A lot of news today centres on the Queen’s Speech in Parliament but there are also important warnings about the imminence of cyberattacks, which if your practice is unprotected, could take you and it to oblivion with all your money (and possibly the monies that belong to your clients) gone for ever.
By the way, have you claimed your cyber security Innovation Vouchers yet? Hurry up or you may be too late. There may be £5,000 funding to help your firm protect itself. Available if you are a start-up, micro, small and medium-sized business located anywhere in the UK. Details from the Innovate UK website here.
Negative interest rates:
Have you heard this one: Banks, flush with cash, put it on deposit and get charged for doing so? Sounds crazy doesn’t it? But yesterday, the European Central Bank (ECB) announced some significant changes on the European banking scene. The idea behind the introduction of a negative interest rate is that if banks aren’t being rewarded by the ECB with a good deposit rate by parking their reserves at the central bank, then they will lend to small firms rather than to hoard cash.
I disagree with that. Banks are too clever to fall for that one. Maybe any costs the banks incur will be passed onto those customers who have been lucky enough to get a bank loan. The BBC said it [that is, having negative interest rates] has been tried before in smaller economies. Sweden and Denmark, who are both outside the Single Currency, attempted to use negative rates in recent years with mixed results.
Anyway, we will have to wait to see where this idea goes. It was good to see the announcement of a new €400 billion (£323 billion) programme from the ECB to boost bank lending as it acts to ward off deflationary pressures. A burning question is whether the Bank of England follows suit on the negative interest front and if so, how it will affect small businesses and depositors.
The Queen’s Speech in Parliament
The Telegraph focus on the Ministerial announcement of plans to ‘get Britain building again’ with the Coalition encouraging the building of tens of thousands of new homes as well as mounted a fresh assault on planning laws. Under the infrastructure bill, developers will be given the power to push through applications without the need for council approval in a move described by planning experts as a “nuclear option”. The bill will also make it easier for the government to sell off unused public land for development, enable the construction of new garden cities and give small house-builders more support. “Above board” could become “Under your feet” as Ministers reveal plans to enable fracking to take place under people’s homes without their permission.
City A.M. News report that if a big bank turns down a small firm’s loan application, they will have to refer it on to other lenders. Other plans include that zero-hours contracts can no longer include an exclusivity clause that ban workers from taking several such jobs. And tax-free childcare will be extended to under-12s from 2015 in a bid to make work easier for parents (a draft bill could be published in the next few weeks, before the summer recess). The beefy infrastructure bill includes measures to turn the Highways Agency into a government-owned company. Ministers have watered down a pledge to make all new homes zero carbon by 2016 and developers can pay a contribution instead. Small sites will be exempt, but small is yet to be defined.
The Law Society Gazette talk about a new Serious Crimes Bill Law to crack down on corrupt solicitors who collude with organised criminals. But it’s unnecessary and could result in innocent people being convicted, the Law Society has warned as the government have plans to introduce the measure. The bill would create an offence of ‘participation in an organised crime group’ to catch professionals who assist gangsters. Prosecutors will have to prove that defendants had ‘reasonable grounds to suspect’ they were helping criminals carry out their activities.
The government intends to press on with major changes to Land Registry of England and Wales – a bill ‘to bolster investment in infrastructure and reform planning law to improve economic competitiveness’ will include statutory backing for new roles widely seen as ‘fattening up’ the body for privatisation.
Daniel Barnett, the employment law barrister, has identified (albeit minor) Employment Law Reforms in the Queen’s Speech:
- “Strengthen UK employment law by tackling National Minimum Wage abuses and cracking down on abuse in zero hours contracts”. No details are given, although speculation on Twitter is that this might be a (fairly useless) right to request not working zero hour contracts.
- “Stop highly paid public sector employees keeping redundancy payments when they come back to the same part of the public sector within a short period of time.”
- Legislation to “reduce delays in employment tribunals”. Since delays have been reduced considerably by the introduction of tribunal fees, it’s not clear what this refers to. Again, speculation on Twitter suggests it might concern reforms to equal pay claim procedure.
