Insight

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Autumn/Winter 2016

Insight

News and comment from HW Fisher & Company

Brexit may mean Brexit, but what will it mean for business?

Brexit economic impact – Apocalypse postponed or keep calm

and carry on?

Improving business performance by cutting red tape

Insight | 1


Brexit may mean Brexit,

but what will it mean

for business?

The process of Brexit will be neither quick nor easy, with even the Chancellor

warning that British businesses face a “rollercoaster.” Corporate tax partner

Toby Ryland charts the potential ups and downs that lie ahead.

One of the many misleading

assumptions made during the febrile

pre-referendum atmosphere was that

British businesses would vote en masse

to remain in the EU.

The assumption was simple, but

simply wrong. It reasoned that if

businesses hate uncertainty above all

else, why would they choose to swap

the status quo for a prolonged bout

of uncertainty?

While that logic may have held sway

in most large corporates, and with

many in the financial services and tech

sectors, sizeable numbers of smaller

business owners and entrepreneurs

voted for Brexit.

But whichever side they backed, all

British businesses are already being

affected to some degree by the plunge

in the Pound triggered by the UK’s

momentous decision.

Many also face considerable upheaval

during the extended period of

uncertainty that now looms.

With divorce negotiations between

the UK and the EU set to begin in

early 2017, and Brexit itself not due to

happen until 2019, it is still far from

clear what a non-EU UK will look like.

However two areas likely to see

significant change are taxation

and trade – so what should

businesses expect?

Battle lines are drawn

At its heart, the EU is a customs union

and a single market. As a customs

union, there are no tariffs on goods and

services traded between EU member

countries. And when trading with

countries outside the bloc, member

states all face the same tariffs – putting

them on a level playing field.

With divorce negotiations

between the UK and the EU

set to begin in early 2017,

and Brexit itself not due to

happen until 2019, it is still

far from clear what a non-EU

UK will look like.

The single market means there is a

shared VAT system that is harmonised

and charged on a consistent basis

across the EU.

As a trading nation, Britain has

benefitted greatly from this

arrangement – with even Brexiteers

praising the ease and efficiency it

brought to cross-border trade, even if

they disagreed with the free movement

of labour that came with it.

In the wake of the referendum,

optimists suggested that the UK might

be able to negotiate a “soft’ Brexit in

which it left the EU but stayed in the

single market.

However, by October the chances of

that happening were looking ever

more slim. At the Conservative Party

conference, Theresa May made it clear

Britain would not remain in the single

market if doing so meant losing control

of immigration.

Yet European leaders insist that the free

movement of goods and services comes

hand in hand with the free movement

of people.

And so the first battle lines of the

Brexit negotiations were drawn – the

UK must choose between immigration

controls or the single market. Britain

can’t have both.

Growing signs that the government

favours the former convinced the

currency markets that the UK is heading

for a traumatic “hard” Brexit, and the

resulting fears sent Sterling plunging to

record lows against both the Dollar and

the Euro in early October.

The CBI and the UK manufacturers’ body

the EEF responded by writing an open

letter urging the government to preserve

barrier-free trade with Europe.

It warned that if the UK left the single

market and defaulted to World Trade

Organisation (WTO) rules instead, 90%

of UK goods traded with the EU would

be subject to new tariffs.

And so the first battle lines of

the Brexit negotiations were

drawn – the UK must choose

between immigration controls

or the single market. Britain

can’t have both.

However, in my view such tariffs would

be cumbersome but manageable and

are unlikely to be high, since high tariffs

would not be in the best interests of

either the UK or the EU.

Hold VAT thought

Changes to the most obvious direct

tax on business were mooted within

days of the referendum. One of George

Osborne’s last acts as Chancellor was to

suggest corporation tax be slashed to just

15%, though he gave no timeframe.

Insight | 2


The rationale behind the suggested cut

was to make the UK more attractive to

foreign investors, and it was possible

as the EU already allows its member

states to set their own corporation tax

as they see fit. However, the current

Chancellor, Philip Hammond, may feel

that such a cut in corporation tax is not

needed – more will become clear when

he delivers the Autumn Statement later

this month.

By contrast the other major tax that

affects businesses – VAT – is closely

wrapped up in the EU mechanism.

While nothing is expected to happen in

advance of Brexit, once Britain leaves

the EU, the UK could change how VAT

is charged in the UK or even replace

it completely.

One of George Osborne’s

last acts as Chancellor was to

suggest corporation tax be

slashed to just 15%, though

he gave no timeframe.

But this too is unlikely, as the cost to

UK business would be high and

completely unnecessary.

So in practice, the risk of double or

non-taxation means that the UK VAT

system is likely to continue to mirror the

EU system even after the two separate.

With fundamental change unlikely,

the main impact will be the imposition

of import VAT when goods enter the

EU from the UK and vice versa –

which may have cashflow implications

for businesses.

However there could be better news

for small and medium-sized enterprises

developing new products or services, as

a post-Brexit UK will be free to extend

research and development (R&D) tax

relief. Together with the Enterprise

Investment Scheme and Seed Enterprise

Investment Scheme – and the specialist

tax reliefs available to the creative

industries – such tax incentives are

currently classed as State Aid by the EU

and are strictly limited.

While nothing is expected to

happen in advance of Brexit,

once Britain leaves the EU, the

UK could change how VAT

is charged in the UK or even

replace it completely.

But these State Aid restrictions

would cease to apply to Britain after

Brexit, freeing Westminster to increase

the value of the existing tax breaks,

or introduce new tax incentives if

it wishes.

Similarly Britain’s Patent Box regime –

which was curtailed after EU opponents

accused it of offering a competitive

advantage to UK businesses – could

be extended.

Divorce proceedings never

run smooth

Theresa May has warned that she won’t

provide a “running commentary” of her

Brexit plans. But it’s safe to assume they

will have to adapt in the face of tough

negotiations with the EU.

Insight

In this issue...

Brexit may mean Brexit, but

what will it mean for business?

Brexit economic impact –

Apocalypse postponed or keep

calm and carry on?

Improving business performance

by cutting red tape

HMRC’s digital future – death of

the tax return?

Spotlight on…Kate Lyall Grant

No mercy for non-doms:

Another tax hit looms for those

who own UK property through

offshore structures

HW Fisher launch new Wills

and Probate service. Jamie

Morrison, Private Client Partner

explains all

One year on: learning the

lessons from the ‘extraordinary

failures’ at Kids Company

Financial due diligence – is it

really necessary?

2

4

6

8

9

11

12

13

15

Negative impact on

multinationals, but a boost

for R&D

One aspect of Brexit that will hit

multinational companies operating

in the UK will be the loss of an

EU-wide corporate tax “freedom”

which allows organisations to make

cross-border interest or royalty

payments between subsidiaries free

from withholding taxes.

This “WHT protection” is a key factor in

the UK’s appeal to global corporations

as a gateway to the EU. Without it,

Britain may find it more challenging

to attract inward investment at the

same rate, however low its rate of

corporation tax.

