accountant The recognition issue Achievements & ambitions Progress & possibilities

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1 financial jan/feb accountant 12 The recognition issue Achievements & ambitions Progress & possibilities

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3 1 COMMENT Upwards and onwards President Robin Liddell Patron The Right Honourable Earl of Westmeath Chief executive David Woodgate Chairman of council Eric Anstee Head office Burford House, 44 London Road, Sevenoaks, Kent TN13 IAS Telephone: Fax: Website: Produced by CCH for the Institute of Financial Accountants Editor Lesley Meall Classified advertising manager Elly Kiss Display sales executive Nick Pye Production Editor Andy Price Circulation management Circulation Data Services Ltd Head of CCH content Douglas Broom Happy New Year and welcome to The recognition issue of Financial Accountant. As we look ahead into 2012 and beyond, the future of the IFA and its members has an increasingly rosy glow, so in this issue the balance is tilted towards the positive microeconomic picture rather than the not-so positive macroeconomic picture. The world s economic problems cannot be ignored, of course. There is coverage in Opinion on page 6, and in the news round up on pages 4 and 5; whilst technical update (page 19), will help you to prepare for some of the professional hurdles you may need to jump in the months ahead. But elsewhere the focus is on the IFA. You can read about IFA successes during the past year and its plans for more of the same in the year ahead, from myself (on pages 8 & 9), and the new marketing and communications manager William Archer (on page 15). You can also learn more about the IFA becoming a full member of the International Federation of Accountants, and why this matters to members. Some of the IFA news in this issue is more of a mixed blessing. On 31 December Professor David Hunt will retire as our president, and we will all be very sad to see him go. Fortunately, this also presents us with an opportunity to celebrate the appointment of a new IFA president: Robin Liddell (learn more on pages 10 & 11). This issue of Financial Accountant demonstrates how far the IFA has progressed. Council, members, and staff have all worked very hard to attain our current achievements, and it is only right that these are recognised both inside the IFA and outside it. So read on, and take pride in our progress. Financial Accountant is a bi-monthly publication for members and students of the Institute of Financial Accountants. Subscription enquiries to: Financial Accountant Customer Services, CCH, FREEPOST, 145 London Road, Kingston upon Thames, Surrey KT2 6SR. Tel: (0844) [email protected] UK subscription rate for 6 issues 0/S subscription rate 2010 on request. Editorial enquiries to: Lesley Meall, Financial Accountant, CCH Magazines, 145 London Road, Kingston upon Thames, Surrey KT2 6SR. [email protected] The institute accepts no responsibility for the accuracy of contributed articles or statements appearing in this publication. Opinions expressed in this issue should not be regarded as the official view of the institute, except where stated. The articles and content within this magazine have been prepared as general information on matters of interest only, and do not constitute professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this magazine, and, to the extent permitted by law, the authors, IFA, and Wolters Kluwer (UK) Ltd accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining from acting, in reliance on the information contained in this magazine or for any decision based on it. Printed by Wyndeham Grange. David Woodgate IFA chief executive I am always interested in the opinions and experiences of members, so if you have something to share, please don t hesitate to [email protected] and don t hold back. Inside this issue Branch activities Developments at local IFA branches. International issues Learn more about IFAC and its members. Professional development Following the new CPD rules. financial accountant I january/february 2012

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5 3 CONTENTS BRIEFING 04 News round-up 06 Opinion 6 Export is essential FEATURES 08 Spotlight on the future The IFA chief executive on ambitions and achievements. 10 Travelling man Professor David Hunt prepares for a busy retirement. 11 Going for growth Meet the new IFA president Robin Liddell. John Cridland, director general of the Confederation of British Industry, on why businesses must look overseas for their future successes. 12 Going global The IFA and IFAC a world of possibilities. 15 Grand plans Marketing and communications from THE KNOWLEDGE 16 Facts & figures 17 The CCAB The Consultative Committee of Accountancy Bodies and its role in the accountancy profession in the United Kingdom and beyond. 19 Technical update SA 252 letters, new VAT notices, online PAYE coding notices, sailaway scheme, and Revenue schemes to target tax dodgers. MEMBERS ONLY Official material from the Institute of Financial Accountants 20 Music by numbers Wilfred Smith reminisces on his accountancy career and the important role the IFA has played. 21 IFA Privileges 22 IFA examination timetable June Planning CPD 23 President s column 24 Inside IFA 8 19 Spotlight on the future 12 Technical update From VAT changes and notices to tax dodgers and tax exemptions. Growing recognition for the IFA, its members and its qualifications in the UK and internationally, creates challenges and opportunities. Insights from the IFA chief executive. Going global The IFA is now a full member of the International Federation of Accountants. Göran Tidström, its president has words of welcome, whilst the IFA and its members and staff, celebrate the achievement. financial accountant I january/february 2012

6 4 NEWS ROUND-UP BRIEFS US delay on IFRS The United States (US) Securities and Exchange Commission (SEC) has delayed its decision on the future of International Financial Reporting Standards (IFRS) in the US. A decision on whether or not to incorporate IFRS into the US financial reporting system, had been expected by the end of But the decision on convergence will take a measure of a few additional months according to James Kroeker, SEC chief accountant, as there are numerous conceptual operational and practical questions still to consider. Cuts hit Christmas More than one third of small and medium businesses in the UK cancelled their traditional celebrations so that they could work longer hours over the festive season, according to research by Close Invoice Finance. One in ten businesses also closed down for a shorter period than usual, because they could not afford to do so for any longer than necessary. Revenue targets online traders HM Revenue & Customs will be increasing its focus on online traders who attempt to evade tax, with a New Year campaign targeting e-marketplaces. Gregory Allnutt was recently sentenced to 20 months in prison after the Revenue proved that he had sought to evade over 420,000 in VAT due on goods sold online, through ebay. Allnutt used a VAT registration number to obtain zero-rated goods from suppliers within the European Union and then sold them on through another online company, without declaring and paying the tax to HMRC. Chris Martin, HMRC s assistant director of criminal investigation said: Our successful investigation and this sentencing send a clear message to others involved in such crime that our investigators will identify and pursue you. Digital crime wave Cybercrime is on the increase and the finance sector is the main target. A quarter of frauds involving UK organisations in 2011 were digital crimes, according to the PricewaterhouseCoopers (PwC) Global Economic Crime survey, which also found that half of reports of online crime were from the financial industry. This is alarming, said Tony Parton, forensics partner, PwC. A tax break for the British film industry has been extended until the end of The industry makes a vital contribution to the economy and cultural landscape and the government is committed to supporting it, said David Gauke, exchequer secretary to the Treasury. The film tax relief scheme supports culturally British films, such as recent productions Brighton Rock, Gnomeo & Juliet, Clash of the Titans, Horrid Henry 3D, Coriolanus and Harry Potter Deathly Hallows (Parts 1 and 2). This scheme, along with the quality of the UK s infrastructure and high levels of skills, has led to the UK being recognised around the world as an attractive destination for film production, said Gauke. Crimes where a computer and the internet play a central role were the third most common type of economic crime reported by businesses and public sector bodies last year. Parton said that as well as the direct financial costs of digital crime, other commercial consequences include damage to reputation and brand, poor employee morale and service disruption. Film tax relief extended Practice consolidations big and small Exploiting economies of scale may be the only way for some accountancy firms to survive or thrive the flatlining economy. After Target Chartered Accountants called in insolvency practitioners at PwC to administer the company s operations in locations across the South West, the Bath office was acquired by Bishop Flemming. Matthew Lee, Bishop Flemming managing partner said: This deal preserves the superb operations of Target s professional audit and corporate tax services, but excludes Target s financial advice operation, which caused the failure of the business. Consolidation is also afoot higher up the marketplace. Smith & Williamson recently acquired the tax arm of Begbies Traynor. Kevin Stopps, managing director of tax and business services at Smith & Williamson, said: There is an excellent strategic fit in terms of geography and service provision between the new team and Smith & Williamson, which could increase its fees by as much as 7m following the deal, which will result in no redundancies. january/february 2012 I financial accountant

