTD-compliant software. Handwritten records will no longer be acceptable for VAT purposes. If you are already using software to maintain your VAT records, you should check that it is MTD compliant. If you keep your records using spreadsheets, you will need to either start using MTD compliant software and special “bridging” software to link to your spreadsheets, or else move completely to MTD compliant software. There are many brands of software on the market as well as numerous apps. Making the right choice of product and having access to training and guidance is important. While some people find digital technology intimidating, many others
Around 200 clien ts attended our recent MTD seminars to hear ab see demonstratio out the new rules and to ns of software an d apps.
find it gives them information that helps them run their businesses more efficiently. We can advise you on the best software to choose and provide you with help and support. Making the move to digital isn’t just about complying with MTD. Software and apps can make record keeping faster and easier and provide you with better information to run your business efficiently and profitably. By linking your software to your business bank account for example, you can automate an important part of the accounts process. Software can also help you to raise sales invoices and monitor debts. April 1 is now behind us. MTD has arrived. The sooner you take advice, the easier the transition will be.
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With Ray McCann (President of the te of Chartered Institu er 11 mb Nu at n) tio Taxa
A President’s Life
With Mr Te o Ee Sing (Executive Director of Sunway Col lege, Malay sia)
With Rt Hon Justine Greening MP and Iain Wright, former MP for Hartlepoo l
In our last newsletter, tax partner Paul Aplin described his first four months as president of the Institute of Chartered Accountants in England & Wales (ICAEW). He’d spoken at receptions at the Labour and Conservative party conferences alongside ministers and shadow ministers and had travelled to many locations in the UK as well as to Malaysia to meet ICAEW members and students. Here he looks back on what happened in the following four months. Paul writes: In October I travelled to Scotland to speak at conferences and to meet Kate Forbes MSP, an ICAEW member and a minister in the Scottish Government, then at the end of the month I began a five-week overseas trip. I arrived in Sydney, Australia on 28 October. The next day the Chancellor gave his Budget speech back in the UK. Thanks to jet lag I was wide awake at 3 am Sydney time, which was shortly after the Chancellor had sat down, so I was able to start analysing the Budget Red Book straight away. By lunchtime I had prepared A C Mole & Sons Budget summary and written the text for our newsletter. I then took a cab across to the University of New South Wales Business School to give a seminar on tax administration to a group of academics and post graduate students. I didn’t want to miss out on our traditional joint Budget Breakfast at Taunton Racecourse with Clarke Willmott, so I gave my analysis of the Budget announcements via video link! I spent the next couple of weeks travelling between Sydney, Canberra and Melbourne, meeting ICAEW members, attending the International Federation of Accountants Council, the World Congress of Accountants and numerous other events. Highlights were speaking alongside the UK’s trade representative in Australia and getting a first-hand insight into
the way the Australian tax authority uses digital technology to improve tax compliance. And technology has been vital on my travels. It has enabled me to read my office post every day, to check emails and to deal with client issues irrespective of whether I was in a hotel, a conference hall or an airport lounge. After Australia it was on to Singapore, Malaysia and Hong Kong, returning to London in early December to chair the ICAEW Board, give the keynote speech at an NFU event and then head off again for Dubai (to speak alongside BBC security correspondent Frank Gardner) and Mauritius. January was mainly spent at Stafford House on tax returns, but I visited Cyprus towards the end of the month. In 48 hours, I had meetings with ICAEW members, the Auditor General, the Accountant General, Deputy Accountant General and with the Tax Commissioner of Cyprus. I also met the British Deputy High Commissioner, UK trade representative and the Rector at the University of Cyprus as well as speaking and presenting certificates at a graduation ceremony for over 130 new members. In February I met members in Vancouver and in March I attended a reception at Downing Street and held meetings with HMRC on Making Tax Digital, spoke alongside former Cabinet minister Justine Greening MP at the ICAEW’s annual dinner at Chartered Accountants Hall and travelled to Brussels for meetings with ICAEW members from across Europe. What lies ahead? Travel to Lagos, Singapore, Hong Kong and China; a Buckingham Palace Garden Party and – well, who knows? All will be revealed in our next edition of Proactive...
AC Mole - Proactive Newsletter - Spring 2019