HMRC Accounting and Tax Group

Notes of Meeting- 17 April 2008 at 10.15

Attendees:

Matt Blake - Commissioners’ Advisory Accountant (MB) HMRC
Michelle Telford (MT) HMRC
Nick Houghton (NH) HMRC
Peter Faherty (PF) HMRC
Josephine Crimmin (JC) HMRC
John Harnedy (JH) HMT
Richard Martin (RM) ACCA
Chas Roy-Chowdhury (CRC) ACCA
Lakshmi Narain CIOT
James Barbour (JB) ICAS
Andrew Lennard (AL) ASB
Nicola Smart of BAT Lge Crpts

Apologies:

Ian Menzies-Conacher CBI
Frank Haskew ICAEW
Mark Kenny Phillip Gillet ICI.

1. Minutes of previous meeting & matters arising

1.1. Introductions were made since there were a number of first time attendees present.

1.2. The minutes of the previous meeting were agreed.

2. 2. Simplification consultation

2.1. It was announced in the Budget that there would be a simplification review for small businesses with the view to reduce admin burden. A questionnaire on the consultation had been issued and was available on the HMT website. The review would look at simplification for the very smallest companies (T/O< £750,000 and > ten employees). There were two streams:

(a) Tax rules stream– simplification of the tax rules for small entities. It was explained that it may be better to start from scratch rather than trying to tweak the existing rules although this was still a possibility.

(b) Accounting stream – this will be taken forward in conjunction with BERR. It was explained that HMRC had heard from the profession that for many small companies, the main user of full statutory accounts was HMRC. The review would consider whether it would be possible to devise an accounting standard that included tax methods of measurement, where they were different from the accounting methods, so that only one document would be required to be prepared.

The review would also consider whether it would be possible to align tax methods of measurement more closely to accounting measurement.

2.2 The review was discussed it was noted that a series of meetings would be arranged to discuss the review further.

3. Report of the IAS 39 working party

3.1. It was reported that the March meeting had been postponed until 25 April 2008.

3.2. Foreign Exchange matching – Draft legislation and a paper on using the consolidated accounts for matching purposes had been passed to the Working Group. Comments received so far on the consolidated matching paper were not encouraging but further discussion was required.

4. Hot topics and future developments

4.1. The group went through the items on the Commissioners’ Advisory Accountant’s Forward Look that had been updated on 3 April 2008 and had been circulated before the meeting. The main items for discussion were as follows:

4.1.1. IFRIC 12 – HMRC continued to hear representations that this could cause problems. The issue being that entities may have accounted for the asset as a fixed asset and under IFRIC 12 it would be a financial asset and there were tax implications if so. This was understood but it was noted IFRIC 12 was yet to be endorsed and this may or may not happen.

4.1.2. Companies Act 2006 regulations - The regulations on accounting have been published but as yet no issues had been identified.

4.1.3. Income Taxes Project, IAS 12 – It was acknowledged that there was very slow progress on this project. There were number of reasons for this including staffing at the IASB, convergence of IFRS with the US and a wish to converge on only major issues. It was thought doubtful that anything would happen very soon.

4.1.4. General timetabling of IASB work – Again, it was acknowledged that the timetable had slipped and that it was likely that a lot of what was tabled to be issued in Q2 would not in practice be issued until Q3. It was also acknowledged that papers coming out were likely to be more tentative rather that saying this is what you should do.

4.1.5. Tiers of GAAP – this was discussed and it was noted that although there may be three tiers of GAAP this was more like a Russian doll rather than a dilution of principles, more was simply added as you moved upwards.

4.1.6. IFRS for SMES – It was thought that a large number of companies would be able to use this standard but as it was not due to be published until Q4 it could still change quite a lot before then.

4.1.7. Advertising& Promotional activities (IAS 38) – the amendment was noted.

5. AOB

5.1 There was no other business

Date for the next meeting: 3 December 2008