26th August 2015
HMRC's large business compliance regime shouldn't apply to universities
EY has received confirmation that HMRC Policy do not (at this stage) intend universities to be treated as part of the large business compliance regime (the subject of a current HMRC consultation).
EY asked HMRC Policy to confirm this point directly after HMRC suggested the measures will apply to 'non-corporates'. HMRC confirmed that they intend the measures to cover taxpayers administered by the large business directorate, and they use the term 'non-corporates' because some of those taxpayers are, for example, partnerships. HMRC said that they would look to clarify the fact that universities would not be covered when drafting the legislation. So for now, there should be no changes for the higher education sector, and no need to respond to the consultation. Although we will continue to keep an eye on the consultation outcome and the resulting draft legislation to watch out for any 'unintended consequences'.
Although this will mean there would be no legal obligation for a university to publish its tax strategy, this shouldn't of course stop a university considering adopting an internal tax strategy which will aid good governance and reduction in tax risk. An example tax strategy is available on our website, as well as information on tax risk registers from the 2015 tax conference.
HESA annual HE statistics
HESA has published its annual HE statistics today, for the 2013/14 academic year. It gives an overview of the facts and figures of the university sector, covering areas such as students and staff, income, qualifications, and more. There’s a brief summary of some of the figures on the press release here, but much more detail in this introduction. Click here for the full datasets.
There were 2.3million students of all kinds in HE last year, down 1.7% on last year, but figures for part-time students were down 16.5% on 12/13. 56.1% of students were female, a figure that rises to 60.4% for part-timers. For the financial figures, sector net income was up 5.2% at £30.6bn, with expenditure up 5.1% at £29.4bn. Staff costs as a percentage of total expenditure has risen slightly from 55.2% to 55.4%.
In other figures, the proportion of academic staff HEIs employ has risen from 48.5% to 49.1% of the total workforce.
Citizens Advice Bureau report on bogus self-employment while HMRC examines IR35
Hot on the heels of HMRC issuing its discussion document regarding the use of IR35 (and if you have any comments about their proposals to move a more significant burden onto 'engagers' - i.e. you - in this regard, then please see our previous article and use our template response to let Amanda know before 10th September), the Citizens Advice Bureau ('CAB') has issued a report on what it terms 'bogus self-employment' - Neither one thing nor the other: how reducing bogus self-employment could benefit workers, business and the Exchequer.
The CAB report mirrors much of the recent Office of Tax Simplification ('OTS') report on employment status regarding how confusing employment status is, saying that "government should address the lack of clarity around self-employment status as a priority". The report goes on to find that around one in ten self-employed people of 500 surveyed should actually be classed as employed. The report is largely concerned about the effects on the individual (losing out on employment benefits) but also the effect on business (those businesses who properly employ staff are at a competitive disadvantage to those who incorrectly treat staff as self-employed), and the Exchequer, which the report estimates could be losing £314 million a year due to bogus self-employment.
It goes on to provide some recommendations including "extending to self-employed people some of the rights have been previously reserved for employment, reviewing the tax and national insurance system with a view to ensuring that self-employed people are treated fairly" (which of course ties back to the OTS report again) "and strongly enforcing the rights of those who suspect that they are in bogus self-employment".
Eversheds bulletin on TPS, Charity Law, Student Accommodation
The Summer edition of Evershed’s InStep bulletin for Higher Education has reached inboxes this week. It covers a number of issues including TPS, student accommodation, and charity law, with the first article an interview with the Head of UK R&D at Siemens, looking at HE-Business interaction. In summary:
TPS – There are concerns, based on anecdotal evidence, that some employees previously on TPS but, on new employment, joining USS are not correctly ‘opting-out’ of TPS as part of the appointment process. The article notes that historically the notification has been the employers’ responsibility, and there is uncertainty over how complicated (and costly) any oversight may turn out to be.
Student Accommodation – While many universities will consider themselves relative ‘experts’ on undertaking student accommodation projects, the article walks the reader through some of the main procurement and management considerations during the ‘agreement’, ‘construction’, and ‘facilities management’ phases.
Charity Law – The article examines the implications for universities of the new Charities (Protection and Social Investment) Bill currently working its way through parliament. It’s a relatively short bill whose two strands outline the considerations and responsibilities of trustees when making social investments (transactions from which the charity seeks to achieve both its charitable purpose and a financial benefit), as well as the new proposed powers for the Charity Commission to issue “official warnings” for breach of trust, misconduct or mismanagement, and to suspend trustees.
