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9am Lowdown: MoD used ‘creative accounting’

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21st Apr 2016
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Good morning and welcome to AccountingWEB’s 9am Lowdown.

MoD accused of using creative accounting

A committee of MPs said ministers have only been able to meet their Nato commitment to spend 2% of GDP on defence by using ‘creative accounting’.

The Commons Defence Committee revealed the inclusion of items such as more than £1bn of pension payments and intelligence-gathering were the only means by which the government was able to meet the Chancellor’s Budget targets.

The committee warned that this redefinition undermined the government's claims that the 2% figure represented a significant increase in defence spending.

The committee said: “We note that the Nato minimum would not have been fulfilled if UK accounting practices had not been modified, albeit in ways permitted by Nato guidelines.

“The only way that the Ministry of Defence can refute claims of ‘creative accounting’ is to outline, clearly and unambiguously, what the new inclusions are, how much they constitute, and from which department each was previously funded.”

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PwC in top 50 employers for women list

The Big Four firm has been named as a leader on workplace gender equality by being included in The Times Top 50 Employers for Women 2016.

The list is published in partnership with Business in the Community, the Prince’s Responsible Business Network, as part of the charity’s Responsible Business Week.

Kathryn Nawrockyi, gender equality director at Business in the Community, said: “They [PwC] have demonstrated a commitment to fundamentally changing workplace processes and cultures to make them inclusive to all, benefitting women and men at every level in their organisation, and I hope they inspire other employers to do the same.”

Gaenor Bagley, head of people at PwC, added: “We’re committed to gender equality as part of the wider inclusion agenda, and through our work we hope to inspire and motivate others to do the same. While it’s pleasing to be recognised by The Times and BITC, we have more to do, and we will continue to build on our achievements to date."

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Institute challenges HMRC on Employment Allowance guidance

The ICAEW has reported that HMRC’s guidance on the NICs Employment Allowance is “not in accordance with the law”.

The institute has contacted the Revenue to make them aware of this issue and to resolve the situation.

For 2016/17, there is a new category of company excluded from the Employment Allowance: Single-director companies.

As per HMRC guidance the new exclusion applies where:

1. the company has only one employee who is paid earnings above the secondary threshold

2. that employee is a director of the company

The ICAEW believes this view of the law to be incorrect. For the ICAEW, condition one is that the company has only one employee who is paid earnings. Therefore, the exclusion does not apply where the company makes payments of earnings to two or more employees, regardless of the amounts paid.

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