The Spring Budget contained a number of VAT and duty related measures in specific areas which we cover in detail below. VAT interest and late payment rules Legislation is included in the Spring Finance Bill 2023 to make what is referred to as minor technical changes to the new interest and late payment rules for VAT which took effect for VAT return periods beginning on or after 1 January 2023. These measures have effect:- from 15 March 2023 for late payment interest; from 1 January 2023 for late payment penalties; and from the date of Royal Assent of the Spring Finance Bill 2023, for repayment interest. VAT relief for energy saving materials A call for evidence has been published on options to reform VAT relief for the installation of energy saving materials in the UK. This considers the inclusion of additional technologies and the possible extension of the relief to include buildings used solely for a relevant charitable purpose. Any changes to be made in this area will also apply in Northern Ireland due to the Windsor Framework which has now been ratified by both the UK and the EU. Deposit return schemes Legislation will be introduced to simplify the VAT treatment of deposits charged under a deposit return scheme for drinks containers. Where a deposit is charged on a drink that is within the scope of a deposit return scheme and the container is returned for recycling, VAT will not be applied to the deposit amount. Where the container is not returned for recycling, HMRC will collect the VAT on the unredeemed deposit. DIY housebuilders scheme digitisation project The DIY housebuilders’ scheme will be digitised and the time limit for making claims will be increased from three to six months. No timeframe has been announced as yet for when these particular changes will be introduced.  Services supervised by pharmacists From 1 May 2023, the VAT exemption on healthcare is being extended to include medical services carried out by staff directly supervised by registered pharmacists.   Treatment of patient group directions From autumn 2023, the zero rate on prescriptions will be extended to medicines supplied through patient group directions, which effectively enables some health professionals to administer specified medicines to a pre-defined group of patients, without them having to see a prescriber. Fund management reform Following the consultation on proposed reform of the VAT rules on fund management which closed in February, the government is considering the responses and is continuing to discuss the proposals with stakeholders. The government will publish its response to the consultation in the coming months. Review of the VAT treatment of financial services Building on the recommendations of the Industry Working Group established to consider the future of VAT and financial services, the government will continue to consider possible reforms to simplify the VAT treatment of financial services. Fuel duty For an additional 12 months until 31 March 2024, fuel duty will not increase as planned, hence the temporary 5 pence fuel duty cut will remain in place and the planned increase in line with inflation for 2023/24 will not proceed. According to the Budget publications, the government will continue to keep fuel duty rates in the long term under review. Alcohol duty and alcohol duty reform Alcohol duty will remain frozen until 1 August 2023 when duty rates of all alcoholic products produced in or imported into the UK will increase in line with RPI. From the same date, draught relief (the duty paid on drinks served from pumps) will increase from 5 percent to 9.2 percent for beer and cider draught products and from 20 percent to 23 percent for wine, spirits based and other fermented draught products. The government also intends to legislate, as planned, to reform the duty structure for alcoholic products by creating standardised tax bands based on alcohol by volume. Two new reliefs and transitional arrangements for certain wine products will feature in these changes which will also take effect from 1 August 2023. A policy paper sets out the rates of duty for all categories of alcoholic products in Schedule 6. Stakeholders including producers, importers and resellers of alcoholic products have until 9 April 2023 to submit their views on the draft secondary legislation.  HMRC also intends to harmonise the approval, return and payment processes for domestic producers of alcoholic products. These changes are scheduled to take effect from late 2024 when it is intended that a new digital system will be introduced. Temporary approvals for certain excise regimes The government is legislating for minor technical amendment to temporary approvals which are given to a business seeking a review or appealing against HMRC’s decision to revoke certain excise approvals. HMRC will also be provided with a discretionary power to extend a temporary approval when a business is unsuccessful in overturning HMRC’s decision, which would otherwise end automatically. This will give HMRC the ability to agree a short period for the business to legally dispose of stocks without incurring a penalty. The change will take effect from Royal Assent of the Spring Finance Bill 2023. Gaming duties The gross gaming yield bandings for gaming duty will be frozen from 1 April 2023. Tobacco duties Duty rates on all tobacco products increased by RPI plus 2 percent. The rate on hand-rolling tobacco increased by RPI plus 6 percent and the minimum excise tax increased by RPI plus 3 percent with all these changes taking effect from 6pm on 15 March 2023. Air Passenger Duty (“APD”) APD rates will increase in line with RPI for 2024/25. Short haul international rates remain frozen. Following a 50 percent cut in APD for domestic flights in 2023/24, the rate for domestic flights will increase by 50p to £7. Long haul and ultra-long haul economy rates will increase by £1. Vehicle Excise Duty (“VED”) VED rates for cars, vans and motorcycles will increase in line with RPI from 1 April 2023. To support the haulage sector, VED for heavy goods vehicles will remain frozen in 2023/24.

