The Consultative Committee of Accountancy Bodies (CCAB) has released the 2024 edition of its Statement of Recommended Practice Accounting (SORP) for Limited Liability Partnerships (LLPs).

CCAB is appointed by the Financial Reporting Council (FRC) to oversee the SORP for LLPs, ensuring that such businesses can present financial statements and accounts similar to those of other businesses, such as limited companies.

LLPs can present a challenge as they incorporate elements of limited companies and general partnerships.

Partners bear financial responsibility for the business, but only up to the value of the capital that they have contributed.

For this reason, CCAB regularly issues updated guidance for accounting rules for LLPs – with new rules applying to accounting periods (APs) beginning from 1 July 2024.

Remuneration changes

The most recent changes include guidance on sharing group profits and post-retirement payments for partnership members.

The latest SORP for LLPs dictates that, where an LLP has members who provide capital to the business, but where some do not provide ‘substantive services’ to the business, the automatic right to a share of the LLP’s profits should be treated as a return on capital – i.e. a share in future profits of the LLP.

Additionally, the SORP confirms that, if a former member is classed as an employee, post-retirement payments are covered by Section 28 of FRS 102.

It further outlines that LLP obligations towards members post-retirement are covered by FRS 102 and 103, including:

• Insurance contracts – Contracts which carry varying liability, for example when the total amount payable by the LLP is significantly affected by the longevity of the retiree.
• Share-based payments – Where a contractual obligation meets the definition of a share-based payment, this will fall in the scope of Section 26. For example, a retiree with an equity interest in the business may be entitled to a specific percentage of disposal proceeds if the LLP is sold.

Reporting requirements

With regard to financial reporting, new disclosure requirements have been included in the latest SORP, particularly for notes to the accounts, which must include:

• A decision on where loans and debts due to members sit concerning other unsecured creditors in the event of a winding-up petition
• Protections afforded to creditors which cannot be revoked by members
• The amount of debts owed to the LLP by members
• Policies which relate to members contributing funds to the LLP and to repayments by the LLP

LLPs must also detail their policy for drawings on account and divisions of profit.

For further advice on accounting rules for LLPs, contact our team today to discuss your needs.

HM Revenue & Customs (HMRC) has warned that a new wave of fraudulent text messages is targeting taxpayers using iPhones, claiming that recipients are owed tax refunds and must supply personal information to receive them.

Some recipients are also being asked to follow a link to access their refund, which is disguised to appear legitimate.

This latest incident comes as HMRC-related scam messages rise sharply, growing by 36 per cent per annum between January 2022 and January 2023.

Recognising an incident

HMRC is aware of the issue and is working to tackle it. It has urged taxpayers to be cautious and be on the lookout for any fraudulent communications purporting to be from HMRC.

This includes text messages, as well as emails, phone calls, social media and WhatsApp messages, both on Apple and other devices.

HMRC has also warned recipients of these messages to exercise caution when asked to act quickly or send personal details via text message – as these are common warning signs of fraudulent activity.

Finally, it has confirmed that it avoids using methods of communication commonly used by fraudsters, particularly steering clear of requesting personal details via text message.

If you are concerned about communications relating to a tax refund, contact your accountant for advice.

Reporting an attack

The issue that many taxpayers are facing with this new campaign of scam messages is that it is difficult to report and block the number.

Fraudsters are using legitimate business phone numbers or Apple accounts to send messages, meaning they often cannot be blocked by the recipient.

Many recipients are also facing issues in reporting scam messages to Ofcom’s designated anti-spam line because they are often sent from legitimate business numbers.

For further advice on tax, tax refunds and staying safe as a taxpayer, please contact our team today.

As of 1st May 2024, Companies House has implemented revised fees, marking a significant change in the cost structure for various services.

This adjustment stems from the Economic Crime and Corporate Transparency (ECCT) Act, introducing measures that inevitably increase operational costs for Companies House.

Understanding the impact

The fee revisions encompass a range of services, each carrying its own implications for businesses.

Notably, the fee for an annual confirmation statement, when submitted digitally, has surged to £34, compared to the previous rate of £13.

This increase represents a substantial adjustment and demands careful consideration from businesses, especially those accustomed to the previous fee structure.

Strategic considerations

Given the recent changes, businesses are urged to assess their filing schedules and plan accordingly.

For a comprehensive breakdown of the prices that have taken effect from 1 May 2024, businesses can refer to the official source provided by Companies House: Changes to Companies House Fees.

