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ICAEW technical round-up: July 2021

Author: ICAEW Insights

Published: 27 Jul 2021

This month’s top technical stories include information on the fifth SEISS grant, ICAEW’s response to the government’s proposed reforms for audit and corporate governance, and the FRC’s new Quality Management standards.

Need to know

HMRC publishes guidance on the fifth SEISS grant: Full details of the fifth SEISS grant, including a new turnover test that determines the level of the grant, are now available. ICAEW’s Tax Faculty explains what has changed.

HMRC needs more resource to rebuild the UK's tax system: ICAEW welcomes HMRC’s vision of a more flexible and responsive tax system outlined in the Tax Administration Framework Review but warns that significant challenges, such as creating a single identifier for taxpayers and consolidation of tax systems, can only be met if HMRC is properly resourced.

TAFR gets real with consultation on basis period reform: The government has moved swiftly to consult on draft legislation to reform basis period rules before MTD ITSA becomes mandatory. ICAEW is concerned that changes will be rushed through and disappointed that the normal consultation process is not being followed. 

BEIS white paper - the long and complicated road to reform: With the public consultation on its audit and corporate governance reforms now closed, the government hopes to publish its response by mid-October. But the process which follows, of driving reform and delivering results, might take a decade or more and could easily not have the intended impact, writes ICAEW Chief Executive Michael Izza.

ICAEW calls for update to AQR process: The current benchmarking system does not meet requirements for encouraging improvement in the audit market, says ICAEW.

FRC seeks to clarify fraud responsibilities for auditors: ICAEW’s Audit and Assurance Faculty highlights key changes from the FRC’s revised standard on the auditor’s responsibilities relating to fraud in an audit of financial statements.

Planning ahead for the new quality management standards: The Financial Reporting Council has published two new Quality Management standards and a revised ISA 220. Louise Sharp, Manager at ICAEW’s Audit and Assurance Faculty, looks at steps that firms can take now to help with implementation.

SRA Accounts Rules: think about quality: Reporting accountants should carefully plan and document the work, including key judgments, conclusions and how they report their findings. 

CCAB proposes changes to the LLPs SORP: CCAB has published a revised draft LLPs SORP, responding to feedback that diversity in practice has arisen when interpreting whether divisions of profit are made on an automatic or discretionary basis. 

HMRC answers questions on CGT on UK residential property: Following pressure from ICAEW and other professional bodies on the quality of guidance on reporting and paying capital gains tax on UK residential property, HMRC has developed a new question and answer helpsheet offering further clarity and pledged to update existing guidance. 

No change to TRS agent authorisation process: HMRC has confirmed that a planned change to simplify the authorisation of agents by trustees has not gone ahead due to security concerns. HMRC has told ICAEW that the Trust Registration Service process will remain unchanged.


Blurring boundaries, e-money accounts and the future of tax: ICAEW’s Sophie Wales, Philippa Kelly and Lindsey Wicks join host Tom Herbert to discuss the boundaries between accountants’ personal and business lives, the fifth SEISS grant and the difference between e-money and bank accounts.

Other technical news and updates

Making Tax Digital - the current state of play: As work continues behind the scenes on the complex rollout of Making Tax Digital, ICAEW’s Tax Faculty has the latest details on where things stand with MTD for VAT and income tax.

L-Day 2021 - consultations, but more to come: Draft legislation, consultation updates and promises of future tax measures were made on 20 July. The focus for many will be on basis period reform, but ICAEW's Tax Faculty highlights the other key announcements.

In-year tax estimates wouldn't be accurate basis for payment: ICAEW considers HMRC’s call for evidence on timely payment to be premature, as earlier payment of income and corporation tax would reduce businesses’ flexibility to manage their cashflow and in-year tax estimates would not be a reliable basis for payment for most taxpayers.

Global tax deal edges forward: Finance ministers from the G20 have backed the global tax agreement brokered by the Organisation for Economic Co-operation and Development and urged that a detailed implementation plan be finalised by October.

Bridging the gap - the value of Section 172 statements: What information investors want to see in relation to reporting on stakeholders, and how key decisions take their perspectives into account, has been clarified by the FRC’s FR Lab. Its report highlights the value of the Section 172 statement.

Align tax year end with calendar to improve tax administration, say practitioners: More than three-quarters of attendees to ICAEW’s recent Wyman Symposium agreed that the UK’s tax year end should move from 5 April to 31 December after hearing about the potential benefits and practical implications of making the change.

GDS strategy may support HMRC’s review of tax administration: The Government Digital Service’s strategy is to create a single sign-in and digital identity solution that will work for all online government services. ICAEW’s Tax Faculty explains how this might support HMRC’s review of tax administration.

Identification and registration of taxpayers must be a priority, says ICAEW: A single identifier for individuals and smoother registration processes are prerequisites for a better tax system, argues ICAEW. HMRC also needs funding to develop an improved process for registering, authenticating and authorising agents.

Updated EU sustainable finance strategy - what are the key measures? A revised strategy published by the European Commission sets out a long list of additional actions to finance the transition to sustainability, strengthening the financial sector’s resilience to risks and combatting greenwashing.

EU outlines ‘make or break’ package of climate measures: The European Commission has adopted a sweeping set of legislative proposals to deliver climate neutrality by 2050. The package paves the way for a transformation of the EU’s climate, energy, land use, transport and taxation policies over the next decade.

IFRS Standards - a new approach to disclosures: The IASB is calling for comments on a proposed new approach to developing disclosure requirements in IFRS Standards and proposed amendments to the standards on fair value measurement and employee benefits that were developed applying that approach.

FCA examines UK listings rule change: The Financial Conduct Authority has launched a consultation into reforms designed to increase the attractiveness of London as a place for high-growth tech companies to raise equity capital via an Initial Public Offering.

Group loss carry-back allocation statements update: The procedures required to appoint a nominated company to a corporate group and for that company to submit a loss carry-back allocation statement to HMRC under the extended corporation tax loss carry-back provisions have been set out in regulations. ICAEW’s Tax Faculty explains the details.