Good morning and welcome to this 31 October edition of the 9am Lowdown, which today features BT, Xero and a new HMRC compliance team.
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BT takes £145m accounting errors hit
BT has revealed it has taken a £145m hit following the discovery of historical accounting errors and inappropriate management behaviour at its Italian division.
Its second quarter results to 30 September 2016 include a non-cash specific item charge of £145m, which the company says it has recorded following an initial internal investigation at BT Italia.
BT said: “We have identified certain historical accounting errors and reassessed certain areas of management judgement.”
The balance sheet write down is described as a current best estimate of the financial impact based on the investigation. However, the telecoms company added that in its view the errors have not materially impacted the group’s reported earnings over the previous two years.
As a non-cash item in the period it does not impact normalised free cash flow.
According to The Guardian the company has appointed external advisers to assist with a full investigation into BT Italia.
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Xero reveals organisational changes
Xero has revealed changes to its organisational structure to support its strategy of reaching a $1bn of operating revenues.
The company is implementing a flatter organisational structure with country managers reporting directly to the chief executive.
Xero's chief marketing officer Andy Lark is leaving the accounting software firm amid a management shake-up.
The function of the chief marketing and revenue officer will be replaced by a chief marketing officer who will focus on global brand and marketing communications. the recent addition of the chief people officer and chief accounting officer roles have enabled chief financial officer, Sankar Narayan to broaden his focus to drive operational outcomes and revenue globally.
To lead Xero Americas, Keri Gohman will join the company in December as president of the Americas.
Gohman was formerly an executive vice president and general manager of Capital One Small Business, banking division. Gohman will be based out of Xero’s Denver office supporting hubs in San Francisco, New York, Austin and Seattle. As part of this transition to build scale in Denver, Russ Fujioka, who has chosen to remain in the San Francisco Bay area, will leave Xero at the end of the year.
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HMRC creates gig economy compliance team
HMRC will establish a new compliance team which will address the risks associated with the changing nature of employment.
Jane Ellison, financial secretary to the Treasury, confirmed the measure in a letter to Frank Field, the Labour MP who chairs the House of Commons Work and Pensions Select Committee.
Field had written to the Revenue requesting an investigation into employment practices at delivery company Hermes.
According to law firm Pinsent Masons the new team will be called the Employment Status and Intermediaries Team, and will have as its focus status and employment intermediary risks.
In her letter to Field, Ellison said: “Employment status in the UK is determined by the reality of the working relationship and not simply by the terms of any contract. Individuals cannot be opted out of employment rights and protections simply by an engager calling them 'self employed'
“Where companies are believed to have misclassified individuals as self-employed, HMRC establishes the facts of the case and will take steps to ensure that all the appropriate tax, [National Insurance contributions], interest and penalties are paid. These include, where necessary, taking individuals and companies to court to force payment,” she said.