Members of the English ICA’s tax faculty had been hoping for a statutory definition of research and development to clear up ‘grey areas’ but the Bill simply adopts a meaning used in ‘normal accounting practices’ set by the ASB.
Commentators said the changes were part of a trend for the Inland Revenue to pass tricky issues back to the ASB and reduce the gap between tax and accounting definitions. Many believe the trend places more pressure on the ASB which, they believe, will have to now consider the tax implications of any changes to accounting standards.
John Whiting, tax partner at PwC said: ‘If research and development follows accounting standards anybody forming standards has to be very careful about what they do.’
Frank Haskew, at the ICA’s tax faculty, said: ‘They are throwing it back at the ASB and what we are seeing is a slow move to tax following accounting.’
Historically the setting of accounting standards has been kept independent and members of the board would not want their work confused with setting tax rules.
The ASB said that as long as tax rules followed accounting rules it would have few concerns. But if the opposite were to happen, and accounting was forced to follow tax rules, then the alarm bells would start ringing.
One member said that though developments are being closely watched the board would not be influenced by a connection with tax. ‘I don’t think that a tax link would alter the considerations we would give to it,’ he said.
Just one half of UK practices have implemented a pricing structure around auto enrolment implementation and advice - with many suffering increased costs
Deloitte's north-west Europe foray; BDO, Smith & Williamson investment paths; Shelley Stock Hutter; and Wilkins Kennedy discussed by editor Kevin Reed on our Friday Afternoon Live broadcast
Accountants should alter their perspective on auto-enrolment to maximise business opportunities, according to Eric Clapton.
Kevin Reed discusses whether new accountancy group Cogital can rival the Big Four...and its likely direction of travel