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On 1 April 2019, Making Tax Digital (MTD) is being introduced in the UK with the aim of transforming and modernising how tax is reported and managed. The first stage of MTD is to bring VAT into the digital domain. Jennifer Upton and Senan Kavanagh explain the steps businesses need to take to prepare themselves. For VAT periods commencing on or after 1 April 2019, all VAT registered businesses with a turnover in excess of the VAT registration threshold (taxable supplies of £85,000 per annum) are required to maintain digital records for VAT and submit their VAT returns digitally. Certain businesses are able to avail of a six-month deferral whereby MTD for VAT is not mandated until 1 October 2019. MTD Requirements There are three principal requirements in relation to MTD for VAT: Digital records (effective 1 April 2019) Details of the business transactions that directly lead to the creation of the summarised VAT return figures due for periodic submission to HMRC must be maintained in digital form within ‘functional compatible software’. Digital links (effective 1 April 2019 with a soft landing up to 1 April 2020) It will be necessary to demonstrate that ‘digital links’ are used throughout the end-to-end VAT return preparation process to transmit data between systems used to produce data relevant to the VAT return. Re-keying data and the use of ‘cut and paste’ are specifically prohibited, which will require information flows between systems to be automated. While this requirement has the force of law from 1 April 2019, HMRC has confirmed that a ‘soft landing’ period will apply, whereby penalties will not be imposed for non-compliance prior to 1 April 2020 (or 1 October 2020 where the deferral applies). It should be noted that the soft landing only applies in respect of the digital links requirement. Digital submission of VAT returns (effective 1 April 2019) For VAT returns filed in respect of periods commencing on or after 1 April 2019, VAT return information can only be submitted to HMRC via an application programme interface (API). It will no longer be permitted to manually complete the nine box UK VAT return via HMRC’s portal. HMRC have issued a list of approved software packages that will support this requirement. Deferral A six-month deferral is available for certain categories of taxpayers, including public bodies, members of VAT groups and foreign, non-established businesses with a UK VAT-registration. Businesses in scope of the deferral have to receive a specific direction from HMRC in order for the deferral to apply. We understand that HMRC has now written to all taxpayers that they believe to be in this category. Where the deferral applies, the requirements – in respect of digital records and the digital submission – will apply from 1 October 2019, while the requirement to maintain digital links will not apply until October 2020. Other taxes MTD is expected to be extended to income tax and corporation tax in the near future. An exact timeline for implementation has not yet been confirmed, however, HMRC have stated that it will not be before April 2020. It is expected that MTD for income tax and corporation tax will require periodic disclosure of income, expenditure and profit data, which would not currently be disclosed until annual tax returns are filed. Next steps Businesses should assess the impact of MTD on their UK VAT reporting process to ensure that they are compliant. This should include: Verifying that there is the capability in place to submit VAT returns digitally via an API for VAT return periods commencing on or after 1 April 2019, or 1 October 2019 (where applicable). Reviewing existing records to confirm that they meet the MTD digital recordkeeping requirements and are retained in functional compatible software. Reviewing the existing end-to-end process to ensure it is efficient and accurate. Putting a plan in place to ensure that the journey of information, from source to VAT return, will be compliant prior to the end of the soft landing period 1 April 2020 or 1 October 2020 (where applicable). Where the deferral applies, ensuring that correspondence has been received from HMRC to this effect. Jennifer Upton is a Director in KPMG’s Belfast VAT team. Senan Kavanagh is an Associate Director in KPMG’s Tax Technology team.

