Mha Plc · LSE:MHA
Mha — Investor Presentation (September 2024)
77 slides from Mha's investor presentation, September 2024
Slide 1: Finance Directors Update Course
Finance Directors Update Course September 2024 Now, for tomorrow
Slide 2: Seminar materials copyright notice
You shall not copy, make available, retransmit, reproduce, sell, disseminate, licence, distribute, publish, broadcast or otherwise circulate either within your business or for public or commercial purposes any of (or any part of) these seminar materials provided by MacIntyre Hudson LLP (“MHA”) in an
Slide 3: Webinar housekeeping and Q&A
A copy of the slides has been sent to you this morning, are available to download from our website, via the QR code here, or via the link in the Chat, where you will also find other useful information. Please use the Q&A to ask any questions. We will do our best to answer them during the webinar or
Slide 4: CPD course information and feedback
This is a CPD Course and provides 3 hours of relevant CPD. Please use our feedback form to request your CPD certificate for attending. Certificates will be sent out by the end of November, once your attendance has been verified. We appreciate all feedback, which helps us to plan future events to ens
Slide 5: Our Speakers
Our Speakers Chris Danes Tax Partner & Chairperson Richard Maitland Beverley Scott Jonathan Dowding Employment Tax Corporate Tax International Tax Partner Partner Director Robin Prince Carlison Morris Kanika Mishra Pathak VAT & Indirect Tax Financial Reporting Research & Development Partner Partner
Slide 6: Agenda
Agenda FD Update Course Thursday 19 September 2024 08.30 - 08.45 Chris Danes Introduction and insights on the current market conditions Partner 08.45 - 09.00 Richard Maitland Employment Tax update Employment Tax Partner 09.00 - 09.30 Beverley Scott Corporate Tax update Tax Partner 09.30 - 10.00 Jona
Slide 7: Agenda: Accounting for ESG
Agenda Accounting for ESG 14.00- 15.00 CPD: 1 hour Mark Lumsden-Taylor Sustainability & ESG Partner Tim Dee-McCullough Sustainability & ESG Technical Director Thursday 26" September 2024 Accounting for ESG Following the General Election, this course will provide an update on the ESG reporting landsc
Slide 8: Business risks survey results
Regulatory burden Feb-23 Climate, environmental, or social issues Sep-23 Global threats Feb-24 Supply chain disruption Technology Energy costs Impact of cost-of-living on customers Recruitment / Skills shortage Wage increases High interest rates Inflation Economic slowdown - 5.0% 10.0% 15.0% 20.0% 2
Slide 9: Business priorities survey results
Investing in R&D / innovation Feb-23 Investment & focus on ESG Sep-23 Feb-24 Reducing debt Raising finance Investment in technology Product or service diversification Expansion (acquisition / organic growth) Raising prices / increasing margins Retention of staff / recruitment Reducing costs / findin
Slide 10: The Autumn Budget
• The Autumn Budget is on Wednesday 30 October • Labour has pledged to make the tax system fairer, deliver economic stability with tough spending rules, and grow the UK economy • You can follow all of our budget commentary and insights on our website www.mha.co.uk/spotlight-on/autumn-budget- 2024 9
Slide 11: Richard Maitland
Richard Maitland Employment Tax Partner tichard.maitland@mha.co.uk
Slide 12: Employment tax developments since February 2024
• Key developments impacting tax and payroll compliance since February 2024, including the Spring Budget • Further reductions in the rate of Employee National Insurance Contributions • Mandatory payrolling of benefits - from April 2026 • April 2024 increases in minimum wage rates • Looking ahead to
Slide 13: Autumn Budget expectations and key risk areas
• Autumn Budget – what can we expect ? • "Labour will not increase taxes on working people" - but what about employers ? • Maximising salary sacrifice – pension contributions and EVs • National Insurance on Car Allowances – potential refund opportunity • Key risk areas: • Employment tax status (empl
Slide 14: Corporate Tax
*. °° % fe Corporate Tax Beverley Scott Corporate Tax Partner beverley.scott@mbha.co.uk Sct
Slide 15: Corporate tax: what to expect from the Budget
• Things have been rather quiet since our last Budget (6 March 2024) – the “Budget for Long term growth” • No major changes were announced – possible extension of full expensing to leased assets…. “when fiscal constraints allow”? • No open consultations…. • What can we expect from the upcoming Budge
Slide 16: Corporation tax rates and capital allowances
• Corporation tax rates from 1 April 2023: £0 - £50,000 19% £50,001 – 250,000 Marginal band (effective rate of 26.75%) £250,001 25% • Watch out for associated companies (not 51% group companies anymore) • Capital Allowances: Main rate pool 18% Special rate pool 6% Structural Buildings Allowances 2%
Slide 17: What can you be doing now?
