Software firms in uproar over charges.

The row followed the imposition of fees on accountants for using special code numbers to access data needed for the calculation of capital gains tax.

Software providers, which provide products to accountants to collect the data, have accused the LSE of not understanding what effects the new fees will have.

The argument revolves around the use of SEDOL (stock exchange daily official list) numbers, which are used in conjunction with taxation software to calculate what capital gains tax an accountant’s clients will have to pay on their stock investments.

The LSE previously provided this information for free, but from 26 January 2004 it will charge licensing fees to all end users. SEDOLs are mainly used by investment banks and financial institutions, as well as accountants and solicitors.

Nigel Powell, product manager for tax products at Solution 6 UK, argued against the charges with the LSE last spring. He said: ‘We tried with one of our competitors to put up a fight against the exchange, with no luck.’

An LSE spokesman said that it had ‘worked hard’ with Solution 6 to ensure that most of its customers’ fees would by kept to a minimum, which it argued was a ‘fraction’ of the cost of most accounting software packages.

However, Powell was angry that the LSE had forced extra costs onto his clients. ‘The stock exchange is wrong if it doesn’t think it will affect accountants,’ he said.

Valerie Murrell, head of CCH software, agreed. ‘If a small firm pays £600 for our software, it could be hit with another £500 fee on top,’ she said. ‘It was a huge shock when the LSE brought up these proposals.’

Alan Poole, a sole practitioner at A&J Tax Management Services, is worried about the implications for similar firms to his own. ‘I’m sure the fee will have a major impact. The license would cost me £1,500 a year. Because I use CCH software, and it has rightly stopped using the SEDOLs, I will probably have to manually enter the data,’ he said.

But an LSE spokesman told Accountancy Age that it was ‘grossly misleading’ to suggest that accountancy and legal firms faced ‘huge fee increases’ to use the codes. He pointed out that it has to issue the SEDOLs, which has cost implications, LSE doesn’t just hold the license rights. ‘Any accounting or legal firm that has questions about SEDOL can contact us directly for more information,’ the spokesperson said.

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