7 5 NEWS ROUND-UP Clients could do better Paying fees on time, providing the correct information when it is needed and reducing the blame culture were the top three items on accountants wish lists when they were asked what their clients could do better, according to a snapshot poll by E-conomic, a provider of online accounting software. Late payment of fees was the biggest issue (cited by 39% of respondents). While many clients will tell us that late payment and managing debtors is a major issue, they don t seem to think that applies to us small firms of accountants it s a real problem getting clients to pay up on time, said one respondent from a small three partner firm. Another respondent echoed the experiences of many small practitioners when he cited unrealistic expectations and a culture of blame as the things he would most like to see change. Some clients expect me to be available with no notice, he said, and they seem to think that I can magically reduce their tax bill. Accountancy apprenticeships from 2015 The government backed apprenticeship scheme will include the accountancy sector from 2015, business secretary Vince Cable has announced. The Department for Business, Innovation and Skills will partner with PricewaterhouseCoopers to develop a higher apprenticeship programme focussing on tax, audit and consultancy management. The government launched the accountancy apprenticeship scheme as part of a wider announcement of an 18.7m Higher Apprenticeship Fund, supporting 19,000 new apprenticeships in the construction, advanced engineering, insurance and financial services industries. There will be1,500 accountancy apprenticeships. Ian Powell, PwC chairman and senior partner said: This is a fantastic opportunity to make professional services more accessible and offers people who want to earn while they learn an exciting, recognised and accredited way to develop highly skilled careers in professional services. Technology trends in 2012 Accountants in business and in practice will make greater use of cloud computing and mobile data during 2012, according to predictions from the researcher IDC. Global spending on tablets and mobile phones will surpass that of PCs in 2012, whilst mobile app downloads will hit an all time high of 85 billion during the year ahead. The next issue of Financial Accountant will look at the potential of both of these trends in more detail. It will also explore the ways in which accountants are already exploiting cloud computing and mobile data: from firms creating their own mobile phone apps to those using online software for accounting, bookkeeping, payroll, practice management and more. Invoice finance increase More and more British businesses are managing their cash flow planning with the support of non-bank finance. During 2011, the value of invoice finance increased to 16bn, the highest level since 2008, and a 9% rise on 2010, according to figures from the Asset Based Finance Association (ABFA). According to Edward Rimmer, Bibby Financial Services UK chief executive, there is 7.2bn of available invoice finance funding. It is vital that small to medium-sized businesses do not fail because cash flow dries up, when there are facilities available which bridge the gap between invoices raised and their payment. Knowledge is power Experian has seen an increase in insolvencies across most sizes of business. Because of this, more businesses are aware of the importance of having a good understanding about the companies they deal with, said Experian s Max Firth, who suggests using commercial information to make better decisions by gaining insight into the financial health of customers, partners and suppliers. Glyn Mummery, partner at FRP Advisory LLP, added: Credit rating data is often the first visible red flag of a business in trouble. However it should be considered within the broader context of the business performance and operating environment. A poor credit rating report may demonstrate ongoing cash flow problems, but equally it could be a one-off event that has been resolved. financial accountant I january/february 2012

8 6 OPINION export is essential Steve Wood is a partner with Barnes Roffe LLP. Gaaaaaaaaaaaaar!!! When the report from Graham Aaronson QC on a general anti avoidance rule (GAAR) was published recently it was broadly welcomed, but many question whether it has been worth the wait and I am one of them. The exercise was well-intentioned. At the moment, a plethora of poorly drafted and highly prescriptive legislation gives aggressive tax planners the opportunity for wholly artificial and unacceptable tax avoidance schemes; whilst Tax Tribunal and High Court efforts to counter them with judgements have resulted in the law being applied in an inconsistent and even capricious manner. So an initiative that might be a catalyst for better legislation and better court judgements could be a good thing. It isn t. It pains me to say this, but in my view, it s a waste of time, effort and money. The report indicates that a moderate rule aimed at abusive arrangements would be a good thing but for whom? A GAAR will be good for lawyers on both sides of the tax-avoidance divide, but it will not provide simplification or eliminate uncertainty, and the distinction between abusive and non-abusive tax planning arrangements will become even harder to recognise. Instead of adding another layer of complexity and subjectivity to an area that is already, in some regards, almost unintelligible, the government should radically simplify the tax system and ensure that the law on fiscal matters is fit for purpose. HM Revenue & Customs abhors the loopholes that poor drafting creates. But it also enjoys the benefit of pitfalls that seem to be woven into the taxing legislation deliberately to catch and tax the ill-informed. Both these issues are opposite sides of the same coin. The regulators seem to believe that tax avoiders currently have the upper hand, despite: tax legislation with hundreds of targeted anti-avoidance rules, early disclosure of tax avoidance schemes (DOTAS) rules, and the significant information gathering and inspection powers of HMRC which make the need for a GAAR difficult to discern. I would loudly applaud a genuine effort to reform the UK s over-complex tax system and produce clear and comprehensible legislation. But I fear I might grow very old before this happens. The UK has a proud history as a great trading nation, but in recent years our performance has been lacklustre. Export success will be one of the key drivers of growth, but for too long we have been over-dependent on advanced economies for our trade, and the Eurozone crisis underlines how important it is for the UK to diversify its export efforts to high-growth countries. Given that we re already playing catch-up with many of our competitors, we must act now to target high-growth economies, leapfrog the competition and deliver our growth potential. We need to capitalise on the booming success of the BRIC countries (Brazil, Russia, India and China), and look beyond the curve to future high-growth markets such as Indonesia, Mexico and Turkey. The new middle classes in emerging economies will have needs that our niche, high-end producers are more than able to fulfil. The government must aim to increase net exports as a proportion of Gross Domestic Product, and support the growth of small and medium companies. At the moment only one in five export, whilst the EU average is one in four. Too often businesses are finding that the government s public rhetoric does not match with the reality of their experience on the ground, so the CBI is calling on the government to set out a credible exports strategy with achievable performance targets. The government should apply an export-enabling test on all new legislation, skills policy should be used to help businesses remain innovative and internationally competitive, UK Trade & Investment must increase its commercial focus, access to export finance must be made easier for the small and mid-sized companies which have so much potential to export and grow, the need for more hub and regional airport capacity should be resolved, and a single online portal should be introduced through which businesses can access all government export services. The CBI will develop regional exports clubs to share knowledge and experience, help to shape trade missions to maximise business outcomes, and establish an export finance taskforce to explore ways of removing barriers to finance, reducing risk, and the viability of incentivising exploratory export activity with an export tax credit. But businesses must play their part too. We need to hard-wire exporting into our DNA like many of our competitors, and firms need to share expertise more effectively and shout about their successes. John Cridland is director-general of the CBI. january/february 2012 I financial accountant

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10 8 AMBITIONS AND ACHIEVEMENTS spotlight on the future David Woodgate, IFA chief executive, shares his plans for the future, and explains why members have much to look forward to. Not many professional accountancy bodies can look back on 100 years of history, so when the Institute of Financial Accountants reaches this milestone, in 2016, it will be in illustrious company. Just this achievement would be cause enough for celebration, but when we look back from our centenary year, we will have many more achievements to be proud of. When I became IFA chief executive at the end of 2007, the accountancy profession was going through one of its many periods of adjustment, and this was reflected in the modernising agenda. So over the past few years, Council and the staff team have focussed on developing the long-term strategy for the IFA, and on strengthening the governance of the IFA and its members and students. This has already delivered significant benefits. The IFA was approved for monitoring status for the purposes of the Money Laundering Regulations (MLR) in Strong internal governance and structures were also significant in achieving Recognised Awarding Body status from Ofqual and will be important in our forthcoming acceptance into the Qualifications and Credit Framework, the UK system for recognising skills and qualifications (on which more, later), and the IFA s recent ascent to full membership of the International Federation of Accountants (see pages 12 & 13). I cannot over-emphasise the significance of these developments for the IFA and its members and students, today and tomorrow. If the IFA did not have recognition as a supervisory body for MLR, many of you would be forced to register for supervision with HM Revenue & Customs (HMRC) or apply for membership of another professional body. Whilst IFA regulation of its members is no less rigorous than regulation by HMRC or any of the other supervisory bodies, the transition would be costly, inconvenient and time-consuming not least because of the Revenue s fit and proper test, which can affect multiple employees. Ofqual recognition and acceptance into the Qualifications and Credit Framework (QCF) are vital to the IFA s future success as a provider of qualifications, in the United Kingdom (UK) and internationally. The regulators Ofqual in England, DCELLS in Wales, SQA in Scotland and CCEA in Northern Ireland recognise only organisations that meet very high standards. Without this recognition, IFA would not be able to progress and gain accreditation for the IFA Financial Accountant Diploma and the IFA Professional Financial Accountant qualification, and the qualifications would be less appealing to training providers and students. None of you will be IFA members forever; even if the oldest IFA member, who is almost 100 (see page 20), demonstrates that many of you may be with us for a long time to come. If the IFA is to thrive in the future, as well as changing to reflect changes in the profession and the wider business community, it needs to grow. When I come to look back from our centenary year in 2016, I want to see a river of IFA students turning into an ocean of members, from the UK and across the world. The IFA has historically been more successful than many other professional bodies at providing crossborder qualifications and attracting international members and students, and it is in all of our best interests for this to continue. Strength in numbers This is one of the many reasons why it is such good news that the IFA is now a full member of the International Federation of Accountants january/february 2012 I financial accountant