BBC News reported on a series of measures in the Queen’s Speech that it said were “unashamedly pro- work and pro-business”:
- Included in a raft of bills were proposals to make it easier for small businesses to access finance and remove red tape.
- There will also be measures to tackle zero-hours contracts and national minimum wage abuses.
- Some childcare regulations will also be made more flexible.
- A corporate ownership bill will make it easier to punish rogue company directors by increasing the period for which they can be disqualified and awarding compensation to victims.
- The bill will also introduce a public register of beneficial shareholders in a company.
- The Small Business, Enterprise and Employment bill will put forward proposals to give small business owners fairer access to compete for £230bn worth of annual public procurement contracts.
- It will also include measures to ensure larger companies pay small business owners promptly for work they do for them.
The Queen’s speech, in full, is here.
Ethics made easier: How to use [learn from] the revised AICPA Code of Professional Conduct
Ellen Goria, CPA, CGMA, from the US has written an excellent article in Journal of Accountancy. She is senior manager–Independence & Special Projects for the AICPA Professional Ethics Division. She describes a situation in a firm: “Six months ago the managing partner of your firm retired, and the remaining partners divided up his responsibilities. One of his responsibilities was handling consultations on independence and ethics matters. For some reason, none of your partners wanted that responsibility, so you grabbed it.” Since researching these issues is now much easier using the online version of the revised AICPA Code of Professional Conduct (the code) available here.
Protect Your Firm’s WiFi Network
This will prompt you to call your IT support team immediately after you read it. Daniel Hood, hailing from Los Angeles, USA warns that your firm’s wireless network may well represent a tempting target for hackers and criminals, an expert told accountants at a recent event. “Is your WiFi network just low-hanging fruit for bad guys?” asked security expert Rolfe Pope, in a session titled ‘Locking Down Your WiFi Network Security’ at the California Accounting and Business Show this week – and then proceeded to detail exactly how vulnerable WiFi networks can be.
Using four different scanning programs that are available free on the Web, Pope, a consultant and advisor with over 30 years’ experience managing and advising on network security, including work at the Department of Defense, described how he was able to scan WiFi networks at an airport gate, a coffee shop, and a hotel, and to find identifying information and even login names for a wide range of attached devices, from traveller’s iPhones and laptops to local printers and even cash registers. With similar information from your firm’s WiFi network, hackers can hijack your network, steal or change client data, or use your network to attack others.
Read the full article here.
‘Game Over Zeus / Cryptolocker’ cyber threat: advice for businesses
The Department for Business, Innovation & Skills says that The National Crime Agency has alerted the public to protect their computers against malicious software that could cost them millions of pounds.
There is a 2 week window in which you can take action. Businesses can protect themselves against cyber risks by ensuring security software is installed, by running scans and by checking that operating systems and applications are up to date. If you run a business, you should test your incident response and business resilience protocols and work with your IT departments or suppliers to tell employees of the potential threat. Firms running Windows operating systems are at risk from the GOZeuS and CryptoLocker threats. Small businesses could be particularly at risk as they may not have the necessary protective systems in place.
As part of this, the Department for Business, Innovation & Skills (BIS) is working to make the UK one of the safest places in the world to do business in cyber space. BIS has put together a package of support to help your business protect itself from cyber threats:
- What you need to know about cyber security: guidance for small businesses
- 10 steps to cyber security: guidance for large businesses and organisations
- Cyber security Innovation Vouchers: £5,000 funding to help small businesses protect themselves
In addition, BIS will shortly be announcing further details on Cyber Essentials a new scheme which sets out how your business can protect itself and enable you to demonstrate your business is cyber secure.
Please read the full BIS article as soon as you can. It’s available here.
The Internet of Things – What we know about Apple’s HomeKit so far
Andrew Sadauskas in Australia in Smart Company previews what the new apps announced by Apple in the last few days will do. By the way, the rest of his article is also worth reading. In particular, we focus on something new called HomeKit:
- Under HomeKit, your smart appliances are known as “accessories” so, for example, a garage door opener is an accessory.
- Each of the things a home appliance can do is known as a “service”, so opening or closing the garage door would be two services available for your garage door opener.
