Partial exemption and ability to adjust for COVID-19

The VAT year end has now passed for most Financial Services businesses (in either March, April or May) and it is important to remember that the VAT year end is not necessarily the same as the financial year end. Following the VAT year end there are annual filing requirements that apply to all partly exempt businesses, which are summarised below:

  • Annual adjustment: all partly exempt businesses are required to carry out an annual adjustment each VAT year which needs to be included. The VAT year end is an ideal time to review the year’s VAT accounting, particularly if your income levels were affected by COVID-19 (ie as a result of different business practices being in place pre and post COVID-19).
  • Capital Goods Scheme adjustment: any VAT that has been reclaimed on capital assets must be adjusted annually for the life of the asset after the VAT year end. For VAT purposes, capital assets include commercial property costing over £250,000 (purchase and/or refurbishment) and computer hardware costing over £50,000 (which is more or less redundant nowadays). For all commercial property, the life of the asset is considered to be 10 years.

Last chance to adjust for potential COVID-19 impact

Last year HMRC published Revenue and Customs Brief 4/21 in which they announced that businesses could request temporary alterations to their partial exemption methods if the business was affected by COVID-19. This allowed for the changes to be applied from 2020 onwards and could be applied until the end of the current VAT year (ending in 2022) as long as your business was still affected throughout.

Therefore, the current annual adjustment period is the last opportunity to take advantage of these special measures by HMRC. When you review your annual adjustment calculations for the year, and if you find that your income levels and partial exemption recovery percentage has been affected by COVID-19, then there is potential scope to submit a request and make a claim to HMRC based on an alternative method. HMRC will only accept a single request to use an alternative method, so it is important to consider all years that may have been impacted if you have not already made an application to use an alternative method.

The VAT year end is the best time to review your VAT position and consider whether any improvements could be made to your VAT recovery. Even if you have agreed on a special method with HMRC it can often be worth reviewing the application of the method and whether it is still fair and reasonable for the business. Often the method will have been agreed with HMRC some time ago after which business operations may have changed significantly, especially in light of the changes businesses have gone through as a result of COVID-19.

What now?

We would recommend that your partial exemption position is reviewed to ensure you are carrying out the necessary requirements correctly and are maximising your potential VAT recovery. This is especially relevant this year because it is the last opportunity to take advantage of the special measures introduced by HMRC for businesses affected by COVID-19.

Our VAT team are experts in this area and can help you with your partial exemption requirements and establishing whether any improvements can be made to your VAT position. If you would like to discuss any of these issues further, please contact Kamlesh Chauhan, VAT Director, in our Financial Services team.

Corporate and Private Client eNews

The latest edition of our Corporate and Private Client eNews is now available and covers the following topics:

  • haysmacintyre’s new Managing Partner
  • Government pulls plug on PiCG
  • Property register progresses
  • Digital reporting delayed by a year
  • IOD looks to improve innovation
  • Government delays minimum tax rate
  • FRC updates Strategic Report guidance
  • And finally… low MTD awareness

Click the button below to download this week’s edition, or read our previous editions here.


FCA proposes stronger requirements on oversight of the Appointed Representative regime

In December 2021, the Financial Conduct Authority (FCA), released Consultation Paper (CP) 21/34 on ’Improving the Appointed Representatives (AR) Regime’. This CP was released in the context of the Treasury’s ’call for evidence’ paper (also released in December 2021) on how market participants use the AR regime, how effectively the regime works in practice, potential challenges to the safe operation of the regime and possible future reforms.

The AR regime was introduced through primary legislation in 1986. An AR is a firm or person who carries on regulated activity on behalf, and under the responsibility of, an authorised firm (the principal). When appointing an AR, the principal assumes responsibility for the regulated activities the AR carries on.

The reforms were initiated after the well-publicised collapse of Greensill Capital (Greensill) and David Cameron lobbying scandal in 2021 – Greensill being an AR rather than directly authorised by the FCA brought the AR regime significantly into the spotlight.

