Issue 20 Spring 2015
CPD Seminars Confirmed
Under the
Spotlight
In the previous issue of our newsletter we
mentioned that we were going to organise a
CPD seminar for accountants & bookkeepers
in the Leicestershire area in the summer.
Name Thomas Harris
Position
Case Manager
How long have you been with F A Simms &
Partners?
One year
What are your interests and hobbies?
I am vice president of my local athletics club
where I help with a beginners group and also
assist with the organisation of charity races
across the year.
I love running myself and run at least 30
miles a week.
I support Leicester City and spend most of my
Saturdays watching the games.
Who are your favourite music artists?
Sam Smith, Kasabian, Ed Sheeran,
Rudimental
I am pleased to announce that the seminar
has been booked for the 2nd June 2015 at
the Hinckley Island Hotel, Leicestershire and
will include 4 presentations covering; AntiMoney Laundering Compliance, Members’
Voluntary Liquidations, Entrepreneurs Relief
& an insolvency update.
If you are interested in attending this event
then please contact one of our Marketing
Managers; Martha Wood mwood@fasimms.
com or Chantel McCullough cmccullough@
fasimms.com or call 01455 555444. We have
limited availability so please contact ASAP if
you wish to attend.
The event will commence at 9am and finish
around 2pm. Teas & coffees and a 3 course
lunch will be available on the day. The cost to
attend this event will be £25 +vat pp.
If you weren’t working in insolvency what
career path would you be following?
Either a fireman or a police officer
What would you say was one of your
greatest achievements?
Losing 56lbs and completing the Brighton
Marathon in a time of 3h37m in the space of
18 months and raising over £2,000 for charity
in the process.
Which foreign country would you say was
your favourite?
Cyprus (East). It has great beaches and the
weather is great.
Quick fire questions…
News and views from the F A Simms & Partners Group
Emailing our
Newsletter
Since we began sending out the Rapport
newsletters we have always posted out hard
copies to our recipients. This system will be
changing as of our summer edition which is
due to be released in August 2015.
Welcome Message
Welcome to the spring edition of our Rapport Newsletter.
Working with a number of accountancy & bookkeeping organisations means we are keeping ourselves busy by attending
and presenting at numerous branch meetings and conferences this year. We provide presentations that are both
educational and informative to the recipients and cover a number of topics including insolvency warning signs and AntiMoney Laundering updates. We are looking to attend branch meetings across the UK this year so make sure you look out
for one of our representatives and let us know what you think of the presentation; all feedback is appreciated.
Our services include:
Corporate clients:
• Business rescue services
• Solvent restructuring
• Company Voluntary Arrangements
• Company liquidations
• Administrations
• Turnaround review
Personal clients:
• Debt advice
• Individual Voluntary Arrangements
• Bankruptcy
Telephone: 01455 555 444
Fax: 01455 552 572
Email: info@fasimms.com
Web: www.fasimms.co.uk
Offices nationwide
Our Practitioners
As of the summer 2015 Edition we will only be
sending out our newsletter via email due to a
high increase in our mailing lists.
Football or rugby?
Football
Coronation Street or Eastenders?
Coronation Street
Chinese or Indian?
Both, I love a Chinese Curry
Finally please tell us two truths
about yourself and one untruth
I once had hair longer than my girlfriend.
I once ran on the same track at the same time
as Mo Farah.
Kate Middleton winked at me during the
Queens Diamond Jubilee tour.
We would therefore request that if you would
like to still receive the newsletter then to give
your email details to our Marketing Manager
s; Martha Wood at mwood@fasimms.com
or Chantel McCullough at cmccullough@
fasimms.com.
Rapport
Spring 2015
Managing Director
If you ever have a question or comment with regards to anything you read in this newsletter then please do not hesitate
to contact a member of the team on 01455 555444 or email enquiries@fasimms.com.
Changes in Office Holder fee approval
Business Minister Jo Swinson announced on the
3rd March 2015 that Insolvency Practitioners
will be required to provide fee estimates at the
commencement of an appointment for the
completion of the assignment from October
2015.
issues identified in both of these studies. The
main conclusion from this 2014 consultation
was that creditors wanted meaningful
information at the beginning of the process
to increase transparency, and to address
shortcomings in the current regime.
Business Minister Jo Swinson said: “Increased
transparency is a sensible and practical way to
strengthen the hands of those owed money in
insolvency and will give insolvency practitioners
the opportunity to demonstrate how their services
provide value for money.”
In July 2013 a review was conducted in
regards to Insolvency Practitioner fees by
Elaine Kempson which highlighted concerns
in regards to the charges made by Insolvency
Practitioners that included both remuneration
and expenses. The review highlighted that it
will look into predominantly the impact it has
on the position of unsecured creditors and
personal debtors.
