The ICAEW audit registration committee has recently clarified the application of the rules on the provision of tax services to AIM fully listed and listed companies.
For listed companies, and from immediate effect, Auditors are no longer able to have any direct involvement in the preparation of the tax provision included in the figures they audit. The services that an Auditor can provide to a company that is not listed remains unchanged and can include a complete tax service as well as any services such as payroll and VAT compliance work.
In practical terms the Auditors can no longer have any involvement in the following:
- preparation of current or deferred tax charge
- preparation of any tax journals or any tax disclosures
- preparation of the tax computation prior to the audited accounts being approved by the directors and the audit report issued
- payroll services (including P11D preparation)
- VAT return preparation
This means that the Auditors role is limited to auditing the figures and that way they will remain completely independent.
If you fall within this category you will need to consider your options. If you have the right combination of available resource and skill base you should consider whether you can take the tax work, and any other services your Auditor currently provides, in-house. You will need to consider whether some initial training is necessary to bring your staff fully up to speed. You may also consider recruiting additional staff so that you have the capacity to take the work in-house and there will of course be costs associated with that.
If prepating your own tax computations or doing your own payroll is not an option you will need to engage another firm to do this for you. As an alternative, and particularly where you have a stronger relationship with the tax advisers than the audit team, you could retaining your existing tax advisers and engaging new Auditors. Either way you will need to divide the work between two parties.