Newswire May 2020

  • Mercia Group
  • 29 May 2020 00:00

Understandably, activities of regulators continue to be dominated by handling the fallout of Covid-19 and the ongoing financial reporting, auditing and governance issues it is giving rise to. Updates are included below and our free download summarises key developments in May around support from the government and the tax and accounting considerations. The download also contains a link to client letter on the SSP Rebate Scheme, written for you to use with our compliments, to update your clients. 

Looking forward to the future, we have started to plan our 2021 course programme and at the end of this newswire you will find a short questionnaire, so we can consider your feedback in the planning. Please note the word short as some surveys can be time consuming. Your time and feedback would be very much appreciated.

Latest tax and accounting products

 

COVID-19 – Support from Government and the tax and accounting considerations

AUDIT & ACCOUNTING

 

New corporate insolvency and governance bill

The UK government has just issued the corporate insolvency and governance bill, written to ease some burdens on businesses during the pandemic and in the recovery period. One notable impact is the temporary permission to hold closed AGMs (rather than public ones) and communicate with members electronically, which should mean companies can meet their obligations to stakeholders safely. It also extends some other deadlines such as notification of PSCs, and removes the threat of personal liability for wrongful trading, so that directors can in good faith work to keep their companies running without falling foul of the law. 

Charity Commission guidance on audits and independent examinations

The Charity Commission has updated its guidance on audits and independent examinations, and the requirement to report matters of material significance directly to the commission. It has also confirmed that it will be conducting a review of all independent examination reports and audit opinions signed on or after 1st May 2020 which contain a qualification, modified opinion or other reporting paragraph, to confirm that the reporting auditor or independent examiner had also met their obligation to communicate this to the Commission.

Other A&A publications

Other audit and accountancy publications over the past month that you may find of interest include:
  • The FRC has shared the results of a review of audit quality indicators (AQIs). It noted that most larger firms monitor the quality of their audits using AQIs and encourages smaller firms to follow suit. The report also observes that they are often reviewed too late, after the audit report has been signed. And it discusses the possibility of publishing AQIs, in the spirit of transparency.
  •  The IASB has issued a set of narrow-scope amendments to IFRS standards. These are mostly minor changes and the most interesting is the clarification to IAS 37 about which costs are included when assessing whether a contract will be loss making. 
  • The IASB has also agreed to make amendments to IFRS 16 on leasing, as proposed in April. The changes, which will be effective as soon as they are formally issued at the end of May 2020, mean that lessees do not need to treat rental holidays and reductions for payments due up to 30 June 2021 relating to the coronavirus pandemic as a lease modification, but instead can simply recognise the effect in profit as they occur. The agreed amendments differ from the proposals only in extending the time period to 2021 and requiring disclosures.  
  • The IAASB has issued an exposure draft of an amended version of ISA 600 on group audits. The proposed amendments say more about a risk-based approach and emphasise the need for communication between the audit engagement partner, group audit team and local auditors. In the UK, the FRC has welcomed the issue of the exposure draft and will consider whether comparable changes will be made in the equivalent ISA (UK).
  • The FRC has issued updated guidance on interim reports. In its May 2020 Covid-19 update  it encourages companies to make use of all extensions available so that uncertainty can be reduced. It also urges companies to pay careful attention to their risk management and internal control procedures, and to consider capital management, including dividend policy, where the future is so uniquely unpredictable. The material on interim reports suggests that asking the company's auditors to perform a review engagement may be helpful for stakeholders.




TAXATION

Lords committee concludes that the Government must address IR35’s flaws and unfairnesses

The Lords Finance Bill Sub-Committee has concluded its review of the off-payroll working rules, stating that the IR35 rules are flawed and have never worked satisfactorily To read more, please click here

How to treat certain expenses and benefits provided to employees during coronavirus (COVID-19) 

HMRC has issued guidance on taxable expenses and benefits when they are paid to employees because of coronavirus and how to report them to HMRC. To read more please click here.

Capital Gains Tax on UK property reporting

For UK residential property disposals made from 6 April 2020, UK residents have 30 days after the property’s completion date to report and pay Capital Gains Tax on the disposals. HMRC have stated that, due to the coronavirus, UK residents will not get a late filing penalty for any transactions completed on or after 6 April 2020 to 1 July 2020 and reported up to 31 July 2020. To read more please click here.

HMRC guidance on reasonable excuse

HMRC have extended their guidance on reasonable excuse, for example for returns or payments being late. To read more, please click here

New exemption for COVID-19 related reimbursed home office expenses

A temporary exemption for tax and NIC has been announced for expenses reimbursed by employers for home office equipment to ensure that no tax liability arises where employers reimburse employees’ personal expenditure on home office equipment arising from arrangements to work from home during the coronavirus. The changes and will have effect from 16 March 2020 until the end of the tax year 2020/21. To read more, please click here.

 


 

OTHER NEWS

 

Client Letter - Statutory Sick Pay Rebate Scheme

On 26 May, HMRC opened up its Statutory Sick Pay (SSP) rebate claim service. Keep your clients up to date with our free client letter, which provides invaluable detail on the service.

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