Under the heading of “tackling the tax gap”, a number of measures featured including doubling the maximum sentence for the most egregious cases of tax fraud from seven to 14 years. HMRC’s debt management capability The government is investing £47.2 million in order to improve HMRC’s capability to collect tax debts. This is also designed to allow HMRC to better distinguish between taxpayers who can afford to settle their tax debts but choose not to, from those who are temporarily unable to pay. Support will continue to be provided to taxpayers who are temporarily unable to pay by enhancing the online Self-Serve Time To Pay service, whilst also providing HMRC with additional capacity to ensure that those who can afford to settle their debts do so. Tackling promoters of tax avoidance The government intends to consult on the introduction of a new criminal offence for promoters of tax avoidance who fail to comply with a legal notice from HMRC to stop promoting a tax avoidance scheme. This will also examine expediting the disqualification of directors of companies involved in promoting tax avoidance, including those who exercise control or influence over a company. Self-Assessment for cryptoassets The government is introducing changes to Self-Assessment tax return forms requiring amounts in respect of cryptoassets to be identified separately. The changes will be introduced on forms from the tax year 2024/25. Capital gains assessment time period An avoidance loophole which can leave HMRC out of time to assess tax due on capital gains when an asset is disposed of under an unconditional contract is being closed. The changes will apply in relation to contracts entered into on or after 1 April 2023 for corporation tax and 6 April 2023 for capital gains tax.

The Spring Budget’s main publication also featured an overview of a range of proposals designed to simplify customs import and export processes with more detail set out in an accompanying policy paper from which our analysis below is derived. Detail of changes to customs guarantees for special procedures, temporary storage and duty deferment and modernising authorisations also feature in the policy paper. The policy paper also sets out a detailed stakeholder engagement timeline as the government plans to engage with stakeholders on each of these measures in the coming months. The timetable for this engagement also takes into account the existing systems changes, for example the final phase of the transition to the Customs Declaration Service for exports by 30 November 2023, and the first strategic release of the UK Single Trade Window. This is to ensure there is sufficient lead in time for stakeholders to adapt their own systems ahead of any policy changes coming into force. The government also intends to  consult in summer 2023 on introducing a voluntary standard for customs intermediaries, with the aim of improving the overall quality of service provided across the sector. According to the government, this is in response to feedback received as part of the “2022 Call for Evidence: An Independent Customs Regime”, which indicated that “quality varies across the customs intermediary market”. Simplified Customs Declaration Process (“SCDP”) changes A series of policy improvements will be implemented to the SCDP. These are:- increasing the amount of time traders have to submit their supplementary declaration for imports and exports (in the case of exports where it relates to more than one consignment of goods) from the fourth working day of the month to the 10th calendar day of the month; increasing the amount of time traders have to submit their final supplementary declarations from the fourth working day of the month to the 11th calendar day of the month; and allowing traders to submit one supplementary declaration for goods imported over the course of a month (known as aggregation), reducing the total number of declarations that have to be submitted. The government will work with stakeholders separately to set out the timeframes for delivery. Simplifying customs declarations review The government is also reviewing opportunities to streamline customs declaration requirements and will engage stakeholders later in the year to support this work. The review will cover both simplified and standard customs declarations, for both imports and exports and will have a particular focus on export declarations, and on ensuring that customs declarations do not impose disproportionate burdens on small and less experienced UK businesses. Transit policy simplifications In summer 2023, the government will engage on various simplifications to the transit regime, including proposed changes to make it easier for businesses to access a guarantee waiver and to start and end transit movements at their own premises. These measures are intended to improve processes for both outbound and inbound movements and to improve the offer to authorised consignee/consignors. Proposals under development are split as follows between outbound and inbound movements: For outbound movements: making it easier for authorised consignors to start a movement at a client’s premises by replacing the current paper-based approval process with a digital notification process; reducing costs for authorised consignors by making a 100 percent guarantee waiver the default position during the authorisation process and signposting applicants to possibility of operating without a financial guarantee in place; and clarifying how authorised consignors can start a transit movement from their (or their client’s) premises when exporting goods from standard export ports. For inbound movements: modernising the unloading process for authorised consignees; and clarifying how to end a transit movement when loading goods on ships, trains and planes that are destined for their stores, and simplifying the export declaration requirements in these cases. Engagement with industry on these proposals will take place in summer 2023.

