MiP News JUNE 2011 CONTENTS 1
Editor’s note
2
Current affairs
7 Useful links 8
MiP events
9
Letters
Editor’s note Another quarter comes around all too quickly. John Niland has provided another great article to start us off again and will be at the conference again this year to tell us what we need to keep our businesses growing.
For those of you who are thinking about becoming a Member in Practice, we strongly recommend that you come to the conference and Ian Ross has provided an article to help new MiPs get the most out of the conference. Philip Badger Editor
Referral or rejection? All the opportunities we will ever want are already available from the people we already know or those to whom they can introduce us. People would rather do business with people they know, or know of, than strangers. So why is it that when you mention the word ‘referrals’ you may trigger quite touchy reactions from many people? In fact many professionals would rather starve than ask for referrals. Why are referral conversations so difficult? While the precise reasons vary from person to person, here are some key ones: • They don’t want to create mistrust with the client, by sounding too commercial, or even letting the client know they are looking for more work. • They are afraid the conversation will go wrong in some vague, unspecified (but scary) way. • They are afraid the client won’t provide referrals and that this reflects negatively on them. • Being unfamiliar with this style of conversation, they keep postponing it. • They believe this is a conversation that should be initiated by the client. • They simply forget to have the conversation, even when they know they should and there are no specific fear factors in operation. With some reflection, most professionals would agree that the risks above are minute when seen in the context of the potential benefits of increasing referrals and introductions. Referral business is the easiest to close, the cost of marketing is nil, it reinforces your reputation with the referrer and there is no capacity limit. Seen against all of this, these little pieces of trepidation seem tiny indeed.
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Current affairs So where do we begin? The key to success is to get the conversation started. Doing this takes courage. It takes courage to stand for the value we represent. This is not ego; value always lies in the client world, so we are not making claims for ourselves. We are making claims for what our clients achieve with our support. And so we should; what’s important is how we are valuable, not how valuable we are. Whatever the reason for disliking the referral conversation, for example ‘it feels like selling’ the conversation can be reframed as genuine value centred conversation. Value is something we build together. A whole different dynamic can be created both in conversation and in the mind of the professional. Recognising this distinction will raise your value in the eyes of the client and ultimately make the referral conversation easier, or even a natural part of your conversations with your clients. That shift takes courage and skill, particularly when following up leads and introductions. Success 121 runs regular webinars to boost your skill sets; you can find out more by visiting www.success121.com Parting shot In looking for referrals, many professionals feel they are asking for a favour. But who is being done the greater favour: the client organisation who is suffering with a problem, or the professional who can guide them through? If there is any doubt about the answer to this question, then perhaps there is an inner conversation that needs to precede any referral conversation. Have you the courage to ask the questions? John Niland and Sarah Cronin Success 121
Update on CIMA’s withdrawal from the CCAB You may have heard that CIMA is withdrawing from the CCAB (Consultative Committee of Accounting Bodies). The decision was taken by the CIMA Council, which acts on behalf of all members and students, in part because CIMA’s proposal that the CCAB accept our desire to go to binding arbitration on fees paid by CIMA to the FRC was denied. The CCAB had been apportioning payments from the principal accounting bodies to the FRC on a formula which CIMA wanted revised as it felt it was unfair to CIMA. We had put forward a case as to why the situation was inequitable for CIMA and were happy to put the case to binding arbitration, but the other bodies were unwilling for this to take place. Such an outcome would have left CIMA members and students continuing to pay what it sees as a hugely disproportionate proportion of the CCAB bodies’ contribution to the FRC. As the world’s leading and largest professional body of management accountants, the Institute’s agenda is to develop and support the role of financially qualified business leaders who are able to drive some of the world’s most influential organisations. CIMA had been paying a significant amount of money every year, essentially in support of the audit profession; money which should be focused on management accountancy, how it benefits the public, and the interests of our members and students. We would like to emphasise that the withdrawal from the CCAB, in no way diminishes the CIMA qualification or the skills that students studying CIMA bring to an organisation and it will not affect CIMA’s standing in terms of its professional accountancy qualification. Historically, many job adverts have called for ‘CCAB qualified’ accountants as shorthand for, and to avoid, spelling out every member body. The CCAB itself has no qualification and only referred to the qualifications of its Chartered member bodies.
