Sowing the seeds of doubt
D Turner (‘Letters’, 20 August, page 13) complains that his local inspector would not help him with a query about how to reflect a complex transaction in a client’s tax return. The inspector said that it ‘was not Inland Revenue policy to offer any guidance at all’.
If Mr Turner asks the inspector to read Inland Revenue Code of Practice 10 (‘Information Advice’), he will find that it is Revenue policy – not just to give guidance, but to give a binding ‘post-transaction ruling’.
Of course, Mr Turner will need to follow the stated procedures – send in a written request for a ruling, ‘place all of his cards face upwards on the table’, give all the information set out in appendix 1 of COP 10 – and the matter should not be one of those listed in appendix 2.
This includes the wonderful ‘applications that do not involve genuine points of doubt’ – as if we have time to write to HMIT asking for confirmation of things we already know!
Mike Thexton, Thexton Training, Richmond
/b> Regarding Mr Brown’s letter, ‘Under the Influence’ (‘Letters’, 17 September, page 23), and pressure brought to bear by a bank to move accountants, this has happened to me twice. And, with a recession looming, I believe it will happen many times.
HW Williams, ACCA, Truro, Cornwall
Profession needs realism Once again, we have the councils of accountancy bodies jockeying for position in the size stakes handicap. When will an imaginative working party be formed to push through a realistic rationalisation?
Basically there are two types of accountant: those who provide a public service and those who serve their managers. The former should belong to a chartered institute of public accountants and the latter to a chartered association of management accountants. Those who satisfy the necessary examination and experience criteria could be a member of each. This would be a prerequisite for those moving from one type of work to another.
Entry to public practice might still require a period working in practice prior to being let loose on the public. This need not be done sitting by Nellie, however. It could be covered by supervised work. That would be a new role for redundant, experienced accountants, who could work with and train inexperienced people. Not easy – but worth a second look. The trouble is that no existing body would dream of pushing this idea forward.
Does the idea of two specialised institutes have any grass-roots support?
Mike Houldershaw, Dudley, West Midlands
Conversation misconstrued I refer to the article entitled ‘Now PwC law firms merge’ (3 September, page 8).
Your correspondent has misconstrued the contents of our telephone conversation and I would therefore like to correct the position.
In our conversation, I made two entirely separate points. First, that certain types of work undertaken by law firms tend to increase in times of recession (for example, litigation).
Second, and separately, we discussed the success of the large accounting firms and in particular the Big Five in expanding the services that they provide to their clients, and the fact that the law firms that have been selected to act for them in relation to those services have benefited.
I did not say, as reported by you, that ‘the long-term trend of accountancy firms diversifying into professional services provided a recession-proof income for law firms’- a statement which is very general and manifestly wrong.
I would be grateful if you could correct the impression that may have been given to your readers.
JS Ogilvie, partner, commercial litigation, Herbert Smith, London
The euro is unstoppable The euro will soon be reality, and poor accountants in the UK will have the problem of managing the risk of currency fluctuations between this currency and sterling.
Of course, managing risk costs money, and accordingly prices in the UK will continue to be above the rest of Europe. The British public will maintain its lower standard of living compared with its near neighbours.
It could be so different, as all we have to do is join the single currency when conditions are right. The problem is that the totally confused backwoodsmen who will die in the cause of sterling protection are to be financed by the beneficiaries of artificially high prices.
I can offer six good reasons why the UK must join the single currency (in alphabetical order): Conrad Black, Sir Rocco Forte, Lord Hanson, William Hague, Stanley Kalms and Rupert Murdoch.
The tragedy for the UK is that these influential people cannot stop the euro and in the end they will not be able to prevent the UK joining the single currency, but what they may be able to do is to persuade the British public not to join when the time is right.
Instead, we may join, kicking and screaming, when we have no choice, possibly having been turned down to become another state of the US, on the grounds that our prime minister is deemed inadequate because of his refusal to participate in oral sex while having telephone conversations with members of the cabinet.
Malcolm Howard (pro single currency and against the certifieds’ taking over the world), Banstead, Surrey
Are we euro ‘survivors’? I was pleased to read about the Treasury’s scheme to promote awareness of the euro (9 July, page 3). There is certainly a need to target small to medium-sized businesses, which are not aware of the effects European Monetary Union will have on accountancy systems.
However, I would contest the claim made by David Leighton, head of legal and fiscal affairs at the Association of British Insurers, that the principles behind multiple currency accounting will not change. At present, mixed currencies are simply converted using the prevailing exchange rate.
With the advent of the euro in 1999, however, there will not be any official published rate for participating currencies within monetary union. Foreign exchange will alter from being a bilateral transaction to becoming a trilateral one.
This is known as triangulation – the exchange process between non-member state currencies, such as UK sterling, and member state currencies, such as the Italian lira, via the euro. This can be dealt with relatively simply with the right tool, but many accounting systems were never designed to handle this method. Vendors have not been quick off the mark in redeveloping their financial systems. With less than six months to go until EMU commences, many vendors still cannot offer ‘euro-compliant’ solutions to their customers.
Banks and accountancy practices are little more prepared.
I believe that the majority of accountancy practices have not yet upgraded their systems to be able to include euro currency transactions.
The euro cannot be treated as just another currency. Its introduction adds an extra dimension to every transaction it touches. Now is the time to address the issues businesses will be facing in making sure their systems are able to cope.
Rob Steele, sales and marketing director, Exchequer Software
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