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Benefit from our new business guides

ACCA has refreshed its range of free practitioner guides and checklists to help businesses.
There are over 160 guides for 2019 and many others available from earlier years for research purposes. The guides are regularly updated so that clients will always have access to current information.

Guide to the Spring statement 2019

Six areas of focus for accountants, plus a Guide to share with clients.

Guide to the Autumn budget 2018

In conjunction with ACCA we have prepared a full guide to the budget available here.

Guide to the Spring budget 2018

In conjuntion with ACCA we have prepared a full guide to the budget available here.

Guide to the Autumn Budget 2017

In conjunction with ACCA we have prepared a full guide to the budget available here.

Guide to dividend payments

The practical procedures for payment of dividend templates for board minutes, dividend vouchers and dividend waivers.

The payment of a dividend is governed by a company's Articles of Association. Unless otherwise stated, this will be in accordance with paragraphs 30-31 of Table A.

Companies Act 2006 (CA 2006 (s830)) states that 'a company may only make a distribution out of profits available for the purpose'.

What this means is that the company needs to have sufficient retained profits (accumulated realised profits less accumulated realised losses) to cover the dividend at the date of payment. 

1.    Declaring dividends
There are two types of dividends - interim and final.

Interim dividends are those which are paid throughout the  year (monthly, quarterly, annually etc.) Before declaring an interim dividend, the directors must satisfy themselves that the financial position of the company warrants the payment of such a dividend out of profits available for distribution. The general meeting cannot interfere with the directors’ exercise of their power to pay interim dividends. Note that HMRC consider the date of payment of interim dividends to be the date of entry in the company’s books. CTM 20095 (8)

Final dividends are paid once per year after the end of each year. Where a final dividend is declared and the resolution fixes a later date for payment then the declaration creates a debt owing to the shareholder. However, the shareholder can take no steps to enforce payment until the due date of payment (or payments if by fixed instalments, see Potel v CIR (1971)). The ‘due and payable’ date in such circumstances is the date fixed for payment and not the date of declaration.

Before declaring a dividend, company’s directors must hold a board meeting and keep the minutes of the meetings (on paper or electronic format) with their statutory records (CA 2006 s388). Here is an example of the Board Meeting Minutes.

2.    Issuing dividend vouchers
For each dividend a company issues, a voucher must be created and given to its shareholder. This voucher provides the following details about the dividend:
Name of company
Company registration number
Date of issue
Name and address of shareholder receiving the dividend
Share class
Amount of the dividend payment
Signature of authorising officer.
Here is an example of a dividend voucher template

3.    Taxation of dividend
All taxpayers are required to pay tax on dividends above £5,000. The following rates apply: 
Basic rate taxpayer – 7.5%
Higher rate taxpayer – 32.5%
Additional rate taxpayer – 38.1%

4.    Ultra vires and illegal dividends
As a brief reminder, dividends or distribution to shareholders may only be made out of profits available for the purpose. For interim dividends, full accounts are not required. However, the directors are required to have sufficient information available in order to enable them to make a reasonable judgement as to whether the amount of the ‘distributable profits’ at the date of payment is acceptable.

Any dividend paid in excess of this profit, or out of capital or when losses are made, is ‘ultra vires’ and, in effect, ‘illegal’.

The treatment of the improperly paid dividend is dependent upon the position of the recipient:

(a) If the recipient knows or has reasonable grounds to believe that a distribution or part of it is unlawful, then he/she is liable to repay it to the company.
(b) If the recipient is not aware that an illegal divided was declared (ie shareholder of a quoted company), then no such liability exists. However, for private companies that are controlled by directors who are shareholders, such members are deemed to know the status of the dividend.

A significant consequence of the payment of an ‘illegal’ dividend might arise if the company goes into liquidation. If it is found that dividends have been paid ‘illegally’ to the directors over the three years prior to insolvency, the directors might be required to repay same to the company.

5.    Dividend waiver
There can be a number of complexities around dividend waivers. The process described looks at the process that is needed rather than explores case law. If a shareholder decides to waive his right to receive a dividend, he must do so before the date it is paid, via a formal deed.