• What can / should you be doing now? • Never forget the fundamentals: Employer pension contributions – pay them last day of AP! Remuneration accruals – watch for over provisions Payment of capex – 4 month rule Analysis of expenditure – do it as you go Review any arrangements you may have in place w
Slide 18: Maximising reliefs and tax payments
• Are you maximising your reliefs: Capital Allowances Research & Development Patent Box Creative Tax Reliefs – Theatre, Video Games, Animation • Corporation Tax Payments Are you managing your instalment payments appropriately? Do you forecast for the “cashflow tax pinch” when you have 6 payments in
Slide 19: Uncertain tax treatment legislation
• Announced in Budget 2020 and effective for returns filed on or after 1 April 2022 • “The Uncertain Tax Treatment legislation is intended to help reduce the legal interpretation portion of the tax gap by promoting early identification and disclosure to HMRC of tax uncertainties by large businesses
Slide 20: Uncertain tax treatment notification requirements
• There is a requirement to notify HMRC where the notification criteria and threshold test are met • Threshold criteria – ‘tax advantage’ of £5m • Notification criteria – one or both of the following: Provision made in the accounts and/or HMRC’s known interpretation of the law • There are exemptions
Slide 21: International Tax
International Tax Jonathan Dowding International Tax Director jonathan.dowding@mha.co.uk
Slide 22: Apple Irish state aid ruling
• Sweetheart Tax deal concerning Irish Tax Rulings which resulted in reduced tax rates being paid by Apple in Ireland over several years. • Apple’s ETR in Ireland was below 1% some years. • ECJ have now found (following 8 years of appeals) that the tax arrangements amounted to illegal State Aid. • D
Slide 23: Comparison of UK, Dutch and Irish tax rates
12.5% (25% on passive income, 33% Corporate Income Tax Rate 25% (19% up to £50k) 25.8% (19% up to EUR 200k) on capital gains) Substantial Shareholding Exemption Dutch Participation Exemption can Irish Participation Exemption can Corporate Gains fully exempts gains on qualifying sale fully or partly
Slide 24: Pillar 2 global minimum tax
Designed to ensure 15% global minimum tax rate Rules apply to groups with gross revenue > €750m Reporting requirements in multiple jurisdictions Significant reporting requirements for affected Groups 23 23
Slide 25: Group structure example
US Company Singapore Company UK Company 24 24
Slide 26: Pillar 2 timeline
Accounting Period from 1 Detailed disclosure requirements in Accounts January 2023 Accrue additional Pillar 2 taxes as they apply. Data review In FY24 required. Pillar 2 software to be selected. 30 June 2025 Register for DDT with the UK Tax Authorities. 30 June 2026 First Pillar 2 return to be filed
Slide 27: Pillar 2 local registration requirements
Pillar 2 Local Registration Requirements: Groups or single entities with: • At least one entity located in the UK; and, • Consolidated group annual revenues of 750 million euros or more in at least two of the last four accounting periods. Must register for Pillar 2 top-up taxes. Filing Member: The f
Slide 28: Registration details and post-registration requirements
1 The Name and registered address of the UPE and filing member (if different) 2 The Company Registration Number (CRN), and Unique Taxpayer Reference (UTR) where either the UPE (or the filing member if different) is a UK entity 3 Details of whether the group has entities located only in the UK or als
Slide 29: Current opportunities
Current opportunities: Modelling Accounts disclosures 28 28
Slide 30: Future opportunities
Future opportunities Restructuring Implement Filing 29 29
Slide 31: Pillar 2 accounts disclosures
Disclose Group ETR Territories where ETR is <15% Aggregate profit, tax & weighted average ETR in those territories Any other jurisdictions falling within scope Mandatory temporary exception – don’t disclose DTA / DTL in relation to Pillar 2 30 30
Slide 32: Illustrative effective tax rate disclosure