The result of all of this work saw new rules
created in Parliament on the 3rd March 2015
which will require office holders to provide
a summary of all the estimated costs within
an insolvency process and the work that
will be under-taken at the beginning of an
appointment. It is proposed that introducing
this system will cap the fees that an office
holder can charge for a case and will prevent
any un-expected increase in fees.
Giles Frampton R3 President said: “We are
very pleased with the Government’s practical
proposals for updating the insolvency fee-setting
process. An up-front estimate should work for
both creditors and the insolvency profession, and
will help improve trust and transparency in our
insolvency regime.”
Following this 2013 review and a market study
from The Office of Fair Trading in 2010, Business
Minister Jenny Willott launched a consultation
on the proposals in 2014; aimed at tackling the
The only way to amend the fee proposed under
the new rules will be an agreement made
between the office holder and the creditors.
Richard Simms said: “At F A Simms we have
always been transparent with our fees from the
outset and we hope that the new rules will help to
extinguish those practitioners who do not act in
the best interest of the creditors.”
Changes to the Small Business, Enterprise & Employment Act 2015
Richard Simms
FCA, FIPA, FABRP, FFA, FIAB, FAIA
Managing Director
Emailing out our newsletter will begin from
our summer edition which will be distributed
in August. If you have any questions with
regards to the change in our newsletter
distribution then please contact one of the
Marketing Managers on 01455 555444.
Martin Buttriss
Carolynn Best
MIPA
FCCA, BSc (Hons), MIPA
Director
Director
Telephone: 01455 555 444 Email: enquiries@fasimms.com Web: www.fasimms.co.uk
www.fasimms.co.uk
Richard Simms
FCA, FIPA, FABRP, FFA, FIAB, FAIA
As a reminder from our previous newsletter, we will be emailing out our newsletter starting from the Summer Edition
which is due out in August. If you would like to be added to our mailing list then please send over your email details to our
Marketing Department at either of the following email addresses: mwood@fasimms.com | cmcullough@fasimms.com.
The Small Business, Enterprise & Employment
Act 2015 has been given Royal Assent in
Parliament this quarter which means there
have been a number of changes put in place.
Director Disqualification
A new approach to the reporting of director
misconduct by liquidators will include adding
new grounds for disqualifying a director in the
UK. The two new grounds include disqualifying
a director in the UK against a person convicted
of a company-related offence overseas and
also against a person who has instructed a
disqualified director.
Creditor Grievances
The Secretary of State will have new powers
to seek compensation against a disqualified
director
if
their
misconduct
caused
identifiable loss to creditors. Liquidators
will also be able to assign certain legal
claims to third parties such as creditors.
Engagement Changes
Insolvency proceedings are going to increase
the use of modern communication by being
able to hold virtual meetings and electronic
voting. Creditors will still be able to request a
physical meeting should they require one.
Changes to Company Administration
A reserve power has been taken to either
prohibit administration sales to connected
parties or to be able to impose conditions
to allow connected party sales to proceed.
Insolvency Practitioners Regulation
A clearer framework within which an Insolvency
Practitioner can carry out their duties will
provide the Insolvency Service with a legislative
framework to hold the regulators to account.
One of the new frameworks will be Insolvency
Practitioners being required to provide fee
estimates for the entirety of the liquidation in
order to help avoid un-reasonable costs.
Telephone: 01455 555 444 Email: enquiries@fasimms.com Web: www.fasimms.co.uk
www.fasimms.co.uk
Rapport
Spring 2015
Anti-Money Laundering Reports
MVL Case Study
The Company was an IT consultancy business
and had traded for around 10 years. The
Director was a sole Director and Shareholder.
The Director of the company advised that the
company was solvent and had been a very
successful company throughout the trading
history.
The company had only two creditors, their
accountants for accountancy fees and HM
Revenue & Customs for Corporation Tax.
The Director advised that the company was
solvent and therefore could pay both of these
creditors in full.
The assets of the business consisted of
approximately £500,000 cash remaining
in the company bank account and a small
number of office items, namely a computer
and office furniture.
The Director wanted to cease to trade the
business as the business was coming to a
natural end and the Director was looking
to retire. The Director, who was also the
company’s sole shareholder wanted to
extract the funds of £500,000 from the
business in the most tax efficient way.
The options available to the company were
discussed and these consisted of
Strike off – The option of writing to
Companies House to apply for the company
to be struck off was discussed. The company
would have to pay the two outstanding
creditors in full and distribute the remaining
funds by way of shareholder dividend,
The latest Insolvency Statistics released
highlights that the liquidation rate was at
its lowest level since Q4 1984; the earliest
period it is possible to calculate the rate.
