accounting developments seminar · accounting developments seminar november 2015 slide 10...

Accounting developments seminar

www.pwc.co.uk

November 2015

@PwC_Midlands #ADS15

PwC

Agenda

November 2015Accounting developments seminar

Slide 2

What’s happening inthe economy?

New UK GAAP IFRS accounting update

Data regulation – Cyber security

Telling the story –Corporate reporting

Accounting regulator activity

Tax debate and developments

HRS/pensions update Closing comments

1 2 3

4 5 6

7 8 9

PwCNovember 2015Accounting developments seminar

3

What’s happening inthe economy?

1

PwC

What’s happening in the economy?

http://www.pwc.co.uk/services/economics-policy/insights/uk-economic-outlook/ukeo-nov-15-summary.html


Slide 4

http://www.pwc.co.uk/services/economics-policy/insights/uk-economic-outlook/ukeo-nov-15-summary.html

PwC

Implications of the economy on financial reporting


Slide 5

Reporting of risks and exposures

Impairment testing and sensitivities

FX, hedgingBusiness

combinations


6

New UK GAAP

2

PwC

New UK GAAPTemperature test


Slide 7

Q: Have you

started to look at

New UK GAAP?

PwC

New UK GAAP is here!


Slide 8

PwC

New UK GAAP frameworkRecap


Slide 9

• Qualifying entities

• Notify shareholders

FRS 101 – IFRS with disclosure exemptions

• FRS 100 – Application of financial reporting requirements

• FRS 103 – Insurance contracts

• FRS 104 – Interim financial reporting

• FRS 105 – Micro-entities

What else is there?

FRS 102 – The ‘New UK GAAP’

• All entities except groups listed on an EU regulated market

• Notify shareholders of reduced disclosures

PwC

Changes to Company Law and new UK GAAP


Slide 10

• Effective date 1 January 2016 for most changes

• Main impact of changes on small and micro companies

• Consolidation exemption conditions changed

• A full list of related undertakings (direct and indirect) is required for accounts approved after 1 July 2015

• IFRS formats for P&L and balance sheet allowed

New EU Accounting Directive now implemented into Company Law (SI 2015/980)1

New UK GAAP standards a moving target until recently2

PwC

Small companies: FRS 102 Section 1A


Slide 11

Thresholds Previous New law

Turnover £6.5m £10.2m

Balance sheet total £3.26m £5.1m

• No more ‘abbreviated accounts’:

- Prepare balance sheet, income statement and notes but filing P&L and directors’ report is optional

- No SCI, cash flow or SOCIE

- Fewer disclosures – Subject to true and fair view

• Choice of formats

• Audit exemption

PwC

FRS 102Measurement changes vs. old UK GAAP


Slide 12

Ta

ng

ible

assets

Sh

are b

ased

pa

ym

ents

Leases

Post employment benefits

Intangible assets

Other employee benefits

Capitalisation of borrowing costs

Business combinations

Deferred tax

Investment propertiesFinancial instrumentsD

eriva

tives

Hed

gin

gC

ash

an

d ca

sh

equ

iva

lents

Comparative information

PwC

FRS 102Measurement changes vs. old UK GAAP


Slide 13

1. Off-market intercompany loans

2. Forward contract

3. Investment property

Areas we will cover

4. Business combinations

5. Debt restructuring

6. Deferred tax

Other key areas

PwC

FRS 102 Company background


Slide 14

New GAAP Limited

Parent Co

Sub 1 Sub 2 Sub 3

Sub 4

PwC

FRS 102 Scenario 1Off-market intercompany loans: Old UK GAAP


Slide 15

New GAAP Limited

Parent Co• £100m lent in 2012

• 10 year term, bears interest at fixed rate of 10%

• Market rate of interest 15%

£100m @ 10%

Sub 1 Sub 3

Old UK GAAP (FRS 4):

• Net proceeds

PwC

FRS 102 Scenario 1Off-market intercompany loans: FRS 102


Slide 16

BasicAmortised cost (Section 11)

ComplexFair value P&L (Section 12)

• Basic – amortised cost

Basic or complex? 1

PwC

FRS 102 Scenario 1Off-market intercompany loans: FRS 102


Slide 17

• Recognise at face value

• Basic – amortised cost

Basic or complex? 1

• Initial measurement of basic loan at fair value

Is it a financing arrangement? 2

Is it repayable on demand?3

PwC

FRS 102 Scenario 2 Forward contract – Old UK GAAP


Slide 18

• Foreign currency debtor €100m

• Due in three months time

• Forward contract taken out to fix the price at £

• Revenue and debtor recorded at forward contract rate

New GAAP Limited

BANK

In 3 months:• pay €100m

• receive £75m

Old UK GAAP:

• Presented as £75m

Debtor €100m

PwC

FRS 102 Scenario 2Forward contract – FRS 102


Slide 19

• Translate sale and debtor at transaction spot rate

• Retranslate debtor over three month period, difference in P&L

• Derivative recognised on the balance sheet at fair value

New GAAP Limited

BANK

In 3 months:• pay €100m

• receive £75m

Debtor €100m

PwC

FRS 102 Scenario 3Investment property – Old UK GAAP

20


• New GAAP Ltd owns office block in Manchester

• Five floors occupied by New GAAP Ltd

• Two floors rented by Sub 3 under operating lease

• Building treated as fixed asset under old UK GAAP

Property A

• New GAAP Ltd owns 2 hotels in Southampton

• Leased out to hotel management group under operating leases

• Previously treated as investment properties at open market value

Properties B and C

PwC

FRS 102 Scenario 3Investment property – FRS 102

21


Individual accounts

• Two rented floors will be treated as investment property

• Fair value will be needed

• Five owner-occupied floors will remain as PPE

Group accounts

• Remain as PPE

Property A

• Recognise fair value movements in P&L not STRGL

• Assess P&L for realised/distributable reserves

Properties B and C

PwC

The practical side – Transition process


Slide 22

• Accounting

• Cash tax

• Distributable reserves

• Legal structure

• People, systems, processes

1

2

3

Phase

Impact assessment

Phase

Evaluation

• Step plan

• Cost vs. benefit

• Detailed quantification

Phase

Integration

• Embedding

• Training

• Testing

• Review

PwC

The practical side – FRS 102 transition checklist


Slide 23

• Restate comparatives

• Explain impact

• Balance sheet and P&L reconciliations, including opening period

• Other reconciliations as considered useful

• Update policies

• Update notes

PwC

Disclosure when adopting FRS 102


Slide 24

All entities

Qualifying entity

exemptions

Transition

Judgements and

estimates

Primary statements

Statement of

compliance

PwC

Other possible disclosures


Slide 25

Financial instruments(including fair value)1 Deferred tax2

Joint ventures3 Investment properties (including FV)4

Defined benefit plans5 Business combinations6

PwC

Help is available


Slide 26

• Practical guides

• Similarities and differences publication

• PwC ‘Manual of accounting – NewUK GAAP’ (2nd edition)

• FRS 102 and FRS 101 Illustrative accounts

• Reporting Impact Assessment

• FRS 102 roll forward

• PwC Treasury, Structuring, Tax, Accounting Advisory and Pensions

• PwC Inform – New UK GAAP branch


27

IFRS accounting update What’s new in 2015/16? What’s in the pipeline after 2015/16?

3

PwC

What’s new in 2015?


Slide 28

Not much!

PwC

Amendments effective this year


Standard Nature of amendment

IAS 19, ‘Employee benefits’ Employee contributions

Annual improvements Various

November 2015Slide 29

PwC

A little more change next year

Accounting developments seminar November 2015Slide 30

Standard Nature of amendment

IFRS 14, ‘Regulatory deferral accounts’ Rate-regulated activities

Amendments to IFRSs 10, 11 and IAS 28 Acquisition of interests

IASs 16 and 38 Methods of depreciation

IAS 1 ‘Disclosure initiative’

IFRS 10 and IAS 28 Investment entities

Annual improvements Various

EU endorsement is still pending for most standard changes

PwC

What’s next? The ‘big three’


Slide 31

• Published July 2014

• Effective 2018

• EFRAG predict EU endorsement before end of 2015

IFRS 9 Financial instruments

IFRS 15 Revenue

IFRS 16 Leases

• Published May 2014

• Effective 2018

• EFRAG predict EU endorsement soon

• IASB and FASB proposing amendments already

• May be published before end of 2015

• (Almost) all leases on-balance sheet

• IASB to treat all leases like finance leases; FASB to classify leases for P&L purposes


32

IFRS 9

PwC

Classification and measurement – OverviewFinancial assets


Slide 33

IFRS 9IAS 39

Amortised cost

Fair Value

P&L

OCI

Held to Maturity

Loans and receivables

Available for Sale

Trading

PwC

Impairment of financial assets What is the impact?