The Group operates in a number of jurisdictions and there are factors which impact the effective tax rate which are out of the Group’s control. The effective tax rate for the financial year 2023 was XX% (2022: 39%) as a result of XXXXX. For periods commencing on or after 1 January 2024, additional r
Slide 33: Pillar 1
Pillar 2
Slide 34: Pillar 2 action steps
1 2 Accounting Impact disclosures & Assessments registering with local tax authorities 3 4 Test Consider capabilities of rationalisation global restructuring accounting opportunities 33 33
Slide 35: Pillar 1 Amount B
• Pillar 1 Amount B has no de minimis - unlike Amount A and Pillar 2. • However, Amount B should only be relevant to certain businesses (i.e. distributors operating in jurisdictions deciding to adopt Amount B). • LRD margins may be restricted where amount B applies. • Use of impact assessments to he
Slide 36: Double tax treaties and the MLI
• New DTTs and old DTTs modified by the MLI. • What is the MLI? • What are some of the issues being encountered? • Dual tax residency in a more complex global tax landscape. • MAP process now the only way to resolve double taxation in some scenarios. • Importance of refreshing analysis of tax reside
Slide 37: VAT & Indirect Tax
c VAT & Indirect Tax » Partner bun robin.prince@mha.co.uk EVERGREE; Say Sa Ee ; - -" " t
Slide 38: VAT on gifts and entertainment
Gifts • Input tax incurred on the purchase of gifts is only recoverable if it they are given away as a ‘business gift’. • If the gift costs less than £50 (excluding VAT), no output tax will be due. • The £50 limit applies per person within a rolling 12- month period. Entertainment • VAT on hospitali
Slide 39: VAT on buying and charging an EV
Buying an EV • There are no special VAT reliefs for electric vehicles. • VAT can only be reclaimed if the car has 100% business use. VAT incurred on the lease of car can be recovered at: • 50% if available for private use • 100% if exclusively for business use Charging an EV: At home: • Sole proprie
Slide 40: VAT on private school education
What’s changing From 1 January the provision of education and boarding by a private school will be subject to VAT. Services which are closely related to the provision of education will remain exempt. Including • Catering, • Transport and • School trips. ‘Unbundling’ It may be possible for the school
Slide 41: Capital Goods Scheme and prepayments
Capital Goods Scheme • The VAT incurred on property cost >£250k is subject to adjustment over a 10 year period. • Schools which have recently undertaken large capital projects will be able to claw back some previously blocked input tax. Prepayments • A tax point is created upon the earliest of payme
Slide 42: Tax Governance
A Tax Governance N Robin Prince VAT & Indirect Tax Partner
Slide 43: Tax as a board level issue
Tax is now a board level issue A global increase in data-led tax and needs to be aligned with the audits as tax authorities seek to company’s broader ESG agenda. increase their tax take. Reputational damage from being Regulatory requirements to seen to be a bad corporate tax increase disclosure of t
Slide 44: Large business tax governance requirements
Senior Accounting Officer • Once a business exceeds £200m turnover it is falls into HMRC’s Large Business regime and it is subject to additional tax governance requirements. Business Risk Tax • This may be the first time that a business is Review+ Strategy having to navigate tax governance and likel
Slide 45: Tax Control Framework building blocks
Increasingly businesses are expected to adopt a Tax Control Framework (TCF), which can help a business manage its tax risks and strengthen its tax governance. A TCF is a structured system of internal controls that ensures accuracy, completeness, and compliance of an organisation’s tax-related activi
Slide 46: We will resume shortly
We will resume shortly 45
Slide 47: Carlison Morris
carlison.morris@mha.co.uk 46
Slide 48: Standard published March 2024
• Published in March 2024 • Effective for periods beginning on or after 1 January 2027 • Early application is permitted 47 47