The latest figures show that only 0.5% of
active companies in England & Wales entered
into some type of liquidation process in
the last quarter which totals around 4,052
companies. This continues the decreasing
trend of company insolvencies for a 5th
quarter in a row.
Changes in company liquidation rates are
related to economic conditions and as the
economy has slowly been recovering across
the last 12 months or so, this supports the
decrease in company liquidation figures of
the last quarter.
The personal insolvency figures show that
Individual Voluntary Arrangements; (IVAs)
comprise of 50% of all individual insolvencies
in Q1 2015; despite a -23% drop from Q1
2014. There has been a broad trend of IVAs
being within the range of 10,000 to 15,000
since 2008 and these latest figures continue
to support this trend.
company’s assets and distribute them to
shareholders once all creditors had been paid
in full.
following which the company could apply for
strike off. However, this would not have been
the most tax efficient manner to distribute
the funds for the shareholders as the rate
of income tax payable would have been
greater than if the funds were distributed in
a Members’ Voluntary Liquidation.
As part of the process of placing the company
into an MVL the directors were required to
sign and swear a Declaration of Solvency
which must be done prior to the Shareholders
Meeting. This declaration is a statement of the
company’s assets and liabilities and includes
a statement that the company can pay all off
its liabilities in full within 12 months.
Members’ Voluntary Liquidation (MVL) –
The option of an MVL was discussed and
the Director felt that this would be the
best option for the company. This would
allow the company to be formally wound
up and ensure that all creditors were paid
in full through the liquidation process. The
Director also sought independent tax advice
and was advised that a MVL would be the
most tax efficient way of extracting funds of
£500,000 from the company as this would
be regarded as a capital distribution from
the liquidation rather than being taxed as
income. As a result the shareholders would
qualify for Entrepreneurs Relief on the capital
distribution of these funds.
Following appointment, the company’s
remaining creditors were repaid in full and the
remaining funds; less costs, were distributed
to the shareholders. The company’s physical
assets were transferred to the shareholder by
way of a Distribution in Specie which allows
for the distribution of a physical asset by way
of capital distribution to the shareholders.
Once all matters were finalised, clearance
to close the case was then sought from HM
Revenue & Customs and upon receipt of such
written confirmation; the case was able to
be passed for closure. A final dividend was
paid to the shareholders of the residual funds
remaining in the Liquidation estate.
Once the director had instructed F A Simms
to assist with placing the company into
an MVL dates were agreed upon which a
Directors Meeting and Shareholders Meeting
could be held. As the director was also the
sole shareholder it was possible to hold these
meetings on the same day.
A final meeting was held and the appointed
Liquidators were released from office. The
company was then dissolved at Companies
House approximately three months after the
final meeting was held.
At these meetings resolutions were passed to
place the company into an MVL and appoint
the liquidators together with resolutions to
empower the liquidators to collect in the
Insolvency Latest - Quarter 1 2015, published 29th April 2015
Corporate
Personal
Creditors' Voluntary Liquidations
2,481
-3.7%
Change on
Previous
Quarter
-5.6%
Change on
Q1 2014
Compulsory
Liquidations
904
Company
Voluntary
Arrangements
Individual
Voluntary
Arrangements
Debt
Relief
Orders
Bankruptcy
Orders
10,405
6,213
432
Receiverships
93
142
-31.1%
-17.9%
9.2%
Change on
Previous
Quarter
9.3%
-34.5%
-30.7%
-16.9%
Change on
Q1 2014
-15.9%
-6.6%
-1.8%
Change on
Previous
Quarter
-13.1%
-22.5%
-5.1%
Change on
Q1 2014
-23.5%
www.fasimms.co.uk
Rapport
Spring 2015
The Proceeds of Crime Act 2002 states that
someone is engaged in Money Laundering
if they:
•conceal, disguise, convert, transfer or
remove (from the United Kingdom)
criminal property;
•
enter into or become concerned
in an arrangement which they know
or suspect facilitates (by whatever
means) the acquisition, retention, use or
control of criminal property by or on
behalf of another person; or
•acquire, use or have procession of
criminal property
and they know or suspect that the property
in question constitutes or represents a
benefit from criminal conduct. Or, to put it
more succinctly, a money laundering offence
occurs where there is a crime, with proceeds
of crime. Generally, ‘innocent mistakes’ do
not represent a crime and therefore are not
money laundering.
In terms of reporting, all individuals
working for the firm have a personal legal
responsibility to report any knowledge or
suspicion of Money Laundering as soon as
practical. An employees’ duty ends when
the report has been made to the MLRO
and a receipt has been received. The MLRO
must assess the information received and if
necessary make a report to NCA.