With hard and soft Brexit factions

already dividing the government, and

the EU’s two biggest powerbrokers

– Chancellor Merkel and President

Hollande – drawing a line in the sand

over Britain’s continued access to the

single market, there is likely to be

considerable horsetrading during the

two-year Brexit negotiations.

The “three t’s” of tariffs, tax and trade

will all be key battlegrounds. Businesses

should accept that change is coming on

all three fronts, even if the exact nature

of that change won’t be thrashed out

for some time yet.

Toby Ryland,

Corporate Tax Partner

T 020 7874 7959

E tryland@hwfisher.co.uk

The Bribery Act – doing business

a favour?

FRS 102 Practical issues:

Deferred tax on revaluations

Disclosure of transparency in

supply chains

17

18

19

Insight | 3


Brexit’s economic impact –

Apocalypse postponed or

keep calm and carry on?

?

??

After the initial shock of Britain’s decision to leave the EU, an uneasy calm is

returning. But talk of a post-Brexit bounce is premature, and the impact on the UK

economy will be profound and long-term. British businesses must adapt to the new

normal in order to survive, argues Michael Davis.

When Britons voted to leave the EU

in June, both the UK and its European

trading partners were plunged into a

period of acute uncertainty.

Within hours, Britain’s Prime Minister

had resigned, billions were wiped off

the UK stock markets and Sterling

had slumped in value against both the

Dollar and the Euro.

The days that followed saw a

succession of business leaders make

dire predictions, and the Governor of

the Bank of England describe the UK

as suffering from “economic posttraumatic

stress disorder.”

But by the start of October, the sky had

steadfastly refused to fall in. Britain’s

property market, that reliable driver of

popular sentiment, had settled into a

familiar pattern of steady price rises.

Buoyed by low inflation, rising wages

and record low interest rates, British

consumers have continued to spend.

By August, UK retail sales figures

were up 6.2% on the same time in

2015. And in September, a GfK survey

of 2,000 households showed that

consumer confidence had surged back

to its pre-Brexit levels.

While the full picture of the

referendum’s economic impact has

yet to emerge, there are some

encouraging early signs. UK GDP grew

by a brisk 0.5% in the third quarter

of 2016, less than in the previous

three months but far faster than most

economists had predicted.

Growth in Britain’s dominant service

sector – which makes up four-fifths of

the economy – grew strongly in July,

according to ONS figures.

In contrast to earlier surveys of business

leaders that suggested there had been

a sharp drop in activity and confidence

in the aftermath of the vote, this first

hard data revealed that the sector grew

by 0.4% in July, faster even than the

0.3% increases notched up in May

and June.

While the full picture of the

referendum’s economic impact

has yet to emerge, there are

some encouraging early signs.

The good news didn’t stop there.

Helped by the weak Pound, in

September Britain’s manufacturing

sector grew at its fastest rate in

more than two years, according to

the Markit/CIPS purchasing

managers’ index.

Bounce or benign limbo?

Such apparent stability has led some

commentators to conclude that the

initial gloom following the referendum

result was overblown.

“What was all the fuss about?”

they ask, seizing on the surprisingly

robust data as evidence of a postreferendum

bounce.

Committed Brexiteers are now

confidently predicting a bright

economic future for a non-EU UK, and

that Britain will divorce amicably from

its European neighbours with little

economic fallout.

Such a stance overlooks the fact

that much of the post-referendum

improvement in economic indicators

was down to a reversal of earlier falls

rather than a sign of a coming boom.

The fact the UK has not plunged into

the economic abyss, as some feared it

might, is more likely to be down to the

vast monetary stimulus unleashed by

the Bank of England.

In addition to its decision in August

to slash interest rates to a record low,

the Bank has embarked on a £70bn

extension of its quantitative easing

programme, and launched a £100bn

scheme to force banks to pass on

the low interest rate to households

and businesses.

This has shored up consumer and

business confidence to a large degree,

and helped Britain slip into a benign

limbo rather than a recession.

The fact the UK has not

plunged into the economic

abyss, as some feared it

might, is more likely to be

down to the vast monetary

stimulus unleased by the

Bank of England.

Apocalypse not yet

The consensus among most economists

in the run-up to vote was that Brexit

would have a broadly negative impact.

This has changed little, despite the

economy’s resilience so far.

True, the OECD has rowed back on

its warning that the UK would suffer

Insight | 4


immediately from a Brexit vote and

revised its 2016 GDP growth forecasts

for the UK slightly upwards from 1.7%

to 1.8%.

But it has cut the forecast for

next year from 2% to 1%, saying:

“Uncertainty about the future path of

policy and the reaction of the economy

remains very high and risks remain to

the downside.”

The World Trade Organisation is also

hedging its bets. Its director-general

Roberto Azevedo said in September:

“Economic forecasts for the UK in

2017 range from fairly optimistic to

quite pessimistic. Our forecast assumes

an intermediate case, with a growth

slowdown next year but not an

outright recession.”

Such predictions that the UK will

avoid a recession, while more upbeat

than the forecasts of imminent

doom made during the frenzied

referendum campaign, are hardly

a ringing endorsement of Britain’s

economic prospects.

The reason for the cautious

ambivalence is two-fold – hard

economic data can take many months

to filter through, and the course of

Brexit negotiations is far from clear.

With the Prime Minister finally

confirming in October that Article 50

– the formal process by which the UK

will extract itself from the EU – will be

triggered in early 2017, there is at least

a timeframe.

Once underway, the negotiations must

be completed within two years. But

with rival “hard” and “soft” Brexit

factions already forming in government

and the EU’s two most powerful leaders

– Germany’s Chancellor Merkel and

France’s President Hollande – distracted

by domestic political problems, it is

impossible to predict what sort of

settlement will be reached.

Such predictions that the

UK will avoid a recession,

while more upbeat than the

forecasts of imminent doom

made during the frenzied

referendum campaign,

are hardly a ringing

endorsement of Britain’s

economic prospects.

With such little clarity on everything

from Britain’s access to the European

single market to UK employers’ ability

to recruit skilled workers from the EU,

the post-referendum Phoney War is set

to continue for a while yet.

Brexit will be a process,

not an event

The first snapshot of the UK economy

in the wake of the referendum was

surprisingly positive, and only the most

churlish Remain campaigner could fail

to be cheered by it.

But to cite this initial resilience as

proof that the economy will sail blithely

through the next few years is premature

at best, and dangerously complacent

at worst.

It also fundamentally underestimates

the scale – and length – of the

challenge ahead. As the Chancellor

Philip Hammond put it in October, the

economy faces “a rollercoaster” ride as

Brexit negotiations progress.

The sharp fall in the Pound following

the referendum may have helped

Britain’s exporters, but it has also

ramped up import costs. Coupled

with September’s oil price spike, more

expensive imports will likely drive up

inflation and steadily stifle consumer

spending.

