• Receipt Bank launches 1Tap quarterly tax app
    Receipt Bank launches 1Tap quarterly tax app
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    Bookkeeping cloud add-on developer Receipt Bank is the first out of the traps with an app catering for sole traders under the embryonic quarterly reporting regime proposed by HMRC.

    Known as 1Tap Receipts, the new app is a stripped-down version of the current Receipt Bank expenses and data capture tool. 1Tap will be free to end users (within certain volume limits) and is designed to expand the pool of businesses connected to the underlying bookkeeping management platform.

    According to Receipt Bank chief technology officer Michael Wood, 1Tap has been specifically designed to help UK traders cope with the demands of HMRC’s proposed making tax digital regime.

    “Within six years everyone has got to be in cloud,” he said. “When we looked at making tax digital we wanted to release a product that helps the modern practices that have already done the hard work to adapt and expand.”

    While Receipt Bank focuses on recruiting a new group of microbusiness users, it still hasn’t worked out a pricing model, Wood said. “Our aim is to share the upside with accountants, but we don’t yet know what the upside is.”

    But after early demonstrations to accounting partners, he added, “There’s already a waiting list of accountants wanting to sign up.”

    For the client, 1Tap streamlines expense capture to its bare essentials. You open the smartphone app and choose one of three options: Home, Camera or HMRC. If you can see the paper receipt on the screen, you just have to push the red shutter button and it starts winging it away to the automated Receipt  Bank expense recognition system. One of the app’s neat features is that it will automatically assign the expense to a default category based on the supplier’s name.

    On the app itself, the cumulative tax saved by claiming qualifying expenses is represented by a graphic on screen and there is an accompanying “I” information icon to advise the user on things like allowability. If they choose the HMRC option at the bottom of the screen, they will see a summary of their expenses presented as they would appear in the relevant SA 103 boxes.

    The resulting data file will then be available within Receipt Bank for accountant partners to pick up and process through their systems to HMRC.

    How 1Tap works

    1.Camera captures image     2. 1Tap processes data     3. On screen summary

     

    The key feature of 1Tap, according to Receipt Bank director Nick Bartlett is its simplicity, convenience and price. “In the era of MTD accountants said there’s a need for lightweight, low cost cloud tools. The toolset for sole traders has got to be so easy that there’s no need for training or on-boarding. And they’ve got to be so affordable that any sole trader can use them.”

    The challenge facing accountancy firms serving sole traders is to deliver the quarterly submissions demanded by HMRC within a fee structure that won’t scare off sole traders.

    “Receipt Bank is all about automating bookkeeping for the practice,” said Wood. “If we’re going to help practices automate that, you need to have one workflow for all clients. It’s inefficient to have multiple workflows.”

    That means the back-end processes will need to be standardised whether the business is paying £3,000 for accounting services, or £150, he added.

    “Receipt Bank has a very explicit aim to reduce the costs of deliver services to sole traders. It’s a difficult task to enable accountants to review and edit data in a way that is far quicker and cheaper than it is today, and we think we’ve achieved it,” said Wood.

    It’s a big claim, but 1Tap catches the eye because it’s an early example of what tax reporting might look like after making tax digital. The actual workflows and specifications still haven’t emerged from HMRC, but Wood said part of the MTD plan is for third party software developers like Receipt Bank to design the processes that deliver the data HMRC wants.

    “HMRC was always confident that free software could emerge,” Wood said.

    There’s still a lot of engineering work to complete in the background, but Receipt Bank is positioning 1Tap as the front end of the MTD process. According to Wood, cloud-based general ledger systems and tax tools are likely to continue playing their traditional roles in the tax workflow. And so are accountants.

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  • 9am Lowdown: Swindon Town fined after AE foul
    9am Lowdown: Swindon Town fined after AE foul
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    Welcome to Friday’s 9am Lowdown.

    * * *

    Swindon Town fined after AE foul

    Swindon Town football club has been fined £22,900 by the Pension Regulator for failing to meet its staging date.

    In a statement published on their website, the football club said it is “unfortunate” that it has been fined by the Pension Regulator.