Mar 08, 2019
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Your services are only a small percentage of what you offer to your clients. Dependability, honesty and transparency are what can turn a consultation into a contract. The best way to demonstrate all three and ensure your own success is mastering the follow-up, argues Sarah Daly. As with all relationships, transparency and clarity are central. True, these words are thrown about quite a bit these days but that does not diminish their relevance and importance in today’s business world. These tenets are the building blocks of all relationships and can help to dispel fear, distrust and insecurity. So, why don’t we embrace transparency and clarity fully and utilise the honest foundations that they afford us? Are we embarrassed? Are we lazy? Are we not organised enough to act? Or are we afraid that we will be perceived as pushy, desperate or nagging? The psychological barriers are too many to mention but also too ridiculous to give credence to. We all strive to empower our clients through solution-based presentations yet sometimes we can leave them feeling distracted with the vague promise of future contact. Whatever business you are in, we all have one thing in common – we are all trying to succeed. We want to grow, we want to take that next step, but we can’t take it alone. Business development and success go hand in hand with client growth and retention, but how do we build our client base and how do we hook that new client post-meeting? You would never head into a client meeting unprepared, so why would you think it is acceptable to leave without a definitive follow-up schedule? Clients deserve more, as do we. Nobody enjoys being left in limbo. The issue of the call-back needs to be put to bed. When do you call a client post-meeting? To answer this, you must know your own schedule inside and out. This will allow you the flexibility to fit in with your client’s diary. How assured would a prospective client feel leaving a meeting knowing exactly when to expect your call? Feeling secure in the knowledge that you are confident enough to set a time in stone and cut out all ambiguity. What I propose is simple. It is what we all strive to ensure for our clients – clarity. Just step up to the plate and own the follow-up. Six steps for a successful follow-up Here are six steps to get the ball moving: Before ending that all-important initial meeting, set out your plan of action. Write your own script and use it every time you have a new client meeting. Assure your client that you will call them on a specific date and put that date in your diary while you are with them. Encourage them to also put it in their diary, assuring everyone that you are both making time for one another. Send an eVite once you are back in the office, further encouraging yourself to make sure the follow-up happens. Assure them that no matter the outcome, you will be in touch via email one week after your call. Not only have you positioned the ball for the next shot, but you have shown that you are confident and adept at the process. Prospective client or not, you will have made your mark and filled your schedule. Sarah Daly is the Founder and CEO at GroForth.

Mar 08, 2019
News

According to PwC’s 22nd Annual Global CEO Survey, the majority of Irish CEOs are cautiously optimistic about the future, but more recognise investment is needed in emerging technologies and key skills. Feargal O’Rourke breaks down the results into four key messages that are imperative for Irish CEOs to take on. At the time the PwC Annual Global CEO Survey was conducted, over half of Irish business leaders were positive about the future prospects for the economy and the future performance for their organisation’s revenue growth. However, possibly reflecting external uncertainties, a quarter felt unfavourable about the prospects for the Irish economy, up from 17 % in 2017. Key challenges include the unavailability of key talent, at an all-time high, cyber threats and geopolitical uncertainties. As external uncertainties persist, it is interesting to see how Irish CEOs, like their global counterparts, are turning their attention to the areas within their own control to drive growth. In light of external disruptors, such as Brexit, it is critical that CEOs take charge of their own destiny in as much as they can. However, in order to be confident that their organisation is fit for the future, they must first solve the key skills challenge. People are always the key to a successful organisation and that’s something I’ve found to be true throughout my own professional career. From our survey, we have discovered four key messages for CEOs. Ensure your organisation is fit for growth CEOs’ focus is turning inward, to things they can control in their businesses. 54% said their organisation’s growth will be driven by operational efficiencies. They are planning to invest in organic activities within their organisations they believe will propel them to success. That means they must ensure their organisations’ combination of processes, tools, workforce and culture are fit to cultivate, deliver and sustain growth. Close the information gap As CEOs look inside their businesses for growth opportunities, they are contending with gaps in their organisation’s data analytics capabilities. Only 19% of Irish CEOs said the information they receive is adequate. They need to ensure they are extracting the maximum value out of their data to allow them to leverage new technologies in sustainable ways. Prepare for the artificial intelligence revolution To help unlock internal growth potential in their organisations, CEOs are paying close attention to emerging digital technologies such as artificial intelligence (AI). 64% of Irish CEOs believe AI will significantly change the way they do business, so they need to understand how AI can be applied in their businesses, and ensure their businesses have the right talent, data and technology to exploit the opportunities that AI presents. Invest in key skills The challenge of finding staff with the right skills is at an all-time high. The majority of Irish CEOs see this as the biggest threat to potential business growth and 75% of them said that hiring people has become more difficult. Irish businesses should look inwards and invest in their workforce to make them fit for the future, providing them with the right training and career development support. Feargal O’Rourke is the Managing Partner of PwC Ireland.