But to cite this initial resilience

as proof that the economy will

sail blithely through the next

few years is premature at best,

and dangerously complacent

at worst.

Despite the immediate shock

following the referendum result,

the true economic cost of the UK’s

monumental decision to leave the EU

has yet to be felt.

Brexit itself will be a process, not an

event. And for the UK economy, it’s not

so much a question of not being out of

the woods – as not even having entered

them yet.

Michael Davis,

Managing Partner

T 020 7380 4963

E mdavis@hwfisher.co.uk

Insight | 5


Improving business

performance by

cutting red tape

The British Chamber of Commerce recently downgraded UK growth expectations

after Brexit, warning that, although the UK should avoid recession, a turbulent

business period still lies ahead.

It is therefore more crucial than ever for businesses to reduce

their costs and improve their efficiency and performance using

all means possible.

One of the ongoing challenges facing small and medium-sized

enterprises (SMEs) is the abundance of red tape they need to

deal with when running a business. Keeping up-to-date with

compliance can be expensive and, together with the burden

of administration, time consuming. In fact, it is estimated

that small business owners spend a day a week on business

administration, time that would be better spent focused on

core business activities and strategy.

It is therefore more crucial than ever for

businesses to reduce their costs and improve

their efficiency and performance using all

means possible.

The government pledged to cut the cost of regulation by

£10bn between 2015 and 2020 and one of the key arguments

to leave the EU was to reduce the burden of EU regulation

on businesses. Whether a reduction on the cost and burden

on businesses will materialise is uncertain. So what can

SMEs do now to reduce red tape and make their businesses

more efficient?

Cutting the burden of administration

An efficient business will ideally undertake all of its processes in

the most efficient manner to save time and money. There are

two key ways this can be achieved:

Automation

Automation uses technology, typically software for business

administration, to automatically complete business processes.

Automating as many of the day-to-day tasks required for your

business to run will ultimately save time and money in the long

run. This could include automatically sending out payment

reminders to customers or automating ongoing marketing form

enquiries on your website.

Outsourcing

It can be both cost-effective and efficient to outsource

administrative tasks to another party that specialises in that

specific task. A good example where outsourcing can be

effective is payroll services. In order to operate an efficient

payroll you need to be able to keep up-to-date with changes

in legislation, and have the right software and trained

personnel. A good payroll company will have these resources,

and therefore will reduce the administrative burden on your

business as well as providing a cost saving.

Ultimately the processes you outsource will depend on your

individual business and its focus.

Cutting the burden of compliance

Reducing the cost and time spent on compliance is a balancing

act. The cost of keeping up-to-date with compliance can

be costly, but failing to comply can be more expensive still,

resulting in fines and a loss of customers.

Regulatory changes that have affected a large

proportion of businesses in recent years have

included:

• Auto-enrolment of pensions

• HRMC Real Time Information (RTI)

• Food labelling regulations

The latest change on the horizon is the ‘Making Tax Digital’

proposal from HMRC which could see businesses being

required to upload management information to HMRC on a

quarterly basis which could be a massive burden on

unprepared businesses.

The time saving, and ultimately the cost saving to the business

through the use of automation, can be significant and can also

ensure key tasks are completed with the minimum amount

of monitoring.

Insight | 6


So how can a business deal with compliance

in the most effective and efficient manner?

Keep up-to-date

The first measure is to ensure your business is kept up-to-date

so that you can deal with new compliance issues effectively.

Consider calling on a small number of key sources of

information such as the Chamber of Commerce to keep up-todate

with general compliance matters, the trade association for

your sector for specific industry matters and your accountants.

Be prepared

Preparing for changes in regulations well in advance allows you

to budget for costs, seek advice, source suppliers and put in

place any new business processes required. This will minimise

the impact on your cash flow, your staff and ultimately your

business as a whole.

Take advice

Seek advice from professionals particularly if the matter is not

straightforward. If your business makes a mistake the fines

and costs can be significant. Taking advice from a regulated

professional, such as your solicitor or accountant, provides

comfort that the correct steps have been taken.

Shop around

If you need to outsource a compliance function or purchase

new software, spend some time searching for a supplier

that will give you the best value for money and best service.

The sooner you start the process, the more time you have

to negotiate.

Delegate

Whilst it is important to ensure that your business is compliant,

remember that your time is best spent focusing on your

core business. Delegate the task of being compliant to an

appropriate member of staff that deals with that area, such as

an HR manager, bookkeeper or financial controller.

By carefully cutting the burden of red tape you can save time

and cost, and increase the efficiency of your business – as a

result, this will free up more of your time to work on your core

business proposition as you look to move to the next level.

John Buchanan, Performance Senior Manager

T 020 7874 7954

E jbuchanan@hwfisher.co.uk

Insight | 7


HMRC’s digital future –

death of the tax return?

By 2020, the government plans to introduce a digital tax system for all UK taxpayers.

Called ‘Making Tax Digital’, the proposed plans will have a

wide-ranging impact on how businesses and individuals report

their taxable income and gains.

HMRC sees this as a shift towards ‘real-time reporting’ and has

even hailed the changes as “the end of the tax return”.

So why is the government making these changes and what

are the implications of such a comprehensive overhaul for

UK taxpayers?

HMRC sees this as a shift towards ‘real-time

reporting’ and has even hailed the changes as

“the end of the tax return”.

What is ‘Making Tax Digital’ about?

The move towards digital – often called the Fourth Industrial

Revolution – has had a wide-ranging impact on all manner

of industries.

The government has leapt upon this technological shift as

it seeks to streamline how tax is reported in the UK – with

the overall aim being a simplified and more holistic way of

declaring taxable income for the taxpayer, while driving up

levels of compliance through more accurate reporting.

As HMRC sees it, this is a move away from the “needlessly

bureaucratic form filling” of old, according to David Gauke,

Chief Secretary to the Treasury.

Instead, the government’s goal is for taxpayers to report their

transactions and income in ‘real-time’, making the onerous task

of filing tax returns at the end of the financial year a thing of

the past. In addition, the government intends to end the free

provision of software for filing the annual tax return and will

require reporting to be made using third party software – thus

driving up the cost of compliance.

The government has leapt upon this technological

shift as it seeks to streamline how tax is reported

in the UK – with the overall aim being a simplified

and more holistic way of declaring taxable

income for the taxpayer, while driving up levels of

compliance through more accurate reporting.

What are the implications of this?

The government’s target for this changeover is 2020, but a few

of these changes are already in place. Taxpayers can now open

digital personal tax accounts (PTA), to get a real-time view of

their tax affairs and see how their tax is calculated.

Over the next four years, UK taxpayers will progressively gain

more powers over their tax affairs through their PTAs.

For the self-employed, digitisation will include pre-population

of self-assessment with basic earnings and deductions from the

last tax year already filled in.