The Deed of Waiver must be signed by the shareholder, must be witnessed, and returned to the company. Here is an example of a dividend waiver template.

A waiver should typically be used only for genuine commercial reasons, and not purely to avoid tax.

The company should have sufficient retained profits to pay the same dividend rate to all shareholders (including the shareholders who waive their rights to dividend). An alternative solution to a dividend waiver is for the company to issue different classes of shares

Guide to the new public sector IR 35 regulations

Guidance to share with clients who operate in the public sector.

The new IR35 provisions within the public sector apply when:
A worker personally performs services, or is under obligation to personally perform services for the client
The client is a public authority
The services are provided under circumstances where, if the contract had been directly with the client, the worker would be regarded for Income Tax purposes as an employee of the client or the holder of an office with the client, or the worker actually is an office holder with the client.

In summary, individual worker (say A) provided services via an intermediary (say B) to a public authority (say C).

C must look at the arrangements under which A provides their services, and decides if these new rules apply. If C decides the new rules apply tax and employee’s national insurance will be deducted and the net amount paid to B. The VAT exclusive amounts must be accounted for by C through Real Time Information in the same way as for an employee.  These rules do not affect employment rights available to the worker.

The guidance from HMRC says: ‘The worker’s intermediary is able to reduce the turnover it records to reflect the deductions made from the fee from the fee payer’.

These new rules do not create any new pension obligations on the public sector, agency or third party to operate occupational or stakeholder pensions. These new rules do not affect:
workers who provide their services to clients other than public authorities
where an agency directly employs a worker and it operates tax and NICs on earnings it pays to the worker
foreign entertainers who are within the statutory tax withholding scheme.

To help to decide whether the new rules apply a tool has been made available entitled check employment status for tax.

Public sector body providing information to intermediary
The public sector client must inform the intermediary, agency, or third party with whom they have a contract to provide the services that the contract falls within the new off-payroll rules or that it does not. For contracts starting on or after 6 April 2017, this decision should be notified before the date of entry into the contract, or before the provision of the services begins. For contracts already in place before 6 April 2017, the decision should be notified before the date of the first payment made on or after 6 April 2017.

If the public sector client fails to notify its decision within the timescale, they become liable to account for tax and NIC.

The intermediary, agency or third party with whom the public sector client has contracted directly may request a written response setting out the reasons for the decision. The public sector client must reply to the written request for the reasons within 31 days of receiving it.

The fee paid to the intermediary is treated as a payment of the worker’s employment income when it is paid. For tax, NICs and Apprenticeship Levy purposes, the worker is treated as having an employment with the fee-payer. Stakeholder pensions, statutory payments and certain other employment rights do not apply.

Intermediary paying worker a salary
The intermediary can pay the worker provided to the public sector client, through that intermediary’s payroll. The intermediary will receive a deduction up to the total of the net fee, exclusive of VAT received from the fee-payer. In example 1 above that would be a non-taxable payment up to the total of £4,200 per month that does not require further deduction of Income Tax or NICs. An amount up to £4,200 per month can be paid by the intermediary to the worker each month through the payroll without income tax and NICs.

The intermediary should report to HMRC non-taxable payments the intermediary pays the worker on the Full Payment Submission (FPS) that the payroll software produces.

Intermediary paying worker/shareholder a dividend
The intermediary company can pay a dividend if it has distributable reserves. If this is paid to the worker/shareholder this will be tax free up to the total of the net fee received from contracts in the public sector, where Income Tax and NICs have been deducted at source. The worker/shareholder would not need to declare that dividend on their Self-Assessment Return. This is assuming that the company has not paid the worker/shareholder in any other way, such as via the payroll.

Corporation tax
The guidance from HMRC says: ‘When you are calculating your company’s income, you should deduct the total amount of the invoice, less the amount of Income Tax and NICs that were deducted at source. Your company accounts should reflect this deduction to ensure the amount is not taxed twice.’ 

