News round-up 9 September 2010

Tax blunder affects millions
Up to six million PAYE taxpayers have paid the wrong tax, according to HM Revenue & Customs. Of those 1.4 million will receive letters in the post informing them that they owe outstanding liabilities of up £1,400. About four million people are expected to receive rebates. HMRC was due to send out 45,000 letters this week. The errors were discovered during implementation of a new computer system and appear to mostly affect taxpayers who have recently changed their employer. Later it emerged that HMRC may have exceeded its own 12-month time limit for demanding unpaid tax, casting doubt on whether many of the errors would result in the correct sums being paid.

Tax man ploughing through 17m extra cases

Six million pay the wrong tax

All change at Audit Commission

The strategy to turn part of the Audit Commission into a business got underway with the appointment of Gareth Davies,a former district auditor, to the post of managing director of the Commission’s audit practice. There have been suggestions that the practice could evolve into an employee-owned or mutual audit organisation competing with audit firms for public sector work. Meanwhile, the future of Audit Commission chief executive Eugene Sullivan remains unclear.

Audit Commission names Gareth Davies in crucial MD role

Begbies branches out

Begbies Traynor has branched out launching a new forensic accounting and security division. Called BTG Global risk Partners, the new business brings together four separate practices already in the firm. The business launches into a highly competitive market place with significant players already present but new executive chairman John Reynard said the launch was a “milestone” that would help the firm serve not only mid market clients but also those in the FTSE100 and the Fortune 500.

Begbies Traynor Group sets up global fraud and risk division

Osborne dumps PBR

The pre-Budget report (PBR) is to be abolished. Chancellor George Osborne is to replace the autumn event with a slimmed-down statement that will include forecasts. Many have come to see the PBR as a second opportunity for the chancellor to grandstand on policy and even the previous incumbent Alistair Campbell is on record saying the practice should end when the economic crisis is over. The PBR was a Gordon Brown innovation that began in 1997. The content of Osborne’s much reduced report is yet to be finalised and is likely to depend on decisions still be made by the new Office for Budget Responsibility.

Osborne to can pre-Budget report

Menzies steps in at HLB

Menzies is to replace collapsed practice Vantis as the UK branch of international network HLB, though there might be more appointments to follow. Menzies hopes the tie-up will expand its international business, particularly on cross-jurisdictional issues such as transfer pricing. However, it is understood HLB will look for other network partners in the UK with “strong local reputations”.

M enzies replaces Vantis as HLB partner

PwC keeps number one spot

PwC has reported that its revenues for the year ending June 2010 have risen by 4% outstripping those Deloitte reported a week before which saw a small fall. However, PwC saw profits per partner drop for the second year running to £759,000. The results widen the gap between the UK’s two largest firms though Deloitte chief executive John Connolly, due to step down next year (see page 16-17) has threatened his firm can overhaul PwC’s position at the top. Advisory at PwC saw growth of 9% which was countered by a stumble in the tax practice of 2%. Ian Powell, PwC UK chairman, took the opportunity to sound off about the competitive­ness of the UK saying: “Ensuring that the UK is seen as ‘open for business’ will determine the future success of our own firm and the UK economy.” He said government emphasis “must be” on “investing to accelerate business growth”. Powell was voted a rise in salary to £3.6m, up £300,000.

PwC revenues rise 4% to £2.3bn

PwC boss Ian Powell's salary up to £3.6m despite partner profits slump

Accountants are in demand

The demand for accountants reportedly “surged” over the summer. Recruitment specialist Reed said the positions for pre-qualified accountants were at their highest since the start of the year. The Reed Job Index showed a 17% uplift on the position in December 2009. However, Reed also said salaries slipped back marginally while those for qualified staff held firm. Days before the Reed announcement, fellow recruiter Hays revealed its profits slumped from £158m in 2009 to £80.5m for 2010.

Demand for accountants surges over summer

New favourite at FASB

A new favourite emerged for the now vacant post of chairman of the US accounting standard setter FASB. Bob Herz made a surprise announcement that he was to retire two years early and one of his current staffers, Robert Golden, currently technical director, was revealed as the tipster’s choice. The appointment is being viewed as critical to the progress of converging international accounting standards (IFRS) with US GAAP and whether the US financial regulator, the SEC, will finally sign off on adopting IFRS for America. In the UK, Golden is viewed as friendly to IFRS and the International Accounting Standards Board. The SEC has said it will make a choice on IFRS next year though it is likely to be in the second half. There remains stiff opposition among companies and markets in the US to IFRS adoption.

Favourite emerges for top post in US accounting

Analysis: Herz's departure could speed up convergence