11 AMBITIONS AND ACHIEVEMENTS 9 (IFAC). Membership was granted only after thorough due diligence by a sponsoring body (on behalf of IFAC), had confirmed the financial and operational viability of the IFA, and assured that its governance, regulatory frameworks and support for members, all meet IFAC s high expectations. Membership also requires a commitment to compliance with IFAC policies and its ethics code (see page 23). IFAC membership also means that the IFA and its members gain access to a wealth of technical and institutional expertise; so you can look forward to seeing an increase in both the amount and the quality of the professional information and guidance available to you, during the years ahead. Being an associate member of IFAC was itself an achievement, but full membership consolidates our position on the global stage, and secures a place for the IFA at the profession s top table, alongside leading accountancy bodies from across the world though growing recognition among our fellow-professionals means we will not feel out of place. During my four years with the IFA, it has slowly but surely developed the sort of professional profile that I believe it should always have had. I can t claim all of the credit for this: Council, the executive, staff, members and students, have all worked tirelessly to promote the IFA, but a great deal of the credit must go to our retiring president Professor David Hunt. When I became IFA chief executive, it was his faith in the IFA and its members that helped, in turn, to give me faith in the IFA and its members; he has sung your praises far and wide, high and low, and I have tried to follow this lead. Together, and with the blessing and support of Council, we have worked tirelessly to build relationships with the many organisations and individuals that populate the ecosystem of small and medium enterprises (SMEs) and small and medium practices (SMPs) in the UK and internationally. We have developed and reinforced recognition of the IFA as the professional body for finance professionals who work with and for SMEs and SMPs at a time when others (including IFAC) have also become increasingly aware of just how vital they are to the economic success of nations across the world. The IFA has become more actively involved with regulators such as HMRC and politicians, lobbying on behalf of the IFA and its members and formally responding to government consultations. The IFA has also developed relationships with large accountancy firms, technical publishers, recruiters, and providers of specialist services to the profession, which helps us to provide you with more and improved member services: from online courses and regional seminars, to the expanding range of services offered by IFA Privileges. Standing on the shoulders of giants Gaining peer recognition has also been a vital component in our recent successes and increased recognition, even if this isn t always evident to members. For many of you, direct experience of the strong relationship between the IFA and the Institute of Chartered Accountants in England and Wales (ICAEW) may go no further than your access to its impressive Library & Information Service (see page 21). But there is more to it than this. The IFA s associate membership of IFAC was sponsored by the ICAEW, and having its ex-chief executive Eric Anstee as chairman of our Council has helped to enhance our status with other professional bodies and their members full membership of IFAC was sponsored by the Chartered Institute of Management Accountants (CIMA). All of which has had a knock-on effect in many areas. Wider recognition has touched the IFA Achievement Awards, the Business Barometer, and the President s Dinner too. The Achievement Awards attracted support from Accountancy Age, Belmont International, CCH Wolters Kluwer, FRP Advisory, LexisNexis, PQ magazine, and Royal Bank of Scotland; the Business Barometer has been described as a premier indicator of what small businesses think ; whilst Baroness Hogg, chair of the Financial Reporting Council and speaker at the last President s Dinner described it as an opportunity for those from the world of financial regulation and development to learn from each other. All of this proactivity is going to continue during 2012, and beyond. The IFA will be developing its tax faculty, which it created with its acquisition of the Federation of Tax Advisers; more and enhanced member services are in the pipeline; likewise improvements to the website, and many other developments that will be of benefit to members and students. I can t go into the details of some aspects of the future strategy we are planning for the IFA, because of commercial sensitivities. But on the basis of what we have achieved during the past few years, I hope that I can rely on your acceptance and trust when I tell you that there are even more exciting times ahead. financial accountant I january/february 2012

12 10 IFA PRESIDENTS travelling man On 31 December 2011, IFA president Professor David Hunt retired. Lesley Meall looks back at his career, his time with the IFA, and finds out about his plans for the future. january/february 2012 I financial accountant Things don t always turn out the way that you expect them to. When Professor David Hunt was a boy, he dreamed about being a deepsea fisherman. Yet he went on to become an accountant and still later qualified in human resources. When he became President of the IFA in 2007, he expected to stay three years but ended up staying for five. I have enjoyed the role and was happy to stay on longer when I believed I was still contributing to our development, he says, which he has most certainly done. We have all risen to the challenge and created a credible and wellrespected institute, serving a clearly defined niche among small and medium businesses and practices, he adds. It has been good to meet so many members who are becoming increasingly satisfied with their institute. Even so, Professor Hunt believes that there is still work to be done on the recognition trail. Our full membership of IFAC will help us to consolidate our growing recognition within the accountancy profession, but we must now focus on improving our recognition within colleges and universities, he says. His successor, the new IFA president Robin Liddell, also cites this as one of his major priorities (see opposite). Having Ofqual recognition will make us much stronger. Without it educational establishments would not run our qualification programmes, explains Hunt. We would have no students and would wither on the vine, he says, but I think the time has come for some fresh blood. During his five years as president, the professor has done everything he can to increase recognition for the IFA and its members. He has determinedly sung their praises in the UK and overseas, raising the IFA profile at a host of events and meetings and with a host of professional bodies and other business and accounting luminaries (his contact book reads like a Who s Who of the accountancy profession). All of which has called for enormous dedication, enthusiasm and impressive organisational skills. It is quite possible to fit it all in if you have a good sense of priorities, good time management and lots of energy and commitment, says Professor Hunt, modestly. It is an approach that has served him, and others, well. In addition to being IFA president, his professional achievements include being UK representative on the IFAC education committee, independent chairman of the CCAB education committee, international training partner with Pannell Kerr Forster, president of the Association of Accounting Technicians and principal of La Chasse Management Development Company. He has also been visiting Professor at Nottingham Business School for more than 20 years, and spent many years on the Council of the Institute of Chartered Accountants in England and Wales, as well as doing so much charity work that in 2003 the Duke of Edinburgh presented him with the Everybody Counts Lifetime Achievement Award. Professor Hunt s list of affiliations and achievements is so long that you might wonder when he found time to sleep, let alone get married and have a family, and play squash to a reasonable club standard and even coach it. All of which begs the question, how is he going to spend his time, now that he can do with it exactly as he pleases? I will be doing more travelling, but at a slower, less urgent pace, he says, though when he shares his itinerary, it is clear that his retirement will demand the same awesome ball-juggling skills as his professional life. He says: To start with I shall take the mail boat from Cape Town to St Helena and back look what it did for Napoleon. Then, after a couple of weeks walking and exploring he will be off again. There will be two months of train journeys across the United States and then back across the Rockies, with a cruise to Hawaii in between, he adds. This time we hope things turn out exactly the way he has planned.

13 11 IFA PRESIDENTS going for growth Financial Accountant welcomes Robin Liddell as the new president of the IFA. He is looking forward to his time in the role and so should members. When Robin Liddell joined James Watson and Son in 1957 it was a small chartered accountancy firm with an office in Carlisle; by the time he left in 2001 it was one of the top 50 firms in the United Kingdom (UK), with offices across the North of England and Southern Scotland. It went from a local four partner firm to a regional firm with more than 30 partners and a 20m turnover, says Liddell, after a merger with Armstrong Routledge & Co in 1960 formed what is now Armstrong Watson. Liddell enjoyed the journey. I started out as an articled clerk, qualified in 1963 and became a partner in 1969, he says, and by 1989 Liddell was managing partner. I gave up my clients, and concentrated on running Armstrong Watson until 1995, he explains, by when there was a management team in place, and he became senior partner. My remit then was to represent the firm externally, settle disputes, and get work in, he says. Things could have been very different. As a teenager, Liddell had no interest in becoming an accountant. He says: I wanted to be a mining engineer, but when I went to see the youth employment people, they told me to become a chartered accountant, which pleased his mother. She was very happy, because she d always wanted me to be a chartered accountant, and it was a chance meeting at a cricket match in the early 1970 s that shaped his future success at Armstrong Watson. The firm was about to buy a visible record computer, but when rain stopped play, Liddell got talking to someone who sold the latest mini computers. They were half the price, so we bought one of those instead, and because it had lots of spare capacity, we used it to start one of the earliest computer bureaus. The mini computer business became one of Liddell s audit clients, and by 1981 it was generating 150,000 in fee income more than the total annual fee income of some other Armstrong Watson partners. Clearly, the new IFA president knows a lot about small and medium sized enterprises (SMEs) and small and medium practices (SMPs); but what about professional bodies? Well, he s been there too. As well as being a member of the IFA and its Council, he is a member of the Institute of Chartered Accountants in Scotland (ICAS) and the Institute of Chartered Accountants in England and Wales (ICAEW), and he has been a member of its Council since 1998, and been active in its Northern Society. I am used to regional structures, says Liddell, who hopes to see local branches of the IFA spread through more regions during his presidency. There is lots of growth potential, he says, in light of IFA membership of the International Federation of Accountants (IFAC) and IFA recognition as an awarding body by Ofqual, the regulator of qualifications, examinations and assessments in England. As well as being the body for SMEs and SMPs, he says, we have our qualifications to sell. The IFA Professional Financial Accountant qualification provides more credits towards the ICAEW chartered accountancy qualification the ACA than other non-chartered accountancy qualifications, so there are lots of possibilities. So far we have been pushing the IFA qualifications into colleges and universities, but we are going to start pushing directly into small businesses and small practices too, says Liddell. So, is he looking forward to his time as IFA president? Very much, he says, and one of his main priorities will be education. The IFA education department is working hard to get the IFA qualifications onto the Qualifications and Credit Framework in the UK, says Liddell, who is hoping for a positive outcome some time soon, because, with this to advance recognition of the IFA and its qualifications and members in the UK and internationally, as he observes: The sky s the limit. financial accountant I january/february 2012