This resource serves as a valuable reference point for understanding the specific fee adjustments and their implications for businesses of varying sizes and industries.

Seeking expert guidance

Navigating these fee adjustments and the broader implications of the ECCT requires a nuanced understanding of company law and compliance obligations.

As such, businesses are encouraged to seek professional advice and support to navigate these changes seamlessly.

Our company secretarial experts are ready to assist businesses in adapting to the revised fee structure and ensuring continued compliance with regulatory requirements, so speak to us.

HM Revenue & Customs (HMRC) has recently announced new Advisory Fuel Rates (AFRs) that will take effect from 1 June 2024.

These changes include a reduction in the Advisory Electric Rate (AER) for electric vehicles – which can be highly tax efficient.

Many businesses have invested in electric fleets, which presents a slight problem for business owners.

Should you reduce your rates in line with the AER or stick with your current rates? Here’s everything you need to know.

Key changes in the AFRs

Below is a breakdown of the key changes made to the rates – these are advisory, however, so you have no obligation to follow them to the letter.

• Electric vehicles: The AER has been reduced from 9 pence per mile (ppm) to 8ppm. This rate is intended to cover the cost of electricity used for business travel by electric company car drivers.
• Petrol: Rates have increased by 1ppm for engine sizes up to 2,000cc, and by 2ppm for engines over 2,000cc.
• Diesel: Rates have increased by 1ppm across all engine sizes.
• LPG vehicles: Rates remain unchanged across all engine sizes.

How does the AER calculation work

In essence, the AER is derived from data on electricity costs and vehicle consumption rates.

The Department for Energy Security and Net Zero (DESNZ) provides the annual “pence per kilowatt hour” cost, which is then adjusted quarterly by the Office for National Statistics (ONS) Consumer Prices Index for electricity.

This data is combined with vehicle-specific electricity consumption rates and business car sales data to calculate a weighted average cost per mile for fully electric cars.

The Association of Fleet Professionals (AFP) suggests having different rates based on access to home charging and vehicle type (cars versus vans) which could provide a more accurate reflection of actual costs and improve fairness among employees (this is yet to be implemented).

Responding to the changes

You’ll want to review how the new AER compares to the actual costs incurred by your employees for charging their electric vehicles.

If the new rate falls short, consider whether this might lead to dissatisfaction or financial strain for your employees.

It’s important to remember that although HMRC sets the advisory rates, businesses can set their own reimbursement rates.

So, if the new AER does not cover the true costs, you might want to consider offering a higher reimbursement rate to ensure employees are not out of pocket.

We can provide tailored advice to ensure your reimbursement policies meet both regulatory requirements and the needs of your employees.

For more information, or guidance based on your unique circumstances, please get in touch. 

We often find that clients begin to show signs of stress when the Self-Assessment tax return deadline approaches.

This is just one of the reasons we recommend you file your return early, but there are numerous other benefits.

Here are three key reasons to consider submitting your tax return sooner rather than later:

1. Avoid last-minute stress

As mentioned above, filing your tax return early can significantly reduce the stress associated with meeting the deadline.

Rushing to compile and submit your financial information at the last minute also increases the likelihood of errors and omissions, which can lead to penalties and additional scrutiny from HM Revenue & Customs (HMRC).

By completing your tax return early, you allow yourself ample time to review your documentation, ensure accuracy, and seek professional advice from your accountant.

This preparation time can be invaluable, particularly if your financial situation is complex or if you encounter unexpected issues.

2. Better financial planning

Submitting your tax return early provides a clearer picture of your financial situation for the year.

This information is crucial for effective financial planning and decision-making. Knowing your tax liabilities well in advance enables you to manage your cash flow and make better-informed decisions about investments, savings, and expenses.

Early filing also allows you to identify potential tax savings opportunities, such as allowable deductions and reliefs, that you might otherwise overlook in a rushed preparation.

3. Quicker refunds and reduced penalties

If you are due a tax refund, filing your return early ensures you receive it sooner, further improving your cash flow.

Timely refunds can be particularly beneficial for reinvesting in your business or managing personal finances.

Conversely, if you owe tax, early filing gives you more time to create a payment arrangement with HMRC, helping you avoid late payment penalties and interest charges.

Early filing also reduces the risk of missing the deadline and incurring automatic late filing penalties, which can add unnecessary financial strain. Penalties and interest charges can quickly accumulate.

The bottom line

To take full advantage of the above-mentioned benefits, you should speak to your accountant about preparing your tax return well in advance of the deadline.

For help with any aspect of your tax return, please get in touch with one of our team.