Technical
4 Apr 2019 01:34pm

Practice Q&A: audit exemption after Brexit

Questions on complying with anti-money laundering regulations, MTD and audit exemption after Brexit are answered by our experts in this month’s session

practice qa april mag 19 630
Caption: Illustrations by Yukai Du

Q: If I think a firm is not registered for anti money laundering – is there a whistleblowing helpline?

A: If you come across an accountancy service provider (ASP) or trust and company service provider (TCSP) that does not appear to be regulated under the Money Laundering Regulations 2017 or appears to be ignoring the regulations, and you want to report it confidentiality, there are two things that you can do:

1) Contact their anti money laundering supervisor. If their supervisor is ICAEW, you can report this to ICAEW confidentially at icaew.com/complaints If ICAEW is not their AML supervisor, you should contact the relevant supervisory body.

2) Alternatively you can contact the HMRC MLR registration team on their confidential enquiry line +44 (0)1702 366 312. When you disclose information, the more detail you can give, the easier it will be for ICAEW or the relevant supervisory body to consider what its response should be.

The following information is all useful to give: the names of any individuals involved; any key dates you know about; the ‘how’, ‘what’ and ‘where’ of any supporting documents or evidence; the type of wrongdoing and who else knows about it.

If you are making a report to ICAEW, you don’t need to provide your identity or contact details, although it would make it easier if ICAEW needs to clarify things or ask for further information. If you have provided contact details then you may be contacted if further information is required, unless you specifically ask not to be contacted.

Sophie Falcon, integrity and law manager, ICAEW Technical Strategy Department

Q: My client takes the s479A audit exemption as its UK parent provides a guarantee. Will this still be possible after Brexit?

A: The short answer is yes. The Companies Act 2006 (s479A) offers an exemption for a subsidiary undertaking where its parent is established under the law of an EEA state and (in addition to a number of more detailed requirements), the EEA parent consolidates and provides a declaration of guarantee in accordance with the criteria in s479C.

When the UK leaves the EU, a UK parent will no longer be established under the law of an EEA state, which would appear to stop the exemption being available in this case. However, regulations made in January, The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019, update the requirement on Exit Day such that it is available where the parent is established under either the law of an EEA state or part of the UK.

As such in this case the exemption would still be available, subject to meeting the other detailed criteria. The directors of the parent should of course consider the risks of providing the guarantee, in particular the risk that the guarantee may be called upon.

They may wish to take their own legal advice based on the specific facts and circumstances. Further guidance is available on the Brexit Hub and to members from the ICAEW Technical Advisory Service on +44 (0)1908 248 250.

Chris Turner, professional consultant, ICAEW Advisory Services

Q: When I sign up for an agent services account, it asks me for my money laundering supervisory body details. What do I enter?

A: If ICAEW supervises your firm for anti money laundering, you will need to enter ICAEW as the supervisory body and your firm number (it usually starts C00). If you are automatically supervised by ICAEW as a member firm, the expiry date will be 31 December 2019, as your supervision renews at the same time as your membership.

If ICAEW is your money-laundering supervisor because you have paid for a contract for supervision, the expiry date will be detailed in the contract. If you are not supervised by ICAEW you should contact your supervisor for advice.

Don’t forget, you won’t be able to see a list of clients in your agent services account. Once you have authorised your MTD software, if the software has the facility, you’ll be able to see a list of clients from within it.

Further guidance on MTD is available on the MTD hub and members may discuss their query with the ICAEW Technical Advisory Service on +44 (0)1908 248 250.

Chris Turner, professional consultant, ICAEW Advisory Services

Five in brief

1) MTD for VAT

From April 2019, all VAT-registered businesses and organisations with a taxable turnover over the VAT threshold of £85,000 will be required to maintain digital accounting records and submit them in digital form to HMRC

2) Guidance on sanctions

ICAEW has updated its Guidance on Sanctions. Changes cover fixed penalties for summary offences, how to deal with inaccurate annual returns and new guidance on AML breaches by firms

3) FRC CASS reporting standard


The FCA and FRC are encouraging firms conducting CASS engagements to build knowledge and understanding of the existing FCA CASS rules and the FRC’s reporting standard

4) Trustee’s names on charities register

From 1 April 2019, the name of all charity trustees will be displayed to the public on the charity register, unless a dispensation has been granted.

5) Prospective financial information

ICAEW is inviting comments on its revised guidance on prospective financial information and the application guidance to support preparation of any financial information relating to a future period, by 30 April 2019.

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