IASC’s draft standards
Your report (28 March) on the IASC’s discussions on investment properties is misleading in terms of both current UK GAAP and current international accounting standards.
The comments of professor Nobes on the UK GAAP treatment of investment properties are wrong on two counts.
First, SSAP 19 requires, rather than allows, the use of market values for such properties. Second, SSAP 19 requires that the resulting gains and losses should be included in the statement of total recognised gains and losses as movements in the revaluation reserve. SSAP 19 specifically prohibits the practice which professor Nobes describes as UK practice.
As far as the IASC is concerned, IASs have allowed the use of the UK practice since 1986, enabling UK companies to comply with both UK GAAP and IASs.
IASs, however, have also allowed such properties to be accounted for in the same way as other properties, that is, at cost or market value less depreciation.
This is the practice adopted in virtually every other country in the world.
The IASC is now trying to remove that choice and require the use of market values and the inclusion of gains and losses in the income statement.
This new treatment may well be better than any of the existing treatments, but the controversy is not surprising.
The adoption of such a treatment will require the use of all the IASC’s diplomatic powers as well as extensive consultations with national standard-setting bodies, the property industry itself and the users of property company accounts.
David Cairns, London EC2A
Overseas tax crackdown In view of the foreign secretary’s White Paper heralding government plans to crack down on money laundering and tax evasion in Britain’s overseas territories, can we expect to see a more effective regime in the UK?
I refer to recent revelations made by the National Criminal Intelligence Service concerning not only disappointing compliance with UK money-laundering regulations among UK professionals, but also possible prosecutions involving major national firms.
M Whitwell, Bristol
Tax and the one-man band Richard Baron misses the point in his column (25 March).
The vast majority of one-man-band contracting companies do not exist for the tax advantage of the owner. These companies are created for two reasons. Firstly, employers insist on it. The tax advantage from consulting is theirs because they do not pay employer’s national insurance.
The contractor must then avoid this NIC or they would work at an undervalue. The second reason is that in the modern economy security of employment does not exist, redundancy is commonplace, and contracting is the only way to make a living.
In launching this attack on contracting companies, the government has missed the point. Contractors do not receive a tax advantage. They are people who are trying to adapt to the modern economy’s way of working.
If the Inland Revenue cannot accept that this practice is the way the world now works, then this tax change will simply drive down incomes, increase unemployment, enhance skill shortages, and force people out of the UK economy.
In the interest of the wider economy, please think again, Gordon.
Richard Murphy, London SW18
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