Last week we examined option one in HMRC’s long planned consultation on “Raising standards in the tax advice market” which proposes mandatory membership of a recognised professional body and is clearly HMRC’s preferred option. This week we are seeking your feedback on option two, a hybrid regulatory model in of joint HMRC and industry enforcement and encourage you to share your views with us by Tuesday 7 May 2024. Next week’s edition of Chartered Accountants Tax News will set out more information on the final option, regulation by a separate statutory government body in addition to approaches to strengthen the controls on access to HMRC’s services for tax practitioners. Joint HMRC and industry enforcement Under this option, HMRC and industry would monitor and raise standards of the market. Unaffiliated tax practitioners would have to be supervised by HMRC and professional body members would be subject to the supervisory requirements of their professional body. Note that this option is unlikely to beHMRC’s preferred option. More information on this option is set out in Chapter 6. Tax practitioners in scope of the regulatory framework would be required to become and remain a member of a recognised professional body or be supervised by HMRC to provide tax advice and tax services. According to the consultation document, this would provide greater market flexibility as tax practitioners would have a choice of either becoming a member of a professional body or being unaffiliated with any professional body and instead being supervised by HMRC as a tax practitioner. Professional bodies’ responsibilities would remain the same, which includes maintaining oversight and supervision for their members and ensuring they meet the appropriate standards. They would also remain responsible for acting where members are found to be in breach of the standards required of them. This would build on the supervisory role professional bodies currently undertake to maintain professional standards amongst tax practitioners. They would not be expected to oversee the unaffiliated market. HMRC believes that as for option one, this would have minimal impact on current professional body members who meet expected standards. Under this approach HMRC would take a greater role in maintaining and raising standards of those tax practitioners who are unaffiliated with a recognised professional body. HMRC would undertake checks of those being supervised, beyond those being proposed under mandatory registration (see Chapter 5). Checks could include adherence to the ‘Standard for Agents’ and/or complete and certify that they have met appropriate continuing professional development requirements. The practitioner would be expected to declare annually that they continued to meet requirements. Additionally, HMRC would carry out ongoing risk-based checks to ensure tax practitioners continued to meet requirements and would be responsible for enforcement when tax practitioners do not comply with standards. This approach would therefore require investment to expand HMRC’s role beyond its current role of administering the tax system and supervising some tax practitioners for AML. The ability of this approach to raise standards in the market will be dependent on the supervisory role undertaken by HMRC. However, HMRC taking on a strong supervisory role of tax practitioner professional standards whilst administering the tax system could create a conflict of interest. This is because HMRC could be perceived as acting as both judge and jury, as the department would be responsible for checking both tax compliance and setting and enforcing standards of tax practitioners, for example, where there is a difference in interpretation of the law, or where the tax practitioner considers they are acting in the best interest of the client even though HMRC disagrees with the outcome. Other risks include the added complexity in the market for example, the potential for there to be different requirements and levels of oversight and enforcement for HMRC-supervised tax practitioners compared to professional body-supervised tax practitioners. This could cause confusion and complexity for clients and start a race to the bottom if HMRC and professional bodies had differing requirements. The government would be cautious about creating a dual system of regulation that could undermine the objective of supporting consistent standards and enforcement in the pursuit of creating a level playing field.

The Financial Reporting Council (FRC) has today issued amendments to Irish and UK accounting standards which conclude the ongoing periodic review of the FRS 100 to FRS 105 standards, and significantly, FRS 102. Periodic reviews take place approximately every 5 years and consider issues which may merit changing the extant standards, including developments in IFRS Standards, feedback from stakeholders and new or developing topics that need to be addressed in an accounting standard. These amendments represent the completion of the second periodic review of the standards. In late 2022/early 2023, the FRC issued FRED 82 which set out the proposed amendments to the standards as part of the periodic review. The Institute issued a response to this in 2023. Some of the key amendments made by the FRC include; Significant changes to lease accounting for FRS 102 preparers, with many leases now being required to be recognised on the balance sheet. These new rules are consistent with the requirements of IFRS 16 Leases, but will include some simplifications whereby certain leases will be exempt from the new requirements (notably for short-term leases & low-value assets). There will also be other practical simplifications relating to rates used, contract modifications and sale & leasebacks. No significant changes have been made to lease accounting under FRS 105 compared to the current standards. Significant changes to revenue recognition requirements under both FRS 102 and FRS 105. The revenue recognition sections of both standards have been retitled & rewritten based on IFRS 15 Revenue from Contracts with Customers. A central feature of the new requirements in both standards is the incorporation of a five-step revenue recognition model. The new model is intended to provide a single comprehensive framework for revenue recognition. Some simplifications are included in the standards compared to IFRS 15 (with further simplifications offered in FRS 105 for micro-entities). Other changes to FRS 102 arising from the periodic review include; Section 2 Concepts and Pervasive Principles has been rewritten to align with the IASB’s Conceptual Framework for Financial Reporting. A new Section 2A Fair Value Measurement has been introduced, replacing the previous appendix to Section 2. A new paragraph 3.8A has been added to section 3 of FRS 102, requiring disclosure of the fact that financial statements have been prepared on a going concern basis, confirmation that management has considered information about the future as well as any significant judgements made in assessing the entity’s ability to continue as a going concern. Section 7 Statement of Cash Flows has been amended to introduce disclosure requirements relating to Supplier Finance Arrangements. Section 1 has also been amended to exempt qualifying entities from making these disclosures (subject to equivalent disclosures being made in its consolidated financial statements). The ability for a company to newly adopt the recognition and measurement provisions of IAS 39 as an accounting policy choice under section 11.2 of FRS 102 will be restricted to situations where adopting the option is necessary to achieve group consistency. The effective date for most of the proposed amendments is periods beginning on or after 1 January 2026. Early adoption is permitted, provided all amendments are applied together. There is one exception to this relating to the supplier finance arrangements amendments which are effective for periods beginning on or after 1 January 2025. The FRC decided not to amend the standard to incorporate the expected credit loss model from IFRS 9 into FRS 102, but have noted their intention to reconsider this matter in the future.