Further guidance from HMRC can be found here and here

The legislation which introduces these provisions is the Finance (No 2) Act 2017 Schedule 1, which amends ITEPA 2003. The legislation is currently a Bill, which can be found at the following address. The details are in Schedule 1 of this Bill while the Bill and Explanatory Notes can be found here 

Implementing FRS 102 – problem areas and how to account for them

FRS 102 is effective for accounting periods beginning on or after 1 January 2015. It requires the comparative and opening balance sheet at the date of transition to be restated in accordance with FRS 102; the date of transition being the beginning of the earliest period for which an entity presents full comparative information. However, the opening balance sheet itself does not need to be presented.

For example, for an entity with a 31 December year end, the first year of mandatory application will be the year ending 31 December 2015. The entity will need to restate its opening balance sheet at the date of transition (ie at 1 January 2014) and comparative balance sheet (ie at 31 December 2014) in accordance with FRS 102, although the opening balance sheet does not need to be presented. The entity will need to prepare reconciliations of equity at 1 January 2014 and 31 December 2014 and of its profit or loss for the year ending 31 December 2014.

ACCA members applying the transition rules have raised a number of queries relating to:

·         Actually applying the rules in practice – what are the ‘nuts and bolts’ of the accounting treatment

·         What are the taxation implications of the changes once implemented on the accounts

This guide seeks to help members by highlighting a number of FRS 102 issues raised by members where ‘new’ UK GAAP under FRS 102 is different to the old treatment. It shows the accounting entries (and exemptions from FRS 102 where applicable) and also explains the tax consequences of the changes. The guide is split into two parts –Transition to FRS 102 and FRS 102 in subsequent years.

Taxation generally

Tax legislation for companies requires that the profits of a trade are calculated in accordance with generally accepted accountancy practice, subject to any adjustment required or authorised by law in calculating profits for Corporation Tax purposes (section 46 Corporation Tax Act 2009). Similar rules exist in other parts of the tax legislation for instance section 307 CTA 2009.

Transition to FRS 102

Paragraph 35.10 of FRS 102 provides a number of exemptions that entities may elect to use on transition to FRS 102. These aim to ease or remove the requirements of paragraph 35.7 of FRS 102 for the restatement of assets and liabilities at the date of transition.

Issues raised by members relating to the transition exemptions

1          Fair value as deemed cost

An entity may elect for an item of property, plant or equipment, an investment property, or an intangible asset that meets the recognition criteria and the criteria for revaluation, to be measured at its fair value at the date of transition and for that fair value to be used as the deemed cost of the item going forward. This option may be attractive to those entities which want to reflect the current value of their assets particularly where there is secured borrowing.. The downside to this is that the higher deemed cost may lead to increased depreciation charges in subsequent years, adversely impacting reported profits and distributable reserves.

For example an asset with original cost of £ 1,000 is deemed to have a fair value of £ 10,000 at date of transition. Depreciation to date has been £ 999.

The accounting entries would be:

DR Cost of asset £ 9,000

DR Depreciation to date £ 999

CR Profit and loss account reserves £ 9,999


1          FRS 102 does not recognise revaluation reserves on the balance sheet so where such a reserve is in existence on transition, this will be included in profit and loss account reserves (albeit non-distributable)

Taxation treatment

UK tax law departs from the accounting standards by disallowing depreciation and revaluations in respect of capital assets, and instead granting capital allowances (on some assets). Hence accounting changes from the transition and FRS 102 should not have a tax impact

2          Revaluation as deemed cost

FRS 102 requires a tangible fixed asset to be measured initially at cost.

For a revalued item of property, plant or equipment, investment property, or intangible asset that meets the recognition criteria and the criteria for revaluation, an entity may elect to use as its deemed cost, its revalued amount either at, or before the date of transition. Therefore the options would be:

·         to elect to use the most recent revaluation as its deemed cost at that date and no further adjustment is required; or

·          it could restate the property to its original cost

For example, property A was acquired on 31 December 1980 at a cost of £1,000 and has been revalued on a regular basis,the last time was on 31 December 2010 when its value was recorded in the financial statements at £100,000 and its remaining useful life was 20 years. There has been no significant change in the value of Property A since that revaluation.