    Continued…

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  • HMRC loses EU farming VAT reclaim case
    HMRC loses EU farming VAT reclaim case
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    HMRC has lost a legal appeal to stop an Aberdeenshire farming business reclaim VAT of more than £1m on its purchase of rights to a subsidy scheme for farmers in the European Union.

    The farm, Frank A Smart & Son Limited, said that the assets it bought, the Single Farm Payment Entitlement (SFPE), which is a tradeable asset, would be used to fund its business and were therefore a valid business expense.

    In the upper-tribunal case (HMRC v Frank A Smart & Son, UKUT 0121) the farm cited the Abbey National and Kretztechnik VAT legal cases which it said established the principle of neutrality required incidental costs to be regarded as overheads of, and therefore cost components of the business generally.

    The fact that the cost of the SFPE units would, economically, be recouped from the annual receipts of Single Farm Payment schemes rather than from sale of farm produce or electricity was irrelevant, the farm argued.

    HMRC, however, argued that the units had been bought for the purpose of obtaining an agricultural subsidy and that this was a “non-economic activity outside the scope of VAT”.

    It also argued that first-tier tribunal had erred in law when it ruled that there was a direct and immediate link between the cost of acquiring the SFPE units and the company’s taxable economic activity so as to entitle the business to a deduction of input tax.

    Lord Tyre rejected HMRC’s appeal. “Once the cost was found to be for the benefit of the company’s taxable activity – as the [first tier tribunal] found – it fell to be treated as a cost component of the business’s taxable supplies,” he said.

    HMRC declined to comment further on the reason for why it took the case to tribunal.

     

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  • TAXtv: EU VAT changes explained
    TAXtv: EU VAT changes explained
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    In this month’s episode of TAXtv Neil Warren covers the most recent news in VAT including explaining the latest European VAT problems.

    Warren tells Giles Mooney what businesses need to know about new European Union MOSS rules on VAT for the sales of digital services to the EU and “distance selling” rules for products sold to the EU.

    Continued…

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  • Share disposal scheme subject to CGT
    Share disposal scheme subject to CGT
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    A complicated tax avoidance scheme involving the sale of shares in Anglia Water Group from Scottish to Irish trusts and then to a large investment bank did not work, a tribunal has ruled.

    Continued…

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  • AccountingWEB v7: End of an era
    AccountingWEB v7: End of an era
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    After five years in its current guise, AccountingWEB is shedding its old skin and taking on a new, more modern character.

    As we put the finishing touches to the brand new AccountingWEB over this bank holiday weekend you will not be able to comment, create or edit content.  

    While we say goodbye to an old friend, it’s worth noting how AccountingWEB has grown up over the past five years. In its current form, the number of monthly visitors to AccountingWEB has nearly tripled from 200,000 in 2011 to 586,000 this year, and the average number of pages read has gone up from just over 1m to 1.9m a month.

    During that time, we have seen social media have a major impact on all forms of media. There has also be a growing emphasis on new forms of communication including podcasts and videos. From next week, the new site will give us more flexible opportunities to present that kind of material for you.

    While we undergo the transformation, some elements from the old site will disappear, including our Discussion Groups and the Opportunities page. Don’t worry, they will be back within the new site, but we wanted to get the new platform bedded in before we worked out how to accommodate them in the new platform. The version of AccountingWEB that you see next week will offer a baseline of functionality, with our programmers adding new features over time.

    One big change that has been driving our agenda has been the rising use of mobile phones to surf the net, best represented by this chart of mobile traffic on the site since 2011:

    AccountingWEB mobile users 2011-16 (% of total visits)

    As you can see in the chart, mobile phone growth has increased fivefold from 5% in 2011 to 25% today. We fully expect that growth rate to continue. To cater for that demand, the new AccountingWEB will be able to accommodate mobile users with a site that looks and operates the same whatever device you use.

    In the meantime, we also thought it would be nice to mark the occasion of our refit by remembering some of the highlights seen on our pages during the “v7” era of AccountingWEB (we’re heading into our 8th incarnation in 19 years, referred to in-house as the new Publishing Platform, or “PP”).