From the Institute's  Professional Accounting team : Introduction On 15 March 2024, the Irish Department of Enterprise, Trade and Employment (DETE ) published the General Scheme of Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024 (“General Scheme”) to make amendments to Companies Act 2014 (CA 2014).Please click here for the press release on the General Scheme. Click here for the text of the publication and the regulatory impact analysis of the General Scheme. Readers may recall that DETE conducted a public consultation on proposals to enhance the CA 2014 (“Consultation”) last year. The Institute responded to that consultation and you can click here to see the response. The General Scheme is wide ranging, and we set out below some of the proposed provisions which if enacted may be of interest to members. Please also refer to the Corporate Enforcement Authority’s press release and accompanying note dated 15 March 2024 which provides detailed information on proposed enhancements to the CEA’s powers and some proposed new offences. Electronic meetings There are proposals to put electronic participation in meetings on a permanent statutory footing and to include provisions for notices, quorum and proceedings and virtual voting at such meetings. Readers may recall that in December 2023 these provisions which were introduced during the pandemic were temporarily extended to 31 December 2024. Audit exemption A change to the rules regarding the loss of audit exemption for companies which fail to file their annual return on time is proposed. It is proposed that if a small company fails to file its annual return with the Companies Registration Office for a second or subsequent time within a period of 5 consecutive years, then the company will lose its ability to claim audit exemption. The current legal position is that the exemption is lost after one failure to file. This proposal is welcomed by the Institute which has lobbied for some time for the change. The Institute recognises the importance of companies complying with legal obligations as regards the publication of financial information. However, it considers that the loss of audit exemption for two years for a late filing to be an overly punitive sanction. Provisions relating to receivers Some changes relating to receivers are proposed. New provisions are proposed requiring the provision of further information on Form E8 which is filed upon the receiver’s appointment. The further information includes details of nature of assets, date and nature of appointment, information regarding future trading where practicable, and other prescribed information. Also, it is proposed that the time limits for filing the receiver’s abstract (Form E9) upon cessation of acting as receiver and notice of cessation of receiver (Form E11) will now be 7 days. Provisions concerning entitlement to remuneration of receivers are proposed in line with existing provisions in the CA 2014 concerning entitlement of liquidators to remuneration. Members, creditors, and prescribed persons can request information regarding receivers’ terms and fees, and requests must be dealt with within 7 days. It is proposed to extend the existing power of the court to fix remuneration of a receiver. Matters to be taken into account for receivers under these proposals include time spent, complexity of the case, exceptional responsibility on receiver, effectiveness of receiver, value, and nature of the property. This mirrors existing provisions for remuneration for liquidators in the CA 2014. DETE had suggested in the Consultation last year that there is merit in amending the CA 2014 to provide that receivers are subject to minimum qualifications along the lines of the qualification requirements for liquidators as set out in the CA 2014. However, there are no such proposals in the General Scheme. Provisions relating to SCARP The provisions relating to SCARP are largely technical amendments and corrections of the Companies (Rescue Process for Small and Micro Companies) Act 2021. Much of the amendment is also to make provision to give notifications “in prescribed form” to the Registrar of Companies and court.  An amendment to the section on the process adviser’s (PA) remuneration costs and expenses proposes that the court can ask the PA for a written report where the PA did not make use of the services of the staff and facilities of the company to which they were appointed where the court is considering any matter relating to the PA’s costs, expenses, and remuneration. Winding up Most of the amendments are to make provision to give notifications “in prescribed form” to the Registrar of Companies. The only proposal of note is an amendment to the section of the CA 2014 which imposes an obligation on a liquidator to apply to the Court for the restriction of a director or directors of an insolvent company. The liquidator may be relieved of this obligation by the CEA. The proposed amendment is to make explicit that the obligation on liquidators endures all the way through to the end, which includes to the end of all appeals proceedings against restriction orders. Strike off and restoration Three new grounds for involuntary strike off are proposed, failure to notify of a change in registered office, no current company secretary recorded and failure to deliver beneficial ownership information. There are some consequential amendments proposed on foot of the three new proposed strike off grounds. These three new proposed grounds will not give rise to disqualification of the directors and the new proposals include the steps to be taken to avert continuation of the strike off under the three new grounds. Provisions relating to the Corporate Enforcement Authority Changes include for example mechanisms for the CEA to receive details of restriction and disqualification orders and reliefs to restricted persons more quickly than at present. An amendment is proposed to section 393 of the CA 2014. This section requires an auditor to notify the CEA if during the course of an audit the auditor comes into possession of information leading them to form the opinion that there are reasonable grounds to believe a category 1 or 2 offence under the CA 2014 has been committed. The amendment requires the auditor to furnish the CEA with copy books and documents or extracts (the current provisions require grant of access to books and documents) and a signed assurance from the audit partner that they are exact copies. New offences of obstruction and intimidation are proposed. Please see the CEA press statement issued 15 March 2024 and accompanying note for a fuller summary of the proposals of the General Scheme which relate to the CEA. Provisions relating to IAASA It is proposed that IAASA will have power to issue an interim notice imposing restrictions on a statutory auditor that a possible relevant contravention has been committed and that it is appropriate in the public interest to do so .Relevant contraventions could be but are not limited to failure to obtain sufficient evidence to support an issued audited opinion, repeated significant deficiencies in standards of audit work or significant breach(es) of independence or ethics rules. IAASA will invite and consider submissions received from the restricted person and will within 21 days either confirm vary or revoke the interim notice. The restrictions remain in place until the investigation is complete. An interim notice will be reviewed every 6 months or a shorter period and automatically expires after 18 months unless a further interim notice is issued. IAASA will be required to make regulations regarding procedures to be followed under this proposal. Other Other miscellaneous proposals which might be of interest is a section whereby a company can provide voluntary information in its annual return on gender balance of its board of directors. The information would be collected for statistical purposes only. There are also proposals for multi located execution of documents and a proposed amendment so that weekends and public holidays are excluded from the time counted towards the minimum 48 hour notice required to appoint proxies. This information is provided as resources and information only and nothing in these pages purports to provide professional advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the pages. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of these pages, we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained in these pages.  