The company could elect to use the most recent revaluation from 2010 (being £100,000) as its deemed cost at that date and no further adjustment is required; or

If the property is restated to the original cost of £ 1,000 the following accounting treatment would apply:

Dr Revaluation Reserve £ 84,660

Dr Accumulated depreciation £ 14,340

Cr Property, plant and equipment £ 99,000


1          FRS 102 does not recognise revaluation reserves on the balance sheet so where such a reserve is in existence on transition, this will be included in profit and loss account reserves (albeit non-distributable)

Taxation treatment

UK tax law departs from the accounting standards by disallowing depreciation and revaluations in respect of capital assets, and instead granting capital allowances (on some assets). Hence accounting changes from the transition and FRS 102 should not have a tax impact.

3          Dormant companies

There is no requirement for dormant companies to restate the opening balance sheet at the date of transition (nor any subsequent balance sheets) until there is a change in its existing balances or the company undertakes any new transactions.

Effectively this allows the company’s figures to remain the same whilst it remains dormant.  There would be no accounting or taxation implications.  However it is recommended that the adoption of this treatment would be disclosed in the accounts.

FRS 102 in the years post transition

Issues raised by members relating to ongoing use of FRS 102:

1          Loans between a director and a company at nil interest

It is common for a fixed term interest-free loan to be made between a director and his/her company. The accounting for the measurement difference arising on the initial recognition of the loan will depend on whether the loan was made in the director’s capacity as a shareholder or for another reason. For example, in a situation where a director is the majority shareholder it can be presumed that the loan was made in the director’s capacity as a shareholder. This presumption can be rebutted, if, for example, loans between the entity and other third parties without an ownership interest in the entity (eg employees) are made on the same or similar terms.

Accounting treatment

 If a fixed term interest-free loan is made between the entity and a director in its capacity as a shareholder the accounting treatment would be as follows:.

A director provides a fixed term interest-free loan of £ 1000 on 1/1/2015 to his company. The present value of the loan using a market rate of interest for a similar loan is £ 900 . The difference of £100 represents an additional investment by the director in the company. The company would record the following accounting entries in its individual financial statements:

Initial recognition

Dr Cash £ 1000

Cr Loan repayable to director £ 900

 Cr Capital contribution (equity) £ 100

After initial recognition the interest free loan is treated for accounting purpose as if it was a loan at a market rate of interest with capital and interest payable at the end of the term of the loan. Interest is accounted for applying the effective interest method.


Carrying value 1 January £

Interest accrued (5.4%)  £

Cash flow £

Carrying value at 31 December £











2015 Year

DR interest ( P and L )                    £ 49

CR loan                                             £ 49

2016 Year

DR interest ( P and L)                     £ 51

CR loan                                             £ 51

DR loan (repayment made)            £ 1,000

CR bank                                            £ 1,000


1          The present value of a financial liability that is repayable on demand is equal to the undiscounted cash amount payable reflecting the lender’s right to demand immediate repayment. Therefore the above treatment is not needed.

2          If the loan had a market rate of interest in the agreement then there would be little difference to the treatment under old UK GAAP.

2          The above treatment is similar to the accounting for a fixed term interest-free loan between a parent and its subsidiary.  In the books of the parent, the amount shown above as an increase in equity would be treated as an increase in the investment in subsidiary.

Taxation treatment

The capital contribution of £100 will be recognised in the company’s statement of changes in equity and the finance expense of £ 49 (2015) and £ 51 (2016) will be recognised in its income statement. The computation of taxable amounts was amended by the Finance Bill 2015 to bring greater alignment with the usual (GAAP) approach for the computation of accounting profits. Tax will be based only on amounts recognised as items of accounting profit or loss rather than on amounts recognised elsewhere in the accounts.

2          Holiday pay accrual

Short-term employee benefits are employee benefits (other than termination benefits) that are expected to be settled wholly before twelve months after the end of the reporting period in which the employees render the related service.

Accounting treatment

A normal accrual would be provided for the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service.

Tax treatment

In most cases it will the case that the holiday pay accrual adjustments in the profit and loss account will be tax deductible. However it should be noted that the holiday pay policy of some employers may mean there is the possibility that the accrual will include some holiday periods that have not been taken/will not be taken within 9 months of the year end which will mean that technically that part of the accrual would not be deductible for tax purposes.