From 2018, it’s also likely that small businesses turning over

£10,000 a year – including from self-employment or through

Buy-to-Let – will have to update HMRC at least quarterly and

possibly pay on account of the eventual tax liability too. ‘Pay as

you go’ tax will be voluntary, at least at first.

The government’s target for this changeover

is 2020, but a few of these changes are already

in place.

While HMRC stress that this is designed to streamline the

reporting process and remove the stress of filing a return at

the end of January, freelancers and small businesses alike are

concerned this will quadruple their tax responsibilities – and

therefore increase the financial burden requiring them to seek

professional help on multiple occasions – and they will still be

required to submit a year end declaration in any event.

There is also a worry that the government’s digitisation

overlooks the ‘digitally excluded’ – who account for around

19% of the UK’s self-employed.

HMRC have sought to put provisions in place for this, allowing

people to nominate others to submit tax returns on their behalf

and to supply information over the phone.

A connected future

Despite some finding cause for concern, the government’s

digitisation of tax is seen as a necessary step to increase

compliance in the UK.

In this digital age, many people earn taxable income from a

growing and diverse range of sources – from online trading

to savings interest. HMRC’s plans are to collate these various

income sources into one place, and streamline the process of

collecting the correct amount of tax.

Tim Walford-Fitzgerald, Principal

T 020 7380 4927

E twfitzgerald@hwfisher.co.uk

Insight | 8


Spotlight on…

Kate Lyall Grant

We speak to our client, publisher Kate Lyall Grant of Severn House Publishers.

As an independent publisher of commercial

fiction, what gives Severn House an edge over

its competition?

Our raison d’etre is to publish established authors who are

no longer being published by the bigger publishing houses,

perhaps because their mass-market sales are no longer

holding up, but who can demonstrate a loyal readership,

solid hardcover sales track record and some positive review

coverage behind them.

We’re also interested in publishing established authors who

are still being published by one of the big publishers, but

who are keen to experiment in some way, perhaps by writing

in a different genre. In the USA, for example, Severn House

punches well above our weight in terms of both the sales and

review coverage we secure; so for British authors wanting to

write a second series that will appeal to the American market,

it’s this transatlantic exposure that gives us an edge over

our competitors.

You’ve had an extremely successful career.

Which character traits would you say are

necessary to be successful in this profession?

A highly-developed sense of humour is a must in this industry,

along with confidence in your own editorial acumen, the

ability to infect others with your personal editorial enthusiasm

and persuade cynical sales & marketing colleagues of the

uniquely brilliant qualities of a particular book. It’s also

important to be open-minded, receptive to new ideas,

and able to connect with people from all different types of

backgrounds. Trade publishing is an incredibly social industry,

and one of the aspects I enjoy most about the job is meeting

potential authors who come from all walks of life, and who

often have the most fascinating day-jobs and life experiences

to share.

What has been the proudest moment of your

career to date?

It’s impossible to choose just one! The top three would have

to be the first time one of my titles reached the Sunday Times

Top Ten bestseller list, the first time I had an author selected

as a Richard & Judy Pick, and the first time I won a hotlycontested

publisher auction for a promising debut author.

What aims and ambitions do you have for

Severn House?

I’d like to see Severn House continue to adapt to the changing

market, ensuring that we attract top quality authors to the

list, and publish their books to the best of our ability. eBooks

and the advent of print-on-demand ensure that our titles have

a wider reach than ever, so I would like to see us explore every

opportunity to fully exploit the ‘discoverability’ of our books.

As a long-term aim I would like to see us find ways to do

more business with the general trade, that being Waterstones

and WHSmith in the UK; Barnes & Noble in the US.

What advantages come from being at an

independent hardcover publisher?

We are a small but highly focused team, assisted by a number

of longstanding, regular freelancers around the world, which

means we can be very flexible and allows us to adapt quickly

to changing market conditions.

Another strength is the quality of our editorial care. We aim

to give our authors the individual, in-depth editorial feedback

and attention that the larger publishing houses often don’t

have the time to devote to midlist authors. Authors also

appreciate the family atmosphere at Severn House – even

the receptionist who answers the phone knows exactly who

they are. It’s that kind of personal touch that is so important,

I think.

What are the biggest challenges that you face

at Severn House?

The ever-declining library budgets are of course a major

challenge. Obviously we have no control over government

spending, so we have to ensure that we can adapt other areas

of the business, such as our eBook list for example.

Insight | 9


Also, the abolishment of the Net Book Agreement almost

twenty years ago now and the subsequent disappearance of

all those high street bookshop chains – Ottakars, Borders,

Books Etc, Dillons – means that the big publishing houses

have drastically cut their midlist publishing over the years. For

an author, this means that to a large extent it’s all or nothing

on your debut novel: authors are no longer given a chance to

build and grow from modest beginnings.

If they’re not a brand name, it’s harder for authors to build

up a loyal and devoted readership: these are the kind of

authors who are the lifeblood of Severn House, and they are

becoming an increasingly rare breed. There is a substantial

readership for just those kinds of books, if publishers would

only give authors a chance.

What are you looking for from authors?

The authors we value most are those who meet their delivery

deadlines; produce excellently-crafted novels at regular

intervals and those who provide us with plenty of extra

content which we can use to market their novel. Also, those

authors who make good use of social media to reach out to

their readers and build up their fanbase online.

How has Severn House changed since you

joined in 2011?

Also, since 2012, technological advances mean that small

reprint runs of hardcover/trade paperbacks and print-ondemand

are far more cost effective than they used to be.

This means that none of our titles need go out of print, as

used to be the case. This is a major advantage for a publisher

like us, who do not publish mass-market editions.

What do you look for in an accountant?

Sound, practical, honest advice. A ‘glass half full’ approach: a

positive attitude to solving seemingly intractable problems.

What is the most important financial lesson

you’ve learnt?

Everything in moderation – don’t spend what you can’t afford

or at least can’t afford to repay within a relatively short space

of time. As far as acquiring new titles is concerned, it’s OK to

take a punt, but don’t over-spend those costings! As a small

independent publisher, we can’t afford to absorb loss-making

books as part of the bigger overall picture. For example, about

85% of our authors earn out their advances and receive

royalties on top; this is certainly not something I can say of the

publishers I worked for previously. We take the view that every

book should cover its direct cost and contribute some margin:

this means not paying excessive advances, and getting the

initial hardcover print run as accurate as possible.

When I joined, our sales were divided approximately 50/50

between Britain and America. Now, admittedly with the

ongoing UK library budget cuts, but more significantly with

the growth of eBooks it’s closer to 30/70 UK/US, so we are

extremely focused on the American market.

Our eBook list has grown exponentially since I first joined, and

last year Amazon overtook the US library supplier, Baker &

Taylor, to become our biggest customer. The growth in online

sales means that we are just as concerned about how a cover

image will look as a thumbnail sketch on a website as how a

traditional hardcover print edition will look on a library shelf..

