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By Jason Piper, tax and business law manager, ACCA

Shortly before disappearing under the avalanche of consultations, discussion papers and reviews that have been spawned by Summer Budget 2015, I managed to grab copies of the four offshore evasion condocs and have a read through. They make up an interesting complementary suite of proposals with some common threads but also some interesting differences.

The proposals all come from the same team, who clearly (shock horror) talk to each other about what they’re trying to achieve and how best to do so. They also talk to people outside the Treasury building, and I know from being involved in some of those discussions that they combine a healthy dose of pragmatism with a genuine passion to stamp out abuse of offshore arrangements. They recognise that actually most offshore work is legitimate, and most advisers want nothing to do with criminal activity. Let’s face it, another way of saying “offshore” is “all the rest of the world”, and there’s quite a lot of that which isn’t tax evasion.

The paper on civil sanctions for enablers of offshore evasion explicitly notes a desire to work closely with the professional bodies to help their members avoid the risk of entanglement with the new sanctions. That’s a move that we welcome too, and we look forward to helping generate and publicise the educational materials to help prevent advisers being duped by others.

Of course, there are advisers who deliberately set out to help their clients evade tax. Up until now, there’s been a gap in HMRC’s powers to deal with such advisers, and it’s that gap which many of the current batch of proposals seek to plug. But, on comparing the ‘civil sanctions for enablers’ proposals to the ‘criminal sanctions for facilitators’ proposals there was one key point which stood out the more I realised it wasn’t there.

Civil sanctions are proposed for advisers where a penalty has been levied on their clients. Fair enough; there’s a proven offence, and everyone involved should be dealt with. But the “criminal sanctions” seems to skirt around the whole issue of when it gets triggered. It might be that when it talks about evasion that’s shorthand for “evasion which we know has happened because there’s been a criminal prosecution for it”. (The rest of the “criminal” document is couched in similar legal shorthand – for example, it uses the term mens rea where the “civil” document tends to talk in terms of “state of mind”; nothing wrong with either approach, depending upon your audience.)

But then again, there are areas in the “criminal” consultation where it refers to “circumventing international tax transparency agreements” as being an evil worthy of remedy, and which potentially could spark the criminal prosecution of advisers involved in it. We’d agree that it needs dealing with – but there’s a catch here.

The proposed new criminal offence is, well, criminal. It’s a significant step to take, accusing anyone of criminal activity. And when the French authorities recently investigated a similar mechanism they found it failed on a constitutional fundamental – you can’t criminalise people for assisting in behaviour which is not, itself criminal. Or in other words, there must have been a successful criminal prosecution of the underlying offence before you can go after the facilitators. And that is what may be the stumbling block for HMRC in the UK. They desperately need more, experienced, resources if they’re going to successfully prosecute the tax evaders themselves – because without those prosecutions, the criminal offence of facilitation will be a pointless piece of legal posturing, a deterrent that will never be used.

ACCA has one UK member – Joe Bourke – standing as a Prospective Parliamentary Candidate (PPC). This is a blog from Joe about his experience ahead of next week’s General Election.  While ACCA is a-political, we wanted to share Joe’s experiences as it is not often we hear from the front line of the political process …

Politics is all about people, it’s about being able to represent a myriad of views and support your local constituents, making sure they have a voice in Westminster.

As someone who runs a small accountancy practice I am always surprised by the parallels of being an accountant and being a politician; it’s about talking to people, listening to their views and trying to help them.

Over the campaign, I’ve been asked a lot “what do I stand for? What does the party stand for?”

So I’ve talked a lot about SMEs. As a small business owner myself, small business is something I am particularly hot on in the campaign. I know from my own work that business rates are the biggest issue for small firms, and business rate relief must be available to help struggling companies. I certainly feel local authorities have a big role to play in securing the redevelopment of their high streets, as is due to happen in Brentford.

Like politicians of all hues, I’ve been out and about meeting people on the doorstep. This has been a really positive experience. Most people are happy to have a chat and of course this time it has been a completely different experience as I am able to discuss our record in the Coalition. I’ve really enjoyed these face to face meetings.

As an honorary auditor for the Brentford Chamber of Commerce, I am really proud of what Vince Cable has done as Business Secretary. We have reduced the regulatory and tax burden by cutting swathes of red tape and providing billions of pounds of Business Rate Relief for small businesses. Our One-in, Two-out rules mean that for every piece of regulation that costs business £1, Whitehall has to remove £2 of regulatory burden. This has slashed the costs of domestic regulation for businesses by more than £2 billion.