The Institute draws the attention of members and firms to proposed changes to the Institute’s PII requirements. PII arrangements are developed jointly by the Institute, the Institute of Chartered Accountants in England and Wales (ICAEW) and the Institute of Chartered Accountants of Scotland, and the three chartered bodies have participated in a review of these joint PII arrangements, led by ICAEW. Institute members and firms will be aware of this review, which included a public consultation that members and firms were invited to participate in. The main proposed changes to the PII requirements which are being considered by the Institute’s Professional Standards Board following that review, are: The minimum limit of indemnity will increase from £1.5m to £2m. For firms with a gross fee income which is below £800,000, the minimum limit will be two and a half times the firm’s gross fee income, subject to a minimum of £250,000 (this is an increase from £100,000). Larger firms with gross fee income over £50m will not be required to put in place ‘qualifying insurance’ but must have in place appropriate arrangements which will be monitored. (Currently this approach is available to firms with 50+ principals.) For firms that will be required to put qualifying insurance in place, the maximum aggregate excess should not exceed the higher of £3,000 or 3% of a firm’s gross fee income. (And euro equivalents). The Institute’s current PII requirements are set out in Chapter 7 of the Public Practice Regulations.  Any decided changes to the Institute’s PII requirements will be reflected in updated versions of same, which will be made available to members and firms through the usual channels in due course. However, as the principles have the support of the Professional Standards Board, in the interest of giving Institute members and firms timely notice of these proposed changes we are providing you with this information at this stage. If approved, the changes are likely to be effective from 1 September 2024, and apply to policies taken out or renewed from that date. Institute members and firms may wish to check with your PII provider whether any of the proposed changes will impact your policy, and ensure you leave sufficient time to prepare for your renewal this year. Members or firms who have any queries in relation to these proposed changes can contact the Institute at professionalstandards@charteredaccountants.ie. Further information on the review of the PII arrangements is available on the ICAEW website here.