3          Deferred tax

Where assets have been revalued, FRS 102 requires that deferred tax is recognised on all timing differences. Revalued assets will therefore now require deferred tax to be recognised on any revaluation gains or losses. Previously under FRS 19, no deferred tax was recognised on revalued assets unless there was a binding commitment to sell.

Accounting treatment

The treatment for the additional deferred tax expense (or income) will follow the presentation of the related transaction (as is the case under FRS 19).The presentation relates to what type of assts has been revalued.  For instance if the asset is an investment property, the revaluation movement is normally shown in the profit and loss account.  Therefore, the movement in deferred tax arising from the revaluation of investment properties will be included as part of the tax charge for the year, whereas the deferred tax arising on the revaluation of properties (which is normally treated through the statement of comprehensive income) will generally be included in other comprehensive income.


1             The transitional provisions in FRS 102 permit certain types of assets to be measured at ‘deemed cost’ which may be either the fair value of the asset or a revalued amount produced previously.  This would mean that deferred tax would normally have to be provided on these amounts on transition.

2             The inclusion of additional deferred tax balances may have an effect on the company’s credit rating due to the reduction in net assets.

3                     Movements on revaluation – investment properties v other properties

Accounting treatment

The treatment of movements on revaluation differs between those on investment and other properties:

Investment properties

FRS 102 requires revaluation each year to fair value (equivalent to open market value) of investment properties with value changes taken to profit or loss. The cost less depreciation model is used only if fair value cannot be measured reliably without undue cost or effort.

Therefore a gain movement of £ 100,000 would be shown as:

DR Investment property £ 100,000

CR Profit and loss account  £ 100,000

On the profit and loss account this might be shown as:





Gross profit

Distribution costs

Administrative expenses

Operating profit

Gain on revaluation of investment property

Interest receivable

Interest payable

Profit on ordinary activities before taxation


1          The profit on revaluation of investment property will not be a realised profit available for distribution. An entity may choose to transfer such gains and losses to a non-distributable reserve, but there is nothing in the law to require this.

Other properties

If an asset’s carrying amount is increased as a result of a revaluation, the increase is recognised in other comprehensive income and accumulated in equity. However, the increase is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss.

The decrease of an asset’s carrying amount as a result of a revaluation is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity, in respect of that asset. If a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess is recognised in profit or loss.

Therefore a gain movement (not a reversing one) of £ 100,000 would be shown as:

DR Investment property £ 100,000

CR Other comprehensive income  £ 100,000

On the comprehensive income statement this might be shown as:





Profit for the financial year

Other comprehensive income

Gain on revaluation of land and buildings

Deferred taxation arising on the revaluation of land and buildings

Total comprehensive income for the year


1          The deferred taxation is also shown on this statement following the presentation of the actual gain.

Tax treatment

Investment properties

Assuming the property is held, for tax purposes, as an investment, the income arising on the property is bought into tax as it is recognised in the accounts (for example rental income would be bought into tax as recognised in profit or loss). In this case, movements in fair value of investment properties are not taxable. The disposal of the investment properties will typically give rise to a chargeable gain.

Other properties

UK tax law departs from the accounting standards by disallowing depreciation and revaluations in respect of capital assets, and instead granting capital allowances (on some assets). Hence accounting changes from the transition and FRS 102 should not have a tax impact

The new apprenticeship levy

The government is putting into place a new levy called 'The Apprenticeship Levy'. This will be a levy on UK employers to fund new apprenticeships. In England, control of apprenticeship funding will be put in the hands of employers through the Digital Apprenticeship Service. The levy will be charged at a rate of 0.5% of an employer’s paybill. Each employer will receive an allowance of £15,000 to offset against their levy payment. It will be introduced in April 2017.