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Current affairs In line with this, CIMA has agreed with the Head of Government Accounting Services that all related job adverts will call for ‘CCAB, CIMA or overseas equivalent’ qualifications and we are also in the process of contacting leading recruitment agencies to inform them of this change. Indeed, recent job adverts in a leading national newspaper have specified ‘CIMA or ACCA preferred’ following the withdrawal. It is important to remember that the function of the CCAB was to provide a discussion and lobbying platform for the chartered accountancy bodies and that it did not exert any supervisory or regulatory authority over the collective membership. In that regard, MiP’s should be reassured that it will be ‘business as usual’ in terms of their day to day operations, and there is absolutely no reason why any of the current CIMA recognitions should be rescinded as a result. Should an MiP experience any unwarranted difficulties as a direct result of the decision to withdraw from the CCAB, CIMA would wish to be informed of this at the earliest opportunity so that appropriate action can be taken. While we were unhappy with the way in which the CCAB apportioned payments to the FRC, CIMA recognises that the FRC is the oversight body for UK accountancy bodies and will continue to contribute to the industry’s fees to the FRC on a basis that is fair and proportionate and currently being identified by the FRC. CIMA’s Chief Executive, Charles Tilley, will be attending the MiP Conference on 24 June to deliver a speech covering new initiatives and recent developments of interest to MiPs. You can find more detail on CIMA’s decision to withdraw from the CCAB at www.cimaglobal.com/ccab. Alternately, you can join the discussion on CIMAsphere http://community.cimaglobal.com/discussions/management-accounting/cimaquits-ccab-discuss For personalised advice on the withdrawal please email the CIMA Contact Centre at cima.contact@cimaglobal.com
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Current affairs New to the MiP conference? How to get the best out of it The prospect of going to the MiP conference this year can be quite daunting for someone who has never been before, so here are a few tips and tricks to get you started. The conference is a great opportunity to network with loads of like-minded people and share their experiences. Like any networking event, go with an open mind and a lot of business cards. Most people will not know each other, even though they may appear to be long lost friends when you first arrive. If you think you won’t know many people, arrive early and you will be one of the people later arrivals will approach. Talk to MiPs who are on their own or join a larger group. An ideal group to join is the ‘open pair’, that is, where two speakers are standing at the corners of an imaginary triangle leaving space for a third person to join them. A smile and ‘Can I join you?’ will usually get you accepted into any group. I have found that MiPs are very helpful and willing to share their experiences with others. Very few have had an easy ride and all share similar problems. If you are thinking of becoming a MiP, there will be plenty of people who will offer suggestions on how to get started and where to get further help. When you’re starting out, you need all the help you can get. After all, you don’t know what you don’t know. Make best use of your time at the conference. Plan the breakout sessions you want to go to, talk to as many people as you can and visit all the exhibitors and sponsors. There is always something interesting to discover and some really useful contacts to make. It’s one of the few events where you won’t have to apologise for being an accountant! The MiP conference is a great place to pick up new ideas, test out theories and meet friends old and new. If you don’t go, you’ll never know. Ian Ross MiPnet Ian Ross has been a MiP since 2000. He specialises in restoring confidence to the business numbers. He runs an electronic network called MiPnet where MiPs can share problems, ideas and the occasional work opportunity. To find out more email mipnet@interim-fcm.co.uk To see what’s on offer at the MiP Conference 2011 please see the events section on page 8 of the newsletter or visit www.cimaglobal.com/mipevents