Alan T. Ennis FCA is a board director, advisor and former CEO and president of Revlon Inc. His experience has taught him the power of pride in his achievements and advocating for himself. What do you value most about your membership of the profession? In everything I’ve done here in the US, my qualification as a Chartered Accountant has been the most valuable jewel in my chest of knowledge. Even today, my finance background continues to be invaluable in terms of buying and selling businesses, understanding capital structures and capital markets.  It has been the same throughout my career. I put a lot of my progression at Revlon down to my training. I could understand financial statements, I understood the importance of profitability and cash and how investments work. I could talk to the Board of Directors in those terms and it was invaluable. What advice would you have for other Chartered Accountants thinking of moving to the US? My advice is to make sure you start to connect with other Chartered Accountants over here straight away – and there are lots of us in New York, Boston, San Francisco and other places. That’s a valuable network. The other piece of advice I would have is that it’s okay to put yourself out there – in fact, it’s a good idea. Americans tend to be confident in how they present themselves professionally. They are proud of what they have done and they're confident in their success and in their abilities.  They're not afraid to talk about it. Irish people, myself included at times, tend to downplay our achievements and abilities. In the US, people won’t necessarily understand that so it’s not a bad idea to learn to advocate for yourself, your skills and talents. What made you choose to become a Chartered Accountant? I studied commerce at University College Dublin, graduating in 1991. Going through the BComm in those days, you had two options: you could follow the management track or the accounting track. The management track covered topics like organisational design, leadership, strategy and marketing. I said to my dad, “I think I'm going to choose that,” and he replied, “oh no, you should do accounting.” At that time, I didn’t think I wanted to be an accountant, but my dad said to me said, “you do, you just don’t know it yet.”So, I followed the accounting track, joined Arthur Andersen in 1991 and raced through my Chartered Accountancy exams. Can you tell us a little about how you got to where you are today – both your relocation and career path? When I was training with Arthur Andersen, I understood how beneficial training in accounting could be in business. I was fairly certain that I wouldn’t stay in the auditing field and become a partner in an accounting firm.  That wasn’t what I wanted to do. I wanted to become a Chartered Accountant and then move out into industry, but I did stay with Arthur Andersen for a while, becoming a manager before leaving Ireland in my mid-twenties.  I moved to the UK to join Ingersoll Rand in Manchester and then negotiated a transfer to the company’s New Jersey office in 1999. I moved through various financial roles from internal audit to financial planning and investor relations. In 2004, I was offered a new position as CFO of Ingersoll Rand’s Bobcat division in North Dakota. At the same time, I was offered the position of Head of Internal Audit at Revlon.  I was in my early thirties and my choice was between Bobcat in Fargo, North Dakota, and this other role with a very different and much smaller company that would put me right in the heart of New York. I chose Revlon. Can you talk us through your experience at Revlon? Being a Chartered Accountant put me in a very good place to understand the financial operations of any corporation and that really stood me in good stead at Revlon. It had a lot of debt at the time. Joining the company was a high-risk move, but I thought, “you know what, I’m going to go for it.”  Within two-and-half years, I had gone from Head of Internal Audit to Corporate Controller to President of International and then Chief Financial Officer. Eventually, I was appointed Chief Executive, a position I held for five years reporting to the company’s Chair, Ron Perelman. What about your work now? I had a great run at Revlon and a superb team of people behind me. When I left that role in 2014, I got a great package and I wasn’t really under pressure anymore to prove myself. I had choices. I’ve since dabbled in private equity and joined a couple of boards, both profit and not-for-profit. The board that occupies most of my time right now is Nutrabolt, a sports nutrition company whose leading product is C4, a pre-workout energy drink. I am the company’s Vice-chair, Chair of the Audit Committee and a member of the Nominating Governance Committee. I’m also Nutrabolt’s lead Independent Director.  Alan T. Ennis is on numerous boards across a variety of industries, including at present the IDA and Nutrabolt. 

IAASA has issued a revised version of ISA (Ireland) 505 – External Confirmations. The main changes to the standard relate to: Clarification on what constitutes an electronic external confirmation. Prohibition on the use of negative external confirmations. Strengthened link with ISA (Ireland) 330 The Auditor’s Responses to Assessed Risks. Enhanced requirements concerning the investigation of exceptions. The revised standard is effective for audits of financial statements for periods beginning on or after 15 December 2024, with early adoption permitted. The revised ISA (Ireland) 505 is available here.

Last Tuesday 19 March 2024, HMRC announced a range of permanent changes to helpline services. However, the next day HMRC announced that the changes were being halted while HMRC “considers how best to help taxpayers harness online services”. Whilst the decision to further consider this issue is welcome, it is disappointing that feedback provided by the Institute and other Professional Bodies which raised various concerns about the proposed changes appears to not have been fully considered before the formal announcement was made last week and subsequently reversed. The Institute will engage with HMRC as it considers the way forward. Members are encouraged to provide feedback on HMRC services on a regular basis.

Earlier this month we highlighted in our Spring Budget 2024 coverage that HMRC had finally launched its long planned consultation on “Raising standards in the tax advice market” which examines three options to strengthen the tax agent regulatory framework in the UK and would also require tax advisers to register with HMRC if they wish to interact with HMRC on a client’s behalf. This consultation will close on 29 May 2024. This week we take a look at the first option set out in the consultation for potential regulation of paid tax agents, mandatory membership of a recognised professional body, and encourage you to share your views by Tuesday 7 May 2024 to enable members views to be reflected in the Institute’s  response. Next week will set out more information on option two.  Mandatory membership of a recognised professional body   This option is clearly the option which HMRC are leaning towards, but they recognise that this will depend on “the capacity and willingness” of the Professional Bodies to do so, including this Institute.   Chapter 7 (including questions 11-18) of the consultation examines this option in detail. This would involve mandatory membership of a recognised professional body with professional bodies monitoring and enforcing standards of their members and raising those standards where necessary.   Taking forward this approach would mean tax practitioners must hold membership of a professional body that is recognised as having an adequate minimum standard for its members and an adequate supervisory framework to monitor and enforce that standard.   The government considers this approach to be proportionate to the problems observed and opportunities afforded. In its view it “minimises extra costs and burdens to tax practitioners who currently meet expected standards and most professional bodies currently deliver the 3 components of a regulatory framework: subjecting their tax practitioner members to minimum standards, monitoring and enforcement action; and offering routes for customer support.”   “The government recognises there may be costs for the professional bodies in extending their supervisory frameworks to new members, with the potential for these to be passed on to clients via increased membership fees. The government will explore how best to mitigate this.  The government considers that enhancing and extending the supervisory framework operated by the professional bodies to this population of tax practitioners could achieve its aim of raising standards. However, it is dependent on the willingness and capacity of professional bodies to both strengthen the regulatory framework to raise standards of their current members who do not meet expected standards and extend membership to new members.”  The consultation also presents evidence in Annex C which according to HMRC shows that there are levels of non-compliance amongst taxpayers represented by affiliated tax practitioners. “This is why the government is looking to explore whether the regulatory frameworks currently in place across professional bodies are strong enough to raise standards in the tax advice market if the government chooses to proceed with this approach.  The government therefore wishes to work with professional bodies to understand their capacity and capability to raise standards across the market and seeks views on key questions to inform how mandatory professional body membership could be implemented in a way that best meets the objectives.  Findings from this consultation will inform whether the government pursues the introduction of mandatory professional body membership or whether another approach, such as regulation by a government body (option 3) should be pursued.” 

