Member Update 29th May 2020
Written on 29/05/2020

Permanent Interest-Bearing Shares (PIBS) are issued by:

A) Insurance companies
B) Building societies
C) Local authorities
D) HM Treasury

correct answer at base.

T&C – CPD exemption during Corona

On 27 May 2020, the FCA said that it is allowing firms to defer individuals' uncompleted continuing professional development (CPD) hours to the next CPD year in the light of the COVID-19 pandemic.  So to bag your 36 hours, you can carry over into 2020-2021 year. 

Firms must still demonstrate that relevant individuals remain competent to carry out their work and that effective and consistent CPD is an essential part of this. Most of us can continue completing CPD while working from home or on furlough, through e-learning reading IFAC member updates and other means.  Accredited bodies and professional qualifications providers also help by providing material. 

FCA expects firms to support furloughed staff with materials to complete their CPD - and this feature of furlough is embedded in the scheme, that individuals can continue to train.  The FCA states that the following circumstances can count as exceptional and thus qualify:

  • When individuals during the current pandemic are needed to carry out extra duties to manage risks or to provide support to consumers and businesses, have caring responsibilities, and have difficulties accessing CPD material, for example, due to technical difficulties or unavailable material.
  • Where it is not realistic to expect the individual to also fulfil the CPD requirements.

The FCA requires firms to take certain factors into account, including the individual's role and responsibilities and their knowledge and skill development. Firms should also record their decision and the reasons for it, but do not need to report this to the FCA.

see FCA statement here

Any queries, please let me know

MORTGAGE Fraud prevention and the URL

TIP ONE - check the bank statements are genuine

As we all know, copies of bank statements are a tricky thing. 
Can you say that you have seen the original?
IFAC say download the bank statement and make sure you include the URL address on the PDF download to prove the validity.

Entrepreneurs relief – ideas for business sales

The great 2020 virus has put most of our working population on benefits – tax rises are likely to follow, and many owners will be looking to sell their practices in advance.  In this feature we look at ideas for the structure of a sale

  1. Get the buyer to pump all the money they can into your pension “for services rendered”. (ie introducing clients for goodwill).  You can’t sell the goodwill of a limited company firm and take the proceeds as owner of the shares, because the asset belongs to the Limited Co.  So the money must be paid to the company, and from there to the existing shareholder – not good for tax.  So better to “introduce” as a highly paid service, with revenue going into your pension fund tax deferred and NI free.  See 2. below
  2. Get buyer to pay into your pension the maximum each year (£40k, plus three years carry forward makes £160k)
  3. Get buyer to pay using loan notes – as long as they are tradeable loan notes, they can be cashed in over the future years, so bagging the annual CGT exemption each year.  This is used by bigger firms, but surprisingly rare in the small company sector.
  4. Purchase price in shares only.  Although conventional wisdom tells you always to take the cash, never the shares, you may not be a dunce to take the shares.  Those who met JD Rockerfeller during the 1870’s surely regretted not taking shares.  The tiny minority – to be counted on two hands according to biographer Ron Cernow - who did take shares became (as a result of the increase in the Standard Oil share price), some of the richest families and best known in the USA, including the Bush family.  Those who took the cash largely disappeared into obscurity.  However take note - you pay the CGT tax on receipt of shares, and don’t get it back again if the share price falls.
  5. Get the buyer to pay a consultancy fee for ongoing work, and pay just £1m for the Entrepreneurs relief.
  6. Sell to an employee trust - less disruption and confidentiality.  The government like it so much that they exempt it from tax – the shares can be sold at full market value without the sellers incurring any liability for Capital Gains Tax (“CGT).
Negative yields – how they work

The Bank of England has sold a gilt as a negative yield for the first time.  The stock was a Treasury bill 2023.  The gilt pays an interest rate of 0.75%, so how can the yield be negative?

Simple – the price paid was £102.4, and the maturity payment due in 2023 is just £100.
0.75% of £100 is 75p, and three years’s worth of that = £2.10, which is less than the price paid for the yield of £2.4


IFAC have signed up to partner with Xero online for accounts.  IFA / MGI practices should all have XERO too.

This past month has been my single busiest time of the year.  It is the time of Gabriel returns for all firms with a year end date of 31st March – and surprise surprise, this is the most popular month end date, closely followed by 31st December.  Gabriel has be submitted within 6 weeks of the year end. It’s a relief to be able to do this from home without so many distractions in the office.

IFAC struggle with the accountants who support IFA / MGI practices-  to be frank, we are not generally impressed by the speed of response, or the accuracy of information, and all IFAs and MGI firms should have some accountancy package in order to speedily access their balance sheet position.  This is a core FCA requirement embedded in IPRU INV 13.1.4 and MIPRU 4.2.1.  

IFA / MGI firms have some unique features, mainly that they don’t need to invoice in the conventional sense, because providers and lenders generally pay what is requested in the application, rather than by separate invoice, and the credit risk is very low – almost no bad debt.  IFAC help a number of firms in the consumer credit sector – many plumbers for instance, who almost without exception are able to provide the relevant numbers on demand, mainly due to the use of accountancy packages.  IFAs / MGI firms need to sign up to Xero.  If interested, please ask our resident accountant.

Sarasin focus on ESG 

Guy monsoon delivers his monthly analysis with his firm explaining why some investors can expect to see ESG delivering superior returns psot crisis 

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