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Current affairs Budget 2011 – a brief summary of the main points Income and personal taxation • The main headline is the consultation about the proposed merger of NIC and income tax. It is unclear if this is simply a merger of the rules or a full merger of the taxes. Also nothing has been said about employers’ NIC which is unlikely to be scrapped as it brings in some £50 billion a year. This is a major issue and will take some time to formulate. • There are changes to the collection of class 2 NIC. In future this will be collected on 31 July and 31 January. Although these are the same dates for payments under self assessment they will be collected separately. This appears to be the start of the merger as surely they will be added to the SA collections eventually. • The approved mileage allowance payment rate will increase by 5p per mile from April. That means that the first 10,000 miles claim is at 45p with 25p thereafter. That is £500 of tax-free mileage for high mileage drivers. • The income tax relief available for investments into EIS will increase to 30% from April and the thresholds for EIS and VCT investments will increase in April 2012 subject to State Aid approval from the EU. • Although previously announced, it has been confirmed that the annual allowance for tax relief on pension contributions reduces from £255,000 to £50,000 from April 2011. • The annual exemption for CGT, like personal allowances, will now increase using CPI not RPI. This will mean that the increases will be lower than using RPI. • The ceiling for entrepreneurs’ relief is increased to £10 million. Corporate and business taxation • T here is to be an acceleration of the reduction in the main rate of Corporation Tax. This means that from 2011 the rate will reduce to 26% with further reductions yearly so that the rate will be 23% from 2014. The small companies’ rate will also reduce to 19% from 1 April 2011. Research and development • A nother consultation document is to be issued on R&D credits with a view to relaxing the rules. State Aid approval will be needed for these to be implemented so nothing can happen until April 2012. • C apital allowances. Tax relief on the equipment for electricity generation under the Feed in Tariff scheme and the Renewable Heat Incentives will be looked at with measures being introduced in the 2012 finance bill. - The length of a short life asset pool is to be increased from the current four to eight years. There is also a previously announced reduction in the rates of Writing Down Allowances. The rates reduce from 20% to 18% on the main pool and 10% to 8% on the special rate pools from 2012. - The already announced reduction in AIA relief in April 2012 from £100,000 to £25,000 is confirmed. • 2 1 new Enterprise Zones are to be introduced. There will be a focus in giving enhanced capital allowances for high value manufacturing in these areas. • V AT. An ESC which allows for overseas group companies to be disregarded in certain circumstances will be consulted upon in May 2011 with a view to establishing a statutory relief.
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Current affairs Residence and domicile • R esidence. A consultation document is to be issued with regard to a statutory residence test, hoped to be in place for April 2012. This follows confusion and controversy with the Gaines Cooper case which is going through the courts at present. • D omicile. A consultation document will be issued on various changes to the non-domicile rules, likely to be issued in July. The proposals will include the removal of remittance basis if the remittance is used for investment into a UK business and a new charge to supplement the £30,000 charge currently in place with a one of £50,000 for nondomiciles who have been in the UK for 12 years. Charitable giving, savings and IHT • I SAs for under 18s are to be introduced from autumn 2011. It is not clear if there will be a restriction on these as to the source of the funds, in terms of parental gifts, as there are with the usual investments for minor children. We await the detail. • F rom April 2013 charities and CASCs will be able to claim gift aid on small gifts (£10 or less) without gift aid declarations, subject to a £5,000 donation limit. HMRC will also be moving the claims to an online form from 2012/13. - The amount of benefit the person making the donation receives potentially restricts the relief available. Where the value of the benefit provided is worth more than 5% of the donation no relief is available. In addition to this there was an annual value limit of £500. This is to increase to £2,500 from April 2011. - The ability to donate tax refunds through the self assessment return will stop. This was apparently seldom used and a source of anxiety for HMRC, in terms of online security. • I HT. Where 10% of an estate is gifted to charity a reduced rate of tax will apply to the estate. This is to be introduced from April 2012. Anti-avoidance and administration • A voidance. The government will be looking at high risk cases for avoidance and will report again next year with a view to including legislation in April 2013. The areas they are starting with are income tax losses and unauthorised unit trusts. More will be added later. • T he government is looking to introduce measures to restrict the relief available where arrangements are made using double tax treaties to avoid UK tax from April 2012. A lot of tax mitigation schemes use measures like this so it could stop a number of them from being effective in future (assuming that they are not ineffective now). • Measures have also been introduced that will stop a number of SDLT avoidance schemes. • A consultation process is to continue in the area of dishonest tax agents. It is proposed that new legislation be available in July. • T he Office of Tax Simplification looked at IR35 and suggested that it should be abolished or revised. HMRC, however, have decided that IR35 is staying for now. HMRC are to provide some additional guidance and assistance. We await the proposals for the merger of NIC and tax which may make IR35 obsolete. The OTS also identified a number of reliefs that could be removed. Most of these were rarely used and will not be missed. Should you have any questions relating to the budget please do contact me. Peter Fry info@protaxconsult.com