Mortgage fraud
Source: The Insolvency Service
Richard Simms, Managing Director comments: “The continual drop in insolvency figures supports the notion of a stronger economy. With the Election
upon us it will be interesting to see how these figures change depending on who the next government will be.”
Telephone: 01455 555 444 Email: enquiries@fasimms.com Web: www.fasimms.co.uk
It is worth reiterating what ‘money laundering’
is and when we must make a report:
It is of course possible that you will identify
a major crime constituting hundreds of
thousands of pounds of criminal proceeds.
However, you should remember that many
more ‘minor’ offences also constitute money
laundering and must be reported. Below we
highlight three examples of crime you may
come across.
4,209
Administrations
In the last edition of this article we highlighted
that the total number of reports made by
accountants to the National Crime Agency
(NCA) last year was just 4,930, down 9% from
the previous year. This contrasts with the total
number of reports made by all sectors, which
rose by 10% to 354,186. We also noted the
NCA had concluded there was no clear reason
why the number of reports from accountants
continued to fall. Consequently, in this issue
we revisit what is actually reportable as it
seems that not everything which should be
reported actually is.
It is quite
lenders to
someone’s
mortgage.
taken that
regarding
before any
common for banks and other
require accountants to ‘certify’
income when they apply for a
Clearly care should always be
sufficient evidence is obtained
the client’s financial position
such assurance is provided. One
simple example of mortgage fraud would be
your client providing false information which
overstates their income. You incorrectly
certify this and a fraud will have occurred as
the bank will have lent the client more money
than the client was legitimately entitled to.
Where the individual concerned is an existing
client of your firm, the risk is reduced as you
may have a good understanding of their
actual level of income and be able to identify
unexpected discrepancies. However, of
course risk still exists. If the individual is a new
client, great care is required.
Mortgage fraud may also occur on a much
more significant scale. Criminal gangs are
known to inappropriately inflate property
prices to gain mortgages larger than the
actual value of the property. Alternatively,
mortgages may be obtained against
properties which the fraudster does not own,
or perhaps does not even exist. Generally,
such fraudsters rely on a corrupt associate
(perhaps solicitor, surveyor or accountant) to
assist them. However, you may be an innocent
adviser dealing with other professionals who
are associated with the criminal and thus be
in a position to make a report.
To highlight the scale of the problem,
Scotland Yard recently disclosed that £180m
of British property has been investigated
in the last 10 years as the likely proceeds of
corruption.
Payment of the National Minimum
Wage
Employers not paying staff the appropriate
National Minimum Wage are committing
a criminal offence. The proceeds of this
crime are the wages which should be, but
are not paid to staff. The government has
recently made it easier for employees to
complain about under-payment and has
taken to publishing the names of employers
who have underpaid staff. The most recent
list (available at bit.ly/1DN8ccM) lists over
seventy employers, mostly small local
businesses, including care providers, hotels,
a Papa Johns pizza franchise, and even a
church. If such non-compliance is identified
by you, you must make a report.
Retention of overpayments
It is quite common for credit balances to arise
on a client’s trade debtor ledger and this
often represents an overpayment from their
customer. It may be the customer paid the
wrong amount, processed an invoice twice
or paid an amount which was subsequently
cleared by a credit note.
In the case of credit balances arising where
there is nothing to suggest dishonest
behaviour no report will be required. For
example where the client attempted to
return the overpayments to its customers
(or at least has made the position clear by
sending out monthly statements showing the
true position), or if the overpayments were
mistakenly overlooked it would seem likely
that your client is not acting dishonestly.
However, if there is evidence that the client
takes action to hide the overpayment,
perhaps by transferring these to a different
account, suppressing normal monthly
statements or transferring such amounts
immediately to profit consideration should
be given as to whether theft of these funds
have occurred and if so a report is necessary.
Amendment to the Money
Laundering Regulations 2007
Finally, the Government published the
Money Laundering Amendment Regulations
2015 (SI 2015/11) earlier this year. These
modify the 2007 Regulations. However, the
only practical impact is that the Chartered
Institute of Public Finance Accountants
(CIPFA) have asked not to be a supervisory
body – hence any firm regulated by CIPFA will
now fall into the scope of HMRC and should
now register with them.
Please contact Richard Simms or
Jenny Mair if you have any questions
concerning money laundering issues or
questions regarding the AMLCC product
Tel: 01455 555 468
or email: admin@amlcc.co.uk
Telephone: 01455 555 444 Email: enquiries@fasimms.com Web: www.fasimms.co.uk
www.fasimms.co.uk
Rapport
Spring 2015