As I write this Blog I am working very hard trying to finish business clients Tax Returns for 2010/11. I am sure most of you who are in practice have the same problems –it is getting the clients to let us have the information and as always it is the same clients who leave everything to the last moment with then frantic telephone calls and emails trying to get the matters resolved. These are also the difficult clients who have the problems either of accounting issues or unpaid tax. The resultant problem is of course we are then involved in negotiations with the Collector of Taxes regarding payment. I find this year even more than previous years that the attitude of HM Revenue & Customs is totally hostile with little understanding of the current economic climate with instructions just to collect as much cash as possible irrespective of the hurt and trauma they give to the tax payer. Even this week clients of mine have received threatening letters from the HMRC Debt Collection Agency with such wording that they will re-possess personal possessions! How horrific just to receive one of these letters! In the case I have mentioned it was only related to payments on account for 2010/11 which had been underpaid and the Collector was now trying to collect this money immediately rather than wait until 31 January when the client would settle the balance of 2010/11 liability!!
On the Charity front you may not be aware that the Charities Act 2011 received the Royal Ascent just before Christmas and this will come into force in March 2012. The Act consolidates the existing legislation repealing and replacing the Recreational Charities Act 1958 and the Charities Act 1993 as amended by the Charities Act 2006. The fund raising provisions of the Charities Act 1992 and the Charities Act 2006 will continue to apply. mTherefore we will all have to deal with new Section numbers presumably from April 2012 in relation to the statutory accounts. One hopes that our software providers will be on the ball to deal with this – well we live in hope. My experience is that software providers have yet to get to grips with the complexities of Charity accounting, let alone a new Act and Section numbers.
The Charity Commission have now amended their guidance on public benefit. This follows the outcome of the Upper Tribunal Ruling on private schools. All Trustees are legally required to have regard to this guidance and guidelines are obviously on the Charity Commission website. In particular Charity trustees of educational charities which charge high fees, in consequence of their duty to administer their charity for the public benefit, are required to take into account the whole of the class of beneficiaries their charity is set up to provide for. Accordingly, they have a duty to make provision for the poor. That provision must be more than minimal or tokenistic and must be related to their charity’s aims.
A further issue on the horizon is the European Community Micro Entity proposals. The European Parliament have voted to agree proposals on allowing member states to significantly reduce their reporting requirement on Micro Entities which will pave the way for future UK legislation in this area. A Micro Entity is a Company, which I assume will include Charitable Companies, not exceeding two of the following three criteria:
- Total assets Euro 350,000
- Total income Euro 700,000
- Employees 10
As is apparent the equivalent sterling figure for the total income figure will be only just above the audit threshold of £500,000 and therefore this will affect many Charitable Companies currently subject to independent examination.
These proposals once formally approved will complement the existing legislation proposals relating to accounting directives which I talked about in my October podcast. How will this sit with the new proposed FRSME standard, the public benefit statement FRSPBE I do not know!
Whether it reduces the reporting requirements of the small charitable Company. remains to be seen. It is obviously some time away but it will be interesting to see the requirements for Charities who are subject to external scrutiny in the form of independent examination and audit.
This legislation is supposed cut red tape but it seems to me it just incurs more work for the accountants who seek to serve their clients! The long hours of January the difficult clients and the attitude of HMRC leave one somewhat disillusioned!
John Caladine
Eastbourne
JRC/MP/ASSO02
www.caladine.co.uk 23 January 2012
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Opinions and comments expressed within CPD Interactive are those of their authors alone, and do not necessarily reflect the opinions of the AAT or any AAT employee. The AAT is not responsible for the content of such opinions and comments. The Association of Accounting Technicians (AAT) provides CPD Interactive to facilitate its members’ free discussion of accounting issues. Persons using CPD Interactive must not post offensive or defamatory material. Breach of this condition may result in disciplinary or legal action. If you are in doubt as to whether material is suitable for posting, please telephone the number below to discuss this with a member of AAT staff, or raise your query by email.
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Basic IHT
January 24th, 2012
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