14 12 IFAC MEMBERSHIP GOING GLOBAL The big voice for small business is getting louder. Full membership of the International Federation of Accountants heralds a new era for the IFA, as Callum Robson reports. january/february 2012 I financial accountant A s IFA members and students will all by now have been made aware, there was good news from Berlin in November 2011, when IFAC (the International Federation of Accountants) announced at its annual meeting of Council that the IFA had been granted full membership. I am very pleased to welcome the IFA to the IFAC family as a full member, says Göran Tidström, president of IFAC. The IFA first joined IFAC as an associate in 2008, and since then it has made significant progress, in particular in the redefinition of its strategy. During the application process, IFA expressed its belief that membership in IFAC is an important building block in executing this strategy. With this membership, IFA gains access to the technical and institutional expertise offered by IFAC and its 167 members and associates in over 120 countries. I am confident that this important milestone will benefit the IFA as it continues its efforts in serving the profession, both in the UK and internationally. A mark of professionalism Admittance to full membership is evidence of having complied with IFAC s strict criteria relating to financial and operational viability, governance, regulatory frameworks and support for members. Member organisations must also commit to

15 13 IFAC MEMBERSHIP participating in IFAC activities and complying with its policies and ethics code. Speaking of the announcement, Professor David Hunt, president of the IFA, says, I am absolutely delighted that the Institute of Financial Accountants is now a fully-fledged member of IFAC. This is a true recognition of the quality of our institute and the professionalism of our membership, while reflecting our forward-thinking, collaborative and global outlook. David Woodgate, the IFA chief executive adds, This represents the achievement of a major strategic milestone. We have demonstrated the quality of our institute, confirmed through an external, independent duediligence process. Champions of small business In recent years, IFAC has stepped up its focus on small and medium enterprises (SMEs) and small and medium practices (SMPs), frequently tailoring policies and recommendations to the unique challenges and trading relationships associated with them. As an organisation for financial accountants and managers, IFA members primarily serve SMEs, says Tidström. Since the SME sector is so vital to economic growth, IFAC is emphasising the essential role that accountancy professionals play in supporting and advising SMEs. I believe that through membership in IFAC, the IFA will further contribute to strengthening the voice of this vitally important constituency at a global level. Professor Hunt adds, As full members of the leading global accountancy community, we now have a real opportunity to represent the views of SMEs and SMPs at the highest level. Our members regard the IFA as the big voice for small business; IFAC membership extends the reach and influence of that voice. Cascading rewards As a full member of IFAC, the IFA takes its place alongside the UK and Ireland s six chartered bodies (see page 17, for more information on them), as well as 135 other accountancy bodies, four regional accountancy organisations and six further groupings worldwide. In the UK, IFA members now acquire the enhanced status and confidence currently enjoyed only by chartered accountancy bodies among providers of banking and financial services. Full membership also supports the IFA s current status with UK government agencies, such as the UK Border Agency and HM Revenue & Customs (HMRC); the IFA will be working to ensure that awareness of the IFA s new status amongst these agencies will result in improved access to new fields of activity. There will be opportunities for IFA members to contribute to IFAC s activities, through its influential committees, forums and special interest groups. The role of accountants in business, the specific needs of SMPs and the development of the profession in emerging and developing economies are just some of the issues on which IFA members might lend expert perspective. The announcement also promises greater visibility and recognition for IFA students. Once today s aspiring IFA members qualify, they can expect to benefit from extra kudos on their CVs, as a result of joining the only non-chartered professional accounting body in the UK to enjoy full membership of IFAC and by association, greater international respect, regardless of where they live and work. Onwards and upwards Frauke Golding FFA of Golding Associates, honorary secretary of the IFA s Mid-Southern & Wessex branch, says, It s great news for IFA members, especially those at grass roots level who dedicate their time to organising or participating in branch activities, or who represent the IFA in initiatives like HMRC s Working Together partnership. She adds, For most of us, clients already acknowledge and appreciate the professionalism, quality and competence they ve come to expect from IFA members. Full recognition by IFAC will enhance our standing within the accounting profession itself, especially amongst the local business communities and networks in which we each operate as individuals. John Archbold, managing director of Archbold Accountancy in Montrose which was awarded SMP of the Year at the IFA s annual awards ceremony last October says, I m delighted at this news; it s the icing on the cake. Full admittance to IFAC provides another selling point for members promoting their service to new clients; this puts us right up there. It s also a great tribute to the proactive efforts of David Hunt, David Woodgate and their team. I know they ve been working earnestly to raise the IFA s profile amongst the bigger players, and on the international stage. Global recognition, global response Within minutes of IFAC s decision being announced, accountancy chatrooms and the IFA s own Facebook and Twitter pages were buzzing with comments and reaction, as well as congratulations (see box). Professor Hunt acknowledges a team effort, saying, Tremendous work was carried out by many people to ensure we met IFAC s rigorous requirements, from ethics and education to professional standards. A big thank-you is due to all our staff for coming up to the bar and upholding our reputation, as well as to CIMA, which sponsored our application and conducted the due diligence required by IFAC. Looking to the future, the IFA chief executive concludes, We must not rest on our laurels. The challenge now is to continue developing our products and services, while providing the support our members demand and deserve. But I m sure that everyone at the IFA will rise to this challenge. Tweet Retweet Comment Like Blog Just some of the online responses from the global accounting community to the IFAC announcement: It s great to hear congratulations to the IFA and its members, and credit to officials and staff. Thank you very much! (Hong Kong) I d been feeling positive about the result now the IFA has proved it. (UK) I m super-proud to have invested in the IFA and to have relied on the institute to support me professionally. Congratulations to all of you at the IFA, and to all of us members!!! (Malta) Thanks to Professor David Hunt for his tireless and persistent efforts in championing the good name of IFA far and wide, and to David Woodgate for the vision of taking the IFA to the pinnacle of our profession worldwide. (Singapore) We are proud of our president and chief executive for working hard and ensuring that the IFA has achieved this prestigious membership. (UK) We are all rejoicing at this excellent news. Keep up with the excellent work. (Guernsey) We spread the news amongst our network and the feedback? Joy! (Russia) Absolutely fantastic. Thoroughly deserved. Time for celebration! (UK) Going to work today has a much better feel about it going as a member of an IFAC body. (UK) Congrats, IFA members all over the world! Thumbs up for the President and all involved! (Nigeria) You must all be delighted! I hope to see the IFA go from strength to strength! (UK) Congratulations to all at the IFA on this wonderful result. (Ireland) financial accountant I january/february 2012

