Accountancy Topics Making The News

There has been a lot happening in the accountancy profession this week with Tesco dropping a big ball, Direct Recovery of Debts becoming a serious bombshell and Minimum Wage increases just around the corner. Here is an update to catch you up to speed with what is news worthy in the world of accounting.

Direct Recovery of Debts from bank accounts

The government is set to take direct action to recover tax and tax credit debts. They are currently consulting on proposals that would give HM Revenue and Customs (HMRC) the ability to recover cash directly from the bank accounts, building society accounts and ISA accounts of debtors who owe the taxman £1,000 or more.

In some articles they have deftly labelled the victim as the taxpayer and are quick to point out that DRD will ‘help to level the playing field, ensuring the honest, hardworking majority are not disadvantaged by the minority that dodge their responsibilities’ (Gov.uk).

They estimate that 17,000 cases a year warrant the extension of these extraordinary powers to HMRC. To ensure that only those refusing to pay are targeted there will be strict safeguards:

  • Debts must be established and have passed the timetable for appeals
  • Debtors must have ignored repeated attempts to make contact
  • Debt must be over £1,000
  • A minimum of £5000 must be left in the debtor’s accounts
  • A hold lasting 14 days will be placed on the accounts in question giving the debtors time to contact HMRC and arrange payment

Like so many government initiatives it sounds very thorough on paper and has been articulated well. The question that remains is how it will actually be actioned. Any company is entitled to chase debtors with escalating force, HMRC in that way should be no exception. If they can manage this humanely and target the correct people, which always sounds like a big if when considering such a large and disjointed organisation, then this may be a potent solution to an escalating problem. Let’s hope it is actioned as well as it is proposed.

Minimum Wage goes up 1st October 2014

It is that time of year again. National Minimum Wage (NMW) is set to increase. This is great news for employees but sometimes a bit of a shock to employers. There will be a big step up of 19p for the 21 and over category. As always we are clear on one message: It is against the law for employers not to pay NMW. ABC will remind you in advance and throughout the changes to your staff wages. It is important to note though that we didn’t raise the NMW ourselves and HMRC are clamping down hard on those who choose to falsify records and break the law.

The rates from October 1st 2014 are as follows:

  • 21 and over = £6.50
  • 18 to 20 = £5.13
  • Under 18 = £3.72
  • Apprentice = £2.73

These rates apply to pay reference periods beginning on or after that date. So, this year the 1st falls on a Wednesday, meaning anyone being paid weekly will be paid two days on the old NMW rate and two days on the new NMW rate.

For help or advice you can always email our Payroll Department Managers: Rachael@abc-accounting-services.co.uk or Fiona@abc-accounting-services.co.uk.

Tesco make a massive accounting blunder

On Monday Tesco admitted that they had overstated their half-year profit guidance by £250m. These days, following a rocky year for the supermarket chain, £250m is no longer pocket change.

The UK’s accountancy watchdog has announced that Tesco is being monitored. The Financial Reporting Council (FRC) said it was ‘monitoring the situation closely’ but they would not take any action until Tesco’s own investigation had been completed. The FRC have a range of powers that include:

  • Issuing fines for misconduct
  • Suspend individuals via an independent panel
  • Suspend firms from the professional accounting body via an independent panel

It could mean more bad news for Tesco if the FRC decide to take regulatory action. The FRC do not have the powers to monitor or require restatement of unaudited trading statements which do not have to be checked by an external accounting firm. Tesco are carrying out their own investigation so much will ride on the findings of Deloitte and the group’s external legal advisers Freshfields.

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