Read it all here.
HMRC Charity reliefs helpline
In a recent meeting with HMRC they asked us to remind members of the HMRC Charities Helpline, which is the best way to resolve queries over charity tax reliefs, such as whether certain items will qualify for zero-rating when purchased for use in medical or veterinary research. The helpline can be contacted on 0300 123 1073 where you will then hear a menu offering the following options:
- VAT reliefs
- Corporation tax for charities (including tax returns and penalty notices)
- Charities online service
- Gift Aid or any other charity enquiries
Alternatively, the helpline team can be contacted by email, and details can be found here.
Impact of economic conditions on course popularity
Research at the University of Warwick has found that the country’s financial and debt crisis has shaped what Greek students choose what subjects to study. Examining data between 2003 and 2011, the research found that, in response to the crisis biting in 2009, there has been “an increase in university majors that are tied to jobs with good employment opportunities, such as healthcare or law, and a rise in the popularity of courses that provide an early source of income such as the military and police academies”. It also suggests that difficult times but students off from courses that are perceived to be more challenging, such as engineering.
The research is outlined in an article on The Conversation website, and found that in general “students switched away from college majors that have poor employment prospects and preferred majors that offered less precarious routes to employment”. This explains the “35% increase between 2009 and 2011 in students listing majors related to the military and police as their most preferred choices”, as well as the 10% increase in Tourism majors – an industry that has continued to expand.
The findings imply that institutions would do well to take into account the wider economic environment when planning their future course provision.
UAE closer to introducing VAT/tax, along with other Gulf states
The United Arab Emirates ('UAE) Ministry of Finance has confirmed it is conducting studies and preparing to introduce VAT, along with the other Gulf Cooperation Council ('GCC') countries (being Bahrain, Kuwait, Oman, Qatar and Saudi Arabia). The Ministry of Finance has conducted several feasibility studies on taxation and its social and economic implications over the past few years and it has now prepared draft legislation on creating a federal tax authority, for tax procedures and for VAT, which included the components agreed on in the GCC draft legislation. However, the legislation is still under review and all GCC states have agreed to impose VAT legislation simultaneously so no date for implementation has been announced. Once announced, businesses "will have around 18 months after imposing the law to implement and fulfill the requirements of their tax obligations".
In May, EY reported on the announcement by the GCC states to introduce VAT and issued a summary document which can be accessed here.
The UAE Minsitry of Finance has also announced that it has conducted studies and is reviewing draft legislation for corporate tax and that "developments on the draft law on corporate tax will be announced once completed to allow concerned entities a time limit of no less than a year to fully prepare for the implementation and fulfillment of their tax obligations."
Counter-view on graduate employment
In an article in last week’s digest, we covered a story about a recent report by CIPD that found that the majority of graduates are now working in non-graduate jobs. According to the institute, 58.8% of graduates are in roles that don’t require a degree. It also highlighted how this is a particular problem for the UK, with the high level here exceeded only by Greece and Estonia.
HEFCE has since responded to the report, and acknowledges that “Measuring the extent to which graduates are fully using their skills and knowledge is, as the CIPD analysis suggests, a complex issue”. However it points out that data from the HESA Destination of Leavers in Higher Education (DLHE) survey show that “graduates find employment which suits their skills”. 80% of graduates (296,000 for 13/14 year) completed the DLHE survey, and “of those students whose main activity was employment, 70% were in professional or managerial occupations”, with 65% saying that their degree was either an essential or advantageous requirement for the job they are currently performing. The full report of the DLHE survey can be found on the HESA website. Meanwhile, there's another accompanying blog post on the HEFCE website, which goes into more detail on the evidence behind the arguments. An interesting article in the Guardian also tackles the subject.
Deloitte webinar on future tax and National Insurance treatment of termination payments
Further to the announcement of HMRC's consultation regarding the tax and National Insurance treatment of termination payments, Deloitte will be holding a free webinar on the subject on Tuesday 8th September at 9.30am. Their marketing information states that the webinar "will explore the practical implications of the above proposals, if they are to be adopted. We will consider the impact on senior executive terminations and large scale redundancy programmes with tailored examples to illustrate the financial consequences in particular. The webinar will help attendees prepare for future change and should help you with any representations you may wish to make." You can register for the webinar here.