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17 15 COMMUNICATIONS grand plans IFA marketing and communications manager William Archer shares his hopes and plans for 2012: it looks like an exciting year. The IFA is fortunate to have the ambitious and enthusiastic William Archer as its new marketing and communications manager. My aim is to deliver IFA communications to our existing members in exciting new ways that will also appeal to a wide scope of potential new members and students throughout the UK and beyond, says Archer, who has high hopes for the IFA. There is huge potential for both the IFA and its members within the accountancy sector, because of their unique focus on small and medium businesses and small and medium practices. This is why the IFA describes itself as The big voice for small business. Members can t fail to be impressed by Archer s plans for I am making it a priority to improve the way the IFA communicates with its members, by utilising both mass communication methods and personal interactivity, he says. This will result in improvements to the website, the monthly e-newsletters that IFA members receive, and to Financial Accountant. We will be conducting regular surveys to gauge the valued thoughts and opinions held by our members, he adds. Developments will be built on planned investments in a diverse range of digital communication tools, that will enable the IFA to deliver news and industry updates more quickly, more easily and more effectively than ever before. We re in the process of developing an enhanced website that will make navigation and access to information far easier, he explains, as well as making the user experience more interactive for members. A host of new membership benefits are being explored too. We re looking at ways to further develop our members overall customer experience with us, as we want to continuously improve the way we operate, says Archer. In David Woodgate, let me assure you, the IFA has a highly motivated and passionate chief executive who is hard at work increasing the package of benefits we provide to our members, to ensure that it will add real value. The success of the 2011 events calendar will be followed by an even more impressive national seminar series during We are also planning a series of road shows designed to reach our members in many of the regions across the UK, he says, where IFA staff will be on hand to interact personally with members. I m looking forward to meeting many of you face-toface, adds Archer. There will be more opportunities for members to interact with each other, too. During 2012, the IFA will support the development of new local branch meetings: These are a great platform for members to network, discuss industry news, and learn from guest speakers, he says, and by participating, members and students can all help each other to maximise the associated personal and professional benefits. The IFA would like to see as many of our members as possible getting involved, and coming along to support their local branch, adds Archer. If there isn t a local branch of the IFA in the region where you live or work, then perhaps you could start one which is what Waqar Jarral and Fergus Nixon have recently done (respectively) in London and Northern Ireland (see page 22). Volunteering to start a local branch can seem like a major undertaking, acknowledges Archer, but myself and others at the IFA will be on hand to provide you with support and guidance. So you will not be expected to go it alone. The future of the IFA will hinge on the success of its qualifications. Archer says: The education team is developing enhancements to the IFA qualifications, and we are initiating new ties with colleges and training providers across the UK, with the aim of increasing student numbers. I believe the IFA will substantially develop and grow within the UK and international markets during 2012, he adds. These are exciting times and I m very much looking forward to the challenge. january/february 2012 I financial accountant

18 16 facts & figures January 2012 Figures compiled on 28 November 2011 Bank Base Rates Date Rate % % % % % % % % % % % % % % % % % % % % % % Mortgage Rates Date Rate % % % % % % % % % % % % % % LIBOR Date Rate % % % % % % % % % % % % % % % % % % % % % Source: Barclays Date Rate % % % % % % % % % % % % % % Existing Borrowers - Source: Halifax January 5.58% 2.17% 0.62% 0.77% February 5.74% 2.05% 0.64% 0.80% March 6.01% 1.65% 0.65% 0.82% April 5.84% 1.45% 0.68% 0.82% May 5.87% 1.28% 0.71% 0.83% June 5.95% 1.19% 0.73% 0.83% July 5.78% 0.89% 0.75% 0.83% August 5.75% 0.69% 0.73% 0.89% September 6.30% 0.54% 0.73% 0.95% October 5.84% 0.59% 0.74% 0.99% November 3.91% 0.61% 0.74% December 2.77% 0.61% 0.76% 3 MONTH INTERBANK - closing rate on last day of month Retail Prices Index January February March April May June July August September October November December th January 1987 = 100 Source: ONS % Annual Inflation January 2.4% 4.2% 4.1% 0.1% 3.7% 5.1% February 2.4% 4.6% 4.1% 0.0% 3.7% 5.5% March 2.4% 4.8% 3.8% -0.4% 4.4% 5.3% April 2.6% 4.5% 4.2% -1.2% 5.3% 5.2% May 3.0% 4.3% 4.3% -1.1% 5.1% 5.2% June 3.3% 4.4% 4.6% -1.6% 5.0% 5.0% July 3.3% 3.8% 5.0% -1.4% 4.8% 5.0% August 3.4% 4.1% 4.8% -1.3% 4.7% 5.2% September 3.6% 3.9% 5.0% -1.4% 4.6% 5.6% October 3.7% 4.2% 4.2% -0.8% 4.5% 5.4% November 3.9% 4.3% 3.0% 0.3% 4.7% December 4.4% 4.0% 0.9% 2.4% 4.8% Source: ONS HM Revenue & Customs Rates OFFICIAL RATE * Effective Date Rate % % % % % *Benefits in Kind: Loans to employees earning 8, official rate of interest. Official rate for loans in foreign currencies: Yen: 3.9% w.e.f ; Swiss F: 5.5% w.e.f (previously 5.7% w.e.f ). INTEREST ON UNPAID/OVERPAID INHERITANCE TAX Effective Date Rate %/1.00% %/0.00% %/0.50% INTEREST ON LATE PAID INCOME TAX, CGT, STAMP DUTY AND STAMP DUTY RESERVE Effective Date Rate % % % % % INTEREST ON OVERPAID INCOME TAX, CGT, STAMP DUTY AND STAMP DUTY RESERVE Effective Date Rate % % % % % Certificates of Tax Deposit w.e.f w.e.f w.e.f up to 100K 0.00% (0.00%) 0.00% (0.00%) 0.00% (0.00%) 100K+ 0-1 mth 0.00% (0.00%) 0.00% (0.00%) 0.00% (0.00%) 100K+ 1-3 mth 0.75% (0.00%) 1.00% (0.50%) 1.50% (0.75%) 100K+ 3-6 mth 0.75% (0.00%) 1.00% (0.50%) 1.25% (0.50%) 100K+ 6-9 mth 0.75% (0.00%) 1.00% (0.50%) 1.25% (0.50%) 100K mth 0.75% (0.00%) 0.75% (0.25%) 1.25% (0.50%) Encashment rates shown in brackets. Above rates are paid gross but are liable to tax. Late Payment of Commercial Debts From To Rate From To Rate % % % % The Late Payment of Commercial Debts (Interest) Act 1998 For contracts from to the rate applying is the Bank of England Base Rate that was in place on the day the debt came overdue plus 8%. The Late Payment of Commercial Debts (Interest) Regulations 2002 For contracts from the rate is set for a six month period by taking the Bank of England Base Rate on 30 June and 31 December and adding 8%. Courts ENGLISH COURTS Judgment Debts: High Court (& w.e.f County Courts) 8% w.e.f (previously 15% w.e.f ). Funds in Court: Special Rate (persons under disability) 0.5% w.e.f (previously 1.5% w.e.f ). Basic Rate (payment into court) 0.3% w.e.f (previously 1% w.e.f ). Interest in Personal Injury cases: Future Earnings - none. Pain & Suffering - 2%. Special damages: same as Special Rate - see Funds in Court above (½ Special Rate payable from date of accident to date of judgment). Interest rate on confiscation orders in Crown & Magistrates Courts: same rate as applies to High Court Judgment Debts. % Change Average Weekly Earnings January 6.3% 3.6% -1.7% -0.2% 3.5% February 7.7% 4.6% -5.7% 5.2% 1.0% March 4.6% 4.8% -1.1% 6.6% 2.1% April 4.2% 4.8% 1.7% 0.4% 2.5% May 4.6% 4.2% 0.9% 1.1% 2.4% June 4.2% 3.4% 1.1% 1.1% 3.3% July 4.5% 3.2% 0.3% 1.8% 3.0% August 5.0% 3.2% 0.3% 2.1% 2.1% September 5.5% 2.8% 0.9% 2.3% 1.8%* October 4.2% 3.6% 0.7% 2.1% November 5.1% 2.3% 0.8% 2.1% December 3.4% 2.5% 0.7% 1.3% Whole GB economy unadjusted. Figures include bonuses and arrears. *Provisional Source:ONS House Price Index January February March April May June July August September October November December All Houses (January 1983 = 100) Source: Halifax Exchange Rates on last working day MARCH DECEMBER YEN US$ SFr YEN US$ SFr Income Support Mortgage Rate Effective Date Rate % % % Effective Date Rate % % % Effective Date Rate % % % From the standard interest rate will be the Bank of England s published monthly avaerage mortgage interest rate. Can claim mortgage interest on, up to 200,000 of the mortgage. Waiting period 13 weeks. SCOTTISH COURTS Decrees: Court of Session & Sheriff Courts 8% w.e.f (previously 15% w.e.f ). NORTHERN IRISH COURTS Judgment Debts: High Court: 8% w.e.f (previously 15% w.e.f ). County Court 8% w.e.f (previously 15% w.e.f ). Interest on amounts awarded in Magistrate Courts 7% w.e.f ADMINISTRATION OF ESTATES England & Wales: Interest on General Legacies: 0.3% w.e.f (previously 1% ). Interest on Statutory Legacies: 6% w.e.f (previously 7% w.e.f ). All rates and terms are subject to change without notice and should be checked before finalising any arrangement. No liability can be accepted for any direct or consequential loss arising from the use of, or reliance upon, this information. Readers who are not financial professionals should seek expert advice. Data specially compiled for financial accountant by emoneyfacts.co.uk the adviser s portal The UK s largest provider of savings and mortgage data Tel: january/february 2012 I financial accountant