- In turn, each of your accessories is grouped by which room of your house it’s in. So your garage door would appear to app developers as being in a separate room to your microwave, washing machine or TV set.
- Optionally, rooms can be grouped into zones, so you might choose to place your bedroom in an “upstairs” zone, your kitchen might be in a “downstairs” zone, and your garage might be in an “outdoor” zone.
- Finally, for those who are so lucky, you can have multiple homes set up, each with their own separate accessories, services, rooms and zones. For example, you might make your principle residence your “home” and then set up a holiday house or guest house as a second “home”.
HomeKit is very much aimed at the domestic, home automation end of the market. If you will, the “controlling your fridge or toaster over the internet” end of the market. What it does not appear to be aimed at is the enterprise end of the market, otherwise known as the “industrial internet of things”. At least at this stage, you will not manage your truck depot or collect real-time GPS data using HomeKit.
You will not remotely control your automated factory using HomeKit. Nor will you collect real-time data from your fleet of vending machines in three states using HomeKit. In these industrial use cases, your business will need an industrial IoT system, such as Microsoft’s Azure Intelligent Systems Service platform or Cisco’s Industrial Smart Solution, rather than a home automation system such as HomeKit.
Moving clients beyond ‘just tax’ to build your practice
Accountancy Age Insight are promoting a free whitepaper from Iris which outlines 5 ways to develop and increase your business: ‘Productivity, people, pounds & pence’ discusses moving ‘up the food chain’ and encouraging clients to think outside the compliance box. With this year’s busy season behind them, accountants are catching their breath, taking stock and even beginning to look to the future. This free whitepaper offers guidance in two key aspects of your practice and what you can do to:
- Move clients beyond ‘just tax’ to build your practice by doing more for existing clients and winning new business.
- Improve practice efficiency to increase profitability and exploit new opportunities.
Partners in the spotlight as a fifth of firms report “competence failures”
In Legal Futures, Neil Rose reports that nearly a fifth of firms have reported “failures in competent legal service delivery” in the last 12 months, a major study for the Solicitors Regulation Authority has found.
The report, based on telephone interviews with 750 firms of all sizes, revealed that that fewer than half (48%) have a training plan for the coming year and 46% have no specific training budget. Researchers concluded that the position of partners needed “careful exploration” as failures in service delivery at this level were “most likely to come to the attention of the organisation through clients (by which time the damage has been done).”
Read the full article here. My worry has always been that many partners in professional firms just “scrape by” and, at best, the work they do and the service they provide is just plain “ordinary”.
Taxpayers should not respond to HMRC ‘nudge letters’
Professional experts are warning that, in legal terms, high net worth individuals who have received HMRC’s letters have no obligation to respond to them. [As previously reported in EziaNews] ICAEW has challenged HMRC’s decision to send ‘nudge’ letters directly to taxpayers who have appointed an agent to handle their tax affairs, saying this approach risks jeopardising the agent/client relationship and should be stopped.
According to the ICAEW, HMRC has sent a letter headed ‘Your effective rate of tax’ to around 1,000 high net worth individuals, suggesting their returns indicate their effective rate of tax is below the average. Copies have been sent to authorised agents. There are plenty of reasons why the effective rate of tax may legitimately be low for a particular taxpayer for a particular year. The letter makes no mention of the possible use of reliefs which have been claimed for losses, EIS (Enterprise Investment Scheme) investments, gift aid payments or pension contributions, any of which could affect the amount of tax paid.
Read the article here.
HMRC loses dog food VAT appeal as UT bites back
Reported in accountancyLIVE, HMRC is in the dog house after the Upper Tribunal (UT) dismissed its appeal to overturn an earlier tax tribunal decision that some specialist canine food products should be zero-rated for VAT when they were fed to working dogs. In the case R & Commrs v Roger Skinner Limited  0204 (TCC), HMRC was appealing against a First Tier Tribunal (FTT) ruling on products made by Roger Skinner Ltd, which HMRC argued had been incorrectly categorised as animal feed.
But the UT agreed with the FTT that Skinner’s products, which were specifically designed to meet the nutritional requirements of working dogs and gun dogs, constituted neither ‘pet foods’ or ‘meal’ for dogs – and so should be VAT zero-rated.