Insight | 10


No mercy for non-doms: Another

tax hit looms for those who own UK

property through offshore structures

In August the Treasury confirmed that the UK inheritance tax (IHT) advantages

enjoyed by non-UK domiciled owners of UK residential property will end, as planned,

in April 2017.

The measure, first announced in the

Budget of summer 2015, will mean that

UK residential property owned by an

offshore structure – such as a company

or trust – will be liable to IHT.

The removal of the exemption from IHT

is the latest change affecting non-UK

domiciled individuals, who have seen

the tax advantages of owning property

through such structures stripped away

steadily since 2012.

The measure, first announced

in the Budget of summer

2015, will mean that UK

residential property owned

by an offshore structure –

such as a company or trust –

will be liable to IHT.

Who will be hit and when?

The new IHT will come into force from

6 April 2017 and will be legislated as

part of the 2017 Finance Act. These

changes will apply to all ownership

structures regardless of when they were

set up.

As of 6 April, HMRC will be able to

assess whether an IHT charge is due

simply by focusing on the underlying

residential property asset, and “looking

through” these overseas structures.

Any one of the following

“chargeable events” could trigger

such HMRC assessments:

• The death of an individual holding

shares in an offshore company

which owns UK residential property

• The death of the donor within seven

years of the gifting of shares in an

offshore company which owns UK

residential property

• The 10-year anniversary

of a trust holding UK property

through an offshore company

Which properties will be

affected?

The government is yet to confirm

exactly which properties the new rules

will apply to, but has suggested that it

is likely to apply the same definition as

is currently used when assessing capital

gains tax, in which ‘residential property’

refers to any building which is used,

or suitable for use, as a dwelling. This

excludes care or nursing homes, any

building with 15 or more bedrooms

that has been purpose-built for student

accommodation and is occupied

by students, as well as prisons and

military accommodation.

It is not intended that the new IHT

charge will have any minimum value

thresholds, and, importantly, it will

apply not just to properties caught

under the enveloped dwelling rules,

but to any UK residential property

interest held by a non-UK resident

through an offshore structure.

The government is yet

to confirm exactly which

properties the new rules will

apply to, but has suggested

that it is likely to apply the

same definition as is currently

used when assessing capital

gains tax, in which ‘residential

property’ refers to any

building which is used, or

suitable for use, as a dwelling.

However, there may be slightly less

pain for the owners of mortgaged

properties. Any outstanding mortgage

debt on a property can be offset

against its value when calculating the

IHT charge, but only if the mortgage

was taken out when the property

was purchased.

Anti-avoidance backdrop

The government also plans to

introduce targeted anti-avoidance

rules in the new legislation, which will

deliberately disregard any arrangements

whose whole or main purpose is to

avoid or reduce an IHT charge on UK

residential property.

In order to boost the reporting of

“chargeable events” to HMRC, a new

liability will be imposed on anyone who

has legal ownership of a UK residential

property (including directors of a

company which holds the property) to

ensure that the reporting requirements

are met, and that any IHT due is paid.

Finally, the government intends to allow

HMRC to block the sale of an indirectlyheld

property on which IHT is owed until

the tax is paid.

A wide variety of ownership structures –

from offshore trusts to companies –

will be affected by these changes.

It is crucial that anyone who owns

UK residential property this way takes

expert advice, as failure to do so could

leave them exposed to a substantial

IHT liability they could not have

anticipated when setting up the

ownership structure.

Jamie Morrison,

Private Client Partner

T 020 7874 7983

E jmorrison@hwfisher.co.uk

Insight | 11


HW Fisher launch new Wills and

Probate service. Jamie Morrison,

Private Client Partner, explains all.

What is this new service and why are you

offering it?

Since August 2014 the ICAEW has licensed accountants to

undertake Probate work that would ordinarily be undertaken

by a solicitor. Having gone through the relevant checks, HW

Fisher has now obtained its Probate licence and can now offer

a more rounded service to clients in helping them and their

families with administering estates and applying for the Grant

of Probate.

We can also draft your Will in conjunction with our partner

specialist firm of Will writers – The Moneta Partnership Ltd –

and assist you with your inheritance tax planning.

So who should make a Will and what happens if

they don’t?

A Will is important because under the terms of the Will you are

appointing executors, who are responsible for dealing with your

assets and liabilities and ensuring the instructions and wishes

in your Will are carried out in terms of distributing your assets.

They are also responsible for obtaining the Grant of Probate

and dealing with any inheritance tax payable.

The Will is a very important document as it allows you to dictate

how you want to distribute your assets. Importantly, your Will

can stipulate who will be legal guardians of your children in the

event that they are orphaned – rather than leave it up to the

discretion of the Court or Social Services.

Your Will should never be a document that you execute once

and leave in the back of the cupboard until it is needed. It

is very important that your Will is constantly reviewed and

updated during your lifetime to ensure it remains suitable in

changing circumstances.

Is it even more important for a business owner

to make a Will?

Yes, because the Will is usually part of wider inheritance

tax planning for owner-managed businesses, along with

Shareholders’ Agreements, LLP Agreements and appropriate life

policies, to ensure that the value that an entrepreneur has built

up during their lifetime can be realised to benefit the family

and allow the business to continue. An incorrectly drafted Will

can cause the loss of valuable inheritance tax reliefs, such as

business property relief.

This is something that I would usually discuss

with my solicitor – why would I use HW Fisher?

We see the introduction of this service as a natural fit to the

services we have historically offered our entrepreneurs and

private clients. As your accountant we typically know your

financial history and have a relationship with you – and the

family – often stretching back years. Rather than use a solicitor

that you barely know to execute documents, we felt that by

introducing this service, we would offer our clients the ability

to ensure that they can get the right tax planning and Will

structuring advice in one place.

What do these services cost?

Our pricing for Wills is on a fixed quotation basis and, coupled

with that, you may well want or need inheritance tax planning

advice. For Probate work, unlike banks or solicitors who

sometimes charge based on the value of your estate, we charge

on a fixed hourly rate, no matter what the size of the estate is.

Is there anything else I should be aware of?

In addition to your Will, we can also help you draft and

register lasting powers of attorney (LPA). An LPA is a powerful

document that allows someone to step in and administer

your affairs during your lifetime in the event that you become

incapacitated. It needs to be executed whilst you have the

mental capacity to understand what you are signing.

It is possible to split the powers you give your attorneys. You

can have one document covering your financial and property

affairs and different attorneys for your health and welfare and

yet still different attorneys for your business interests.

It is important that any LPAs you execute are registered at

the Office of the Public Guardian. Again, with The Moneta

Partnership Ltd, we can help you draft and register your LPAs

to give you peace of mind that arrangements are in place to

administer your affairs in the event that you lose the capacity

to do so.

For any further information please get in touch with

Jamie Morrison below.

Jamie Morrison, Private Client Partner

T 020 7874 7983

E jmorrison@hwfisher.co.uk

HW Fisher & Company is licensed by the ICAEW to carry out the

reserved legal activity of non-contentious probate in England and Wales.