19 17 NEED TO KNOW the CCAB The influence of the Consultative Committee of Accountancy Bodies extends across the accountancy profession in the United Kingdom and internationally. So IFA members and students may benefit from learning more about it. The Consultative Committee of Accountancy Bodies better known as the CCAB was formed in 1974 when the biggest accountancy bodies in the United Kingdom (UK) and Ireland formed a selffunding limited company. Until recently, the CCAB had six members, but during 2011, the Chartered Institute of Management Accountants (CIMA) departed, leaving the following CCAB members: n The Institute of Chartered Accountants in England and Wales (ICAEW) n The Institute of Chartered Accountants of Scotland (ICAS) n The Institute of Chartered Accountants in Ireland (ICAI) n The Association of Chartered Certified Accountants (ACCA) n The Chartered Institute of Public Finance and Accountancy (CIPFA The CCAB aims to provide a forum in which matters affecting the profession as a whole can be discussed and co-ordinated and to enable the profession to speak with a unified voice to government. But it sometimes struggles to find consensus amongst its member bodies, some of which have their own very effective policy units and government links. CIMA departed because it wanted to take its own position on professional matters and convey this in its own distinctive and authentic voice, rather than take a route of joint agreement that inevitably leads to the lowest common denominator. CIMA had also tried and failed to reduce the fees it was paying to the CCAB (and hence to the Financial Reporting Council), because they focus significantly on audit, unlike CIMA and its members. The CCAB plays a significant role in the Financial Reporting Council (FRC), the UK s independent regulator for accounting, reporting and corporate governance, which has a range of statutory and quasi-statutory powers. With the UK government and the financial and banking sectors, the CCAB contributes to the funding of the FRC, which was cobbled together from a series of organisations. The FRC is consulting on dispensing with some of its activities, and there is some streamlining in its future. But presently, the FRC comprises the Auditing Practices Board, the Board for Actuarial Standards, the Professional Oversight Board (including the Audit Inspection Unit), the Financial Reporting Review Panel, the Accountancy CORE OBJECTIVES & Actuarial Discipline Board, and the Accounting Standards Board. The Accounting Standards Board develops and issues UK Financial Reporting Standards (FRSs), the Financial Reporting Standard for Smaller Entities (FRSSE), and sets criteria for Statements of Recommended Practice (SORPS), which are created by ASB recognised industry or sectoral bodies. The ASB also collaborates with accounting standard-setters outside the UK, and with the International Accounting Standards Board (IASB), in order to influence the development of international standards and take account of these in UK FRSs. But as the International Financial Reporting Standards (IFRS) developed by the IASB become more prevalent, the influence of the ASB will wane. UK listed companies already report using IFRS, rather than UK Generally Accepted Accounting Principles (GAAP) and smaller entities will eventually follow in their wake. The IASB is part of the IFRS Foundation, a legal entity governed by a board of 22 trustees (and prior to January 2010 it was called the IASC Foundation). Other bodies influencing and supporting the global accountancy profession, and the statutory and voluntary standards it adheres to, include member bodies the Global Accounting Alliance (GAA) and IFAC (for more on the International Federation of Accountants, and IFA membership of it, see pages 12 & 13). IFA members and students can learn more out about the ASB, CCAB, FRC, GAA, the IASB, IFAC and other organisations mentioned above by visiting their websites. At the time of writing, the CCAB was redeveloping its website. But prior to this, its stated core objective was to: promote and protect the CCAB qualified accountant brand ; something it does by: n Identifying and keeping a watching brief on emerging and current issues (relevant to business and practice) where it will be more effective for the UK and Irish profession to work collectively; n Providing a forum for considering issues and making joint approaches to government and other authorities, both national and international; n Providing a mechanism for representing the views of the UK and Irish profession to international standard setters and regulators; n Recommending and, where appropriate, making appointments to international organisations and reviewing systematically the performance of those appointed; and n Facilitating joint technical work. financial accountant I january/february 2012

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21 19 TECHNICAL UPDATE Tax dodgers targeted Construction workers, tutors, personal coaches, owners of overseas property, holders of Swiss bank accounts with HSBC Geneva, and scrap metal dealers are among some of the new tax dodgers being targeted by HM Revenue & Customs (HMRC). Sophisticated data mining techniques are being used to search publicly available data that will identify those who own property abroad, whilst a series of newly-formed task forces will target high risk Scottish scrap metal dealers and high risk construction traders in the North West of England and North Wales. More on SA252 letters A redesigned SA252 form has been sent to individuals who pay the higher rate of tax and those paying the basic rate who have complex affairs. Copies of the letter will not be sent to agents, but it does suggest that the recipients show it to their tax agent or adviser. The SA252 letters were sent out in late November 2011, dated 19 November, as part of an HMRC bulk processing exercise. UK certificate of residence form online Some individuals who are resident in the UK and claiming relief or exemption (from foreign tax) for income and/or gains received abroad must complete a claim form (for the non-uk country in question) and others must provide a letter, called a certificate of residence, to confirm that they were resident in the UK for a particular period. To check which approach is required read the country-specific section of HMRC double taxation manual at HMRC.gov.uk/manuals/ dtmanual/dt2140.htm If a certificate of residence is required from HMRC, the individual or their adviser or tax agent can apply online by following the link at HMRC.gov.uk/news/cert-ofresidence.htm Corporation tax filing online HMRC has updated the guidance it provides for agents and businesses submitting Corporation Tax online using internet filing software and forms. Learn more at: n HMRC.gov.uk/efiling/ctsoft_dev.htm The following links can also help accountants in business and practice to manage the transition: n HMRC.gov.uk/ct/mandatory-onlinefiling.pdf Managing the transition n HMRC.gov.uk/agents/ct/onlinequestions.htm Answers to FAQ on online CT filing n HMRC.gov.uk/ct/ct-online/filereturn/online-xbrltag.pdf When to tag, how to tag, what to tag Joint Agent Understanding Project A review of the ways in which agents and HMRC interact is underway in an attempt to improve the service the Revenue provides. IFA members can learn more about the Joint Agent Understanding Project, in issue 46 of Working Together at HMRC.gov.uk/ agents/working-together-46.pdf. Locating new VAT notices A number of new notices have been issued by HMRC, superseding previous notices and their (often plentiful) associated HMRC briefs. They cover areas such as Building & Construction, Business Entertainment, Motoring Expenses, and more. As you might expect, each of these notices is extensive; unfortunately, so are the addresses for the web links to them. The easiest way for IFA members to find out more about them is to visit hmrc-vat.rss This is a live feed for VAT news and updates, so you will need to scroll down through it. If you can subscribe to the RSS feed, by following the instructions on the web page, in future you will be automatically kept up-to-date. PAYE coding notices go online Self Assessment customers, tax agents and advisers can now view PAYE coding notices online as long as they are registered for HMRC online services. Coding notices issued on or after 11 October 2011 are now available for viewing. Learn more at HMRC.gov.uk/ news/view-paye-online.htm Disguised remuneration The tax legislation on employment income provided through third parties tackles arrangements which: n involve third parties (including trusts or other vehicles used to reward employees), and n seek to avoid or defer the payment of income tax. The legislation also deals with pension schemes which are not registered pension schemes. Guidance on the anti-avoidance rules on employment income paid through third parties has been finalised and incorporated into the Employment Income Manual at HMRC.gov.uk/manuals/eimanual/ eim45000.htm VAT boat scheme sails away From 1 January 2012 the current concessionary treatment which allowed a VAT-registered business to zero rate the supply of a sailaway boat to a UK resident who intended to keep it outside the European Community (EC) has been withdrawn. A business can still zero rate the supply of a boat to a UK resident, by meeting the conditions set out in paragraph 3.3 of HMRC Notice 703 VAT: Export of goods from the United Kingdom. The business must export the boat itself or make all arrangements for the export and obtain evidence of export within three months. financial accountant I january/february 2012