The saying “the devil is in the detail” is never truer than on Budget day. Although the Chancellor’s speech was fairly light in terms of tax, that can’t be said for the accompanying budget publications which featured a range of miscellaneous measures. One change buried in the detail sets out that from 6 April 2024, land situated in an EEA state, the Channel Islands, or the Isle of Man will no longer qualify for agricultural property relief or woodlands relief for inheritance tax purposes.  A Call for Evidence will be launched in Summer 2023 on informal and ad hoc flexible working “to better understand informal agreements on flexible working between employees and employers”.  And it was also confirmed that a further set of tax administration and maintenance announcements will be made later in the spring at a “Tax Administration and Maintenance Day”, the date for which has not yet been announced. The following also featured in the Spring Budget announcements:- Social investment tax relief will end as planned next month in April 2023. New investments made on or after 6 April 2023 will therefore not qualify for income and capital gains tax relief; A Call for Evidence will be launched on the Share Incentive Plan and Save As You Earn employee share schemes in order to “consider opportunities to improve and simplify the schemes”; Page 78 of the main Budget publication provides confirmation of various rates and thresholds; A new power will be introduced to enable the tax treatment of new payments, or new top-up welfare payments, introduced by the devolved administrations, to be confirmed as social security income; Related to this, the government will clarify that the Scottish Government’s Carer Support Payment, announced on 7 February 2023, is taxable social security income; Income tax, national insurance contributions and capital gains tax exemptions will be available to group litigation order compensation payments received as a result of the Post Office Horizons scandal; A Call for Evidence has been published which explores both the taxation of ecosystem service markets and the potential expansion of agricultural property relief from inheritance tax to cover certain types of environmental land management; The government will formalise and extend an existing income tax concession for low-income trusts and estates and provide further changes to make calculations and reporting more straightforward. HMRC also intends to make changes to inheritance tax regulations to remove non-taxpaying trusts from reporting requirements; As announced at the Autumn Statement 2022, and following the publication of draft legislation on 20 December 2022, the government will legislate for the Electricity Generator Levy. The final legislation will include indexation of the benchmark price, the recognition of a limited set of exceptional costs relating to the acquisition of generation fuel, which can be set against exceptional receipts, and rules for joint ventures; The government will be making a number of modifications to the Corporate Interest Restriction rules which will take effect for periods of account commencing on or after 1 April 2023; Amendments will be made to the Real Estate Investment Trusts (“REITs”) regime to enhance its competitiveness. In addition to changes announced in the Edinburgh Reforms launched on 9 December 2022, the government will also reduce administrative burdens for certain partnerships investing in REITs. The changes will variously apply from 1 April 2023 and Royal Assent of the Spring Finance Bill 2023; Following the introduction of the Qualifying Asset Holding Companies (“QAHC”) tax regime from April 2022, legislation will be introduced to make some targeted changes so that the regime is more widely available to investment fund structures which fall within its intended scope and to ensure the rules better achieve their intended effect. Changes will variously take effect from Royal Assent of the Spring Finance Bill 2023, 20 July 2022 and 15 March 2023, or are deemed to have always had effect. The QAHC regime was introduced by Finance Act 2022 to recognise circumstances where an intermediate asset holding company is used to facilitate the flow of capital, income and gains between investors and underlying assets; The genuine diversity of ownership (“GDO”) condition in the QAHC, REITs and Non-Resident Capital Gains Tax regimes is intended to prevent funds that are only open to a small number of predetermined investors from benefiting from those regimes. With effect from Royal Assent to the Spring Finance Bill 2023, this condition will be changed to improve its operation for fund structures involving multiple pooling vehicles; A new elective accruals basis of taxation for carried interest will be introduced and will be retrospectively available from 6 April 2022 to allow UK resident investment managers to accelerate their tax liabilities in order to align with the timing for double taxation relief purposes; The government has published a response to the Call for Evidence on aspects of landfill tax, which closed in February 2022. This confirms that engagement with stakeholders will continue before making any announcements are made; A new reformed heavy goods vehicle (“HGV”) levy will be introduced from August 2023 following the planned end of the current levy suspension period. The reformed levy is designed to reflect the environmental performance of the vehicle and the levy is to apply to all HGVs using the UK road network; The process to grant options under an Enterprise Management Incentive (“EMI”) scheme is to be simplified. From April 2023, the requirement for a company to set out details of share restrictions within the option agreement and the requirement for a company to declare an employee has signed a working time declaration will be removed. From April 2024, the government will extend the deadline for a company to notify HMRC of the grant of an EMI option from 92 days following grant, to the 6 July following the end of the tax year; IT systems will be introduced to enable tax agents to payroll benefits in kind on behalf of employer clients; The government will introduce legislation in a future Finance Bill to establish the tax treatment of payments made into decommissioning funds by oil and gas companies in relation to the repurposing of oil and gas assets for use in CCUS projects; and Legislation is included in the Spring Finance Bill 2023 to allow relief from the annual tax on enveloped dwellings (“ATED”) and the 15 percent rate of Stamp Duty Land Tax (“SDLT”) for companies which make a dwelling available for occupation by refugees under the Homes for Ukraine Sponsorship Scheme. This legislation will apply retrospectively from 1 April 2022 for ATED and 31 March 2022 for SDLT.