'Back to basics' for cyber-security?
An article on the IT Governance website suggests that it might be ‘back to basics’ for dealing with cyber-crime threats for a while, as they highlight what they see as four main trends. The first is a ‘shift back to attachment-based malware campaigns’, while the second is a ‘change in phishing techniques targeting business users’. Both techniques are likely to deliver some success from fraudsters, as they largely rely on human error. The second technique is evidenced by an (unsuccessful) phishing attempt on a university, shared on the fraud discussion boards.
You may well have excellent cyber-security in place, but it’s worth remembering that there’s often a big gap between cyber-security awareness and cyber-security literacy, and it’s through that gap that attacks can be successful. There are plenty of courses available that help increase both - the Association of Corporate Treasurers have a an excellent (and free) recorded 45 minute webinar on the threats of Cyber-security, which looks at areas such as financial crime, IP theft, and insider threats for anyone who wants to get up to speed, while CIPS also do a useful e-learning module on Cyber-Security (It's FREE!) as well as one on Procurement Fraud that includes cyber-threats - £75 + VAT.
The agenda has been updated for the Universities UK conference on Transnational Education, on the 7th October in London. The conference website states that "in 2013, the UK government’s industrial strategy ‘International Education Global Growth and Prosperity’ suggested that TNE recruitment had the potential to grow more quickly than international student recruitment to the UK", in part due to the reluctance of the government to relax immigration rules or rhetoric. The conference will examine the key issues for the sector and will discuss how institutions can use TNE to enhance their international impact. Full details here.
Kieran Quinn, chair of the Local Authority Pension Fund Forum of LGPS managers, has welcomed the "genuine two-way process" between the government and the schemes over fund reforms. According to Public Finance magazine, "he said the Treasury’s call for funds to develop their own plans was “more positive” than indications from the previous coalition government that it may impose reform", and as a result funds would seek "a loosening of investment regulations to allow collaboration arrangements in the sector to flourish".
Matthew Andrews, Academic Registrar at Oxford Brookes makes a strong case for a re-framing of the clearing process in an article in the THE this week. He writes that the lifting of the student numbers cap has supported the existing trend of clearing involving an ever broader range of students and institutions. Rather than it being “just for courses and unis nobody else wanted”, as one teacher is reported as saying, it is about choice, with “more options are open to students than ever before”. He adds, “some 15 per cent of applicants accepted in clearing this year had not applied in the main round of applications at all, for example. Many students seeking places through clearing have excellent grades, too”, and “neither are the places available restricted to some narrowly defined subset of institution”, with “nearly all” HEIs now taking part.
Paul Feldman has been named as the new Chief Executive of Jisc. According to the organisation, he "has a strong commercial background having spent over 20 years in retail financial services at Nationwide Building Society, Barclays Bank and First Data EMEA, both in IT and business roles. He has also worked in knowledge-based IT companies including Thomson Reuters Legal UK and the Intellectual Property Office. He has a track record in introducing innovative solutions, was in the vanguard of the first moves to use the internet for commercial purposes, and led the work that resulted in same-day payments between bank accounts." Dr Feldman will take up the role in mid-October, but is clearly starting his work early!
Jobs.ac.uk has produced a white paper on the Internationalisation of Higher Education. It spends some time looking at what Internationalisation means, and how it is interpreted at different universities, before using a number of case studies to explore how internationalisation affects the requirements and developmental needs for different university roles.
Universities Scotland has expressed concern that new powers of government intervention included in the forthcoming Higher Education Governance Bill could cause Scottish HEIs to be seen as part of the public sector and lose their charitable status, the Times Higher reports. In a submission of evidence to the Scottish Parliament Finance Committee, the representative group compares the powers outlined within the bill to the classification of central government entities by the Office of National Statistics.
Our Job of the Week is for a Payroll and Payments Manager at the University of Gloucestershire. The closing deadline for applications is the 11th September. The advert states that applications will "take the lead in introducing new and streamlined processes and enhancing and improving our systems", and "must be fully up to date with legislative changes and preferably have some knowledge of defined benefit pension schemes". To advertise a job on the website (it's free!), just email the link to the office. All the other vacancies are listed on the BUFDG jobs page.