22 20 MEMBER PROFILE music by numbers Despite being close to his 100th birthday, Wilfred Smith still has a twinkle in his eye and a jolly chuckle that would be the envy of men 30 years his junior. As the longest standing member of the Institute of Financial Accountants (IFA), Smith has been awarded Honorary Life Membership and was recently presented with a certificate and commemorative shield. Of course, I never wanted to be an accountant originally, he says, when asked about his early days growing up in London. When I was at school I was top of my class in both maths and music but it was music that I was really interested in. Following up this revelation, Smith expands on his background: When I was 18, I wanted to pursue a career in music and was playing with a large orchestra. The conductor at that time happened to be an accountant, and he wrote to my parents asking if I could join his practice. Well, my Mum was very pleased because she recognised what a great career opportunity it would be for me, certainly more promising than a career in music. So I joined his practice and was earning 15 shillings a week. As his career in accountancy started to take off, Smith recognised the need to have the appropriate qualifications and training. However, having failed his initial exams with another accountancy body, he was worried that his career would falter before it had had a chance to bloom. That was when I heard about the IFA, and in 1930, I contacted them to enquire about becoming a member, he explains. They were able to use my previous exams and practising experience to qualify me, which meant I didn t have to sit any new exams. Smith soon started his own accountancy practice based from his home. This proved successful over a number of years but was unfortunately brought to a sudden halt when the outbreak of World War II threatened Europe. The accountant joined the Army and served with the City of London Yeomanry Tank Regiment, but when the war ended in 1945, he returned to England, and after a brief stint working The oldest member of the IFA, Wilfred Smith, reminisces about his life in accountancy, with William Archer, IFA marketing and communications manager. for another accountancy firm, he restarted his own practice. It was difficult coming back into accountancy after the war, but it worked out well in the end, he comments with sombre reflection. Looking back on his long career, Smith recalls some of the challenges he had to face: There were challenges along the way, certainly when in competition with larger firms who could charge more for their services, he says. I m grateful to the IFA; they offered a constant flow of guidance and support, which as a small practice, was invaluable. I ve appreciated their personal interaction and I m happy that they kept me with them all these years, he adds. I m proud of the achievements I have made during my career; I had my own practice, a good portfolio of clients and have managed to invest in a number of properties. My Mum would have been very pleased. When asked about potential accountants looking to enter the industry, the IFA s oldest member was again happy to offer his insight: My advice for them would be to aim high; do the best you can. Of course, it was harder for my generation, he chuckles, because we didn t have all these computers and gadgets - and I d definitely recommend the IFA, because they really helped me. As the interview comes to a close, he adds his final thoughts and reflections: I m actually older than the IFA, I was four when it first formed, and of course I wasn t thinking about accountancy at that time. But we ve both been around for nearly a hundred years may it be a hundred more. However, if I could do it all over again, then who knows, maybe I would have followed a career in music. I still like my music you know! And you certainly wouldn t doubt him. january/february 2012 I financial accountant

23 21 MEMBERS ONLY NEWS New Year resolutions Whether you want to get fit in 2012 or treat yourself to a little more down time, IFA Privileges can help, as among the many member benefits on offer you will find gym membership and discount holiday cottages. n The Incorpore Gym Membership Pass gives you access to an exclusive network of over 2,000 health clubs, gyms and leisure centres, all of which will offer you their lowest available corporate rate for the type of membership you require. Visit IFA Privileges and use the proximity report to find out if your local gym is included. You can then contact them if you wish to verify available rates. You are guaranteed to save a minimum of 50 and as much as 250 against the normal rate, if you don t already qualify for lowest available corporate rates through your work. Participating health clubs include major chains, independent gyms, local leisure centres and hotel health clubs, including well-known names such as Curves, British Military Fitness, Fitness First, LA Fitness, and Nuffield Health. n CottageStayUK offers fantastic cottage discounts across the UK, France and Italy. IFA members receive 10% off all year round prices and special offers. So, whether you want to cuddle up for a cosy cottage break in the Lake District, stay in a cottage on the beaches of Cornwall, or hold a family get together in a French chateau, CottageStayUk will find you the right property for your holiday at a great price. For your exclusive discount, call and quote PARHIL. To access these benefits and other money saving offers visit IFA Privileges at IFA Privileges is managed on behalf of the IFA by Parliament Hill Ltd of 127 Cheapside, London, EC2V 6BT. Neither Parliament Hill nor the IFA is part of the same group as any of the providers. word Visiting the library play As an IFA member or student you have access to resources and services from the ICAEW library and information service These include: l Enquiry helpline for technical and business information needs l Book loans (free of charge and supplied by post if required) l Supply of extracts from books, model documents, journal articles etc by , fax or post (there is a charge for this service). The library is located in the business centre in Chartered Accountants Hall in Moorgate Place, London. It provides a quiet place to work, study and meet colleagues in the heart of the City, with computers and free internet access it s wifi enabled. All you need is your IFA membership or student number. Library enquiry service A team is available to take your enquiries by telephone, or in person. It welcomes straightforward questions that can be dealt with immediately or enquiries that need more detailed research. Most help is free; with very reasonable charges made for providing copies (via the document delivery service), research time for complex enquiries and the provision of mailing lists and company reports. To use the enquiry service, say you are an IFA member/student and quote your IFA number, and you will be quoted member charges. Book loans and document delivery You can borrow books from the library and we will send them to your work or home address free of charge. The initial lending period is three weeks and books can be renewed up to three times unless another member has asked for the book. Before using the service, members must register and provide their IFA membership or student number, but this doesn t take long and can be done over the phone. Company information services The Library can provide a range of company information services including dividends, company reports, capital histories and mailing lists. See for details of charges. financial accountant I january/february 2012

24 22 MEMBERS ONLY NEWS IFA council member takes busman s holiday in Sri Lanka The IFA s intrepid Council member Beryl Shepherd has been off on another charitable exploit. No sooner had she abseiled down the Middlesborough Transporter Bridge to raise money for Butterwick House Children s Hospice, than she was off to Sri Lanka to visit Rikasha, a five year-old girl she sponsors. I would like to think that not only Rikasha will benefit from my sponsorship but the community at large, said Shepherd, who also found time to do some networking for the IFA, despite being on holiday. I met up with Ramola Sivasundaram who is our contact in Sri Lanka, and got re-acquainted with her Mother, Manorama Mutha-Krishna, an IFA international vice president, who is now aged 90, said Shepherd, and another IFA member in Sri Lanka took the Council member for a brief trip on a public bus. That was quite an experience. There are no health & safety rules there, she added. Members have lots to learn from local branches At the September 2011 meeting of the Northern Ireland branch of the IFA, members were treated to some valuable insights from an ex-hm Revenue & Customs employee Tom Penman. He gave a very interesting and authoritative talk on tax enquiries and investigations, including an overview of the penalty regime, culpability and reasonable excuse, reported Fergus Nixon, branch honorary secretary. The local branch is planning four seminars during 2012 and interested members can get details from the IFA website and by ing [email protected] or calling Other local branches have also planned their seminar schedules for the year ahead. During February, the Merseyside branch will hold a seminar providing topical insolvency updates, and the London branch will hold a seminar on insolvency, with speakers from the specialist firm FRP Advisory. More details of these events, and others taking place later in the year, can be obtained at IFA.org.uk/news-and-events/ events n IFA examination timetable June 2012 June 2012 SUBJECT DATE TIME Financial Accountant Diploma D1. Financial Accounting 25 June D2. Business Finance 25 June D3. Management of Systems and Performance 26 June D4. Principles of Taxation 26 June Ethics of the Workplace this will be assessed separately following workshop or self study learning Professional Financial Accountant P1. Financial Accounting and IFRS for SME s 25 June P2. Financial Management 25 June P3. Management and Control Systems 26 June P4. Professional Skills for SMEs 26 June P5. Business and Regulatory Environment 27 June The Ethical Professional this will be assessed separately following workshop or self study learning Closing date for June 2012 exam entries: n UK 14 May 2012 n International 23 April 2012 january/february 2012 I financial accountant