This week we bring you the latest HMRC performance data to the end of January 2024 and draft legislation has been published for consultation in relation to changes being made to the information businesses will need to provide to HMRC via various returns. HMRC is also warning of bogus tax refund offers and we update you below on R&D tax relief including the intensive tax relief available for businesses in Northern Ireland. And finally, a consultation has been launched seeking views on proposals for the design and administration of the UK carbon border adjustment mechanism which would commence from 1 January 2027.  Draft legislation on additional data  HMRC has launched a technical consultation which is open until 9 May 2024 and relates to two draft Statutory Instruments. The consultation examines the draft legislation which will require businesses to provide additional information to HMRC as follows:- employers will be required to provide more detailed information on employees’ hours via PAYE Real Time Information;  directors will be required to provide the amount of dividend income received from their company separate to other dividend income in addition to their percentage shareholding in the company in their Self-Assessment (“SA”) return; and  self-employed individuals will be required to provide start and end dates of self-employment via their SA return. These changes will take effect from April 2025. Finance Act 2024 introduced powers to enable the collection of this additional data and enabled HMRC to specify, through the two Statutory Instruments, the particular information required within those returns. Feedback on the draft regulation should be sent by email to HMRC at responsivenessdataconsultation@hmrc.gov.uk. Bogus tax refunds  HMRC has issued a Press Release which reports that it responded to almost 210,000 referrals of suspicious contact in the last year, up 14 percent on the previous year. More than 79,000 of these were offering bogus tax rebates. HMRC is therefore warning of a further spate in fraudsters contacting taxpayers after the 2022/23 SA deadline on 31 January 2024.  Taxpayer can help fight phishing scams by reporting any suspicious communications to HMRC:-   forward emails to phishing@hmrc.gov.uk;   report tax scam phone calls to HMRC on GOV.UK;  forward suspicious texts claiming to be from HMRC to 60599.  R&D tax relief update   At Spring Budget 2021, the government launched a review of R&D tax reliefs to ensure the UK remains a competitive location for cutting edge research, the reliefs continue to be fit for purpose and taxpayer money is effectively targeted.   As part of this review, the government announced additional support for R&D intensive SMEs, which will continue alongside the new merged scheme SME and “large” company reliefs announced at the Autumn Statement 2023.  Regulations made earlier this month on 4 March specified that the merged scheme and the amendments to the additional relief for R&D intensive SMEs will commence for companies with accounting periods beginning on or after the 1 April 2024.   As a result, the Financial Secretary to the Treasury laid before the House of Commons the Research and Development (Chapter 2 Relief) Regulations 2024 which introduce changes to the further support for R&D intensive SMEs due to particular market conditions in Northern Ireland.   Under the new rules, eligible companies in Northern Ireland will be able to benefit from relief on subcontracting expenditure undertaken outside the United Kingdom. To protect against the fiscal risk of uncapped overseas expenditure, a cap on the amount of relief that can be claimed will also be introduced, at £250,000 over a rolling three-year period.   The cap will only apply to the amount of intensive scheme relief that is above the amount that could have been claimed under the merged scheme.  Guidance on the new rules is available. Further guidance on the merged scheme R&D expenditure credit and enhanced R&D intensive support is also available. As Finance Act 2024 has received Royal Assent and the relevant Appointed Day Regulations have been made, claims for enhanced R&D intensive support for expenditure incurred on or after 1 April 2023 can now be made.  HMRC also published draft guidance on the new subcontracting and overseas rules for consultation on 9 February. HMRC is currently reviewing responses and will publish final versions of that guidance shorty.  At Spring Budget, the government also announced that HMRC will establish an Expert Advisory Panel to support the administration of the R&D tax reliefs. This panel will support HMRC to develop and update guidance, improve communications, provide insights on the types of R&D occurring across certain sectors and feedback from industry.   Given the broad array of projects and specialisms from the life sciences and tech sector, HMRC will seek representatives from these sectors and will directly reach out to relevant organisations. Further details and the terms of reference will be published in due course. This panel will supplement HMRC’s R&D Communications Forum, which will continue to provide the opportunity for broader discussion and feedback.  