This will affect employers in all sectors. The levy will only be paid on annual paybills in excess of £3 million, and so less than 2% of UK employers will pay it. The levy will have effect on and after 6 April 2017

The objective behind this levy is that the government claims to be committed to boosting productivity by investing in human capital. As part of this, the government is committed to developing vocational skills, and to increasing the quantity and quality of apprenticeships. It has committed to an additional 3 million apprenticeship starts in England by 2020. The levy will help to deliver new apprenticeships and it will support quality training by putting employers at the centre of the system. Employers who are committed to training will be able to get back more than they put in by training sufficient numbers of apprentices.

Dividend waivers can be an effective tool in tax planning – if executed correctly

A dividend is a payment from a limited company’s profits to its shareholders. The amount each shareholder receives will depend on the percentage they own in the company. When a shareholder does not wish to receive a dividend, this can be effected by the execution of a dividend waiver. The use of such waivers can be an effective tool in tax planning. Unless a dividend waiver is executed in the right way, HMRC is likely to use anti-avoidance legislation to attack the scheme. 
Settlement legislation can apply where a company with few shareholders declares a dividend when one or more of the shareholders have waived their right to a dividend in circumstances where other shareholders may benefit. HMRC can argue that the person making the waiver has indirectly provided funds for an ‘arrangement’ or ‘settlement’ by giving up a sum to which he or she is, or may become, entitled. 
If a dividend waiver is successfully challenged by HMRC, the result is that those individuals are taxed based on the total paid dividend apportioned according to shareholdings, effectively ignoring the waivers. 
When is the settlement legislation likely to apply?
If the profit is insufficient to allow the same rate of dividend to be paid on all issued share capital.
There has been a succession of waivers over several years where the total dividends payable in the absence of the waivers exceed accumulated realised profits.
The same rate would not have been paid on all the shares in the absence of the waiver.
The non-waiving shareholder would pay less tax on the dividend than the waiving shareholder.
Where the person benefiting under the arrangement is not a spouse, civil partner or minor child, the settlement legislation will not apply unless there are arrangements under which the money will be paid, or used to benefit the settlor. 
How to avoid the distribution being challenged
Deed of waiver should be formally executed, and signed by shareholders who would otherwise be entitled to receive the share income. The deed should be dated, witnessed and lodged with the company.
The dividend waiver must be executed before the right to the dividend arises. Interim dividends must be waived before payment; final dividend should be waived before the shareholders approve the final dividend.
Dividends paid to a spouse should be paid into their own separate bank account (as opposed to the couple’s joint account).
It is always better if there is a commercial reason for the dividend to be waived –such as enabling the company to retain funds for a specific purpose.
It is unwise to use dividend waivers too frequently. A habit of waiving dividends will increase the risk of questioning from HMRC.
Never backdate board minutes and dividend vouchers, as the documents will be legally void and can constitute a criminal offence.
Dividend waiver example 
Waiver of dividend 
I, (Insert name) of (insert address), the registered holder of (insert number of shares and class) of (insert name of the company), hereby waive all rights to payment of the interim/final (delete as applicable) dividend of (£insert amount) per share declared by the Company and its directors on (insert date) in respect of the year ended ([insert company year-end date). 
Date: (insert date) 
Signed by: (insert signature)
Witnessed by: (insert name, address and signature of witness) 

Queen's Awards for Enterprise

Have you got what it takes to win a Queen’s Award for Enterprise?

In conjunction with ACCA we have provided a guide on how to apply which includes the criteria, deadlines for applications and further links.   

New guidance from the Charity commission for Trustees

The Charity Commission has issued new guidance to Trustees on how it will approach recovery of funds from them. This is an important guide for Trustees and as ever if more help is needed please contact us.

The guidance highlights and provides additional support to trustees informing them of its views on 5 key areas/statements:
1. The Commission takes very seriously cases where property is lost to charity as a result of serious wrongdoing by charity trustees or others involved with a charity.
2. Serious wrongdoing by charity trustees and others.
3. It is primarily the responsibility of the trustees to recover the property lost to the charity.
4. Where the trustees are unable or unwilling to do so, and the amount involved is significant and the breach of trust is sufficiently serious, the Commission will not hesitate to use its powers of intervention and remedy to secure the recovery of lost funds.
5. In appropriate cases and exceptionally, the Commission will consider bringing legal proceedings in the public interest with the Attorney General's consent to recover funds lost to charity.
Throughout the guidance it is highlighted that the Charity Commission policy is for “restitution and the recovery of charitable funds misappropriated or lost to charity in breach of trust” and that “most trustees are volunteers and unremunerated for their work. Consequently they will not normally be held responsible for honest actions reasonably undertaken even if mistaken.” But they also warn that a higher bar exists for “remunerated trustees and those possessed of special skills and expertise

Cyber security

BIS has published a short guide called Small businesses: What you need to know about cyber security.