HMRC has published its updated approach to working with agents and updated the standard for agents. If you professionally represent or advise taxpayers, the standard applies to you. We therefore recommend you read the updated standard to ensure you meet the necessary requirements.  The approach to working with agents aims to:- summarise how HMRC works with tax agents; set out what HMRC will do and in what circumstances; clarify what agents and HMRC can expect from each other; and be a resource hub for HMRC’s GOV‌‌‌.UK agent information. 

The Spring Finance Bill 2023 was published last week (official title Finance No. 2 Bill) and features many of the announcement made recently on budget day. Second reading of the Bill is due to take place this week in the House of Commons on Wednesday 29 March. The Bill includes legislation to implement the income inclusion rule and the domestic minimum tax from the Pillar Two rules in the UK for accounting periods beginning on or after 31 December 2023, in line with the Chancellor’s announcement at the Autumn Statement last year. According to HMRC, this draft legislation reflects feedback received as part of the technical consultation which also incorporates the transitional safe harbour and, where appropriate, the administrative guidance published by the OECD. Any forthcoming administrative guidance will also be reflected in legislation, where legislation is required including legislation on qualified flow through tax benefits upon which the Inclusive Framework has committed to provide further guidance.

Viet Nam is now officially part of the international effort toward greater tax co-operation and exchange of information following its signing of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

The OECD has published its Fifth Peer Review Report on Treaty Shopping, which includes data on tax treaties concluded based on countries signed up to BEPS on 31 May 2022. The report shows that members are respecting their commitment to implement the minimum standard on treaty shopping.

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. We also update you on recent developments in relation to the Protocol on Ireland / Northern Ireland. And the latest Trader Support Service bulletin is available. Update on the Protocol On Wednesday last week, the House of Commons voted on the draft Stormont Brake Statutory Instrument for the Windsor Framework after a debate in Parliament. MPs voted overall by a large majority to approve the Stormont brake, viewed as an overall vote on the Windsor Framework, with 515 in favour and 29 against.  On the EU side, the EU formally adopted the required legislative parts of the Windsor Framework in a meeting of the EU General Affairs Council which took place on Tuesday this week.   In order to translate the Windsor Framework into law, this required the UK and the EU to adopt decisions in the Withdrawal Agreement Joint Committee. A meeting took place in London on Friday 24 March, of the Joint Committee at which it the agreement was formally adopted. In other developments, last week the House of Lords Sub-Committee on the Protocol on Ireland/Northern Ireland opened a Call for Evidence into the Windsor Framework and will be accepting evidence until Tuesday 2 May 2023. The House of Commons Library also published a research briefing into the framework. Miscellaneous updated guidance etc. The latest guidance updates, and publications relevant to EU exit are as follows:- Check simplified procedure value rates for fresh fruit and vegetables; Authorised Consignee Temporary Storage (ACTS) location codes for Data Element 5/23 of the Customs Declaration Service; Internal temporary storage facilities (ITSFs) codes for Data Element 5/23 of the Customs Declaration Service; Customs Importer and Exporter Population 2022; Data Element 2/3: Document and Other Reference Codes: Licence Types – Imports and Exports of the Customs Declaration Service (CDS); Receive goods into and remove goods from an excise warehouse (Excise Notice 197); External temporary storage facilities codes for Data Element 5/23 of the Customs Declaration Service; and Maritime ports and wharves location codes for Data Element 5/23 of the Customs Declaration Service.

The European Parliament’s Permanent Subcommittee on Tax Matters (FISC) is meeting tomorrow. The meeting will be livestreamed and among the matters to be discussed will be the implementation of the Two-Pillar Solution, a case study of German tax reforms, and VAT fraud.

This month’s tidbits cover updated guidance on the off-payroll working (IR 35) rules and information on preparing for the economic crime levy.

HMRC’s latest schedule of recorded webinars is now available for booking. Spaces are limited, so take a look now and save your place. Recordings are available to register to view as follows:- An overview of the new VAT late submission, late payment penalties and interest changes; The Trust Registration Service and reporting discrepancies; and Super-deduction capital allowance.

Do you use HMRC online services? Don’t be caught out by the planned downtime to some services. HMRC are warning about the non-availability of specific services on the HMRC website, a range of services are impacted. Check the relevant page for information on planned downtime.

Check out the latest items on the Agent Forum. Remember, in order to view each item, you must be signed up and logged in. All agents, who are a member of a professional body, are invited to join HMRC’s Agent Forum. This dedicated Agent Forum is hosted in a private area within the HMRC’s Online Taxpayer Forum. You can interact with other agents and HMRC experts to discuss topical issues and processes.