    Agent strategy

    Who can forget the first stirrings of agent self service? Back in 2011, Rebecca Benneyworth described HMRC’s Agent Strategy as the “biggest thing to hit the profession in a generation”. The best hope we have of making the reforms work, she continued, “is to respond wholeheartedly to this consultation, by telling HMRC firmly what won’t work, and pushing it towards acknowledging where it can improve its own service levels”. 

    As we launch the new AccountingWEB, the government’s new Making Tax Digital plans have so far received a similar reception from AccountingWEB members as the Agent Strategy. We’re sure, Making Tax Digital be just as popular on the new AccountingWEB. 

    Hartnett heartbreak

    While AccountingWEB celebrated its new incarnation, 2011 was not a good one for HMRC’s then permanent secretary for tax, Dave Hartnett. Private Eye branded Hartnett “Britain’s most wined and dined civil servant” following his enthusiasm for networking with tax experts and large businesses. Then the campaiging group UK Uncut called for Harnett’s resignation over his role in agreeing multi-million pound tax settlements with Vodafone and Goldman Sachs. We haven’t heard as much from UK Uncut or Dave Hartnett since then, but thanks to the Panama Papers and UK Uncut sympathiser Richard Murphy, the tax avoidance issue certainly hasn’t gone away.

    The year of iXBRL

    AccountingWEB’s need to modernisation reflects the rapid change in technology over the last five users.

    Five years ago, the tech buzz swirled around Apple’s new tablet the iPad, and whether the growing collection of associated iPhone and iPad apps would be much use for accountants – Excel, for example, was not compatible at that time.

    The surge of cloud accounting and add-ons since then have made that argument redundant. While we used to devote quite a lot of time to reviewing PCs and laptops back then, our last review appeared in September 2011. Who would have dreamed that one day accountants would be kitted out with MacBooks and all kinds of other Apple gadgetry?

    2011 also saw the introduction of mandatory efiling of Corporation Tax returns accompanied by accounts in iXBRL format. Despite professional bodies and accountancy bodies urging the government to delay compulsory iXBRL, Treasury minister David Gauke said: “There will never be a perfect time to mandate filing in iXBRL.” But after continuing problems over data integrity and waves of inaccurate penalty warnings, he did relent on imposing automatic penalties.

    New era for the community 

    In 2011, AccountingWEB went interactive. The functionality of v7 allowed us to produce interactive quizzes such as What kind of accountant are you?

    The current site also allowed us to play around with rich media, with the ability to embed videos into articles, and conduct video and podcast experiments.

    Recently, the AccountingWEB members gave up their time during the busy self assessment season to give us feedback on the new AccountingWEB, completing surveys and participating in user testing. The AccountingWEB community provided the same expert analysis back in 2011, improving this present version for all of the members. We’d like to thank all those who took part then and now for their efforts.

    The demise of Ralph

    Waving off AccountingWEB V7, we are reminded of another fallen friend that tugged at our heartstrings during this time – Glennzy’s beloved old Casio, Ralph.

    After passing his CIMA exams in 1995, Glennzy’s colleagues had a whip round and bought him a Casio. “Ralph has been with me, man and boy. It was worked through five different jobs and now, my own company,” he said.

    But tragedy struck when Ralph tumbled out of Glennzy’s bag in June 2013 and shattered into several pieces. Fighting back the tears (we’re sure), Glennzy wrote: “I held him in my hands one last time hoping to knock out one last sum, whilst his screen flickered and went onto standby for the last time. I tried to resuscitate him without success he had flatlined. I had lost my career-long side kick.”

    Ralph’s demise brings us to our own fallen comrade. As we gently push the old AccountingWEB pyre out to sea, we hope you join us in wishing it a fond farewell.

    But like the tax return, nothing lasts forever. So we hope you join us on Tuesday morning to welcome in the brand new AccountingWEB!

    You can read further on the different features and functions of the new AccountingWEB, and the research we undertook in crafting the new site in our Editors’ blog series:

    What were some of your memories of the last five years? Let us know below what grabbed your attention during the past five years on AccountingWEB. Don’t hang about, though, v7 will be frozen for comments and posts from 9am on Friday 29 April. But make sure to come back on Tuesday to let us know what you think of the new version.