The guide provides a starting point to help establish a protection plan by highlighting a number of key questions that the business should ask.

The Pension Regulators guide to automatic pension enrolment

The Pension Regulator has issued new guidance on the employers responsibility to enrol its employees into a pension scheme.  There are different enrolment dates (staging dates) which depend on various factors such as the number of employees etc.  For the full guidance follow this link

Guide to the changes to child benefit for 'high earning' families

Following on fom the budget, and the fuss immediately after, HMRC has now issued 'clarification' on the affect that the changes will have.  The rules are very complicated but here goes !

The child benefit charge on ‘high income’ families is now part of our legislation. It appears as Schedule 1 to the Finance Act 2012. It comes into effect for 2012/13, but only applies from 7 January, 2013. A taxpayer (T) is liable to the charge if either T or T’s partner has adjusted net income (ANI) in excess of £50,000 and either is entitled to child benefit.
The charge is the ‘appropriate percentage’ of the total child benefit received by both in the fiscal year. Where the adjusted net income is £60,000, the appropriate percentage is 100%.
Taxpayers are partners if:
·         they are married to each other or are civil partners and are not separated under a court order or in circumstances where the separation is likely to be permanent, or
·         they are living together.
As the charge is by reference to weeks, it will apply only to those weeks of a fiscal year for which a partnership exists. If the partnerships beaks up, the higher income partner will only be liable from 6 April until the week the partnership breaks up.
If child benefit is being paid, and a couple start living together, the charge will arise from the time the couple live together.
There is an exemption if one partner had previously claimed child benefit in the basis that they were living with the child and after a period of less than 52 weeks, resumed the claim on the same basis. This would occur when a parent moves away temporarily for work purposes and leaves the child with a family member until they return.
Adjusted net income is income net of deductions such as pension contributions, gift aid, trading losses, etc.

The formula in the Finance Act 2012 schedule 1, chapter 8, section 381c states:
The amount of the charge
(1)The amount of the high income child benefit charge to which a person (“P”) is liable for a tax year is the appropriate percentage of the total of—
(a)any amounts in relation to which condition A is met, and
(b)any amounts in relation to which condition B is met.
For conditions A and B, see section 681B.
(2)“The appropriate percentage” is—
(a)100%, or
(b)if less, the percentage determined by the formula—
·         ANI is P’s adjusted net income for the tax year;
·         L is £50,000;
·         X is £100.
(a)the total of the amounts mentioned in paragraphs (a) and (b) of subsection (1), or the amount of the charge determined under that subsection, is not a whole number of pounds, or
(b)the percentage determined under subsection (2)(b) is not a whole number,
it is to be rounded down to the nearest whole number.
Vicky and Andy are married, with three sons. Vicky receives child benefit for Ashley (£20.30), Daniel and Josh (£13.40 each). From 7 January to April, she receives (20.30 x 13) =£263 + (£13.4x2x13) = £348, total £611.
Andy earns £55,000 and Vicky earns £5,000.
Percentage charge: £55,000 - £50,000 = 50%
Andy is liable to a charge of 50% x £610 (after rounding down).
Andy would face a charge of £305.
One of the major problems with this is the requirement for both partners to disclose their income. This caused a lot of difficulties prior to the introduction of separate assessment in 1990/91.
Another potential problem arises from the election not to receive child benefit. If a partner’s income is in excess of £60,000, it may be preferable to disclaim the benefit in order to avoid the charge. If the claimant decides to elect not to receive the benefit because the expected income is over £60,000 and the higher income partner finds that this is not the case, the claimant can revoke the election.
The practicalities
Child benefit should be claimed, normally when a child is born. This provides the entitlement to child benefit. Making the claim, even if the parents plan to elect not to receive the payments, is important if the parent wishes to obtain the National Insurance credits for state pension entitlement. It also guarantees that the child will be issued with a National Insurance number once they reach the age of around 15.
New claimants will be told about the new high income child benefit charge when they make their claim, to enable then to decide whether to make an election not to receive the child benefit and avoid the charge.
Existing claimants and their partners are not so easy to identify. HMRC needs to get in touch with everyone who may be in the over £50,000 income bracket and either be a claimant or in a relationship with a claimant.