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Useful links UK Tax The Office of Tax Simplification has provided a report on their proposed changes and can be accessed online: www.hm-treasury.gov.uk/d/ots_small_business_interim_report.pdf www.hmrc.gov.uk/about/new-penalties/index.htm www.accountancyage.com/aa/feature/1937618/don-t-ignore-hmrc-s-disclosure-rules
Tax resources for CIMA Members in Practice It is essential that if you offer tax services you are competent to do so and keep up to date with current issues and changes. The resources below will help keep you informed on UK tax matters. • C IMA’s Member in Practice guidance note 7 (Tax). Examples of everyday tax scenarios, tax resources and discounted ATT tax training and 2011 conference for CIMA members. • C IMA Mastercourses on tax. Refresher and update courses on a wide range of tax issues including capital gains tax, employment tax, income tax, inheritance tax, VAT and tax planning. CIMA members are given a 10% discount on all courses run by BPP. A 50% late availability discount is also available on selected courses if booked two weeks prior to event. • P rofessional Conduct in Relation to Taxation (Jan 2011). A report developed by the Association of Taxation Technicians (ATT) in conjunction with ACCA, ICAEW, ICAS, IIT and STEP which provides guidance on dealing with HMRC in relation to clients’ affairs.
New video for Member in Practice registration Following on from recent communications and member feedback CIMA has produced a guidance video on registering as a Member in Practice. It is an easy step by step guide that takes you through the regulatory requirements and online application screens. The video can be accessed in CIMA’s members’ handbook. Are you a current member in practice and wish to renew your status? If so please renew online through your MYCIMA account. Please note current holders of practising certificates will not be presented with the work experience screen upon renewal.
CIMA Growing Business Knowledge hub The Growing Business Knowledge hub provides SMEs with advice in developing their businesses. More information and a recent webcast can be accessed here: www.cimaglobal.com/growingbusiness
Charity Commission The Charity Commission would like feedback on their proposals for a Financial Reporting Standard for Public Benefit Entities (FRED45) which closes on 31 July 2011. To receive a copy of this article please email hayley.dove@cimaglobal.com
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MiP Events CIMA Members in Practice Conference 2011 Date: 24-25 June 2011 Location: Heythrop Park, Oxfordshire Cost: £320+VAT for two day conference, gala dinner and accommodation (day tickets available) The Members in Practice Conference 2011 will be the best yet with celebrity speakers Gerald Ratner and Jimmy Greaves making appearances alongside CIMA Chief Executive Charles Tilley. This year’s theme, ‘Getting and keeping the clients you want’ is sure to appeal to all so don’t miss out on this great networking and CPD event. To find out more please visit www.cimaglobal.com/mipevents
MiP regional meetings Scotland regional meeting Tuesday 14 June, 6.00 for 6.30pm Royal Hotel Stirling, 55 Henderson Street, Bridge Of Allan, Stirling FK9 4HG No charge
MiP skills workshops Business performance improvement and KPIs Saturday 11 June, 10am-4pm Speaker: Robin Tidd FCMA De Vere Village South Leeds, Capital Boulevard, Tingley, Leeds LS27 0TS £120 plus VAT including lunch and refreshments
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Letters Letters from CIMA Paying the price of regulation Some Members in Practice recently raised concerns, as was their right, about the recent increase in the MiP registration fee. Of course, it is never easy to find a solution which is acceptable to everyone, but CIMA looks to those members elected or co-opted on behalf of the wider membership and special stakeholder groups for advice on key issues directly affecting their peers. All revisions to operational fees (registration fees, examination fees, exemption fees etc) follow the same due process and are normally notified via the online payment system at the same time each year. All of these types of fees are determined by Council and not by the interest groups to which they apply, although in the case of fees affecting members, there are representatives in place both formally and informally who can, and do, contribute views during the course of the review process. CIMA works hard to advance the value