6 Feb 2019 01:58pm

Practice Q&A: wellbeing and suspected criminal activity

This month, our panel of experts take on questions about wellbeing, suspected criminal activity, and a tricky accounting calculation

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Caption: Image by Yukai Du

Q: I want to improve my wellbeing at work and outside, where do I start?

A: At CABA, the charity that supports the wellbeing of chartered accountants, we know that wellbeing means different things to different people. We see wellbeing as falling into seven distinct areas and when there is a balance in these areas we believe that individuals can lead happier, healthier and more fulfilled lives.

A chartered accountant’s career is often at the forefront of their mind and whether this is finding a next role or developing skills while employed, CABA can support you. We offer individual career coaching through face-to-face sessions, or telephone contact with an experienced coach. This is supported by a wide range of information, which is available online. As the working environment changes and evolves it is important to consider soft skills as well as keeping technical skills up to date. CABA offers a number of training courses delivered as one-day open courses or as webinars, which are accessible by all.

The importance of good emotional wellbeing shouldn’t be underestimated either, and CABA also wants to contribute to dispelling the stigma about talking about mental health issues. We offer support through a number of counselling options, which are free to past and present ICAEW members and their families. This support is easy to access, confidential and delivered in a number of formats through our trusted partners.

A good place to start is to look at the CABA website at here you will find lots of information and advice and more in-depth detail about how we can support you with your wellbeing. We believe that there is no one size fits all solution, but we are here to support you to make positive changes to your life, which will improve your wellbeing. Kelly Feehan, service director, CABA

Q: If I don't take on a client as I suspect they're criminals or launderers, do I need to submit a SAR?

A: In many cases such a situation would result in a requirement to submit a suspicious activity report (SAR). The Proceeds of Crime Act 2002 (s330) requires an individual to make a SAR to the NCA or their nominated officer (as appropriate) where all the following (summarised) criteria are met:

• Information has come to a person in the course of business in a regulated sector. Assuming the firm is an accountancy firm then this would be within a regulated sector.

• The information gives the individual knowledge or suspicion (or reasonable grounds for knowledge or suspicion) that another person is engaged in money laundering. Evidence is not required in order to have a suspicion. A suspicion, however, is more than just speculation, a mere idle wondering or a vague feeling of unease.

• The individual can identify that person or the whereabouts of any laundered property or they have information which may assist in doing so.

In all cases the decision to report or not to report should be well documented and kept securely. When declining the appointment, care should be taken to avoid committing a tipping off offence by alerting the prospective client to the fact a SAR has been submitted or that an investigation is underway or being contemplated, as there is a risk that this could prejudice any subsequent investigation.

Further guidance is available to members from the ICAEW Anti-Money Laundering Helpline on +44 (0)1908 248 250 and in the CCAB Anti-Money Laundering Guidance for the Accountancy Sector ( pdf ). Chris Turner, professional consultant, ICAEW Advisory Services

Q: How to account for ‘deemed employment’ deductions from personal services company invoices

A: There has been some debate as to whether the revenue of the personal service company (PSC) should be measured ‘gross’ or ‘net’ (ie, the amount of the contract fee before or after the PAYE and employee’s NIC has been deducted – the ‘deemed employment’ deduction). The clear consensus is that turnover recognised in the PSC’s accounts should be measured gross, reflecting the contract fee and the value of the work done. When the gross method is adopted there will be a difference between the turnover recognised and the amount receivable because of the deduction. This will not be recoverable by the PSC.

The consensus is that this should be treated as an expense in the PSC’s accounts, matched by a reduction in the debtor. In our view this staff cost should be recognised in the same period as the contract revenue. So, if the amount deducted for PAYE and employee’s NIC is only known after the year end, this would give rise to an adjusting post-balance sheet event (debit staff costs and credit debtors). HMRC has indicated that where this approach is adopted (ie, the PSC’s accounts include ‘gross’ turnover, and an expense representing amounts that are not receivable) the expensed amount will normally represent an allowable tax deduction. Marianne Mau, technical manager, financial reporting, ICAEW Financial Reporting Faculty.

Five in brief

1) IFRS 16, Leases
The new standard on leases, effective from 1 January 2019, prescribes a single lessee accounting model requiring the recognition of asset and corresponding liability for all leases with terms over 12 months, unless the underlying asset is of low value.

2) FRC revisions
From 1 January 2019, new corporate governance rules require large companies to include a s172 statement in their strategic report. The FRC’s revised CG code also came into operation and the FRC has guidance on the changes to the strategic report.

3) Contractor loans
Finance Act (No 2) 2017 introduced a new charge on outstanding disguised remuneration loans, known as the 2019 loan charge. This will apply to all loans made since 6 April 1999 if they are still outstanding on 5 April 2019.

4) MTD for VAT

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

5) Brexit
At the time of going to press, the UK was still on course to leave the Europe Union on 29 March 2019, unless the 27 EU member states agree to an extension or the UK parliament decides to abandon Brexit. ICAEW has guidance on what to do.