Welcome to this week’s Technical Roundup.  In developments this week, the Corporate & Insolvency Bar Association is hosting its inaugural annual conference on Friday, 31 March with a drinks reception and dinner taking place after the conference; the European Securities and Markets Authority (ESMA) has sent a letter to the European Parliament and Council raising concerns with proposed changes to the insider list regime in the Markets Abuse Regulation. Read more on these and other developments that may be of interest to members below. Audit and Assurance The FRC has issued guidance for audit firms on eligibility criteria in the context of the firm’s system of quality management and the performance of engagements. ISQM (UK) 1 and ISQM (UK) 2 have been reissued with updated footnotes to reflect this guidance. Insolvency The Revenue Commissioners has recently updated Revenue eBrief No. 69/23 on Examinership Caseworking Guidelines. The updates have been made to reflect recent changes to the Companies (Miscellaneous Provisions) (COVID-19) Act 2020 and the European Union (Preventative Restructuring) Regulations 2022. From 17 April 2023, new creditor winding up petitions may be issued in Northern Ireland for the first time since restrictions were imposed in March 2020.  The following new conditions, which did not exist prior to the pandemic, must now be met – (a) the petition must be in the new standard form; (b) the debt must be based on a Court Judgment; and (c) the statutory demand must be made after 13 March 2023. The Corporate & Insolvency Bar Association is hosting its inaugural annual conference on Friday, 31 March. There will be a drinks reception and dinner taking place after the conference. The conference schedule and booking details are available here. Financial Reporting The International Accounting Standards Board (IASB) has released its March 2023 IFRS for SMEs Accounting Standard Update. The IFRS Interpretations Committee has also released its March 2023 update. The IASB has published an exposure draft proposing amendments to the classification and measurement requirements in IFRS 9 Financial Instruments. The proposed amendments respond to feedback received from a post-implementation review of the classification and measurement requirements in IFRS 9, which concluded in December 2022. The comment period will remain open until 19 July 2023. The IASB has added a project to its work plan to explore whether and how companies can provide better information about climate-related risks in their financial statements. The International Sustainability Standards Board (ISSB) has released its March 2023 update and podcast. The UK Endorsement Board (UKEB) has published a report ‘Accounting for Intangibles: UK Stakeholders’ Views’. It sets out stakeholder views on the accounting for intangibles under international Accounting Standards within the context of the wider economic impact of intangibles in the UK. Sustainability Correspondence in September 2022 from the Financial Conduct Authority (FCA) to benchmark administrators in the UK highlighted the risk of poor disclosures for ESG benchmarks. The FCA said that high quality ESG benchmarks are important to support trust in the market for ESG products and the transition to a net zero economy. The FCA has completed a preliminary review on ESG benchmarks which found that the overall quality of ESG-related disclosures made by benchmark administrators was poor and it has sent a further letter to administrators outlining the issues identified. These include not enough detail on the ESG factors considered in benchmark methodologies and not fully implementing ESG disclosure requirements.  You can read the follow-on correspondence which details the issues here. The FCA has also indicated that it supports regulation of ESG ratings and is  working closely with Government on this. Anti-Money laundering/Sanctions The UK FIU writes that it has updated and redesigned it's 'Requesting A Defence Under POCA and TACT' guidance document, available on the National Crime Agency (NCA) website. This document is intended to inform of the approach when reporters, through submitting a SAR, seek a defence (or ‘consent’) from the NCA to a principal money laundering offence or terrorist financing offence. The UK’s Office of Financial Sanctions Implementation (“OFSI”) recently updated its guidance on monetary penalties and enforcement (the “Guidance”) to set out its enforcement approach in cases involving ownership and control by designated persons. You can read more here. Other Areas of Interest The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has sent a letter to the European Parliament and Council raising concerns with proposed changes to the insider list regime in the Markets Abuse Regulation. The Department for Communities has  launched a public consultation on a prospective Scheme of Delegation for decisions of the Charity Commission for Northern Ireland.  This consultation is accordance with the Charities Act (Northern Ireland) 2022, which allows that the Department may make a Scheme of Delegation to permit some of the Commission’s decision-making functions to be delegated to staff, as they are in other jurisdictions. Enterprise Ireland is running a series of webinars focusing on competitiveness. They are running from now until October and will cover a range of issues critical to competitiveness including supply chain management, raising finance and digital adoption. There are also three in-person workshops focused on attracting and retaining talent. Click here for more details in Enterprise Ireland press release and here for full details of the webinar series and workshops . The Central Bank (CBI) spoke at a recent event about its 2023 regulatory and supervisory priorities which include continuing to remain vigilant in assessing and managing the financial and operational resilience of firms and enhancing the Bank’s regulatory and supervisory approaches to mitigate risks from the changing financial system .It also referred to continuing vigilance of the financial system, supervising firms’ compliance with anti-money laundering and countering terrorist financing  obligations, detecting and sanctioning market abuse, and enforcing financial sanctions working closely with An Garda Síochána and other relevant bodies in all these areas. CBI recently published its Innovation Hub 2022 update. Established in 2018 it writes; the Innovation Hub gives firms operating in the fintech sector a way to engage with CBI outside of existing formal regulator/firm engagement processes. The crypto/ blockchain sector accounted for 33% of enquiries received last year. You can access the 2022 Innovation Update here. For further technical information and updates please visit the Technical Hub on the Institute website.