Slide 49: Five-step revenue recognition model
1 Identify the contract with the customer 2 Identify the separate performance obligations in the contract 3 Determine the transaction price 4 Allocate price to each performance obligation 5 Recognise revenue when an entity satisfies a performance obligation 48 48
Slide 50: IFRS 16 / future FRS 102 lease approach
• IFRS 16 / Future FRS 102 Approach Operating Finance All Leases Asset On B/S None On B/S Depreciation Yes No Yes Receivable No Yes N/A Liability N/A N/A Yes Charge No No Yes Impairment Yes No Yes 49 49
Slide 51: FRS 102 amendments overview
More clarity on the disclosures for small co. Alignment of Section 2 with IASB’s conceptual framework IFRS 13 requirements on Fair value new Section 2A Setting stage for removal of IAS 39 Option 50 50
Slide 52: Supplier finance arrangements example
Due in 45 days Paid in 20 days Due in 30 days 51
Slide 53: Supplier finance disclosures
• The objective of these amendments is to improve the quality of disclosures available to the user on the nature of these sorts of arrangements • the key terms and conditions of the arrangements • as at the end of the reporting period: (i) the carrying amounts and associated line items presented in
Slide 54: Business combinations amendments
• Provides additional guidance from IFRS 3 on how to identify the acquirer in a business combination. “The cost of a transaction that remunerates employees or former owners of the acquiree for future services is not part of the cost of a business combination.” FRS 102.19.11B • Addresses the employee
Slide 55: Uncertain tax treatments in UK GAAP
• These amendments actually brings in the requirements of IFRIC 23 into UKGAAP. • Entity to consider whether it should assess an uncertain tax treatment on its own or together with other uncertainties in considering the likely outcome. • Entity to assume that the tax authority will exercise its righ
Slide 56: IFRS 18 introduction
• Issued April 2024 • Effective for periods beginning on or after 1 Jan 2027 • Replaces IAS 1 Presentation of financial statements 55 55
Slide 57: Aggregation and disaggregation
Aggregation and disaggregation • Requirement to: • aggregate based on shared characteristics and. • disaggregated based on characteristics that are not shared. • The process should enable primary financial statements and notes to fulfil their roles and must not obscure material information. 56 56
Slide 58: Income and expense categories
Where an entity is required to classify all income and The operating category expenses that are not classified in the other categories The investing category; The financing category; The income taxes category The discontinued operations category 57 57
Slide 59: Totals and subtotals in profit or loss
An entity has to present totals and subtotals in the statement of profit or loss for operating profit or loss, profit or loss before financing and income taxes and profit or loss. Revenue Operating Expenses Share of profit or losses of associates and JVs Income tax expense / income Discontinued Oper
Slide 60: Management-defined performance measure
Management-defined performance measure “A subtotal of income and expenses that: (a) an entity uses in public communications outside financial statements; (b) an entity uses to communicate to users of financial statements management’s view of an aspect of the financial performance of the entity as a
Slide 61: Management-defined performance measure note
Management-defined performance measure • Entities to disclose information about MPMs in a single note. • The note will include a statement that the MPMs provide management’s view of an aspect of the financial performance of the entity as a whole and are not necessarily comparable with measures shari
Slide 62: Management-defined performance measure disclosures
Management-defined performance measure Disclosure to include: • Description of the aspect of financial performance that it communicates, • Details of why management believes the MPM provides useful information. • Description of how the MPM is calculated; • Reconciliation between the MPM and the most