Insight | 12


One year on: learning the

lessons from the ‘extraordinary

failures’ at Kids Company

“You don’t have to be Sherlock Holmes to spend 15 minutes or so looking at the

accounts and realise that this was an accident waiting to happen.”

These are the words of a former chief

executive of the Charity Commission,

Andrew Hind, following the collapse of

Kids Company in August 2015.

Yet one of the most depressing

details to emerge from Britain’s most

high-profile charity failure was the

revelation that concerns about financial

management were first raised with

trustees 13 years before it collapsed.

The primary responsibility rested with

those trustees, who repeatedly ignored

auditors’ clear warnings about the

charity’s precarious finances.

It is this failure which has risked

damaging the hard-won reputation

of the whole sector and denting the

public’s trust and confidence.

Critical lessons to be learnt

The demise of Kids Company

offers important lessons for anyone

involved in the governance and

finance of charities.

A fundamental mistake was around

risk management. The charity was

founded on the premise that no child

should be turned away. This demandled

model meant children could

self-refer for help, which posed the risk

that there would be a significant gap

between the charity’s resources and its

ability to deliver.

The demise of Kids Company

offers important lessons

for anyone involved in the

governance and finance

of charities.

The big lesson must be that trustees

need to regularly consider key risks and

ways to mitigate and control them.

If the operating model is unsound and

the financial position is unsustainable,

then they need to act, and act quickly.

was woefully inadequate with no

long-term commitment to build

reserves. The lesson is that charities

need to monitor actual reserves against

a clear and considered reserves policy.

And that a key responsibility of trustees

is to challenge and ask questions of

the chief executive and his or her

executive team.

The big lesson must be that

trustees need to regularly

consider key risks and ways to

mitigate and control them.

The UK’s charity regulators launched

a joint consultation in May this year

(2016) and which closed in September.

Its aim is to make it easier for

accountants who work with charities to

raise the alarm if they uncover a cause

for concern.

Another issue was the demand-led

model meant that its financial reserves

were always low. The reserves policy

Insight | 13


A whistlebower’s charter?

The annual audit of a charity’s accounts

– or its smaller charity equivalent, the

‘independent examination’ – isn’t just

a legal requirement but also an

essential early warning system for

financial problems.

Auditors and accountants carrying out

independent examinations are dutybound

to flag up concerns they have

about the charity’s finances or the way

it is being run.

In the first instance, trustees are warned

of such concerns by a management

letter. But if the trustees and

management repeatedly take no action

to resolve the problem, auditors and

independent examiners are encouraged

to whistleblow to a charity regulator.

At present clear guidelines exist on

what constitutes a serious issue that

must be reported on – for example if

beneficiaries are being placed at risk,

or if there is a suspicion that the

charity’s assets have been used to

support terrorism.

But there is much less clarity about

lower-level concerns, which are known

as ‘matters of material significance’.

As a result, auditors and independent

examiners are often required to use

their professional judgment on when

and whether to raise concerns about

such matters.

The consultation seeks to spell out in

greater detail what should be viewed as

a matter of material significance – for

example if trustees have not managed

conflicts of interest correctly.

In a clear attempt to prevent a repeat of

the mistakes made in the Kids Company

saga, the consultation suggests that if

trustees fail to take action over matters

raised in the prior year’s management

letter, this too could be treated as

grounds for whistleblowing.

So rather than a new whistleblower’s

charter, the proposals are an extension

of the existing mandate for

auditors and independent examiners

to whistleblow.

A bigger whistle, but who

blows it?

The onus remains very much on

financial professionals – auditors and

independent examiners – working with

charities to raise these concerns.

In a clear attempt to prevent a

repeat of the mistakes made

in the Kids Company saga,

the consultation suggests that

if trustees fail to take action

over matters raised in the prior

year’s management letter,

this too could be treated as

grounds for whistleblowing.

But the consultation also puts

more pressure on trustees to act on

management letters. Kids Company

trustees reportedly allowed themselves

to be ignored by the charity’s

management – a situation that

would trigger more decisive and

earlier whistleblowing under the

proposed changes.

While it’s right that both accountants

and trustees share this responsibility,

and the principles behind the

consultation are laudable, even with the

greater clarity there will still be a degree

of subjectivity in what constitutes a

matter of material significance.

For example, how much is too much

to spend on fundraising? Accountants

and trustees may have very different

answers to such questions.

There is an important distinction

between the remit of auditors and

independent examiners: auditors are

explicitly charged with seeking out

and identifying reportable matters,

while independent examiners are not.

However, the auditor’s role is more that

of watchdog than bloodhound.

Irrespective of who pays their fees, both

auditors and independent examiners

are ethically and legally bound to flag

up any concerns they have about a

charity’s finances, and any significant

reportable matters they uncover.

Giving them a bigger whistle is one

thing, but they will still need to use

their financial and moral judgment

when deciding whether to blow it.

Andy Rich, Charities Partner

T 020 7380 4988

E arich@hwfisher.co.uk

Insight | 14


Financial due diligence –

is it really necessary?

If you are considering making a business acquisition you will no doubt have

considered the legal requirements, both in terms of negotiating a sale and purchase

agreement and the legal due diligence required to ensure basic ownership issues

are satisfied.

But have you also considered the benefits of financial due

diligence? Or rather, have you considered the potential fallout

of failing to undertake suitable financial due diligence?

Corporate acquisitions or investments in significant

shareholdings by corporates or individuals involve a

significant degree of risk, some of which can be mitigated

by quality due diligence.

What is financial due diligence?

The Oxford Dictionary defines due diligence

as “a comprehensive appraisal of a business

undertaken by a prospective buyer, especially

to establish its assets and liabilities and evaluate

its commercial potential”. An effective due

diligence process should provide you with

sufficient information to:

• Confirm an acquisition strategy and whether the

target fits that strategy

• Make an informed decision as to the reliability of

the target’s business plan and financial forecasts

• Verify that the target’s assets and liabilities are

as expected

• Confirm the key income drivers of the target

• Evaluate opportunities for improvement

post acquisition

• Provide opportunities to re-negotiate purchase

price if unexpected information arises

• Ensure appropriate warranties are included in the

sale and purchase agreement.

This all sounds like great information to have in an

ideal world, but due diligence obviously comes at a

cost, and many people may wonder if the benefits

really outweigh the cost.

Insight | 15


Is financial due diligence really worth

the cost?

The simple answer is yes…but only if your advisers

understand the nature and size of the transaction and the key

objectives of the due diligence exercise, such that they ensure

it is tailored to the risks involved and the appropriate level of

work is undertaken to mitigate those risks without

disproportionate cost.

The key word here is ‘due’ diligence, as the level of work

undertaken should match the size and complexity of the

transaction, meaning the cost should be appropriate too.

