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April 2008

Welcome to the 4th edition of FD Partnership, our newsletter for accounting and finance professionals.

In our March publication we left open the question of how long it will be until the good times return to the economy. As summer approaches it seems that it is not going to be happening in a hurry and we will probably get acclimatised to the lack of economic buoyancy and grind on in true British style. The only good to come out of this is that it makes businesses more innovative and productive. At FD we have been implementing new ideas too, and in this edition you can read about the launch of our new practice brokerage division:-“Kensington”.

New Brokerage Launch

FD has launched its “Kensington” division, specialising in accountancy practice brokerage. Demand for practices remains strong – after all, it’s the fastest way to grow, especially for an accountant who may be leaving the stability and security of employment and needs an instant income stream.

Today’s practitioner has to be a businessman as well as a professional in order to flourish. The decision to purchase a practice is fundamentally the same as any other businesses faces when taking the plunge to buy out a rival. Aside from the usual due diligence there is a major personal element involved and often the deal will fail or succeed on the chemistry between seller and buyer.

We firmly believe that Kensington can make the difference between success and failure. As a broker we are working for both parties so we strive at all times for a “win-win” outcome that everybody is genuinely satisfied with. Kensington understands the emotional element of the deal as well as the raw figures.

Kensington differs from other practice brokers in a number of ways that gives us a unique perspective that works to your advantage:-

  • As part of FD we have a client database in excess of 5000 firms of accountants across the UK, giving you unrivalled access to the marketplace
  • Our director is a practising FCCA accountant with years of experience so we understand small practice “at the coal face”
  • Ability to service “unwanted” clients that may otherwise have led to the breakdown of negotiations
  • Disposal of surplus office premises through our associated investment company
  • Out of hours service for “signed-up”clients

Whatever the size of the deal, from 1 client to 1,000 clients, Kensington is at your service. Whether you are buying, merging or selling, part or complete disposal, you can be assured that we are “…your partner in practice.”

Thinking of buying, selling or merging apractice in the next 6 months?

www.fd.ltd.uk/kensington 0800 2800 321

Companies Act 2006 Updated Checklist

Although the Companies Act 2006 is being phased in over a period of three years, with final implementation scheduled for 1st October 2009, there are many provisions that have already commenced, a number of which will affect you and your clients.

The changes present you with a good opportunity to write to your clients and make them aware of how they can benefit as well as making them aware of their increased responsibilities. The shortened accounting period rules could mean that you need to reschedule your workload later in the year and it is better to make clients aware now.

Changes already in place:

  • Companies can make greater use of electronic communications for communication with shareholders
  • private companies will not need to hold an annual general meeting unless they positively opt to do so
  • it will be easier for private companies to take decisions by written resolutions
  • a statutory statement of directors’ general duties makes the well established law in this area more accessible and brings it into conformity with modern business practice.
  • position of company secretary becoming optional
  • shortened accounting periods to 9 months for private companies

From 1st October 2008 

A number of important provisions will be commenced on 1 October 2008, including:

  • the general duties of directors in respect of conflicts of interest
  • the new procedure for private companies to make capital reductions supported by a solvency statement instead of by a court order companies will have to have at least one natural person as a director, so a company cannot be a sole director of another company there is a new minimum age of 16 for directors restrictions under the Companies Act 1985 on financial assistance by private companies for the acquisition of their own shares will be repealed

Changes from 1st October 2009

  • Articles of Association: There will continue to be default model articles but there will be separate model articles for private companies and public companies.
  • Memorandum of Association: The company memorandum will become a formal document recording the position at the point of registration, with only the articles being the continuing constitutional document.
    For companies formed before 1 October 2009 any provisions contained in their Memorandum which go beyond the newly required limited information will be regarded as provisions of their articles of association.
    Companies will no longer be required to specify their objects, although they can insert restrictions if they wish.
  • Directors addresses: The information that companies must file relating to its directors will change so that for each director, a service address and the country of usual residence will be required in addition to the home address.
  • This will apply from 1 October 2009 for new appointments; for existing directors, a service address and the country of residence will be required in Annual Returns made up to dates after 30 September 2009. Home addresses will not be put on the public record after that date.