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. The most recent Trader Support Service and Cabinet Officer Borders bulletins are also available. HMRC also recently published guidance on sending parcels from Great Britain to Northern Ireland which will take effect under the Windsor Framework from 30 September 2024. And finally, we provide information on a recent update to VAT and EORI guidance.  VAT and EORI guidance  If a business deregisters for VAT, any Economic Operators Registration and Identification (“EORI”) number(s) they hold will also be removed at the same time.   By way of reminder, EORIs are needed for authorisations, including a UK Internal Market System (“UKIMS”) authorisation, and licences. To continue using these, there are actions a business needs to take which are as follows:  Authorisations (including Duty Deferment Accounts and guarantees) - contact the supervising office. This can be found in the authorisation correspondence received originally;  Licences - to continue using these please contact the issuing government department; and  If a business still needs an EORI number, they can apply for a new GB EORI number. The number is usually confirmed immediately. Once a business has a GB EORI, they will then be able apply for an XI EORI number, if needed and they meet the relevant criteria. The number will be issued within five working days of applying.  If a business needs help getting a new EORI number, please contact HMRC.   Miscellaneous updated guidance etc.   Recently updated guidance, and publications relevant to EU exit are set out below:-  Classifying footwear for import and export;  Customs Declaration Service is open for all export migration;  Get help using example declarations for exports from Great Britain to the rest of the world;  Making an export declaration using a pre-shipment advice;  Making an export supplementary declaration;  Making an export declaration in your records;  Making a full export declaration;  Tell HMRC when exports have arrived or departed a UK port;  Make and manage an export declaration online;  Get help using example declarations for exports from Great Britain to the rest of the world;  Apply for authorised consignor or consignee status; and  Report a problem using the Customs Declaration Service. 

HMRC’s latest schedule of live and recorded webinars for tax agents is available for booking. Spaces are limited, so take a look now and save your place. HMRC is also running a series of webinars on R&D tax relief.  R&D tax relief webinars  HMRC is running a series of webinars on R&D tax reliefs to aid understanding of what qualifies as R&D, how to claim relief correctly and what the new R&D merged scheme entails.  The webinars series will also cover the enhanced support available for R&D intensives schemes: Register here to learn more about 'Research and Development for tax purposes’;  Register here for more information about ‘How to claim Research and Development tax relief’; and  Visit GOV.UK to watch the recorded webinars and to register for the upcoming webinar session about the R&D merged schemes. 

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. 

Nóra Cashe explains the obligations, compliance, and acceptance and rejection procedures for employers outlined in the Work Life Balance and Miscellaneous Provisions Act 2023 Code of Practice The Code of Practice (the Code) for the right to request flexible and remote work has been released. Now that these two rights are in effect, employees can request these entitlements. So, do you know your obligations as an employer, and do you understand how to comply with the new legislation? What are the rights to request remote and flexible work? The right to request flexible working and the right to request remote working are the last two of five statutory parts to come into effect within the Work Life Balance and Miscellaneous Provisions Act 2023. While many of the same guidelines apply to these two entitlements, they are separate. ‘Flexible working’ is defined as the adjustment of an employee’s working hours or working patterns. This includes flexible working schedules, reduced working hours, or even remote working. The right to request flexible working only applies to parents and to those acting in loco parentis or guardians as defined by the Act. Meanwhile, ‘remote working’ is an arrangement between employer and employee in which the work is carried out at a location other than at the employer's place of operation. This is done without any change to the employee's ordinary working hours. What is the Code of Practice? Drafted by the Workplace Relations Commission (WRC), the Code provides practical guidance for businesses and their staff regarding flexible or remote work requests. It is separated into three sections. The first two sections are Flexible Working (FW) and Remote Working (RW), which lay out guidelines for employees and employers to follow when requesting or receiving requests for flexible or remote working arrangements. The last section consists of policies and templates. Here, employers can find templates to use for relevant documentation, such as a Work Life Balance Policy, a Flexible Working Request application, and a Remote Working Request application. Staying compliant The Code defines flexible and remote work and provides the details on who can apply and when. The Code also contains important timelines and procedures for employers and employees to follow when a request is made and the consequences for not doing so. Failure to follow the timelines and procedures and to keep records could result in an award of up to 20 weeks of remuneration and/or a costly fine/summary conviction. Additionally, the Code of Practice includes information on situations such as: the abuse of any new working arrangements; the need to modify new working arrangements; and the need for the employee or employer to terminate the new working arrangements. Acceptance or rejection procedures Employers are not obligated to accept requests for remote or flexible work but it’s important to remember that a response must be delivered to the employee in writing within four weeks of their request. The three responses an employer can give are: Extension: the employer may request up to four more weeks to consider its decision, which it must also do in writing. Refusal: the employer must lay out its reasoning in writing. Acceptance: the employer must produce a written document with the relevant details for the employee to sign. Overall, employers are advised to weigh their employees’ circumstances and rationale for these requests against their own business needs. In addition, the Code provides tangible questions that employers may ask themselves when deciding whether to approve or reject a request. Nóra Cashe is a Litigation Manager at Peninsula

