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ICAEW technical round-up: June 2021

Author: ICAEW Insights

Published: 29 Jun 2021

This month’s top technical stories include more information on the government’s proposed audit and corporate governance reforms, the OTS review on moving tax year end and the relaunching of HMRC’s agent dedicated line.

Restoring trust in audit and corporate governance

Audit and corporate governance reform: why now? The BEIS consultation on audit and corporate governance reform proposes sweeping changes that will have a profound impact on the way corporate Britain operates. Why is this necessary now? What will it mean in practical terms? And is the timing right?

Audit reform - this definition of PIE is hard to swallow: The BEIS whitepaper is right to look at what classifies as a public interest entity. But its suggestions could stretch the capacity of the audit market to breaking point.

Disclosure of distributable reserves - a welcome but complex challenge: The government’s reform of the UK’s corporate governance regime includes potential new requirements for large companies to disclose information on distributable reserves - a proposal that comes with a unique set of challenges.

FRC chief - accountability and responsibility must be assigned to the right people: Sir Jon Thompson, CEO of the Financial Reporting Council, answers questions on the UK’s proposals for governance and audit reform.

Will government-owned companies be caught up by audit reform? Reforms to restore trust in audit and corporate governance are primarily aimed at the private sector, but there is a potential that some public sector organisations might come within the scope of the proposals.

COVID: technical news and updates

SEISS - tax return corrections and pre-claim checks revisited: HMRC has started to autocorrect 2020/21 tax returns where the SEISS grants reported do not match its records and has restarted pre-claim checks in advance of the fifth grant. ICAEW’s Tax Faculty has the latest information.

Updated templates to make CJRS claims easier: HMRC has published new templates for making claims under the Coronavirus Job Retention Scheme to simplify the process. It is now possible to submit claims using a template within the system which can include staff without national insurance numbers even when grants cover fewer than 100 members of staff.

COVID-related rent concessions under FRS 102 and FRS 105: The accounting treatment for rent concessions granted directly as a result of COVID-19 now applies to reductions in lease payments originally due on or before 30 June 2022

Need to know

ICAEW Insights Podcast - Tax year end, Bounce Back Loans and cryptocurrency: ICAEW’s Philippa Kelly and Lindsey Wicks and PwC’s Mike Jervis join host Tom Herbert to discuss the potential moving of tax year end, Bounce Back Loan repayment options, business restructuring and cryptocurrency.

OTS to look at impact of moving tax year end: The Office for Tax Simplification has confirmed it is reviewing the benefits, costs and implications of moving the UK’s tax year end from 5 April. While the review will focus on a move to 31 March, it will also consider 31 December.

Broader consensus needed for G7 tax deal to achieve aims: Finance ministers from the G7 have agreed a principle that would see multinationals pay tax of at least 15% in each country they operate, but clear, worldwide consensus will be needed if it is to deliver a fair and sustainable recovery, according to ICAEW.

HMRC relaunches the agent dedicated line: The UK’s tax authority has restored priority access to the ADL and committed to call waiting times of less than 10 minutes. However, the ADL will not handle certain types of calls where digital alternatives are available.

EU VAT changes and what they will mean for UK businesses: UK companies need to ready themselves for the imminent VAT rule changes when selling to EU consumers (ie B2C transactions), as the changes will see them taxed according to the local VAT rate applicable in each EU country.

In the nick of time - EU grants UK data protection adequacy decision: With the 30 June deadline only days away, the EU has agreed an adequacy decision for the UK. This means the free flow of personal data from the EU and EEA to the UK can continue as before, although there are some caveats.

ICAEW supports aim of mandating PII for tax advisers, but more work is needed: Government plans to mandate professional indemnity insurance for tax advisers could offer important consumer protection, says ICAEW, but further discussions are needed with the insurance industry to identify a viable solution which does not have a disproportionate impact on professionally qualified advisers.

Other technical news and updates

Credit scoring in the current environment - what businesses should know: The economic and business challenges associated with COVID-19 have many businesses looking nervously at their credit scores. With this in mind and given the exceptional set of circumstances facing businesses at present, ICAEW’s Philippa Kelly and Louise Sharp have been speaking to some of the credit reference agencies and other relevant stakeholders about the impact of COVID-19 on SME credit referencing. 

HMRC continues ‘risk-based’ approach to late filed RTI: In its latest Employer Bulletin, HMRC confirms that late filing and late payment penalties under PAYE Real Time Information will remain ‘risk-assessed’ for 2021/22. ICAEW’s Tax Faculty outlines the update and other key reminders from the Bulletin.

Latest on Making Tax Digital for agents: Edition 17 of HMRC’s MTD update for agents includes details of how the functionality of the agent services account is developing and includes screenshots of some of the available services. ICAEW’s Tax Faculty highlights what has changed. 

VAT liability on the cost of charging electric vehicles: Whether a business can recover the VAT on the cost of electricity to charge cars used for business purposes is complex. ICAEW’s Tax Faculty outlines the latest guidance from HMRC and highlights where ICAEW is asking for further clarity.

Additional security added to HMRC online services: Multifactor authentication is already in place for most HMRC online services and will now be extended to all government gateway accounts other than those used by agents. ICAEW’s Tax Faculty explains what is changing.

Nudges could reduce offshore non-compliance and international tax debt: Better communication on taxpayer obligations coupled with prompts from HMRC could help to prevent offshore non-compliance and international tax debt, says ICAEW. There are also opportunities to improve existing systems and processes to make compliance easier.

Rethinking EU business tax - Commission sets out new agenda: A new paper adopted by the European Commission sets out plans to promote a robust, efficient and fair business tax system in the EU, supporting post-pandemic recovery and boosting public revenues in the future. 

New tools for planning shared parental leave: HMRC has launched new online tools to help parents understand their eligibility for shared parental leave and plan how to use it. ICAEW’s Tax Faculty explains how mums and adopters can opt in even if not sharing with a partner.

Refinement still needed on proposals on uncertain tax treatment: Further development and clarity are needed if HMRC proposals for large businesses to report uncertain tax positions are to succeed, according to ICAEW’s Tax Faculty. Better results might be achieved by reducing uncertainty in legislation and encouraging greater communication.

IIRC + SASB = the Value Reporting Foundation: The coming together of the IIRC and SASB to create the Value Reporting Foundation is aimed at providing a suite of tools to assess, manage and communicate value.

Sustainability: technical news and updates

Net-zero - can you tell your LCA from your carbon footprint? Reducing and measuring climate impacts involves getting to grips with new terms and methodology. We look at common, related terms and what they actually mean.

The complex road towards embracing natural capital: As the government formally responds to the Dasgupta Review, one of its architects and a leading economist discuss how to turn it into impactful policy. 

IFRS Foundation ramps up climate commitment: A concerted build-up of sustainability-related activity by the IFRS Foundation is underlining the standard-setter’s commitment to using its clout to address climate change.

Bank of England climate stress test targets financial sector: New stress tests to reveal the level of exposure and resilience of the UK’s largest financial institutions to climate change have been announced by the Bank of England, as it looks to beef up the sector’s ‘relatively immature’ experience and expertise in modelling climate-related risks.