Slide 34

Minimal impact on short term receivables

Provision matrix operational simplification

Lease receivables, trade receivables or contract assets containing a significant financing component

Challenge to apply the general model to assets not in the scope of the operational simplifications

PwC

Hedging What are the main benefits of IFRS 9?


Slide 35

1 2 3

Effectiveness testing is more relaxed

Conditions to hedge account are easier to apply

Simplification of hedge accounting

Exposures permitted to be hedged expanded

4


36

IFRS 15

PwC

Latest updates


Slide 37

Current status

Joint boards

discussion

Transition Resource Group

(TRG)

Other discussions

PwC

IFRS 15 Revenue – The five step approach


Slide 38

Core principle – Revenue recognised to depict transfer of goods or services

Identify the contract with the customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price

Step 1

Step 2

Step 3

Step 4

Step 5 Recognise revenue when (or as) a performance obligation is satisfied

PwC

Revenue recognition – Transfer of control?


Slide 39

Create/enhance an asset customer controls e.g. house on customer land

Customer receive benefits as performed/another would not need to re-perform

e.g. cleaning service, shipping

Does not create asset w/alternative use and Right to payment for work to date e.g. an ‘audit’ report

No

No

Ov

er

tim

eP

oin

t in tim

e

Yes

Yes

Yes No


40

IFRS 16 – Leasing

PwC

Timeline


Slide 41

ED Published

Aug 2010

New ED published

May 2013

Expected final standard

Q4 2015

Discussion paper issued

Re-deliberations began Re-deliberations began

Mar 2009 Jan 2011 Mar 2014

Effective date: TBD EU Endorsement: TBD

PwC

Lessee accounting


Slide 42

• All leases on Balance Sheet as with finance leases under IAS 17

• Exemptions for short term leases and leases of low value assets ($5,000)Single approach

• Right of use (ROU) asset

• Lease liabilityBalance sheet

• Amortisation expense

• Interest expenseIncome statement

PwC

Lessor accounting


Slide 43

Balance sheet Income statement

Finance leases • Derecognise the underlying asset and record a net investment in the lease.

• Interest income on the net investment.

• Any selling profit or loss on the underlying asset.

Operating leases • Underlying asset remains on balance sheet.

• Lease income – Straight line over term of lease.

The classification between finance leases and operating leases for lessors is as under IAS 17.

PwC

Help is available


Slide 44

• Practical guides and In Depths

• Similarities and differences publication

• PwC IFRS Manual of accounting

• IFRS Illustrative accounts

• PwC Treasury, Structuring, Tax, Accounting Advisory and Pensions

• PwC Inform

• Pocket guides

PwC

Data regulation – Cyber security

445


PwC 46November 2015Accounting developments seminar

PwC

Building confidence in your digital futureYou can’t secure everything

We help you set the right priorities

• Enterprise security architecture

• Protect what matters

• Strategy, organisation, governance

• Threat intelligence

It’s not if but when

We help you build an intelligence-led defence, enabling rapid cyber response

• Continuity and resilience

• Crisis management

• Incident response

• Monitoring and detection

Fix the basics

We help you use technology to your advantage, deriving maximum return from your technology investments

• Identity and access management

• Information technology hygiene

• Information technology, operations technology and consumer technology

• Security intelligence and analytics

Seize the advantage

We help you exploit digital opportunity with confidence

• Compliance with privacy and regulation

• Digital trust is embedded in the strategy

• Risk management and risk appetite

Their risk is your risk

We help you understand and manage risk in your interconnected business ecosystem

• Digital channels

• Partner and supplier management

• Robust contracts

People matter

We help you build and maintain a secure culture, where people are aware of their critical security decisions

• Insider threat management

• People and ‘Moments that Matter’

• Security culture and awareness

53November 2015Accounting developments seminar

PwC

In 2015, respondents detected 38% more information security incidents1

Small organizations reported a dramatic increase in incidents, while the number of detected compromises among large companies grew at the slowest pace.

2011 2012 2013 2014 2015

Average number of security incidents in past 12 months

1 A security incident is defined as any adverse incident that threatens some aspect of computer security.

2,5622,989

3,741

4,948

6,853


PwC

The financial costs of incidents more than doubled for small organizations.

Small companies reported a two-fold increase in total financial losses attributed to security incidents, while large companies said losses dropped 16% in 2015.