To find out detailed information including the full timetable and FAQs visit the Department for Business, Enterprise and Regulatory Reform (BERR) website. www.berr.gov.uk/bbf/co-act-2006 or go to the Companies House website which gives detailed information on the way companies should work with the Registrar of Companies. The site gives clear information on new forms, fees and guidance. Like the BERR website this site also gives updates on implementation of the Companies Act.

Capital Allowances and the 2008 Budget

The recent budget contained a number of important changes to the granting of Capital Allowances affecting the scope, rate and period of allowance. Due to the complexity and range of the changes it is not possible to cover everything in great detail so our advice is to check the HMRC website, where full details are given.

We can however highlight the changes that will affect the majority of businesses and you should check carefully to see if you have a client whose arrangements are non-standard.

Plant and Machinery: Rate Changes & New Special Rate

This affects businesses investing in plant and machinery. Currently the general rate of plant and machinery writing down allowance (WDA) is 25% on a reducing balance. For expenditure on long life assets the rate of WDA is currently 6%, again on a reducing balance.

The Finance Bill 2008 will reduce the main rate of WDA for new and unrelieved expenditure on general plant and machinery ( including cars ) allocated to a pool from 25% to 20%.The new rules will also increase the rate of WDA on long life assets from 6% to 10%. Any unrelieved expenditure in the long life asset class pool will, for chargeable periods starting on or after the operative date, is allocated to a new, 10% “special rate” pool. Long life asset pools will cease to exist for all accounting periods starting on or after the operative date.

The operative date is for chargeable periods ending on or after 1 April 2008 for corporation tax and on or after 6 April 2008 for income tax.

Main rate of WDA

The main rate of WDA will also be reduced from 25% to 20% from 1 April 2008 (CT) and 6 April 2008 (IT). The rate changes have effect from a fixed date, so for those businesses where the chargeable period spans the change date a hybrid rate will have effect for the whole of that transitional period.

New special rate pool WDA

On and after 1 April 2008 (CT) or 6 April 2008 (IT) a new special rate pool will be introduced. From these dates, expenditure on long life assets, thermal insulation and integral features will be allocated to the new special rate pool with a WDA of 10%, on a reducing balance.

Where the chargeable period of a business begins on 1 April 2008 (CT) or 6 April 2008 (IT) any unrelieved expenditure in the long life asset pool will be transferred to the new special rate pool and qualify for 10% WDAs.

However, when the chargeable period of a business spans those operative dates, the following transitional provisions apply:-
  • No new expenditure incurred on or after 1 (or 6) April 2008 is to be allocated to the long life pool – it must be allocated to the special rate pool
  • A hybrid rate will have effect for existing expenditure in the long life asset pool for the whole of the transitional chargeable period and
  • At the start of the next chargeable period, all unrelieved expenditure in the long life asset pool will be transferred to the new special rate pool.

Hybrid rate

For businesses whose chargeable period spans either 1 or 6 April a hybrid rate will apply for unrelieved expenditure in any pool, including single asset pools. There will be 2 hybrid rates:

  1. ·One for any expenditure that currently qualifies for 25% WDA; and
  2. The other for expenditure that currently qualifies for 6%.

The hybrid rate is arrived at by calculating the proportion of a chargeable period falling before the change date and the corresponding proportion falling after the change date.

For example, if a company's chargeable period began on 1 January 2008 and ends on 31 December 2008, one quarter of the period would fall before the date of the change (on 1 April 2008) and three quarters afterwards. The calculation of the hybrid rate on the main rate of WDAs would be as follows:

91/366 x 25% = 6.22%

Plus 275/366 x 20% = 15.03%

Therefore hybrid rate for transitional period = 21.25%

Ready reckoner

HMRC will provide a ready reckoner to calculate the hybrid rate for any chargeable periods affected by the transitional provisions.

