In brief

Joe Pickard, 10 November 2021

All unincorporated businesses, including sole traders, the self-employed and trading partnerships, could face a much higher tax bill in years to come, according to Haslers Chartered Accountants. The concern is that changes to the tax basis period, from April 2024, could mean some businesses are hit by a larger one-off tax bill.

Currently, unincorporated businesses are taxed on profits arising in the accounting period ending in a given tax year. An accounting period ending on 31 December 2021, for example, would be taxed on profits arising in the 2021 calendar year rather than the 2021-22 tax year.

A business’s profit or loss for a tax year is, therefore, usually the profit or loss for the year up to the accounting date in the tax year. This is called the ‘basis period’. However, the proposed reforms would mean that interim arrangements will apply to businesses that do not currently have year-ends falling between 31 March and 5 April each year.

These businesses will potentially face a single greater tax bill from their profits arising in the year-end falling in the 2023-24 tax year to 5 April 2024.

Joe Pickard, 10 November 2021

Just 14% of CFOs are confident that their finance function has the skills required to help their organisation grow and adapt over the next five years according to a global survey of C-suite executives and finance professionals commissioned by BlackLine.

Furthermore, more than a third (35%) of C-suite respondents believe finance and accounting (F&A) is failing to keep up with other areas of the business when it comes to digital transformation.

The survey of 1,150 business leaders and finance professionals, conducted by independent research agency Censuswide across the US, UK, Germany, France, Singapore and Australia, suggests that talent acquisition and retention are high on the C-suite’s agenda as companies seek to implement more aggressive growth strategies post-pandemic.

However, it also identifies a major skills gap that threatens F&A’s ability to provide the consultancy, analysis, planning and due diligence required to support these broader business goals, said Blackline.

More information, including a detailed white paper on the research, can be found here.

Joe Pickard, 10 November 2021

As the UK government’s temporary restrictions on statutory demands and winding up petitions are phased out, Paul Reeves MD – restructuring advisory, and Joanne Wright at Kroll have recommend a triage approach to overcome the challenges ahead.

The insolvency service has announced that temporary restrictions on creditor action, introduced in the Corporate Insolvency and Governance Act 2020, are to be phased out.

These temporary restrictions were put in place to prevent businesses suffering financial distress, as a result of the Covid pandemic, from being forced into insolvency. Effectively, this means that from 1 October 2021 a business’s creditors can serve statutory demands and present winding-up petitions, albeit that a minimum debt level of £10,000 ($13,393) is required during a phased period ending in spring next year.

During this phased period, landlords will still be unable to petition for winding-up in relation to outstanding rent and similar debts.

Joe Pickard, 3 November 2021

Chartered Professional Accountants of Canada (CPA Canada) has welcomed the IFRS Foundation’s decision to establish an office of the International Sustainability Standards Board (ISSB) in Montreal, Quebec.

The ISSB will feature a global and multi-office structure. According to the IFRS Foundation announcement: “Offices in Frankfurt (the seat of the board and the office of the chair) and in Montreal will be responsible for key functions supporting the new board and deeper co-operation with regional stakeholders.”

In addition, there will be offices in San Francisco and London, providing technical support and platforms for market engagement and regional stakeholder co-operation. Further discussions are also ongoing in relation to proposals from Beijing and Tokyo to establish the new board’s footprint in the Asia-Pacific region.

Joe Pickard, 3 November 2021

Research from Chartered Accountants Worldwide and Edelman Data and Intelligence has found that trust remains strong in the profession following the onset of the pandemic.

The research, which surveyed 1,450 business decision makers consider chartered accountants as among the most trusted professionals, ranking behind doctors, engineers, nurses and teachers, but ahead of bankers, financial advisors, economists and insurance brokers.

The majority of business decision makers (84%) believe chartered accountants have the skills and expertise to make business thrive today, and 81% are confident in chartered accountants’ ability to navigate a new operating environment in the future.

Most respondents (70%) see chartered accountants as credible spokespeople on societal issues such as sustainability, diversity, equity and inclusion. However, they also expect accountants to follow through by driving sustainable environmental practices within businesses, and doing more to foster diversity, equity and inclusion practices.

Joe Pickard, 28 October 2021

A new study from CABA has found that one in five (41%) accountants feel as though their energy levels are so low they are unable to carry out their work effectively. One if five (21%) would even go so far as to say that they either never or rarely feel optimistic about the future.