Average total financial losses due to security incidents

Small(Revenues less than

$100 million)

Medium(Revenues $100 million

to $1 billion)

Large(Revenues more than $1 billion)

2014 2015

£3.22

million

£3.88

million

£856,187

£619,372£282,196 £856,187


PwC

Employees remain the most cited source of compromise, but incidents attributed to business partners are up substantially.

Security events ascribed to current and former third-party partners jumped 22% over the year before, while those attributed to employees inched down a notch.

Estimated likely source of incidents

Cu

rre

nt

em

plo

yee

s

Form

er

em

plo

yee

s

Cu

rre

nt se

rvic

ep

rovid

ers

/co

nsu

lta

nts

/co

ntr

acto

rs

Form

er

se

rvic

ep

rovid

ers

/co

ns

ulta

nts

/co

ntr

act

ors

Su

pp

liers

/b

usin

ess

part

ners

2014 2015

35% 34% 30% 29%

18%22%

15%19%

13% 16%


PwC

Increasingly, organizations report that employee, customer and internal data are primary targets of cyberattacks.

While compromise of customer records rose 35%, theft of ‘hard’ intellectual property like strategic business plans and financial documents increased more than any other data loss.

Impact of security incidents

Cu

sto

me

rre

co

rds

co

mp

rom

ise

d

Em

plo

yee

reco

rds

co

mp

rom

ise

d

Loss o

rd

am

age

of in

tern

al

reco

rds

The

ft o

f 's

oft'

in

telle

ctu

al

pro

pe

rty

The

ft o

f 'h

ard

' in

telle

ctu

al

pro

pe

rty

2014 2015

28%

38%

29%33%

20%26% 24% 25%

15%

23%


PwC

As risks rise, organizations significantly boost investments in information security1

Reversing last year’s slight drop in security spending, respondents increased their information security budgets by 24% in 2015.

Information security budget for 2015

1Information security budget refers to funds specifically and explicitly dedicated to information security, including money for hardware, software, services, education, and information security staff.

2011 2012 2013 2014 2015

£1.7

million

£1.8

million

£2.8

million

£2.7

million

£3.3

million

of IT budget spent on information security

19%


PwC

6 steps to better defences

Manage access well…Ensure your third-parties

know your baseline…Assess your key priorities,

focus investment on them…

Use threat intelligence to inform you…

Ensure there is clear responsibility, with power…

Be in a position to respond immediately & consistently…


PwC


Slide 61November 2015

Christian ToonInformation Protection Superhero

07889 [email protected]@christiantoon

Visit www.pwc.com/cyber-security to explore further


62

Telling the story –Corporate reporting

5

PwC

What does your reporting say about?Emerging themes from our review


Slide 63

Relevant risk reporting – Is your risk reporting specific and dynamic enough to bring to life your risk management?

Weighty tomes – has the continued increase in length of annual reports been at the expense of quality?

Telling an authentic story – Is your narrative consistent and coherent throughout?

Measures that matter – Do your KPIs genuinely explain the progress being made?

Facing the future – Are you providing the reader with a forward-looking orientation that is clear and consistent?

1

2

3

4

5

PwC

Beyond financialA broad balance of strategic themes


Slide 64

Finance

Operational

People

ESG

Portfolio

PwC

The most popular risks and KPIsA consistent picture?


Slide 65

Top 3 Risks reported by the FTSE 350 Top 3 KPIs in the FTSE 350

Regulation

People

Safety

Earnings per share

Revenue

Return on CapitalEmployed

PwC

2014 UK Corporate governance code and guidancePeriods beginning on or after 1 October 2014


Slide 66

New

Viability statement

Going concern confirmation

Robust assessment of principal risks

Monitoring and review of risk

management and internal control

Amended

Going concern

Risk

PwC

Ongoing review of effectiveness of systems


Slide 67

The annual review should consider…

1

2

4

5

6 Risk appetite and culture

3

FRC guidancepara 43

Issues

Communication

Changes

Integration

Operation of systems

PwC

Viability statementsWhat we’ve seen in early examples

November 2015Accounting developments seminarSlide 68

Periods chosen – 3 to 5 years

Business plan forecasts usedas basis

Occasional references to other factors

Explanation of process could be more insightful

Particular opportunities on stress testing

Lack of clarity on qualifications or assumptions


69

Accounting regulator activity

6

PwC

Spotlight on the accounting regulator – CRRT

November 2015Accounting developments seminarSlide 70

1Quality of reporting good, room for improvement for smaller companies

2Clear and concise continues to be a focus

330% of companies approached for further information and explanation; three Press Notices and six Committee References