Details of the case are available here.
IRS issues its first FATCA Financial Institutions list
Mike Godfrey, Tax-News.com, Washington, USA has reported that around 77,000 banks and other foreign financial institutions (FFIs) have already registered with the United States and received a global intermediary identification number (GIIN), to comply with the Foreign Account Tax Compliance Act (FATCA), as shown in the first list published by the Internal Revenue Service (IRS) on June 2, 2014.
FATCA, enacted by the US Congress in 2010, is intended to ensure that the US obtains information on accounts held at FFIs by US persons. Failure by an FFI to disclose information on their US clients will result in a requirement to withhold 30 percent tax on payments of US-sourced income.
Read the full article here.
The Senior Accounting Officer regime – HMRC increases the pressure to comply
Accountancy Age Insight report that non-compliance with the SAO regime can result in a penalty for the company and a personal penalty for the Senior Accounting Officer (SAO).
Download this free article from Mazars to find out more. Registration is required.
The Flexible Working Regulations 2014
Daniel Barnet, employment law barrister has alerted me to the fact that The Flexible Working Regulations 2014 were laid before Parliament this week and come into force on 30th June. The regulations extend the right to make a request for flexible working to any employee who has been employed for 26 weeks (not just parents of children under 17, or 18 if disabled, and certain carers – as was previously the case).
The basic right to request is unchanged. Employees can make up to one written request every year, the employer needs to deal with it within three months, and can refuse on any of eight (very wide) business grounds. A tribunal cannot normally investigate the rights and wrongs of the refusal, only whether the procedure has been properly followed. Maximum compensation for a failure to comply is eight weeks’ pay (currently capped at £464 per week).
Grayling tells LSB to work towards its own abolition
In Legal Futures, Neil Rose reports that the Lord Chancellor has set the Legal Services Board (LSB) the task of working towards its own abolition as part of a push to reduce the burden of regulation on the legal profession. Chris Grayling also hit back at criticisms of him holding the post while not a lawyer by saying it allowed him to look at the system “afresh”. In a wide-ranging speech to the presidential dinner held by the Chartered Institute of Legal Executives, Mr Grayling repeatedly stressed the need for change in the legal system, and he said this included regulation. Read the full article here.
New guides on setting up and registering a charity
The Charity Commission has today published revised guidance on setting up and registering a charity. The core guidance on How to set up a charity (CC21a) is designed as a practical and concise “how-to” guide, broken down into seven steps (see notes to editors in the article). The core document is accompanied by more detailed guidance on writing charitable purposes, choosing a charity name, recruiting trustees and applying to register.
The Commission has also published revised guidance on Charity types: how to choose a structure (CC22a) and on How to write your governing document (CC22b).
You can read the press release here.
Buffer rule for deadlines ‘a good day for common sense’
John Hyde reports in Law Society Gazette that lawyers have been granted extra leeway to extend case management agreements by up to 28 days. The so-called ‘buffer rule’ was introduced as an amendment to the Civil Procedure Rules and will apply across all areas of civil litigation.
The change, first revealed by the Gazette in March, allows prior written agreements to be extended by a maximum 28 days, provided both parties agree and it does not put any hearing date at risk.
“Door is open” on regulation of will-writing, Kenny says
In Legal Futures, Nick Hilborne writes that the government may look again at the question of whether to regulate will-writing, the chief executive of the Legal Services Board (LSB) has indicated. In recently released LSB papers, Chris Kenny said that a reply to LSB correspondence from justice minister Shailesh Vara “interestingly seems to leave open the door for further consideration of the will-writing issue in due course”.
CML warns on indemnity reforms: “Lenders will cut their panels”
In Legal Futures, Nick Hilborne writes that small firms and sole practitioners could be removed from conveyancing panels if the Solicitors Regulation Authority goes ahead with its indemnity insurance reforms, the Council of Mortgage Lenders (CML) has warned. The CML also said that it did “not believe there is sufficient evidence at this stage that the professional indemnity insurance proposals will result in premium levels being reduced”.
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