One in three (30%) respondents had recently felt isolated, while more than half (56%) had felt emotionally challenged. When asked the cause of this distress, one in three (33%) cited either their work, career or studies, while one in five (18%) put it down to lockdown and the impact of Covid-19, and 14% put it down simply to feeling constantly under pressure.

Asked how they were coping with these feelings, just over half (51%) of respondents said they were dealing with them well, while 25% said they do not feel able to speak about their feelings.

CABA offers the Qwell online mental health support service to help support the accountancy community. Safe and confidential chat sessions with a qualified counsellor are available seven days a week, 365 days a year, with peer support and informative articles also available online.

Joe Pickard, 3 November 2021

Licensed CPAs and CPA firms in Canada can now apply for .cpa web domains to enhance their brand positioning and promote greater client trust and security.

The restricted web domain, which is administered by the American Institute of CPAs (AICPA) and its business and technology arm, CPA.com, launched in Canada on 2 November. CPAs and CPA firms must be licensed to be eligible.

AICPA launched the .cpa domain in the US in September last year. So far, thousands of domains have been registered by US CPAs and firms, ranging from sole practitioners to the majority of top 500 US accounting firms.

CPA.com president and CEO Erik Asgeirsson said: “Restricted domains are more secure, promote greater trust and credibility with clients and the general public, and enable stronger branding opportunities.

“We’ve seen great interest and creativity in the types of domains that CPAs have sought since the service began last year. We look forward to bringing this important capability for the CPA profession to Canada as we end 2021 and we’ll be launching it in more countries in 2022.”

The AICPA was awarded ownership and oversight of .cpa in 2019 by the Internet Corporation for Assigned Names and Numbers, the non-profit organisation that oversees the internet’s naming system. CPA.com is responsible for managing the service globally. 

Joe Pickard, 26 October 2021

Over eight in 10 (82%) mid-sized businesses have indicated that Making Tax Digital (MTD) for VAT has convinced them that further digitisation will make the tax system more efficient, according to a recent survey from BDO.

HMRC’s MTD programme is wide-ranging, but has been delayed by Covid-19, with HMRC instead needing to prioritise its resources on a broad range of support measures in a bid to keep businesses solvent and individuals employed during the pandemic, said BDO.

The firm suggested that investing more in HMRC to improve its system and IT teams is perhaps something that Chancellor Rishi Sunak might consider ahead of the 2021 Budget.
BDO tax partner Paul Falvey said: “The pandemic has put everyone under pressure and HMRC was right to delay some areas of MTD if they did not have the resources to roll it out effectively during the peak of Covid-19."

Joe Pickard, 25 October 2021

Hong Kong’s Financial Reporting Council has gained additional powers following the passage of the Financial Reporting (Amendment) Bill by the Legislative Council.

The FRC will assume the following regulatory functions from the Hong Kong Institute of Certified Public Accountants (HKICPA):

i. Issuance of practising certificates to certified public accountants (CPAs);
ii. Registration and inspection of practice units;
iii. Investigation and discipline of all CPAs, certified public accountants (practising) and practice units; and
iv. Overseeing the remaining statutory functions of the HKICPA:

a) Setting of requirements for and provision of continuing professional development;
b) Setting of standards of professional ethics, and setting of accounting and auditing standards; and
c) Registration of CPAs including conducting qualifying examinations for CPAs and mutual and reciprocal recognition of accountants with overseas accountancy bodies.

The legislation aims to enhance the independence of the regulatory regime for the accounting profession in Hong Kong. A date is yet to be set for the legislation to come into force.

Joe Pickard, 22 October 2021

The Association of Accounting Technicians (AAT) has expressed concern to HMRC and the Treasury about the changes to reporting requirements for Capital Gains Tax (CGT) on residential properties, and has called for the reporting requirements to be doubled from 30 days to 60 days.

Changes which came into effect in April 2020 require anyone with a reportable gain on UK residential property to report and pay any tax due using CGT on UK property account within just 30 days of selling it. Gains could previously be reported in a self-assessment tax return in the tax year after the property was sold.

For accountants to undertake this work on their client’s behalf, they need specific authorisation from their client, which must be gained using an agent services account and emailing authorisation links to clients for them to create a Government Gateway account.

More information about changes to reporting requirements for CGT on residential properties is available here.