4Company responses: good practice guidelines

5Changes to CRRT operating procedures

PwC

FRC progress so far


Slide 71

Audit committee reporting

Fair, balanced and understandable

New UK GAAP

The extendedaudit report

Strategic report

Audit firm tendering

Remuneration reporting

The StewardshipCode

New risk management disclosures

The viability statement

Recent FRCActivity

£

PwC

Development of prior years areas of focus


Slide 72

Involvement of professional expertise

Tax impacts

Clarity of specific nature of judgments applied

Include IAS 1 sensitivity analysis

Disclosed benefits vs. intangibles recognised

Accounting policy needed

Auditors’ and Audit Committee reports used

Clear disclosure of significant estimates

Expect to see more intangibles

Items which enhance rather than distract

Exceptional items Significant judgements

Estimates and sensitivities

Business combinations and separate intangibles

PwC

Areas of focus for 2015/16


Slide 73

Applicationof materiality

judgements

Complex supplier

arrangementsPensions

RevenueCash flow

statementsTax

PwC

FRC priority sectors


Slide 74

• Support services

• IT (including software companies)

2014/15

2015/16

• Insurance

• Food, drink and consumer goods manufacturers and retailers

• Companies servicing the extractive industries

• Business services

PwC

Tax debate and developments

775


PwC

Large UK Corporates hit the headlines for ‘questionable’ tax practices

Addressing the balance between perceived tax avoidance and ‘Britain is open for business’

Tax continues to hit the headlines…

“Facebook paid just £4,327 ($6,643) in corporation tax in 2014”

(BBC)

“Starbucks and Fiat sweetheart tax deals with EU nations ruled unlawful”

(Guardian)

“The Chancellor ‘taking action’ against tax evasion in 2015 budget”

(Times)


PwC

Round up of key tax developments

Summer 2015 Budget

International tax

developments

Opportunities

Managing tax risk

1

23

4


PwC

2015 Summer BudgetKey headline taxation matters arising

• CT rates reduced from 20% to 19% in 2017 and 18% in 2020

• Increase in personal allowance (£12.5k aim by end of this Parliament)

• Dividend Tax Credit to be abolished from April 2016

Taxation rates – 5 year triple lock:

• New payment dates will be introduced for companies and groups with annual taxable profits of £20m or more

Corporation tax payment dates

• Inheritance tax – New measures are being introduced to remove the majority of family homes from IHT net

• No immediate changes to Entrepreneurs’ Relief rates or limits (except for certain fund managers/’management’ companies)

• Buy to let landlords - The relief on finance costs that individual landlords of residential property will be restricted to the basic rate of tax

Personal taxation


PwC

2015 Summer BudgetKey anti-avoidance measures

Controlled foreign companies loss relief

Loss refresh anti-avoidance (prior to Summer budget)

Corporation tax relief for business goodwill amortisation on acquisitions post 8 July 2015


PwC

Base Erosion and Profit ShiftingKey projects/actions

Country by country reporting

Limitation on deductions for finance costs

Neutralising the effects of hybrid mismatch arrangements

Preventing treaty benefits in inappropriate circumstances

Preventing the artificial avoidance of PE status

Aligning transfer pricing outcomes with value creation

Designing effective CFC rules

Addressing the tax challenges of a digital economy


PwC

HMRC practice

Additional compliance obligations

Large Business Condoc

Mid sized business enquiry approach

£800m to be invested in HMRC over life of

this Parliament

Hardening of HMRC’s approach to

SAO reviews


PwC

VAT

Compound interest

• Littlewoods won in Court of Appeal • HMRC trying to appeal to Supreme Court &

saying case is fact-specific• Announcement of 45% CT on ‘restitution

interest’ – sign of surrender?• Seems clear High Court is correct route

VAT recovery by holding companies

• Many long running disputes with HMRC re deal fees

• Landmark EU judgement in Larentia and Minerva – taxpayer win

• Revised HMRC guidance due out shortly

VAT Recovery on pension costs

• Changeover date of 1 January 2016 extended to 1 January 2017

• Solutions = (1) tripartite contracts for IM fees, (2) VAT grouping or onward supply by the scheme for Admin fees

• Outstanding issue is CT deduction for IM fees under tripartite solution


PwC

UK innovation incentives are increasingly important

Optimising R&D funding allows companies to invest substantially more in R&D at the same net cost to the business, giving a clear competitive edge.

€80 billion Horizon 2020 grant funding pot for innovation activities.

£1 billion for each of R&D and Patent Box government ‘blessed’ incentives.

