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Accountancy Services


The joys of additional regulation and legislation


By Graham Cook (pictured), senior partner at GM & Co Chartered Accountants


As accountants and business owners I’m sure we all subscribe to fairness in dealing and have total respect for ethical practices on both sides of the counter. The rights of the individual are paramount in any dealings we have and in upholding that viewpoint additional regulation may seem the most appropriate way to ensure that transgressors are discouraged. We must though beware of the tidal wave of new legislation and regulation that can overpower businesses, be they corporates or sole traders, and consider the point at which the balance tips detrimentally against the individual. Enter Making Tax Digital (MTD), General


Data Protection Rules (GDPR) and a recent change in the Money Laundering Regulations (MLR). We are all becoming accustomed


to the Digital Age of online transacting, social media, mobile phones that do everything for us (bar making phone calls when in low or zero signal areas) and of course the demise of such traditional techniques as writing cheques and sending letters! Making Tax Digital is the way forward


we are told and essentially this means having to report to Her Majesty’s Revenue and Customs electronically – no more paper based forms and records. The implementation was staggered for different sizes of business with the proposed timetable of MTD for Income Tax having originally been April 2018 for some and April 2019 for others depending on turnover levels. As the Draft Finance Bill 2017 containing these proposals hit The Lords they were overcome with common sense and a delay to its introduction followed at their behest. Currently for businesses with a turnover of


£85,000 or more (the compulsory VAT registration limit) the latest HMRC statement for Income Tax is ‘not at least until 2020’ with a complete absence of a start date for Individuals with trading or property rental income in excess of £10,000 annual turnover. The target for Corporation tax, subject to a


turnover of £85,000 or more and for trading periods commencing on or after 1 April 2020 is ‘not until at least 2020’. For VAT registered businesses, VAT filing must be


digital from quarters or annual periods commencing 1 April 2019 from that date forward, subject again to the minimum £85,000 turnover limit. The real rub with MTD for businesses is that albeit


simple (whatever that means remains to be seen) income and expenditure accounts will need to be submitted on a quarterly basis online. My question in light of this is what about those long established businesses and traders who keep impeccable manual records. These are often kept to a higher standard than many misunderstood and inadequately operated, more often than not albeit quite innocently, computerised accounting systems.


48 CHAMBERLINK June 2018 Whoopee I hear the accounting profession cry –


more fees for us, as clients will have to pay us to make them digitally compliant by transferring their ongoing manual records to a suitable ‘Functional Compatible Software’ package, mandatory for the reporting of the information mentioned earlier. The cynics among us might view this increase in


reporting frequency and mandatory use of software as a step towards having to make quarterly payments on account for tax purposes. That in itself may be beneficial for the exchequer and the nation as a whole but it is difficult not to feel that such an overall imposition as MTD on the more mature individuals and those for whom technology is a bridge too far could be considered as an infringement of personal liberty.


Anti-money laundering (AML) The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer)


Regulations 2017 which transpose the Fourth EU Money Laundering Directive into UK law, were laid before parliament on 22 June 2017 and took effect from 26 June. From a business and tax perspective, AML seeks


to prevent money generated as a result of crime or Black Economy activities being legitimised so as to fund lifestyles and purchases and in so doing by- pass the tax regime to which we are all subject. Again however we might question where does this stop. In a recent example, a newly qualified general practitioner client who was buying her first home without a mortgage, an apartment at £300,000, was made to provide a copy of the Investment House portfolio paperwork showing the source of funds and further documentation evidencing the inheritance from her grandmother. This was in spite of a letter of confirmation from us to the solicitor confirming the source of funds, which was deemed inadequate to ‘tick the box’. It seems we can no longer apply common sense or rely upon the integrity of the professions in these situations. I’m sure we don’t want to turn into a nation of


‘Victor Meldrews’ but beware regulators and governments. For now most of us are on your side but if you over-regulate us, to the point of restricting our freedoms and rights, some may see that as a move towards a police state.


I’m sure we don’t want to turn into a nation of ‘Victor Meldrews’ but beware regulators and governments


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