In Government we have also created the British Business Bank – helping thousands of companies secure over £3 billion of finance. And we are also extending the Funding for Lending Scheme, working with the Bank of England, to reduce the cost of lending across the system to SMEs.

As an accountant I know more than most that balancing the books is important, in the private and the public sector. When it comes to Government, and spending tax payer’s money, ultimately, it’s down to politicians and civil service to ensure accountability. Politicians need to be accountable too.

So what about being an accountant and a PPC? It’s not been too hard balancing the day job with campaigning because I know I am fighting for policies I believe in and which will benefit Brentford and Isleworth, and the whole country. I’m really proud to be part of the democratic process.

I know ACCA as an organisation needs to be a-political, and I am sure if it had members standing as PPCs from other parties they’d get to write a blog too.

I welcome your views, and I hope you get engaged with the democratic process as we approach 7 May.

When it comes to spotting the warning signs of developing fiscal problems, the availability of quality information to support decision making is of utmost importance writes Chris Ridley, public sector policy manager at ACCA.

Most countries run with a public sector finance deficit and have done so for many decades, but when does it become unsustainable?

The recent shift towards an integrated global economy has driven the requirement for information to be available on a comparable basis. Gone is the time when national finances can operate in blissful ignorance of conditions overseas. This has resulted in a growing number of nations moving away from country-centric accounting standards towards a common set of international standards for budget and reporting purposes.

International Financial Reporting Standards (IFRS) are already widely used and an equivalent set of International Public Sector Accounting Standards (IPSAS) have been developed alongside them. While being similar in many respects, they reflect the unique requirements of the public sector. For example, the focus on public service provision rather than profit making, and the levying of tax and other charges by government to meet the financial commitments created. This is important as the public sector commonly accounts for around one-third of the Gross Domestic Product (GDP) in the majority of developed countries.

A significant number of countries continue to manage their public sector finances on a cash basis, although an increasing number have adopted full accrual accounting. This has the advantage of looking beyond a simple income and expenditure analysis towards the complete financial position, including the assets and liabilities held. Where this information is consolidated, for example as a set of Whole of Government Accounts (WGA), this provides strategic information on the sustainability of the national fiscal arrangements.

ACCA remains supportive of IPSASs and continues to encourage a move towards the adoption of full accrual rather than cash-only IPSASs given the additional financial information provided. With the move towards IPSAS in many countries, ACCA launched the Certificate in International Public Sector Accounting Standards (Cert IPSAS) at the end of 2014. ACCA’s Cert IPSAS is a flexible, top-up qualification for finance professionals working in / with the public sector. As a globally accessible online course and assessment it meets the needs of individuals and organisations wishing to develop essential working knowledge of IPSAS in an efficient and cost effective way.

Only by improving the information held on public finances and then acting on the issues raised can public services be maintained and improved for the future. Otherwise, as recent events have highlighted, countries could find themselves with severe financial difficulties that might take a generation to resolve.

When it comes to financing sustainable public services, more often than not, there are no quick fixes.

Predicting the future is a dangerous business – just think Sinclair C5 and you’ll understand straight away.  Yet, the newly published ‘See the Future’ report from ACCA and EFMD, gives some pretty good clues about where business education is heading.

It’s perhaps no surprise that technology is going to play a big part.  It’s not just about the MOOCs that have become the subject of so many conversations in the past two years.  Technology has been changing business education since the Open University started broadcasting on late night television in the 1970s.

Indeed, the Open University have been pioneers of technology on many occasions in the past 40 years.  Several years ago, the Open University became one of the first adopters of iTunes U, the Apple platform for disseminating educational content free of charge.  Today, the Open University has had more than 60 million downloads from the service out of more than one billion worldwide, and tops the rankings of most downloaded with Stanford University from the USA.  More recently, the Open University was the driving force behind futurelearn, the UK MOOC platform.

More than anything else, technology is enabling lifestyle learning, the opportunity for students to learn any time, anywhere.  A prospective university student can be up to speed on a subject before they arrive at university, a current student can download the best professors from anywhere in the world as part of their studies and the alumnus can get updates on their specialisation while working, continuing their professional development to suit their individual needs.  The future is flexible and personal.