Corporate acquisitions or investments in significant

shareholdings by corporates or individuals involve

a significant degree of risk, some of which can be

mitigated by quality due diligence.

A well planned and executed due diligence exercise should

provide you with comfort so that you know what you are

getting into. It should help you establish the true value or

cost of an acquisition and give you the ability to negotiate

the terms of an acquisition that work for you. It should

prevent post-acquisition surprises and help post-acquisition

trading to continue smoothly, allowing future strategy to be

implemented as early as possible. It should highlight risks and

ways to mitigate them.

A high-quality financial due diligence report will give you

peace of mind that an expert opinion has been given on the

financial position and risks involved in the acquisition target.

It is usual to seek to mitigate risk in all areas of business

through the use of insurance policies and by obtaining expert

opinions on high risk matters; a financial due diligence on an

acquisition is a way to mitigate risk.

Our Transaction Services team

We have an experienced Transaction Services team with

a wealth of knowledge and expertise in due diligence on

transactions of varying sizes. All our work is tailored to the

specific requirements of our client, bearing in mind the size

and strategic objectives of the transaction, the client’s own

knowledge of the industry and the business being acquired,

and the level of risk associated with the transaction. By

targeting our work based on the risks and objectives, we

are able to keep costs proportionate to the deal, whilst still

providing the key information required.

Costs will vary depending on the specific requirements

and scope of the due diligence, and the size of transaction

being undertaken. You could expect to pay between £30,000

and £50,000 for a full scope due diligence on a transaction

of circa £5,000,000. This works out at between 0.6% and

1% of transaction value, which is small compared to the

benefits obtained.

Our Transaction Services team is experienced in advising

on all aspects of the acquisition process, can get involved at

any stage and can assist with negotiating the heads of terms

and share purchase agreement, as well as advising on suitable

warranties. Additionally, our tax teams, both corporate and

personal, can assist on any tax matters associated with

an acquisition.

Helen James, Principal

T 020 7874 1163

E hjames@hwfisher.co.uk

The key word here is ‘due’ diligence, as the level

of work undertaken should match the size and

complexity of the transaction, meaning the cost

should be appropriate too.

Knowledge is power, and in the world of business acquisition,

effective due diligence provides the information and

knowledge to complete acquisitions on the right terms and

with the right post-acquisition strategy in place.

Insight | 16


The Bribery Act –

doing business a favour?

Before the passing of the Bribery Act 2010, offering prospects or clients lavish

corporate hospitality ahead of an important deal or contract might not have raised

too many corporate eyebrows in some quarters.

After all, there were many countries

around the world where it was the

accepted norm that wheels had to be

oiled and palms greased in order to

facilitate trade negotiations of any kind.

However, when the Act became law in

July 2011, all this was set to change.

Amongst its provisions it created new

offences of bribing another person,

accepting a bribe, and bribing a foreign

public official. On its enactment it was

heralded as the “toughest anti-bribery

legislation in the world.”

The definition of bribery in the Act is

broad and includes offering, promising,

giving or receiving a financial or

other advantage where the intention

is to encourage the recipient to act

improperly in an official or business

function. It doesn’t just cover cash

inducements but also includes gifts,

entertainment, and holidays.

Keeping within guidelines

The UK government has always

made it clear that the intention of

the Act was not to prohibit corporate

hospitality and gifts, rather to prevent

inducements and bribes being offered

that go well beyond what would be

considered reasonable in the normal

course of business.

Today, more and more businesses are

demonstrating that they have antibribery

policies and procedures in place,

especially when tendering for contracts.

These polices commonly include

information on how the risks of bribery

are reduced and controlled within the

organisation, rules about accepting gifts

or hospitality, guidance on conducting

business and negotiating contracts, and

rules on how conflict of interest is dealt

with internally.

The UK government has

always made it clear that

the intention of the Act was

not to prohibit corporate

hospitality and gifts, rather

to prevent inducements and

bribes being offered that go

well beyond what would be

considered reasonable in the

normal course of business.

Many organisations now give staff

specific training in identifying the risks,

and set out the rules in their staff

handbooks to ensure that all employees

are aware of the standard of conduct

expected of them in their business

dealings. Where companies use thirdparty

agents and external business

introducers, it’s particularly important

that they too understand and abide by

the company’s policies.

Practical advice

for businesses

Given that no business owner, large

or small, wants to be sentenced to

10 years in prison for being in breach

of the terms of the Act, taking a few

sensible measures makes good

business sense.

It’s important, especially during the

negotiation of any contract, to look

beyond what might be seen as gestures

of good will, like gifts, business favours,

‘mates’ rates’, free advice or any

advantageous deals, and to be sure

that these actions aren’t being offered

as a bribe.

Many organisations, especially in the

corporate sector, protect their staff

from bribery allegations by prohibiting

the receipt of gifts of any sort. Other

businesses permit their employees to

accept small gifts in certain defined

circumstances, but stipulate that they

must be recorded in a company register

kept for this purpose.

Fundamentally, every firm needs to

consider what the appropriate policies

are for their type of enterprise. Large

multinational companies operating in

many different countries and using

third-party agents to negotiate deals on

their behalf will have to address a wider

range of potential bribery scenarios

than a small-to-medium sized firm that

doesn’t trade outside the UK.

It’s important, especially

during the negotiation of any

contract, to look beyond what

might be seen as gestures of

good will, like gifts, business

favours, ‘mates’ rates’, free

advice or any advantageous

deals, and to be sure

that these actions aren’t being

offered as a bribe.

During her leadership campaign,

Theresa May promised she would ‘get

tough on irresponsible behaviour in big

business’. As the UK searches for new

trading partners post-Brexit, it will be

more important than ever that the UK

can clearly demonstrate that it conducts

business with fairness, transparency and

honesty at every level.

Alfred Iringe-Koko,

Compliance Manager

T 020 7874 1158

E aikoko@hwfisher.co.uk

Insight | 17


FRS 102 Practical issues:

Deferred tax on revaluations

We are now preparing most accounts under FRS 102. One transitional change that

commonly arises is the need to charge deferred tax on revalued assets.

Deferred tax is used to match the overall tax charge with the

accounting profits. For example, the tax relief given for capital

expenditure is normally given in advance of the depreciation

charge in the accounts. Deferred tax is used to spread the tax

relief over the same period as the depreciation charge.

A revaluation may indicate an expected gain on sale.

Otherwise the revaluation will unwind through increased

depreciation charges over the life of the asset.

Under previous accounting requirements the tax effect of

revaluations was regarded as remote and was left out of

account unless there was a binding agreement to sell the asset.

FRS 102 has moved closer to the international standards by

requiring the recognition of deferred tax on most revaluations.