Mar 08, 2019
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The Central Bank of Ireland has published an analysis of over 5,000 applications for approval to occupy senior roles within regulated firms in Ireland (under the Fitness and Probity regime) in 2018. The Central Bank has committed to publishing this analysis on an annual basis as part of its continued focus on the importance of diversity in regulated firms. This is the third such publication. At an overall level, there has been an improvement in the number of female applicants, rising from 22% 2017 to 24% 2018. While some firms are starting to make progress, much more needs to be done to increase the diversity of experience, thought, background and attributes at senior levels to:   Reduce the likelihood of group-think; Reduce overconfidence and improve decision-making; Enhance culture and improve risk management; and Increase the level of internal challenge in financial services firms and reduce excessive resistance to external challenge. Key developments in 2018 include:   Primarily due to Brexit, there was a 50% increase in the number of applications submitted during the period, compared to applications made in 2017; The most material change in composition was in the banking sector, where 31% of applications were for women, compared to 25% in 2017; this was even more pronounced in the applications for board positions, which increased from 23% in 2017 to 36% in 2018; Approximately four out of five applications for board positions were for men, marginally down on 2017 (82%); and this remained even more imbalanced for the most important Chair of the Board and Chief Executive positions, 84% of which were for men; and The analysis continues to show a pronounced gender imbalance at board level and in revenue generating roles. Deputy Governor, Prudential Regulation, Ed Sibley said: "Diversity matters. Similar people looking at similar information and facing similar circumstances are likely to rely on similar assumptions and make similar decisions. This type of group-think contributed to the depth of the financial crisis internationally and in Ireland and contributed to many of the conduct scandals that have subsequently emerged. "While it is positive to see some progress, this is from a low base. More needs to be done to meaningfully address the acute lack of diversity at senior levels; this requires:   More ambition, including in targets and measures; More than lip service being paid to diversity programmes; Better building of pipelines of talent; Considering the overall construct and functioning of the executive management teams when making appointments; and Identifying and reducing barriers to change.” Director General, Financial Conduct Derville Rowland said: "It is positive to see improvements in gender diversity at senior roles in regulated financial services providers, but it is also striking that there remains a pronounced gender imbalance at board level and in revenue generating roles. The Central Bank considers a lack of diversity at senior management and board level to be a leading indicator of heightened behaviour and culture risks in financial institutions. We intend to keep up the pressure on firms to ensure diversity also in those senior roles that are central to how they make their decisions, set their risk appetites and treat their customers." Source: The Central Bank of Ireland 08/03/2019

Mar 08, 2019
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The Financial Reporting Council (FRC) has issued a position paper which sets out how ethical and auditing standards will be developed to respond better to the needs of users of audited financial information, following the recent call for feedback. The paper sets out the issues that will be developed to support a public consultation on the text of revised standards over the summer. It also sets out how the FRC's work on the standards responds to certain recommendations made by Sir John Kingman in his independent review of the FRC; how proposals are being developed to support the Competition and Market Authority’s market study of the UK statutory audit market; and how revisions made to the international Code of Ethics will be incorporated into the FRC Ethical Standard. The position paper also draws the attention of public interest entity (PIE) auditors to changes that will take place to UK law in the event that the UK exits the European Union with no deal or transitional period at 11pm on 29 March 2019. An appendix to the paper shows the most important implications of this, which audit firms will need to address. The FRC will also be writing to the heads of audit for all UK PIE audit firms, and to the professional accountancy bodies to draw attention to this – the most immediate issues will be a change to the definition of a PIE and implications for the provision of certain non-audit services, which will be prohibited on a global basis rather than just within the European Union. Source: Financial Reporting Council 05/03/2019

Mar 08, 2019
News

On 4 March 2019, the Financial Reporting Council (FRC) in the United Kingdom published an exposure draft of International Standard on Auditing (UK) 570 (Revised) Going Concern and issued a request for comments on the proposed changes. The Auditing Framework for Ireland is based on the FRC's Auditing Framework. IAASA's policy is to have minimal amendments to the UK regime. Amendments will be considered where there is a conflict with Irish or EU law or where there are clear, distinct differences between the Irish and UK markets, which impact upon the applicability of standards. Any proposed significant changes to the Auditing Framework in Ireland will be subject to a consultation process prior to the issuing of a revised International Standard on Auditing (Ireland). The FRC's consultation on the exposure draft of International Standard on Auditing (UK) 570 (Revised) Going Concern can be accessed here. Source: IAASA 08/03/2019

Mar 07, 2019