Current year basis: anti-avoidance

Article Abstract:

The UK Finance Act 1995 includes anti-avoidance provisions aimed at counteracting activities exploiting transitional rules applicable to the shift from the preceding-year basis of assessment to a current-year basis. One of the main targets of the provisions are those businesses that shift business profits to take advantage of transitional rules and to boost their transitional relief. The statutory let-outs for these organizations include the benefit test, the motive test and the de minimis test. The other main target of the anti-avoidance provisions are partners who use personal loans to refinance partnership borrowings or to improve interest income and foreign income. The rules are not applicable if the new borrowings were withdrawn prior to Apr. 1994 and used for commercial purposes, and if the total amount of paid interest on the new borrowings is less than a certain threshold. The draft legislation includes examples and a commentary.

Financial Regulation NEC, United Kingdom, Financial services, Commercial law

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A time for cool heads and wise reflection

Article Abstract:

The Institute of Chartered Accountants in England and Wales needs to take steps to resolve the inherent conflict that arises between its duties in serving its members' interests and its tasks in regulating the profession as a matter of public interest. Ways by which to resolve this inherent conflict have been proposed by a working party set up by the Institute. Two broad strategies for change have been delineated: changing regulatory mechanisms and changing regulatory structures. With regard to the former, changes are already in progress and are being evaluated as to their adequacy in meeting the Institute's problems in this area. Changes in structures are also being mulled. One recurring theme in the Institute's deliberations is the idea that a new entity be formed for judging cases involving the public interest, provided that it is independent of the established accounting bodies.

Management, Column, Institute of Chartered Accountants in England and Wales, Ethical aspects, Accountants

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The future of audit regulation

Article Abstract:

The UK auditing profession is not capable of singlehandedly dealing with existing regulatory and professional structures to meet the expectations financial information users, respond to public criticism and restore the credibility of the audit service. This is because the expectations gap stems from the bases of financial statements' preparation, presentation and regulation, rather than from the method of financial reporting and auditing employed. What is needed to successfully meet public expectations is not industry self-regulation, but the concerted efforts of the auditing profession, institutional shareholders, the Financial Reporting Council, the Accounting Standards Board, the Stock Exchange, the Bank of England, the Dept. of Trade and Industry, and Parliament.

Analysis, Auditing, Industry self-regulation, Industry self regulation

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