The new EU Directive NIS2 requires meticulous compliance strategies to improve cybersecurity resilience, explains Puneet Kukreja The intense uptake of digital solutions and innovative technologies over the past four years has changed the way we socialise, work, shop, bank, and receive necessary services, such as health. As sectors and services increasingly become interconnected and interdependent, the cybersecurity threat landscape continues to grow in sophistication and focus. Safeguarding critical infrastructures and services is paramount to protecting society and economies from these actors. In response, EU lawmakers have introduced several interconnected EU-wide laws to improve the digital and operational resilience of the sectors and services we rely on most. The second Network and Information Systems Directive (Directive (EU) 2022/2555 (NIS2)) is one of these EU-wide laws. It comes into effect on 18 October 2024 and will have a compliance impact on many public and private sector organisations across 18 sectors, similar to that experienced under the GDPR. The regulatory supervision and enforcement measures under NIS2 bear similarities to the GDPR. However, direct accountability and liability for upper management and possible suspension of CEO duties brings this squarely into the board room. NIS2 is an evolution from its predecessor, NIS-D (Directive (EU) 2016/1148), extending the legislative scope to capture entities in several additional sectors and subsectors, including public bodies and a wider range of digital service providers, as well as covered entities’ information and communications technology (ICT) supply chains. NIS2 sets out the minimum powers of supervision and enforcement that Member State competent authorities must have. Administrative fines can be imposed on essential and important entities for breaches of obligations relating to cybersecurity risk management measures and incident notification. For ‘essential entities’, the maximum fine is at least €10,000,000 or at least 2 percent of the total worldwide annual turnover in the previous financial year, whichever is higher. For ‘important entities,’ these figures are €7,000,000 and 1.4 percent. Irish legislation must be enacted before 18 October 2024 to transpose NIS2. Consistent with its treatment of NIS-D, the transposing legislation will provide that breaches of certain provisions of the same will be a criminal offence. We expect that a person found guilty of any of these offences will be liable on conviction to a fine and/or imprisonment. It is vital that CEOs, CFOs, CIOs, CISOs and board members understand not only the financial, personal, and reputational consequences of non-compliance – which underscores the urgency of pursuing NIS2 compliance now – but also the role that NIS2 will play in safeguarding their organisation’s cybersecurity and operational resilience. Navigating NIS2 There are several steps an organisation can take to navigate the NIS2. 1. Legal analysis Assess whether NIS2 applies to your organisation or whether any of the statutory exemptions will apply. To the extent NIS2 applies, it will be necessary to understand its requirements, including any cross-border implications and the steps necessary to secure ICT supply chains. 2. Strategic planning of compliance navigation Identify cybersecurity risks and set clear targets to assist in allocating resources and creating strong governance for resilience and regulatory adherence. This will also ensure operational integrity and informed decision-making. 3. Technology procurement Align chosen technologies with organisation needs and regulatory requirements. 4. Implementation strategy Develop a robust plan covering technology integration, employee training, and monitoring mechanisms. 5. Technology implementation Explore partnerships with organisations experienced in technology transformation. This will help you enable the full lifecycle of capability from analysis to managed services. 6. Employee training and awareness Champion comprehensive training programmes to instil a culture of cybersecurity within the organisation. 7. Managed services for continuous compliance Explore partnerships with experienced service providers for ongoing monitoring and response capabilities. 8. Budgeting and resource allocation Collaborate on budgeting to align finance planning with strategic cybersecurity objectives. 9. Documentation and reporting Oversee the creation of comprehensive documentation, ensuring transparency and accountability. Your NIS2 journey Organisations will differ in their level of compliance or maturity across the key control areas that are required under NIS2. However, one thing is certain: all in-scope organisations should now consider the implications of NIS2 to ensure they have sufficient time to assess, design, and implement their compliance plans before the legislation comes into effect. Organisations operating in the sectors defined in NIS2 will need to assess whether they fall within its scope, the availability of any exemptions, their categorisation as ‘essential’ or ‘important’, their NIS2 obligations, and the impact of and interplay with other EU cybersecurity and operational resilience laws. NIS2 requires organisations to address cybersecurity risks in their own ICT supply chains. In practice, this will require a risk-based assessment of ICT supplier relationships, enhancing contracts and securing inspection and other rights to ensure supply chain security. Early supplier engagement will be essential. To the extent certain in-scope organisations are established and/or providing their services in more than one EU Member State, they may be subject to implementing laws in more than one jurisdiction or the EU Member State where their cybersecurity risk management decisions are predominately made. The NIS2 jurisdiction rules require careful consideration and may cause certain entities to rethink the geographic positioning of cybersecurity decision-making. To successfully achieve and sustain NIS2 compliance, an organisation must commit to continuous improvement as well as the adoption of proactive measures. Both are key in this evolving digital landscape. Beginning a compliance journey with a legal analysis of the new directive will ensure you start on the right path and your organisation not only avoids substantial financial penalties but also becomes more resilient to evolving cyber threats. Puneet Kukreja is Cyber Security Leader at EY