Child benefit itself is not liable to tax and the amount that can be claimed is unaffected by the new charge

Guide to keeping accounting records for a Limited Company 

A recurring question from business owners is what are the accounting records that a company is required to maintain and the frequency with which they should be updated, as with many owner-managed companies the accounting records kept may, in many circumstances, be sketchy at best and be updated on a sporadic basis, mainly to coincide with external reporting requirements.
As well as being a key responsibility placed on the company, keeping account records is also of specific interest to auditors who need to form an opinion as to whether adequate accounting records have been kept by a company and to report by exception in the auditor’s report if a company has failed to do so.
Adequate accounting records
Section 386 of Companies Act 2006 requires that every company must keep ‘adequate’ accounting records. Adequate means accounting records that are sufficient to:
  • show and explain the company’s transactions
  • disclose with reasonable accuracy, at any time, the financial position of the company at that time
  • enable the directors to ensure that the accounts they are required to prepare comply with the relevant requirements of the law.
In particular the accounting records must contain:
  1. entries from day to day of all sums of money received and spent by the company and the matters to which they relate, and
  2. a record of the assets and liabilities of the company.
Where a company’s business involves trading in goods, the records must also contain:
  1. statements of stock held by the company at the end of each financial year
  2. all statements of stock-takings from which those statements are prepared and
  3. statements of all goods sold and purchased, showing the goods and the buyers and sellers in sufficient detail to enable all these to be identified - except when goods are sold as part of ordinary retail trade.
The requirements of Companies Act are only concerned with records needed by directors to prepare statutory accounts and represent only the minimum level of accounting records that a company must keep. The actual requirements are not very specific, probably recognising that the level of detail and the nature of the records needed by different companies will depend on the type of business and complexity of the company’s organisation. As a general indication, however, adequate accounting records must be an organised collection of information detailing entries of day to day receipts and expenditure and showing with reasonable accuracy the assets and liability of the company. An unorganised bag full of invoices and receipts is unlikely to represent adequate accounting records.
However accounting records that would allow directors to effectively manage a company will normally include records that provide more detail, and various degrees of analysis, than those suitable for meeting statutory reporting requirements and that would also be updated in a very timely manner.
Frequency of updating
Although accounting records need to be able to disclose the financial position of the company at any time – and to show day to day entries of money received and spent – they do not need be updated immediately to reflect all transactions entered into by a company. Rather, records need to be updated in reasonable time and on a regular basis, which would vary depending on the nature and complexity of the business, i.e. there is no set deadline in legislation or applicable practice that would apply across all sectors and organisations. What is relevant is that the records are suitable to establish the position of the company, with reasonable accuracy and minimal adjustments, if consulted at any time. 
Storage and access to records
The accounting records must be kept at the company’s registered office (or such other place as the directors think fit to keep them) for a period of at least three years from the date on which they are made (in the case of a private company) or six years (in the case of a public company).
Section 1135 of Companies Act allows accounting records to be kept in electronic form; albeit requiring that when records are so kept they should be capable of being reproduced in hard copy form.
A company’s accounting records must be open to inspection by the company’s officers at all times; it has to be noted that shareholders, either holding a minority or a majority of the company’s shares, are not granted a specific right of access to accounting records by Companies Act.
Offences for failure to keep records
Failure by a company to keep accounting records in accordance with the requirements of Companies Act 2006 may result in an offence being committed by every officer of the company who is in default. In any case it would be a defence for an officer to show that he acted honestly and that the default was excusable in view of the circumstances in which the company’s business was carried on
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