In this week’s EU exit bulletin, we focus on recent developments in relation to the Protocol and specifically the Windsor Framework. On Wednesday this week, the House of Commons voted on the draft Stormont Brake Statutory Instrument for the Windsor Framework after a debate in Parliament. MPs voted overall by a large majority to approve the Stormont brake, viewed as an overall vote on the Windsor Framework, with 515 in favour and 29 against.  On the EU side, the EU formally adopted the required legislative parts of the Windsor Framework in a meeting of the EU General Affairs Council which took place on Tuesday this week. Last week, the European Parliament debated the Windsor Framework. In order to translate the Windsor Framework into law, this requires the UK and the EU to adopt decisions in the Withdrawal Agreement Joint Committee. A meeting in London is scheduled for today, Friday 24 March, of the Joint Committee at which it is expected that the agreement will be formally adopted.

To mark the ongoing periodic review of FRS 102, and other UK and Irish Accounting Standards, we have prepared a survey to allow members to share their views on the changes proposed in FRED 82 by the Financial Reporting Council (FRC). FRED 82 proposes a number of changes to FRS 102 and other standards, including FRS 105. These changes are part of the second comprehensive review of the accounting standards. The proposed changes are open for public comment with the FRC until 30 April 2023, with a proposed effective date for the amendments of accounting periods beginning on or after 1 January 2025. This survey will remain open until 7 April 2023. Members who would like to know more about FRED 82 are encouraged to join us in Chartered Accountants House on 29 March for some free, in-person events with the FRC.