of membership so that it improves the career prospects of those who hold it. We are also glad to respond to the needs of those groups of members who, by virtue of their choice of employment, are also subject to external regulatory scrutiny, but sadly, there are always some costs involved in both facilitating and demonstrating compliance, and ultimately protecting the public. We try to carry as much of that cost centrally as is feasible, so that in fact only a nominal amount is passed on to the regulated group. From some of the correspondence we received, clearly some members felt that they were bearing more of the financial burden than was reasonable. The reality, however, is that the MiP registration fee has always been subsidised, and will continue to be regardless of the increases in costs falling on CIMA members generally. It is important to recognise though that the driver for levying the MiP fee is the type of work undertaken (as focused on by the regulators) and not practice size or turnover. It is a business cost, and from CIMA’s standpoint it reflects the operational costs of monitoring and is not a subscription for ‘benefits’ – a point which is sometimes misunderstood. Taking account of a proportion of the professional standards, finance, data and programme management costs to actually enable the licensing and monitoring arrangements we are required to have in place, calculations carried out two years ago revealed that there was a shortfall of some £45 per MiP. The decision was made subsequently that this would be too much to impose in one increase, and that instead it would be phased in over the next three years in equal instalments of £15. It may be of interest that CIMA’s revised fee of £85 p.a. for MiP registration compares with £385 p.a. (FT) and £83 p.a. (PT) paid by ACCA members; £245 p.a. paid by CIPFA members and £268 p.a. paid by ICAEW members. The HMRC currently charges £120 for AML monitoring alone, and the OFT £115 for the same service. The ACCA fee increased by £35 this year; the ICAEW fee by £9. While to some (but to be fair, by no means all) the additional £15 levy was an unacceptable rate of increase, particularly at a time of increased austerity, the requirements of our external regulators with statutory powers have to be responded to, and CIMA is pleased that it does actually manage to do this at a much lower cost than our competitor bodies and other external supervisors. However, as with all experiences, there are lessons to be learned. We will ask the formal MiP representative on the Professional Standards Committee to be as proactive as possible in letting MiP members know of debates that might affect them. In addition, we will make a point of achieving better contact with the Chairman of the MIPMP to also bring him closer into the loop. We are at one with MiPs in wishing not to surprise them, and apologise for the fact that some were surprised, but for all of us, new decisions will always be just that: new decisions. Gail Stirling
Director of Professional Standards & Conduct
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Letters MIPMP Mark Allen Chairman T. 01789 294484 E. mark@accountax.net Philip Badger Editor T. 01733 752677 E. pbadger.manacc@ntlworld.com Ray Baxter Vice Chairman T. 02890 998004 E. ray@baxterworld.com Ray Ankrah Vice Chairman E. rayankrah@aol.com Paul Koumi Immediate Past Chairman T. 01782 286334 E. paulkoumi@regency.uk.net
Letters from CIMA Find a practising accountant Thank you to those members who contacted Chapter Street to alert us to the problem around the Find a Practising Accountant database on the website, where names which had been included after completion of the PC approval process subsequently came off again. We appreciate and acknowledge that this has caused some concern, but with the help of the IT and programme management teams we have been back tracking through the system to identify the cause and prevent it from happening again. The problem was the result of a technical glitch triggered when members with approved PCs went back into the system and updated their practice details found in the MyCIMA MiP area, which was interpreted by the system as a ‘new/incomplete’ Member in Practice application. Reports are run each night to update the database, so any accounts showing a ‘new/incomplete’ application were automatically identified and those names taken off the database. We have identified all those affected and reloaded the information onto the database. We will continue to run regular manual checks on this to ensure the database remains up to date prior to the systems patch being applied but anyone experiencing persistent problems, please do let us know by email to prof.standards@cimaglobal.com Gail Stirling
Secretary Dr Ndubuisi Anomelechi-Onyeodi Mike Houldershaw Treasurer T. 01205 280094 E. mike@sheafHF.com
Director of Professional Standards & Conduct
Elected Members Philip Badger Tony Boffey Antony Holdsworth Stephen Milne Su Moore Kwasi Okanta-Ofori Alan Scott Kim Swarbrick Robin Tidd
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