Such a future poses challenges for business schools, some of which are already manifest.  Recruiting high quality faculty has been difficult for some time and may only become harder and/or more expensive in coming years.  Some business schools have adapted some of their delivery by moving to a fly in, fly out model, with faculty not on the payroll, but booked to deliver certain programmes at certain times before leaving again.  Increasingly technology means that the cost to the business school may be reduced further with faculty logging in to teach and then logging out, avoiding the costs of flying.

What does this mean in practice?  Imagine the first year of an undergraduate accounting degree.  The high cost of faculty, perhaps more interested in research than teaching, means that the classroom experience has had to change.  To give students a richer experience, a business school might partner with an employer to provide their qualified staff to act as facilitators in a digital classroom where students are ‘taught’ with a MOOC delivered by some of the best global accountancy professors, located at universities elsewhere in the world.

The technological transformation of business education won’t stop at traditional class room degrees.  Employers seeking to grow productivity are already using technology to deliver learning in the workplace.  According to the study ‘By 2020, employers believe 57% of training and development will be delivered online in their organisations’.

Again cost is an element of this transition.  Rather than sending staff away for professional development, employers can run programmes in the workplace, without staff having to leave their desks in some cases.  Perhaps more important are the impact on the individual and the flexibility of delivery.  For an individual, lessons learnt can be applied as soon as a course is over, there is no delay returning to the office.  For the employer, programmes can be quickly constructed with the choice of many different providers available online.

All of this technological involvement in education begs the question, but is it as good as face-to-face learning?  Had you asked the question, ten years ago, the answer might well have been no.  The experience was clunky and often involved little more than watching videos of slide presentations online.

Today the experience is much improved.  Not always perfect, but definitely better.  Interaction with instructors and other students is much more common as providers add social tools to their learning technology.  How will it be in ten years time?  Better still and, perhaps more importantly, there will be a generation of learners who think digital is normal.

Cheryl Sandberg, COO of Facebook, commented a few years back “If you want to know what people like us will do tomorrow, you look at what teenagers are doing today”.  My 10 year-old daughter still has a few years until she becomes a teenager, but I see already she has no fear of technology, it is part of much of her life and will increasingly be so.  For her not to do some of her learning online or with a range of digital tools would seem odd to her, for her not to learn with the best providers wherever they are in the world wherever she is in the world would seem strange and for her not to learn from her peers and from the knowledge and experience of all those around her not just academics would be a missed opportunity.  This is my prediction for her future and for the future of business education.

Andrew Crisp is a Director and co-founder of CarringtonCrisp and author of the See the Future report.

The mid-market sector is now the “most finance-constrained segment of the real economy.” 

I’ve analysed ACCA’s Global Economic Conditions research and how it relates to the Autumn Statement.

The UK recovery throughout 2013 was very robust, but has started to slow down significantly since the end of last year, weighed down by weakness in Europe and low real income growth at home. Here’s what our business confidence readings look like – all saved to here: http://share.pho.to/88bfB.

It’s clear from our analysis that the mid-market is holding up best, but even those very dynamic firms can’t resist the pull of gravity. We note the significant loss of confidence among financials. New orders are up, especially for the mid-market, while other parts of the real economy have seen trends slow in 2014. And job creation, while up significantly year-on-year, is definitely slowing across all size-bands.

ACCA / IMA Global Economic Conditions Survey

When it comes to Small and Medium Sized Enterprises (SME) access to finance, the Treasury must be feeling very relieved. Our analysis of finance constraints and growth capital index data for recent quarters is insightful- it’s worth noting how well micro and small firms are going – as recent as mid-2013 they were lagging the rest of the UK economy significant in terms of access to finance, but they’ve caught up very quickly since.

“This is not likely to last forever, as today’s liquidity conditions are extraordinary. But there are reasons to be confident. To me of course, what is news is that the mid-market isn’t better catered for. They are now bizarrely the most finance-constrained segment of the real economy (not least because they are innovators and exporters). But they clearly also recognise that government support is increasingly targeted squarely at them.

Is any of this going to lead to an increase in investment? Well, so far capital spending by SMEs and the mid-market has soared year on year from 2013. But it’s very interesting how large corporates are weighing down capital spending – lots of stories in the press about falling capital expenditure among listed firms; it’s a longer-term trend that the UK and the world needs to address.

GECS can be found here: 

http://www.accaglobal.com/gb/en/technical-activities/browse-resources/gecsr-update.html