25 23 MEMBERS ONLY COMMENT MEMBERS ONLY NEWS Solving your ethical dilemmas Ethics is a hot topic in the finance profession, and this is reflected in the new qualifications the IFA Financial Accountant Diploma and the IFA Professional Accountant. Although some IFA members will not have studied ethics as part of their professional qualification, all members in all countries are subject to the IFAC Code of Ethics and its Fundamental Principles. These have been used as the basis for the IFA Code of Ethics, which is available for download at IFA.org.uk. It covers matters such as professional behaviour, confidentiality, integrity, objectivity, and professional competence, so there are many reasons to familiarise yourself with it. Members who prefer classroombased study can sign up for one of the IFA Ethics workshops taking place in April 2012, in central London (see IFA.org.uk/news-and-events/news/ view/270). These workshops have been designed for those who are studying for an IFA qualification, but existing members are also welcome. The IFA expects all of its members and students to have a good understanding of the fundamentals of professional ethics and to know the constraints placed on them as individuals, whether in practice or employed in business, said Martin Nimmo, IFA director of professional standards. Appropriate values, ethics and attitudes should influence everything IFA members and students do irrespective of sector, job role or level of seniority, he added. Planning for the new CPD requirements In June, the IFA Council extended the requirement to undertake continuing professional development (CPD) to include all members, whether they work in practice or business, in the United Kingdom (UK) or any other region from the 1 January There are a few exemptions, such as for those not working in accounting, bookkeeping and taxation functions. But retired members who do even the smallest amount of practice work are not exempt. If you are offering practice work beyond your immediate family or small charities (without financial reward), and you live in the UK, you must hold a practising certificate, said Martin Nimmo, IFA director of professional standards, adding: Application for this requires evidence of CPD undertaken each year, plus proof that professional indemnity insurance is in place. At present, the IFA does not regulate its members in practice outside the UK. CPD must be relevant, too. You must be able to demonstrate a link between your CPD and work undertaken, Nimmo said, and of the 30 hours you are required to undertake, at least 20 must be structured, and taken ideally in the context of meetings, distance learning or seminars. You will probably need to plan your CPD in advance, but the IFA has taken steps to help. A simplified CPD record form is available in the members section of the website, and CPD resources are being improved over the next year. IFA.org.uk offers a selection of e-learning courses, ranging from activity-based management, through dynamic budgetary control, to employment law for accountants. Members can also explore the CPD possibilities offered by local IFA branch events and the IFA regional seminar programme in the UK. IFA members can still contact Professor Hunt by ing [email protected]. uk or writing to him c/o: The Communications department, IFA, Burford House, 44 London Road, Sevenoaks, Kent, TN1 1AS. But he will not be available to repond until after he returns from his travels in June PRESIDENT S COLUMN up, up and away As promised, this is my last column as IFA president. It s time for change, thanks to three great achievements and a miracle: full membership of IFAC, recognition by Ofqual, a merger with the Federation of Tax Advisers and my 70th birthday. Moreover other people are coming forward to serve. Change is always easiest when things are going well. There is an air of hope: members are reacting with joy to the IFAC news, wanting to serve on Council, and help in other ways too. It was a different scene when I arrived in January I had just recovered from two successive kidney failures. The then IFA chief executive (CEO), Malcolm Dean, had given notice of retiring 33 months before, but nobody had been recruited. Council was divided; membership had fallen by nearly a half since 1980; almost nobody outside it had heard of this 90 year-old institute. There was no written strategy, nor operational plan. Many members were grumbling and holding on in case something happened though two who felt like that are now hugely committed Council Members. Fortunately throughout all this, Malcolm Dean, had kept in touch with other institutes. At our 90th anniversary, Eric Anstee (then ICAEW chief executive) was one of the speakers; Michael O Brien kept the contact and eventually Eric asked me on behalf of IFA if I would be willing to help. By this time I had served eight years on the IFAC education committee, a different eight years as chairman of the CCAB education committee, and was a past president of AAT, so I knew all the presidents and chief executives of the other institutes; that was to be key in later times. But the key to moving forwards was the recruitment, in late 2007, of David Woodgate, as CEO, with his wonderful energy and ability to keep cheerful despite the odds and inevitable set backs. From other institutes he recruited quality deputies in Heather Venis (education) and Martin Nimmo (professional standards). The marketing department was revamped, whilst Steve Boakes (chief operating officer) and Nick Parris (finance) got on with their day jobs and doggedly and loyally went about their business. The rest is history, as they say. All that remains now is for me to give my thanks and ride off into the sunset. That is at least until the next Council meeting that I can attend (in June). To the operational team, Council, and those members, who have kept me going by showing interest, support and timely words of encouragement, THANK YOU SO VERY, VERY MUCH. It has been a challenge; hard work but fun. So I must also thank those instrumental in getting me here: Malcolm Dean, Eric Anstee and Michael O Brien. My parting shot will come as no surprise to my regular readers. Recognition brings responsibility. If the enthusiasm of the hundreds of messages we received after the IFAC news is anything to go by, we can look forward to great energy and commitment from members. I shall continue on Council for a couple of years and no doubt our ebullient CEO will imagine some past presidential duties for me. I shall also continue as a committed member, acting as part of the IFA sales force, and I hope that you all will join with me. Let us go forward together. financial accountant I january/february 2012

26 24 MEMBERS ONLY NEWS Global recognition for the IFA and its members By now, most of you know that the IFA has become a full member of IFAC (the International Federation of Accountants). For more insight into the decision and the reasons why it is so important read pages 8, 9, 12 & 13. On page 17 of this issue, members can also learn more about the CCAB (Consultative Committee of Accountancy Bodies), an umbrella group that was set up by the UK chartered professional accountancy bodies; they are also members of IFAC. Say hello, wave goodbye In this issue of Financial Accountant it is time to say farewell to one IFA president and welcome his successor. On 31 December 2011 Professor David Hunt retired, and on 1 January 2012 Robin Liddell became the new president of the IFA and you can read more about both of them on pages 10 and 11. I am sorry to see David retire after the outstanding support that he has given to me, the team and the institute, said David Woodgate, IFA chief executive, but I wish him success with the many adventures he has planned. Woodgate will soon be working closely with the new president Robin Liddell. The IFA will Reminder new CPD regime Student update Students will see some small differences in 2012 all for the good. The IFA hopes to have its qualifications added to QCF, the Qualification and Credit Framework of the UK, during 2012, and this will mean a few minor changes to some of the language we use when referring to the IFA Financial Accountant Diploma and the IFA Professional Accountant qualifications, said Heather Venis, IFA director of education. Modules will be described as units, and titles of modules and qualifications will be modified to fit QCF criteria. The IFA is also going to update some content and clarify certain areas of the syllabus. Students who are working towards the June 2012 exam sitting will be pleased to find that they are entirely benefit from his lifetime of experience working with professional bodies and helping businesses to grow, said the chief executive, and I am looking forward to what we can achieve together. The retiring president also had a few words of praise and encouragement for his successor. Robin has been a senior partner in a medium sized crossborder firm and he really knows his way around the profession, said Professor Hunt. The only flaw that I can see is his support for Carlisle United and Leeds United, he laughed, before adding: Best wishes, Robin, our hearts and support are with you. On 1 January 2012 the IFA extended the requirement to undertake continuing professional development. It now includes all members, whether they work in practice or business, in the UK or overseas. You can learn more about your new CPD responsibilities on page 23 and at IFA.org.uk. unaffected by these changes, and although students preparing for the December 2012 sittings will be affected, they have no cause for concern. The changes are not significant, said Venis, but students do need to be aware of them, so the IFA will publish them as soon as they are finalised. This is expected to be in spring 2012, so as she added: Students will be notified of any changes to content well in advance of the December 2012 exams. Individual students will be contacted by the IFA, with guidance on how they will move from modules to units, obtain their qualification, and maintain their pathway to IFA membership. The IFA is working with the education provider BPP to ensure that study guides reflect the changes. INSIDE IFA 23 President s column Professor Hunt reflects on his time in office 22 Exam timetable Dates for June IFA Privileges Money saving offers for IFA members 20 Member profile The IFA s oldest member approaches his centenary 15 Grand plans IFA marketing and communications from 2012 onwards 12 Going global IFA becomes a full member of IFAC 11 New IFA president Meet Robin Liddell 10 Retiring president The life and times of Professor Hunt 8 The road ahead IFA ambitions and achievements january/february 2012 I financial accountant

27 When forming a new company, how do you choose the best start? Ask an member. ACRA, the Association of Company Registration Agents, was established to encourage high standards and to help you find an agent which will form your company to the best legal standard. Benefits for you: You can trust that your company will be formed using robust Articles, and you will get sound advice on the inclusion of any extraordinary provisions. It is free for you to find a company registration service through ACRA. You are guaranteed that the agent you use will act professionally and employ trusted experts. ACRA members have unique access to valuable information covering new thinking, current legislation and industry specific guidance on Anti-Money Laundering Regulations. You will be working with only the best. Did you know that forming your company directly through the Business Link website means you would automatically adopt Model Articles? Business Link use only the Model Articles when incorporating new companies. However there are serious shortfalls in the Model Articles. They make no provision for: Pre-emption rights on the transfer and sale of shares. This means that a company could be sold or transferred without existing shareholders being aware. Multiple classes of shares. Alternate directors, which may be useful where directors are absent for extended periods. Members rights, proxies, meeting regimes, or director conflicts. They also unreasonably assume that directors will have sufficient knowledge of these matters as outlined in the Act. The appointment of a company secretary. ACRA fosters best practice. Shouldn t you?

28 Times change, quality doesn t. 122 years The new accountancy magazine has the best technical insight, commentary and analysis. We ve done it well for 122 years now we re doing it even better. Exclusive IFA members offer! Subscribe now to the sharper-focused accountancy and get a 20% discount just per year (normally 99). accountancy it all adds up. Books & print Online Reference Software Fee Protection Consultancy Advice Lines CPD Visit call and select option 2 or to request a free copy [email protected] CCH is part of Wolters Kluwer, a global information services company and number 1 in tax and accounting worldwide. Registered in England and Wales, No Registered Office: 145 London Road, Kingston upon Thames, Surrey KT2 6SR. Wolters Kluwer (UK) Ltd is authorised and regulated by the Financial Services Authority for general insurance business.