ICAEW.com works better with JavaScript enabled.

ICAEW technical round-up: March 2021

Author: ICAEW Insights

Published: 30 Mar 2021

This month’s top technical stories on ICAEW Insights include updates on the government’s corporate governance reforms, Budget and Tax Day announcements and further news on COVID support schemes.

Need to know

Audit and governance - a ‘whole system’ approach to reform: “A significant package of reform” is how Sir Jon Thompson, CEO of the FRC, framed the BEIS White Paper ‘Restoring trust in audit and corporate governance’ in virtual conversation with Michael Izza, CEO of ICAEW.

SEISS grants four and five confirmed in Budget: The criteria for the fourth and fifth SEISS grants will include 2019/20 self assessment tax return data and widen the scheme to hundreds of thousands more taxpayers, but close it to others. Ahead of legislation and HMRC guidance ICAEW’s Tax Faculty explains what we know so far.

Super-deduction - an attractive measure but start planning now: The government’s new capital allowance ‘super-deduction’ hopes to boost business investment and productivity, but good planning and record-keeping are essential for businesses hoping to take advantage.

Common crime indicators - how accountants can spot the red flags: Accountants can help prevent, detect and disrupt crime by exercising their professional scepticism and keeping suspicious activity on their radar, says Joanna Bliault, a forensic accountant with the Met Police.

An enhanced role for Companies House in law enforcement: UK Companies House reform will result in challenging the information that is delivered to it which will, in turn, enhance its role in relation to law enforcement.

Budget documents confirm new penalty and interest regime: On 3 March the government confirmed it will reform the penalty and interest regimes for VAT and income tax self assessment (ITSA). The measures will bring significant changes and will first apply to VAT returns from April 2022 before being extended to ITSA returns.

Earlier tax payments may be coming in the next parliament: HMRC is seeking views on bringing the payment of income tax and corporation tax closer to the point when the income arises. 

Tax Day announcements take a long-term view: Examining how the UK’s tax system is administered, when taxes should be paid, simplification opportunities and the benefits of digitalisation, form the heart of the HM Treasury’s ‘Tax Day’ announcements, but more detail is awaited in many areas. 

Audit and Assurance policy - ICAEW calls on companies to deliver: ICAEW has set out key recommendations for developing a meaningful Audit and Assurance Policy that helps better inform their stakeholders.

Integrated Review sets out UK global ambitions: A major review of defence, diplomatic and foreign policy announced by the government highlights the UK’s post-Brexit ambition to play a new global role and reiterates concerns around potential national security issues posed by inward investment addressed by its UK National Security and Investment Bill.

Local government governance failures provide insights for councils and their audit committees: Research from Grant Thornton on recent public interest reports by local auditors contains useful lessons for local authorities on the importance of good governance and strong financial controls.

Other technical news and updates

Fraud and audit - challenging clients remotely: With the prevalence of COVID-related fraud, auditors are under pressure to be thorough when assessing material fraud. With remote audits, this is a particular challenge.

Hill review urges UK listing rule reforms: A proposed relaxation of the company listing rules aimed squarely at increasing London’s attractiveness as a financial centre post-Brexit has been published.

Tax and COVID support - what you need to know: ICAEW’s Financial Reporting and Tax Faculties guide you through the accounting and tax treatment of the numerous government support packages made available to businesses through the pandemic.

European Commission tables binding pay transparency measures: The right to equal pay for work of equal value is a founding principle of the EU, but one seldom implemented or enforced in full. With the EU gender pay gap currently over 14%, new legislative proposals seek to remedy this through pay transparency and improved enforcement mechanisms.

FRC issues ‘comply or explain’ reporting guidance: The Financial Reporting Council has published new guidance to help companies overcome compliance issues with corporate governance code provisions.

How agents can appeal late-filing penalties in bulk: HMRC has confirmed details of the temporary process which allows agents to submit an appeal against late-filing penalties on behalf of up to 25 clients.

HMRC issues self assessment repayment verification letters: Some self assessment taxpayers have received letters from HMRC asking for information to verify that repayment claims are not fraudulent. ICAEW’s Tax Faculty confirms that taxpayers are under no legal obligation to respond but may have claims cancelled or delayed if they do not.

HMRC issues protective assessments ahead of 5 April deadline: Under the “Requirement to Correct” legislation HMRC has until 5 April 2021 to raise assessments of tax owed on offshore income that individual taxpayers have not disclosed under the worldwide disclosure facility.

HMRC expands reporting portal for mandatory disclosure rules: It is now possible to manually report arrangements between the UK and EU member states under the mandatory disclosure reporting regime (commonly known as DAC 6).

HMRC issues VAT registration letters to boost compliance: HMRC is this month writing to businesses it believes are not registered for VAT, despite exceeding the £85,000 threshold. ICAEW’s Tax Faculty outlines what businesses can expect.

HMRC consults on mandating PII for tax advisers: As part of its work to raise standards in the tax advice market, HMRC is seeking views on its proposal to require tax advisers hold professional indemnity insurance and on a potential enforcement regime.

More detail on notification of uncertain tax treatment: HMRC has published a second consultation on developing rules for large businesses to report uncertain tax positions, as it continues to work with stakeholders on how to resolve tax disputes quickly.

Clarity crucial to taxing sharing economy, says ICAEW: Providing a clear definition of what supplies are within the sharing economy, and international harmonisation are vital when planning for VAT, according to ICAEW.

AML The Basics - the vulnerabilities of businesses in difficulty: The final instalment of the ICAEW and IFAC series ‘AML – The Basics’ focuses on businesses in difficulty and how accountants advising them can avoid becoming linked with economic crime.

Is the Modern Slavery Act finally starting to bare its teeth? The need for businesses to take their modern slavery responsibilities seriously has taken on a new urgency with the launch of a central registry for modern slavery statements.

Over half of English local authority audit opinions late despite deadline extension: An extra four months was not sufficient as the NAO reports that 55% of local authorities’ March 2020 accounts had not received an audit opinion by the revised deadline of 30 November 2020.

Sustainability and climate

UK Government steps up mandatory climate-related financial disclosure plans: Compulsory climate-related financial disclosures for large organisations moved a step closer after the government published a consultation on new rules for investors to measure and manage climate-related financial risk.

Beyond financial reporting to sustainability reporting: The long-awaited goal of standardised sustainability reporting is getting closer. The announcement of the IFRS Foundation’s strategic direction and the publication of further reports from EFRAG is putting us all on notice.

EU sets out a more sustainable and assertive approach to trade: A strategy recently adopted by the European Commission paves the way towards a greener trade policy, accompanied by a push for reform of global trading rules. It makes clear the EU’s determination to take a tougher approach towards enforcing trade agreements and dealing with unfair trade practices.

New working group launched on sustainability reporting: A working group to accelerate convergence in global sustainability reporting standards has been announced by the Trustees of the IFRS Foundation.

New technical helpsheets from ICAEW Technical Advisory Services