Chartered Accountants identify NI Protocol, now replaced with Windsor Framework, as main opportunity for business Significant increase in perception of number of businesses facing financial distress 22 March 2023 - A survey of chartered accountants in Northern Ireland shows that more than half (54%) believe that prospects for the economy in the year ahead are ‘poor’, with only 7% rating the outlook as ‘good’ or ‘very good’. Three quarters of those surveyed believe that the Northern Ireland economy is either contracting or stagnant, with only one in four believing the economy is growing at present. A long list of negative influences cited in the survey was headed by political instability and cost of living pressures, with 82% of those surveyed saying that the NI Executive should be restored. The survey from Chartered Accountants Ulster Society also shows a significant rise in the number of Chartered Accountants who feel that the number of businesses in financial distress was increasing (77% in 2023, up from 44% in 2022). Despite a difficult year ahead, respondents identified the Northern Ireland Protocol as the biggest opportunity for Northern Ireland in the years ahead, citing its potential to provide a unique trading position for businesses here. The survey was conducted prior to the publication of the Windsor Framework, which replaces the Northern Ireland Protocol. A low cost base, high skills offering, geographic location, English speaking workforce and the ability to potentially lower corporation tax were also cited as plus points for the local economy in terms of attracting more inward investment. Key Issues The biggest negative issues for the year ahead are ‘rising inflation and squeeze on living standards’ (96%), ‘cutbacks in Government spending’ (95%) and ‘current political conditions in Northern Ireland’ (93%). 75% of those surveyed identified ‘EU Exit’ as a ‘strongly negative’ or ‘negative’ factor on the performance of the local economy.  The survey showed that the rise in the cost of doing business is leading most businesses to absorb the costs, or pass on the price rises to customers, with only 10% having to look towards staffing cuts at present. EU Exit The survey did show some modest positives for business from EU Exit in terms of sales/ turnover growth and export growth outside the UK. However, the predominant impacts for business were negative, particularly in the areas of business costs, purchases from Great Britain, access to EU workers, profits growth and investment plans. A majority of respondents to the survey (78%) held a strong belief that Northern Ireland’s reputation had been damaged by the handling of the EU Exit process. 72% of those surveyed believe that the Northern Ireland Protocol presents an opportunity for Northern Ireland and 76% believe that the Northern Ireland Protocol challenges can be addressed. The Windsor Framework is the most recent attempt to overcome these challenges.  Governance 82% say that the Northern Ireland Executive should be restored, while 69% feel that more powers should be given to Permanent Secretaries within government departments until the Executive is restored. The survey found mixed views on whether there should be further devolution of tax powers in Northern Ireland, with 44% saying ‘yes’ and 40% saying ‘no’. Corporation Tax was considered the most suitable tax to devolve, followed by short haul Air Passenger Duty and the Apprenticeship Levy. Skills Attracting and retaining people and skills dominate the challenges facing businesses in Northern Ireland, with 85% saying that it was becoming ‘increasingly difficult’ to find the right people for jobs, while 78% felt there was ‘a lack of skilled people to fill new skilled positions in Northern Ireland’. 80% of chartered accountants surveyed are expecting a fall in wages in real terms, with 25% expecting no change in wages or a pay cut this year. The survey shows that most chartered accountants expect hybrid working to continue in the year ahead. Emma Murray, Chairperson of Chartered Accountants Ulster Society which represents over 5,300 Chartered Accountants in Northern Ireland said:  “The survey results highlight that chartered accountants are seeing some significant warning signs for the local economy with a period of stagnation and fairly poor prospects ahead. “They are pointing to a long list of negative influences including the current political impasse in Northern Ireland, the squeeze on living standards, cuts in government spending, and the increased cost of doing business, plus the impact of the UK’s exit from the European Union. “Our members want the Executive to be restored so that we can begin to work together to address these issues for the benefit of everyone in Northern Ireland. “Our survey shows that a majority of businesses believe that the NI Protocol, now the Windsor Framework, with access to both the British and EU markets, presents a significant opportunity for Northern Ireland. “They believe it is vital that we have leadership taking key decisions, encouraging business investment and better public services. The longer that political instability continues, the more difficult it is for local business to contribute to growth, jobs and a better quality of life in Northern Ireland.” Independent economist Maureen O’Reilly, who formulated and analysed the survey of Northern Ireland’s Chartered Accountants said: “These findings provide a very valuable insight into the underlying challenges and opportunities for the NI economy from the perspective of chartered accountants at the cold face of doing business across the private, public and third sectors here.  “Their main focus is on the financial health of the businesses and organisations they represent and it is concerning that the share of members who believe that financial distress among businesses is on the increase (77%).  This is the highest share recorded over the last 7 years by a considerable margin.  “Businesses are trying to deal with rising costs by absorbing and/or passing them on through increasing prices while at the same time trying to hold on to staff, a difficult balancing act to juggle that can only last for so long if those inflationary pressures persist.    “The current political and economic environment is extremely difficult which unsurprisingly is dampening the mood around prospects for the year ahead.  However, members do see opportunities going forward and the NI Protocol (and now Windsor Framework) is certainly viewed as the main catalyst to support the region to move on to a stronger growth path.  “Members believe economic success should be measured in terms of higher productivity and higher wage jobs sending a clear message around where policy focus should sit. However, they are largely split on whether the devolution of tax varying powers to Northern Ireland should be pursued, the main concern being the need for much greater political stability before this should be pursued further. It is noteworthy that corporation tax remains the most popular tax to devolve here.”  A summary of key findings: 23% felt that the economy was growing; 33% of local Chartered Accountants feel that the local economy is stagnant; 43% believe that the economy is contracting. 77% say that the number of businesses in financial distress is increasing. 2% say the number is falling. 16% say the number is unchanged. 7% feel the outlook for the NI economy in the year ahead is ‘Good’ or ‘Very Good’; 40% feel the outlook is ‘Fair’; 54% say ‘Poor’ or ‘Very Poor’. Rising inflation and squeeze on living standards (96%), Cutbacks in Government spending (95%) and current political conditions in Northern Ireland (93%) are seen as the most negative issues for the economy. 72% of those surveyed believe that the NI Protocol presents an opportunity for Northern Ireland. 76% believe that the NI Protocol challenges can be addressed. 85% say their business or organisation is experiencing skills shortages (up from 62% in 2022) 82% want the NI Executive to be restored. 69% feel that more powers should be given to Permanent Secretaries within government departments until the Executive is restored. 254 Chartered Accountants took part in the survey. ENDS 

Andrew Keating, CFO at Musgrave Group, looks back at his career progression and tells us the most important lessons he has learned along the way Tell us about your current role? What does it involve? I was appointed as the Chief Financial Officer of Musgrave Group earlier this year. We operate 12 food and beverage brands, including SuperValu, Centra, Donnybrook Fair and Frank & Honest coffee, and feed one-in-three people on the island of Ireland every day.  Through our partnership with entrepreneurial independent retailers, Musgrave Group is also the largest private sector employer in Ireland with over 40,000 colleagues.  My role involves partnering with our CEO, executive colleagues, and our Board of Directors to develop and execute Musgrave Group’s business strategy in line with our purpose: “Growing Good Business”.  In addition, I lead, motivate, and develop our finance team—and, very importantly, I aim to act as a role model for our values across the wider organisation. You have had a highly successful career. What do you attribute this to? I believe my career progression to date has been as a consequence of the value and leadership I have brought to the organisations I have worked with, for my colleagues, customers, and wider stakeholders.  Of course, strong and relevant technical skills are important, but I have also found that, as my career has progressed, these skills have really just become the “minimum ticket to the game”.  Equally important for me has been my investment in developing my leadership competencies in areas such as impact and influence, commercial focus, change management and inspiring people.  Developing these competencies to a decent level takes time, a lot of practice and a willingness to learn from your mistakes. It’s important, therefore, to start your journey as early as possible. I would encourage ambitious Chartered Accountants to compare the amount of time they have invested in their technical skills (through school, third level, if relevant, professional exams, CPD, etc.) with the amount of time and energy they have invested in developing and nurturing their leadership competencies.  What was the best career advice you ever received and why?  One piece of career advice that really inspires me is to bring your whole self to work every day. This contributes strongly to a trusting, inclusive and authentic environment.  So much of the value we bring to our organisations comes through our collaboration with other people—colleagues, customers, and wider stakeholders.  The more effective these relationships, the more valuable our contribution to the organisation will be, and the more successful our own careers.  What do you look for yourself when you are hiring? When hiring new colleagues, I’m drawn to individuals who, I believe, could have a long-term career with our company. I don’t tend to simply recruit for a particular vacancy or role.  Once I have determined that the individual can do the job on offer from a technical perspective, my priority is to understand their competencies and values.  I want to understand where they are on their journey in terms of developing an authentic leadership style, how they might contribute to an inclusive team environment, how they will collaborate with colleagues, customers, and other stakeholders, and if their values are consistent both with the values of the organisation and my own. You can read this article and more about your career in accountancy in the Accountancy Ireland Career Guide 2023.