FRS 102 requires deferred tax to be calculated

with reference to the expected tax effect of the

transaction so that:

a. Deferred tax on the revaluation of an asset held

for sale is calculated with reference to capital

gains tax rules, including any available indexation

allowance (although this point is not specifically

stated in FRS 102 and is sometimes disputed),

while the deferred tax on any revaluation of assets

expected to be retained throughout their useful

life would be calculated with reference to the tax

rates expected to apply to future profits;

b. Deferred tax should be recognised on assets

which, as permitted under the FRS 102 transitional

rules, are shown at a deemed cost, which is above

actual cost;

c. Where a gain on a current or previous disposal has

been deferred using Rollover or Holdover Relief,

a deferred tax liability still arises as the deferral will

reverse eventually;

All of these relate to deferred tax liabilities

which would not have been recognised under

previous accounting requirements.

As explained in previous articles (see Insight Summer 2014),

revaluations accounted for under the “fair value accounting

rules” of the Companies Act pass through the profit and loss

account. Deferred tax on these adjustments should match this

treatment and pass through the normal tax charge. This applies

to the revaluation of investment properties in the same way as

it applies to fair value adjustments on investments.

FRS 102 has moved closer to the international

standards by requiring the recognition of deferred

tax on most revaluations.

Most other revaluation adjustments (for example on other types

of property) would instead be reflected in the “revaluation

reserve” required under the Companies Act. Deferred tax

on these revaluations should be taken directly through

“Other comprehensive income” for offset against the related

revaluation reserve.

The Companies Act permits a transfer from

revaluation reserve to profit and loss reserve

as the revalued elements of assets are realised.

Although this transfer is not a requirement, it is

best practice to transfer an amount reflecting:

a. Any depreciation on the revalued asset;

b. The movement on any related deferred tax

liability;

on an annual basis.

The overall effect will be that accounts prepared under FRS 102

are likely to include a higher deferred tax liability.

Michael Comeau, Technical Principal

T 020 7380 4917

E mcomeau@hwfisher.co.uk

Insight | 18


Disclosure of transparency

in supply chains

The Transparency in Supply Chain Provisions of the Modern Slavery Act came into

force on 29 October 2015. The provisions, contained in Section 54 of the Act, require

certain commercial organisations to produce a Slavery and Human Trafficking

Statement each financial year.

Any organisation that carries on a business, or part of a

business, in the UK and has global turnover exceeding £36

million per annum, will need to comply with the new

reporting requirement.

This affects entities which have their business solely in the UK

as well as global organisations that have parent companies or

subsidiaries in the UK.

The Slavery and Human Trafficking Statement

may be structured as follows:

• An introduction to the organisation’s structure,

business model and its supply chains

• Its policies on slavery and human trafficking

• An assessment of the parts of the business and

supply chains where there is a risk of slavery and

human trafficking

• The due diligence processes it has undertaken to

identify the risks of slavery and human trafficking

within its business and supply chains

• How it measures that slavery and human trafficking

has not taken/is not taking place in its business or

supply chains

• Staff training

Common questions:

What is modern slavery?

Modern slavery is a term used to encapsulate

slavery, servitude, forced and compulsory labour,

and human trafficking.

Does Section 54 apply to companies only?

No, partnerships and unincorporated businesses

also have to produce the statement.

Does the Statement need to be published in

the annual report?

This is not required, although an organisation

may voluntarily choose to do so.

I sub-contract all of my manufacturing

processes and don’t employ my own workers.

Should I be concerned?

Any business that has complex supply chains,

uses high numbers of agency workers or

sub-contractors, and relies on gangmasters,

is particularly at risk.

I am a small business with turnover of

£3 million. Am I affected with this new

requirement?

Yes and no. If you are part of the supply chain

of a large company, you may be required to

demonstrate to your customer how you comply

with the new legislation.

The Statement is required for financial years ending on or after

31 March 2016, so affected businesses will need to take action

now to ensure they comply with the requirements.

The Statement must be published on an organisation’s website.

If an organisation does not have a website, a copy must be

provided to anyone who requests it, within 30 days of the

written request.

The Statement is required for financial years

ending on or after 31 March 2016, so affected

businesses will need to take action now to ensure

they comply with the requirements.

Gilles Siow, Principal

T 020 7874 1159

E gsiow@hwfisher.co.uk

Insight | 19


HW Fisher & Company

Business advisers - A medium-sized firm

of chartered accountants based in London

and Watford.

Related companies and specialist divisions:

Fisher Corporate Plc

Corporate finance and business strategy

FisherE@se Limited

Online accounting and back-office services

Fisher Forensic

Litigation support, forensic accounting, licensing and

royalty auditing

FIAC (Fisher IT Asset Consulting)

Software and Hardware Asset Management, contract and

supplier review, licence and audit defence

Fisher Partners

Business recovery, reconstruction and insolvency services

HW Fisher & Company Limited

Advisers to small businesses and start-ups

CBF Wealth Management Limited

Intelligent wealth management and financial services

VAT Assist Limited

UK VAT representative

www.hwfisher.co.uk

London

Acre House

11-15 William Road

London NW1 3ER

Watford

Acre House

3-5 Hyde Road

Watford WD17 4WP

T +44 (0)20 7388 7000

F +44 (0)20 7380 4900

E info@hwfisher.co.uk

T +44 (0)1923 698 340

F +44 (0)1923 698 341

HW Fisher & Company and HW Fisher & Company Limited are registered to carry out audit work in the UK and

in Ireland. A list of the names of the partners of HW Fisher & Company is open to inspection at our offices.

HW Fisher & Company is licensed by the Institute of Chartered Accountants in England & Wales to carry out

the reserved legal activity of non-contentious probate in England and Wales.

Fisher Forensic, Fisher Okkersen, Fisher Partners, Fisher Performance Improvement, Fisher IT Asset Consulting,

FIAC and Kingfisher Collections are trading names of specialist divisions of HW Fisher & Company, Chartered

Accountants.

HW Fisher & Company Limited, Fisher Corporate Plc, FisherE@se Limited, Fisher Forensic Limited, VAT Assist

Limited, CBF Wealth Management Limited, Four Elements Consulting LLP and Fisher IT Asset Consulting

Limited, are related entities of HW Fisher & Company, Chartered Accountants.

HW Fisher & Company and HW Fisher & Company Limited are not authorised under the Financial Services and

Markets Act 2000 but are regulated by the Institute of Chartered Accountants in England and Wales for a

range of investment business activities. They can provide these investment services only if they are an incidental

part of the professional services they have been engaged to provide.

Fisher Corporate Plc is authorised and regulated by the Financial Conduct Authority under reference 193921.

CBF Wealth Management Limited is an Appointed Representative of Close Brothers Asset Management Limited

authorised and regulated by the Financial Conduct Authority under reference 119329.

HW Fisher & Company is a member of the Leading Edge Alliance, an alliance

of major independently owned accounting and consulting firms that share an

entrepreneurial spirit and a drive to be the premier providers of professional

services in their chosen markets.

If you would like to subscribe / unsubscribe to our publications, please email info@hwfisher.co.uk

© HW Fisher & Company 2016.

Print date: November 2016. All rights reserved.

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