R&D relief for both SMEs and large companies have both increased in 2015 evidencing continued importance placed on encouraging UK innovation.

R&D funding R&D investment competitive edge= =


PwC

Summary

• There is an unprecedented level of change across all areas of tax

• The environment has changed

• Key questions to ask:

Are you managing your tax compliance, risk and reputation adequately?

Is your tax strategy still appropriate particularly international or highly leveraged businesses?

Are you making the most of tax incentives (such as innovation)?



85

HRS/Pensions update

8

PwC

The National Living Wage ('NLW')


Slide 86

• The NLW imposes a premium on top of the National Minimum Wage for those workers over age 25

• The minimum hourly rate of pay for these employees will rise by over 7% in April 2016 to £7.20/hour

• The costs through to 2020 are projected to rise to £9 per hour (possibly more)

• Changes may result in:

- Reductions in headcount;

- Increased costs to consumers/customers;

- Changes to pay and grading structures;

- A different demographic of workforce;

- Increased automation

• NLW has broader, knock-on effects.

PwC

Preparing for the National Living Wage


Slide 87

• £100 underpayment across the workforce means you could be 'named and shamed' by HMRC

1. Assess 2. Review 3. Identified risks

• Assess pay practices

• Assess wider business operations

• Understand how and when HMRC audit organisations

• Review the 'end to end process':

- Is time recorded properly?

- Are contracts correct?

- Are age changes picked up quickly?

- Salary sacrifice arrangements approved?

• Sample review of detailed records

• Key stakeholder discussions – does everyone understand the rules/apply them?

• Detailed payroll review

• Are there areas of uncertainty? If so, how will HMRC apply them?

• Are there areas of specific concern from Phase 1?

• Document identified risk and the severity of risks

• Design and implement a program of remediation:

- Processes

- Policies

- Controls

- Testing

• HMRC’s 'amnesty' program

• Disclose and negotiate with HMRC

• Act now – don’t ignore it!

Who: Payroll and HR Who: Key stakeholders and local managers

Who: Management/Risk

PwC

UK pension changes


Slide 88

• Significant changes to both annual and lifetime savings limits from April 2016:

- Annual Allowance reduced for highest earners;

- Lifetime Allowance reduced for UK pension scheme members

• Change in way in which annual contributions are calculated:

- Simplified from April 2016

- Current ‘transitional’ year made significantly more complicated

• What should employers do:

- Calculate impact on members?

- Communicate changes?

- Consider alternative approaches?

PwC

UK pension changes – The ‘hazards’


Slide 89

There are a number of aspects of the new rules which require careful consideration. Potential hazards to look out for include:

Complex rules govern the value of a ‘contribution’ into a Defined Benefit pension scheme

The ‘tapering’ of tax free limits on annual contributions involve a number of complicated calculations

Age discrimination and Auto-enrolment rules affect how employers can respond to the new rules

The Lifetime Allowance reduction should be accompanied by one or more types of ‘protection’ – but no details available yet

PwC

Consultations: Termination payments


Slide 90

• HMRC are considering simplifying the treatment of termination payments:

- No distinction between contractual and non-contractual payments (PILONs)

- Aligning income tax and NIC treatment

- No ‘automatic’ £30,000 tax free limit

- Introduction of a new tax-free element instead:

- No ‘blanket exemption’ (risk of avoidance)

- Linked to Statutory Redundancy entitlement (risk of exclusion)

- Linked to length of service and redundancy (per Employment Law definition)

- ‘Wrongful’ and ‘Unfair’ dismissal carve-outs?

• What does this mean for employers…

- Greater simplicity – fundamental change to current confusion

- Increased costs as a result of changes to exemptions and reliefs

PwC

Consultations: ‘IR35’ contractors


Slide 91

• The debate over “what is employment" continues… employed “vs” self employed status

• Government wants to find “a more equitable” way of enforcing the right tax treatment

• Number of alternatives being considered:

- Better administration of existing rules

- Placing more obligations on IR35 contractor (i.e. the receiver of services)

- Simplify test for application of IR35 rules (supervision, direction, control)

- Time based de minimis rules for employment to exist

• What does this mean for you?

- Greater responsibility and governance processes?

- Increased employment costs?

- Review of existing contracts and ‘contractors’

- Clarity around who HMRC consider as self-employed?


92

Closing Comments

9@PwC_Midlands #ADS15

accounting developments seminar · accounting developments seminar november 2015 slide 10...

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