Investing time and effort in networking can help young professionals to develop important relationships and progress faster in their careers. Sonya Boyce explains why Networking is defined, broadly speaking, as: “the action or process of interacting with others to exchange information and develop professional or social contacts”.  When we think of networking as a transactional, one-sided, and artificial relationship, however, it can make us feel slightly uncomfortable about the concept, as though we are somehow using someone for our own professional gain.  Through our work with clients at Mazars and our own experience, we can see that post-COVID-19, working habits have reinforced artificial or contrived perceptions of networking.  Many employees have lost the appetite to network effectively and it can be difficult to mobilise people to re-engage with their existing network and forge new connections in-person.   Just as those connections become even more important in a physically disconnected professional environment, it is key that people invest now in re-establishing and developing their networks in a meaningful way.  Unlocking your network effectively in a post-COVID-19 world could be the key to deeper engagement with colleagues, faster career development and more enjoyable working environments and relationships.  Benefits of networking A strong professional network can be a powerful asset in your career development, playing a critical role in progression, professional opportunities, and making work more enjoyable. Building a network is about relationships with colleagues, bosses, friends, industry colleagues or connections.  Your network isn’t just the relationships you have nurtured over time with friends and colleagues. It also includes more distant relationships and connections with thought leaders, business leaders, and “infrequent contacts”, such as casual acquaintances, and people you have met at conferences.  While not necessarily as close, these connections can be an invaluable part of your network and often possess information or links that can grow your reach and opportunity to learn.  This network, of both close and looser ties, developed over the course of your career, can support greater job mobility, while also being beneficial for employment opportunities, career progression and rewards. Top networking tips Developing a network or networking is not simply about attending conferences and events to “sell” yourself professionally.  Growing a network is about relationship building, developing trust and engaging with the needs and interests of the people you meet and connect with.  To help you enhance this network, especially if you find the process intimidating, here are some useful ideas to consider:  Networking as learning Developing a network is not about gaining connections immediately. Like any relationship, it takes time to develop trust and understanding. Therefore, considering networking as a learning exercise in which we engage is important. Understanding people’s “currencies” Different people are motivated and engaged in different ways. Allan R. Cohen and David L. Bradford, the organisation psychologists known for their work about the power of influencing, wrote extensively on understanding people’s currencies, in order to be able to influence others without authority. Their work identified five primary currencies:  Tasks Position Inspiration Relationship  Personal These five “currencies” can help us identify areas for potential collaboration with other people, develop our networks, and deepen our relationships with others. Networking to get ahead Building your network is just as much about those outside your organisation as it is about your colleagues inside the organisation. One Cornell University study on networking found a correlation between a person’s ability to engage with internal network and their professional opportunities.  In the study, lawyers whose personal views of networking were positive ended with more billable hours and greater choice over the projects they wished to work on, than their colleagues who were less inclined to network.  In essence, those who engage colleagues, make connections and put themselves forward—i.e., those willing and able to develop their personal networks—were more successful in their careers.  Overcoming your fear There is a great opportunity for employers to support and encourage employees to network.  Julia Hobsbawm, author of The Nowhere Office, has, for example, promoted the idea of a Chief Networks Officer (CNO) as a means for organisations to put focus and energy into ensuring that employees are getting the most value out of their connections. Hobsbawm says: “Really, the office is going to be good for two things—social networks and learning. Because people have been out of the office, the last thing you want  to do is to send them to a conference.” Putting networks, and networking, at the C-Suite level would send a clear message to employees and customers alike about the importance of relationships, consistent engagement, chance encounters and stretch projects or developmental opportunities that come from our direct and indirect network.  Sonya Boyce is HR and Organisational Development Consulting Director with Mazars in Ireland You can read this article and more about your career in accountancy in the Accountancy Ireland Career Guide 2023.