TaxCorporate TaxCCAB urges Brown to ease accountants’ tax burden

CCAB urges Brown to ease accountants' tax burden

In a letter to Treasury officals and HMRC, the accounting umbrella group has called for the tax effects of new accounting rule Abstract 40 on firms to be eased

Accounting umbrella group CCAB has urged the government and HMRC to ease the
‘hardship’ set to hit the professional services sector due to the tax
implications of a new accounting rule.

In a letter, addressed to Treasury heads including chancellor Gordon Brown
and paymaster general Dawn Primarolo, as well as HMRC chairman David Varney,
CCAB has called for the effect of UITF Abstract 40 upon professional
services firms to be minimised.

The Abstract has changed the way service providers account for revenue
regarding work in progress. As work progresses, revenue must be recognised in
proportion to that work rather than when the whole contract is completed.

The change is expected to cause a one-off hike in revenue, and therefore the
tax bill, of businesses affected.

‘On behalf of CCAB, I have written to the chancellor requesting that any
additional tax be spread over a period of 10 years,’ said Ian Morris, chairman
of CCAB.

‘For some businesses, the change could cause a real crisis and erode their
working capital, adversely affecting the business’ competitive position and
ability to survive.

‘For those affected the new rules will cause major hardship for suppliers of
both professional and trade services. This change could affect many ordinary
businesses including, for example, builders and electricians.’

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