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Weekly Technical Bulletin - 15th August 2008

FINANCIAL REPORTING

1. As reported in Farmers’ Weekly, farmers who feared they would be faced with increased taxable profits after having two single payments (SP) falling in the same financial year, now have the accounting option to defer recognition of their 2008 SP until 31 December. The changes outlined by the English and Scottish Institutes of Chartered Accountants apply to farmers with financial years ending between 16 May and 31 December and should keep accounting and taxable profits on a consistent basis.

2. Auditors are reminded that neither the new auditor resignation statements regime nor the new access to information by successor auditors’ facility applies to unincorporated charities, pension schemes or general partnerships which are not qualifying partnerships. [Companies Act 2006, section 1210].

DIRECT TAXES

TAX

1. Salary sacrifice: HMRC have issued some additional guidance in the form of Q&As.

2. Following Royal Assent to FA 2008, the Gift Aid transitional relief rules are effective so charities that have already made repayment claims on donations received on or after 6 April 2008 are now entitled to the transitional relief in respect of those donations. This relief is paid automatically and the charities do not have to take any further action.

INDIRECT TAXES

1. VAT

1. HMRC have issued Brief 36/2008 VAT Treatment of Charity Challenge Events. This Brief announces HMRC’s revised guidance on Charity Challenge Events, including those that qualify for the VAT Charity Fundraising Exemption. Charities may wish to revisit their previous records and make claims for VAT incorrectly treated in respect of previous contracts.

OTHER

1. UK CPI inflation climbed to 15-year high as prices shot up much faster than expected in July, with a fresh increase in food and fuel prices taking the UK’s annual inflation rate to more than double the Bank of England’s target, official data showed on Tuesday. CPI jumped from 3.8% in June to 4.4% in July, the highest since April 1992 and well above analysts’ average forecast. RPI inflation rose to 5% up from 4.6%.

2. Meanwhile the Bank of England’s quarterly Inflation Report published the following day indicated a further substantial rise in the rate of inflation in the coming months, adding that “the inflation outlook is unusually uncertain”. Its general economic assessment was also bleak. Financial markets immediately interpreted this as a strong likelihood of a recession and the Bank’s prediction of a rapid decline in inflation later next year was seen as a strong signal of lower interest rates to come. Sterling plunged.

Whilst every effort is made to ensure accuracy, information contained in this publication may not be comprehensive and recipients should not act solely on the basis of this information.