The EU Accessibility Act sets out to improve accessibility standards. Adela Buliman outlines what organisations need to consider before it comes into effect The European Accessibility Act (EAA) represents a significant step forward in making the European Union more accessible to all people, including people with disabilities. The legislation comes into effect on 28 June 2025. There are many industries in scope, including both the public and private sector. The EAA is extending the reach of the existing Public Sector Accessibility Regulations under the EU Web Accessibility Directive. Under current regulations, any organisation that is at least 50 percent funded by the state has to have a digitally accessible website, mobile app and digital documents, where relevant. The EAA is expanding this. Scope of legislation The EAA is much broader in scope than the public sector regulations. The products covered by the Act include: ATMs Ticket and travel check-in machines Self-service terminals Mobile phones Computers, terminals and operating systems E-reading devices The services covered include: Audio-visual media services Transportation services Banking services Electronic communications services E-books E-commerce The services covered are much broader than it may seem. For instance, when it comes to banking services, it is not just the digital assets that are in scope, but anything a user is required to interact with to use a service. So, a letter that the bank may send you with your card pin must have a digitally accessible alternative. As well as this, when you look at the definition of “e-commerce” under the legislation, it is not just for retail companies, it is any organisation that either sells a product or service on a website or advertises that product or service online. For example, the organisation may be in the insurance sector, but if it advertises its insurance plans online, it would be within the scope of this legislation too. Taking all this into account, there are very few organisations that are not in scope of this legislation. Regulators Surveillance authorities have been assigned to each in-scope industry. The Competition and Consumer Protection Commission (CCPC) is the regulator for each product that is in scope. For services, the following bodies are regulating: Industry Regulator Electronic Communications Commission for Communications Regulation Audiovisual media Coimisiún na Meán Air passenger transport Irish Aviation Authority Bus, rail and waterborne passenger transport National Transport Authority Consumer banking Central Bank of Ireland E-books and dedicated software and e-commerce Competition and Consumer Protection Commission (CPCC) Emergency communications Commission for Communications Regulation   Ramifications for non-compliance It is important to note the consequences of non-compliance with the EAA: A fine (€5,000) or imprisonment of up to six months or both; A fine of up to €60,000 or imprisonment of up to 18 months or both; or Litigation The one that poses the most risk to organisations is litigation. Under the EAA, users will be allowed to litigate against companies that they feel are discriminating against them. Next steps for organisations When it comes to getting ready for the legislation, there are three steps that we recommend: Auditing An audit is a great way to start your journey. An audit will provide you with an issue log of items that need to be fixed to be accessible and compliant. Upskilling Upskilling your own staff is an important second step in preparing for the EAA. When you receive audit results, there will be a large amount of repetition in the types of issues found, highlighting a knowledge gap that you can fill by training staff. Embedding The last step is embedding accessibility into your company culture. It can be up to 30 times more expensive to retroactively make something accessible. Embedding the accessibility into your procurement process, design process, sprints, etc., allows you to keep costs low and create a long-term accessibility plan. Adela Buliman is the Head of Accessibility at Vially and sits on the European Committee for Standardisations, in particular committees relating to the European Accessibility Act and Public Sector Accessibility Regulations

The Economic Crime and Corporate Transparency Act (ECCTA) received Royal Assent on 26 October 2023, and the provisions of the Act are starting to be applied. We have prepared an information booklet entitled The Economic Crime and Corporate Transparency Act 2023 – Changes in Companies House outlining the first set of changes introduced by Companies House on 4 March 2024.  These include: 1. new rules for registered office addresses; 2. a requirement for all companies to supply a registered email address; and 3. new lawful purpose statements The Act gives Companies House, along with the Registrar of Companies for Scotland and the Registrar of Companies for Northern Ireland, the power to play a more significant role in tackling economic crime and supporting economic growth. Over time, its measures will lead to improved transparency and more accurate and trusted information on its registers.  These changes will apply to incorporated entities, limited partnerships and limited liability partnerships. They will also apply to their members and directors. 

The International Accounting Standards Board (IASB) has proposed changes to IFRS 3 Business Combinations and IAS 36 Impairment of Assets in its recently released Exposure Draft. The objective of the proposed changes are to improve the information that companies provide to investors about company acquisitions. This improved information is then intended to help investors to assess decisions to make acquisitions and the performance of acquisitions. The proposals to amend IFRS 3 and IAS 36 are intended to require companies to disclose better information about their acquisitions and to make targeted changes to the impairment test. The exposure draft remains open to public comment until 15 July 2024.

As reported last week, at the most recent meeting of the TALC Indirect Taxes Sub-Committee, officials from Revenue’s National Business Tax Registration Unit gave a presentation on VAT registrations. Revenue has kindly agreed to share the slides from that presentation and you can find them here. The presentation includes useful information on the screening of VAT applications, reasons for disallowed VAT applications, information to include on a VAT application, information on ‘intention to trade’ applications, as well as information on EU and customs applications.

The latest data on taxation trends in the EU indicates that nominal tax revenues collected by EU member states reached a record value in 2022, totalling €6.388 billion (an 8 percent increase on 2021). The data also indicates that the average tax burden (measured by taking the total tax revenues received as a percentage of GDP) decreased slightly in 2022. The average tax burden in the EU is 40.2 percent, with Ireland’s tax-to-GDP ratio for 2022 being the lowest at 20.9 percent.