Other Changes

  • 100% first year allowances for expenditure on cars with low carbon dioxide emissions
  • Plant and machinery: Annual Investment Allowance
  • Enhanced capital allowances for energy efficient and water saving (environmentally-beneficial) technologies
  • Introduction of first year tax credits. Companies within the charge to corporation tax will benefit when they make a loss in a period in which they invest in certain designated energy saving or environmentally beneficial plant and machinery
  • Small plant and machinery pools. This will affect businesses investing in plant and machinery, particularly small and micro businesses whose future expenditure on plant and machinery may be fully relieved by the Annual Investment Allowance (see above), but which have small historic pools of unrelieved expenditure , or businesses that may acquire small pools in future
  • Plant and machinery: Integral features and thermal insulation, affecting businesses investing in certain assets

Industrial Buildings Allowances, Enterprise Zone Allowances and Agricultural Buildings Allowances affect businesses claiming the above and are part of a package announced in the 2007 Budget.

Trade Marks

FD's trade mark department is continuing to expand with the addition of two new services, one for existing trademarks and one for new registrations.

Design registration

Traditionally only styles or names have been registered but now you can register a design, allowing the outward appearance of a product to be protected. It is a relatively simple procedure and is reasonable priced. Often the design of the packaging or the product itself sets it aside from the competition in a fundamental way that can determine how successfully the item will sell.

If your product is new, or the design elements of it are new, then you may be able to protect these. In particular they include decorative elements, lines and contours, texture, materials, shape, colours, ornamentation and graphic representations. Rights can be obtained in the 27 EU countries by a single application. It is possible to file multiple designs in a single application.

Ask yourself the following questions to determine whether you have something worth protecting:-

  • What is it, eg a graphic design, a toy?
  • Is your design in the public domain and if so when did this occur?
  • If not, when do you anticipate exhibiting your design or launching it?
  • Who owns the design?
  • If you commissioned the design, who was the artist?
  • Which elements of the design do you wish to protect?
  • Do you have specific representations of the design?

Trade Mark Monitoring & Name Watching after Registration

Like other investments that may require periodic management and nurturing to protect their value and realise their true potential, a registered trade mark needs care and attention paid to it. You should be aware that the UK and Community Registrars will accept conflicting trade marks unless the proprietor of the earlier right objects. Therefore it is essential that trade mark owners subscribe to a monitoring and name watching service.

  • Although you own the rights to a trade mark it is up to you to ensure that a third party has not adopted a conflicting trade mark.
  • A trade mark monitoring service of the pertinent registers will alert us to prospective trade marks that may conflict with your rights.
  • We can then advise you of the appropriate action to take in order to prevent both their use and registration.

What normally happens with this service is that an identical word search is conducted at the commencement of the registration so that the client knows the current status of the Registers regarding their mark, with quarterly updates being provided.

Applications that are advertised for opposition purposes as well as new applications will be drawn to the client's attention on a monthly basis for their consideration. This will allow time to try and negotiate an amicable settlement, if appropriate and if this cannot be concluded within the advertisement period, opposition can be filed whilst negotiations between both parties continue. In addition, caveats can be placed upon new applications which will tell us when the application is to be advertised or whether it is abandoned.

FD is pleased to offer monitoring services of any register in the world, not just the UK and Europe.

To find out more ring our trade marks department and speak to Ian Spielman on 0800 2800 319.


From 13th March 2008 share transfers with a consideration or value of £1,000 or less are no longer liable for Stamp Duty. Whilst this was only £5 per transaction it removes an administrative burden that was mostly observed in the breach by small companies.

A declaration that the transfer is exempt and does not form a series of transactions aggregating to more than £1,000 will have to be made on the form and it is simply retained with the company registrar.

Full details are available from www.hmrc.gov.uk/so/

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