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  • HMRC seeks to impose control in new guidance
    HMRC seeks to impose control in new guidance
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    Kye Burchmore is keen to challenge the new HMRC guidance on “supervision, direction or control”.

    From 6 April 2016 the test for employment intermediaries to consider when deciding whether travel and subsistence expenses can be paid to the workers, is whether the person is subject to supervision, direction or control (SDC) by the engager or any other person. HMRC issued a statement on 27 April 2016, which says the draft Finance Bill 2016 currently contains an error about when the SDC test applies, but that will be corrected at the earliest opportunity.

    HMRC is also consulting on whether the SDC test should be used for determining whether someone is within IR35.

    New guidance

    HMRC has updated its guidance notes on SDC, which make pretty grim reading. The essence of the document is that everyone is subject to a right of SDC and there will be very, very few circumstances when this is not the case.

    The test of SDC does set the bar very high, but bear in mind that this document is HMRC guidance, not the law. The definition of SDC needs to be tested and challenged at the tax tribunals so the correct boundaries can be found, because it is quite apparent upon reading the guidance that HMRC will seldom accept there being a lack of SDC.

    Who provides the proof?

    The guidance makes it clear that the onus of proof is on the taxpayer. HMRC will assume there is the right of supervision, direction or control until it can be proven otherwise.

    HMRC will not accept signed waivers and generic statements about control which means the taxpayer is left with the near impossible task of proving a negative. How does one prove the engager doesn’t control how the work is provided? If you find out the answer please let me know.  

    I suspect most evidence provided to HMRC on this point won’t be satisfactory. Then HMRC will insist on carrying out an inquisition on the workers, or simply ignore the evidence, in which case the only resolution will be to take the matter to a tax tribunal.

    When will SDC apply?

    The HMRC guidance casts the net as wide as possible with regards to when there will be supervision, direction or control. In one example HMRC states that if a person checks the work that the worker is doing to make sure it meets a required standard the worker is subject to supervision.

    Any person or business that is paying for a service will want to check the service is to a sufficient standard. It’s unlikely a judge in a tribunal concluding that this amounts to control, and HMRC’s guidance goes too far in this respect. The case may be different if the engager is checking how the worker is undertaking the services, but not if it is only to ensure the services meet the standard being paid for.

    HMRC also states on many occasions within the guidance that control incudes the power to move a person from job. Moving a person to another job is controlling what work they undertake rather than the manner in which they actually do the work.

    Procedures or instructions

    In its guidance HMRC confirms that if there are procedures, method and instructions in place it is likely the SDC test will be met. It is important to note that health and safety procedures do not count as control, because they apply to all workers (employed or self-employed). Thus if health and safety is the only reason why such documents and procedures are in place it will not cause a problem (although may still be disputed by HMRC).

    In contradiction to the above the HMRC guidance goes on to state that if the manner in which the work is governed by regulations or some other industry framework and standards there will be SDC, such as health care or teaching. This begs the question that if these are industry regulations they will also be applicable to all workers (employed and self-employed) and should therefore be no different to how HMRC treat health and safety regulations. The examples in the HMRC guidance are largely public sector industries which seem to be a focus of HMRC at the moment (as per the consultation on IR35). 

    Other factors to consider

    HMRC has indicated it will look at factors beyond the manner in which the services are provided. The guidance sets out the example of a teacher that is not subject to SDC because the worker decides what services he will provide, when and how. This is all well and good but having control over how he works would have been sufficient on its own, control over what and when are not relevant to this legislation. A concern is that HMRC will use this example to say you must be able to demonstrate a lack of SDC over what work is provided, when it is provided, where and how; whereas only the last of these needs to be absent.

    Final straw

    A major concern with the HMRC guidance is the last example of a house builder, in which the individual is subject to site rules, is told what jobs need doing that day, and is shown plans and specifications. According to HMRC this is sufficient for there to be SDC, in which case the construction industry has a huge problem. 

    This highlights perfectly that HMRC guidance is not legislation, it is only guidance and it should be challenged.

     

    Kye Burchmore is director of Assured Tax Consulting which specialises in advice on employment status, IR35 and the agency legislation.