Slide 63: Subsidiaries without public accountability standard
• Objective of this standard is to bridge the GAAP between Full IFRS and IFRS for SMEs • Relevant for entities that are subsidiaries but which do not themselves have any public accountability • Reduces the detailed disclosures that would otherwise be required by the full IFRS standards • Should sign
Slide 64: Qualifying criteria and public accountability
An entity qualifies where: • it is a subsidiary; • it does not have public accountability; and. • it has an ultimate or intermediate parent that produces consolidated financial statements available for public use that comply with IFRS Accounting Standards. An entity has public accountability where:
Slide 65: UK accounting framework overview
IAS Accounts FRS 105 UK Adopted FRS 102 FRS 103 Micro IFRS FRS 102.1A FRS 101 Small 64
Slide 66: Future UK adopted IFRS framework
This will require changes to legislation and considerable political will on the part of the government of the day and any new regulator. Handled correctly it could reduce the complexity of financial reporting and substantially improve convergence. All entities will be required to apply IFRS 9. Insur
Slide 67: Current company size thresholds
Micro £632k £316k 10 Small £10.2m £5.1m 50 Medium £36m £18m 250 66 66
Slide 68: New company size thresholds
Micro £1m £500k 10 Small £15m £7.5m 50 Medium £54m £27m 250 67 67
Slide 69: Audit reform delay
UK government set to omit audit reform from legislative plans. Overhaul of accounting regulation and corporate governance is facing fresh delay. 68 68
Slide 70: Audit and corporate governance reform plans
• Government will tackle dominance of ‘Big Four’ audit firms and create a new regulator to reduce the risk of sudden big company collapses, safeguard jobs and reinforce the UK’s reputation as a world-leading destination for investment • Reform is already underway, with the Business Secretary taking
Slide 71: Research & Development
Research & Development Kanika.mishrapathak@mha.co.uk 70
Slide 72: HMRC enquiries into R&D claims
• HMRC have confirmed they intend on enquiring into over 20% of R&D claims made. • Not submitting pre notification or additional information forms when submitting the R&D claim • Claims not within the correct entity (e.g. for groups where one entity contracts another). Review of TP/intragroup agreem
Slide 73: R&D claim submission issues
• Mandatory for claims submitted after 8 August 2023 • Dates not matching those in returns, especially for long and short periods • CT 600 checkbox not ticked • Level of detail in technical narratives – need to ensure sufficiently technical and clearly answer the questions HMRC have posed • Classifi
Slide 74: R&D costs and scheme eligibility
• Where costs capitalised as intangibles – S1308 elections for year one write off • Capital vs. revenue nature of assets and ensure tangible assets excluded • Subcontracted and subsidised R&D – do the contracts match fact pattern of working relationship with third parties and clients? • Allowable co
Slide 75: R&D definition compliance
• Ensure compliance with R&D definition – including link between advances sought, field of science/technology, uncertainties and systematic activities • Focus on resolution of uncertainties in relation to the underlying field of science or technology as opposed to innovation in company’s own sector
Slide 76: Questions
Questions Chris Danes Tax Partner & Chairperson Richard Maitland Beverley Scott Jonathan Dowding Employment Tax Corporate Tax International Tax Partner Partner Director Robin Prince Carlison Morris Kanika Mishra Pathak VAT & Indirect Tax Financial Reporting Research & Development Partner Partner Tax
Slide 77: Upcoming CPD courses
Save the dates Upcoming CPD courses Accounting for ESG Date: 26th September 2024 Time: 10am – 11am CPD: 1 hour Finance Directors Update Course Date: Thursday 13th February 2025 Time: 8.30am – 12.30pm CPD: 3 hours 76