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  • New IR35 tests are not necessary
    New IR35 tests are not necessary
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    Julia Kermode of FCSA questions the need for new IR35 tests aimed at workers in the public sector.

    From April 2017 HMRC plans on bringing in new tests along with a new digital tool so workers in the public sector can determine whether they fall in or outside IR35.

    Continued…

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  • 9am Lowdown: Tyrie expresses concern over MTD
    9am Lowdown: Tyrie expresses concern over MTD
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    Good morning. Here is Thursday’s 9am Lowdown.

     

    Tyrie expresses concern over MTD

    The chairman of the Treasury committee has written to David Gauke to express his concern over the “extra burden” the government’s Making Tax Digital plans will place on small businesses.

    In his letter to Gauke, MP Andrew Tyrie used the recent ICAEW survey which suggested 75% of all businesses, and 82% of sole traders, would have to change their record keeping systems to comply with the changes to argue that “the vast majority of businesses may face increased compliance costs”.

    Before the MTD proposals are implemented, Tyrie said the government now needs to “provide a comprehensive impact assessment.”

    Commenting on the correspondence, Tyrie said: “Many businesses are now very concerned that the need to establish and maintain a digital account will be mandatory, and at considerable cost to them. So a reassurance is needed from the government that no changes at all will be imposed until all three of the above have taken place will also help.

    “No doubt Making Tax Digital is the future. But businesses and their customers should not be expected to foot the bill for the transition.”

    * * *

    Accountant addicted to gambling takes own life

    The city accountant who took his own life by jumping from the top of PwC’s London South Bank offices struggled with gambling addiction, says his father.

    According to The Guardian, Joshua Jones who had been working as a graduate associate at PwC owed a total of £30,000 to banks and loan companies in order to fund his gambling addiction. His father has urged online betting sites to take action. “How many more deaths are needed before gambling addiction is taken more seriously?” Jones told the Evening Standard, encouraging websites to exclude gambling addicts like his son.

    PwC said in a statement: “Josh was a wonderful young man. Those colleagues who were fortunate enough to work alongside him feel a great loss.”

    * * *

    Overcome negative self talk

    Negative self talk can stop you achieving your full potential and can lead to increased stress, says CABA.

    Writing on AccountingWEB, CABA said: If you tell yourself enough times that you’re not good enough, clever enough or confident enough to do something – finding a great new job, perhaps, meeting your ideal partner or losing weight by starting a new diet – there’s a good chance you’ll talk yourself out of even trying.

    If you catch yourself always thinking something is your fault, or telling yourself that you’re not good enough, the accounting charity suggests writing down your negative thoughts and question how accurate they are, and consider what a positive person would say.

    For more tips on overcoming negative thoughts, head across to CABA’s AccountingWEB suppliers’ page. 

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  • Auto enrolment: Give it to the robots
    Auto enrolment: Give it to the robots
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    1.8m small or micro entities are due to stage between 2016 and 2018These responsibilities are severe and there’s no way out of them. For these businesses, payroll software will play a role in handling this burden.   

    But auto enrolment remains an unknown quantity for a lot of accountants. “I have been speaking with a lot of accountants and what has surprised me is that a lot of them haven’t exactly got into auto enrolment in a big way,” says BrightPay’s director Paul Byrne.

    Byrne will tackle these topics during his Accountex talk on 12 May, where he will suggest a way SMEs with the assistance of their accountant can ease this problem through automating auto enrolment.

    There’s no escaping auto enrolment. So it is important these businesses are prepared. “They have to get pension schemes sorted out, decide which pension scheme they’re going to go with, and then they haven’t to ensure they have the systems in place…” lists Byne.

    “Form filling and manually logging on to websites to complete employee details of every pay period – that would be a nightmare. They wouldn’t have time for it,” adds Byrne.

    Outside of the workload, the consequences of SMEs missing their staging date are bleak. For example, if you missed it by three months you are than liable for the employee deductions as well, as your own contributions – and from there the fines escalate.

    “People are going to try and hide from them or just going to get it wrong,” warns Byrne.  

    But a lot of this auto enrolment work can be completed by the click of a couple of buttons in payroll software.

    Continued…

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