CP21/34 is consulting on two main areas of change:

  1. Additional information on ARs and notification requirements for principals to allow the FCA to identify potential risks more easily within principals and ARs. It will also help assess whether the principal has the expertise, systems and controls to effectively oversee its ARs and to target supervisory interventions more effectively.
  2. Additional guidance for principals on their responsibilities, and how they should act and oversee their ARs which will clarify and strengthen the responsibilities and expectations of principal firms.

More specific areas of change within the regime that are proposed are:

  • Principal firms would be required to submit data on complaints against their ARs on an annual basis. The data would be required to be submitted per AR and not as an aggregated number of complaints across all ARs, which is currently the case;
  • The FCA is proposing to extend the requirement for principal firms to attest to the accuracy of basic details held on their ARs on an annual basis or report any changes. This would bring the rules in line with directly authorised firms who currently attest their details are correct via the FCA Connect system annually. The details would include the activities the principal permits ARs to conduct, with any changes during the period required to be notified to the regulator using an appropriate form set out in SUP 12;
  • The FCA proposes to require principals to submit revenue data for each of their ARs, from both regulated and non-regulated activities. For existing ARs, it is proposed that principal firms provide this information annually based on their accounting reference date, with 30 working days in which to submit the return. Principals would report this using a new AR reporting form and a transitional period would apply for existing ARs so that principals provide this information for the first full year of data following the rules coming into effect.For ARs appointed after the new rules are implemented, it is proposed that principal firms provide actual figures (for example, for non-regulated business, or if regulated business was conducted under a different principal).If the data is not available, particularly when a new AR is set up and there are no revenues yet, the principal would provide a projection of the annual income of the AR (both regulated and non-regulated) at the point of appointment; and
  • The FCA proposes principals notify the regulator of an intention to begin providing regulatory hosting services and to require existing principal firms to notify the FCA if they already provide regulatory hosting services. The principal would need to make this notification at least 60 calendar days before starting to provide regulatory hosting services to allow the FCA time to assess the firm.

HM Treasury – the AR regime: call for evidence

Also in December 2021, HM Treasury released a ’call for evidence’ paper on the regulatory framework for ARs where it acknowledges that the Government, at the time the AR regime was introduced (in 1986), did not expect it to become so widespread, with the initial intention to just be for salespersons to promote and introduce customers to the principal firm. Today, there are more than 40,000 ARs and over 3,600 principal firms within a wide range of financial markets.

This call for evidence, issued in parallel with the FCA’s consultation paper, is designed as an information gathering exercise on how market participants use the AR regime and how effectively the regime works in practice. The Government wants to ensure it has a full and up-to-date understanding of how the AR regime is currently used. The call for evidence is also designed to gather views on potential challenges to the safe operation of the AR regime and possible future reforms that might be considered to address those challenges. The Government’s view is that more evidence is required before it can decide whether legislative reform, in addition to the rule changes the FCA proposes to make, is necessary.

Future changes being considered by the FCA to further strengthen the requirements within the AR regime are:

  • Limiting the maximum size of ARs before requiring them to become fully authorised in their own right;
  • Prohibiting the engagement of ARs which operate businesses that are materially distinct from that of the principal;
  • Limiting the range or scope of regulated activities that regulatory hosts can oversee and/or the number of ARs they can have;
  • Requiring principals to regularly review the relative size/scale of business carried on by their ARs and consider whether it remains appropriate; and
  • Principals are to be required to ensure that their contractual arrangement with an AR allows for termination where a principal considers it can no longer adequately oversee the AR.

Overall, the FCA’s aim is to address the perceived harm in the market while retaining the cost, competition and innovation benefits that the AR model provides. The proposed reforms have a basic goal of allowing the FCA to ’more easily identify potential risks within principals and ARs’ and ’better assess whether the principal firm has the expertise, systems and controls to effectively oversee its ARs’, rather than completely overhauling the AR model or even terminating the option for firms to become ARs at principal firms.

Should you wish to discuss any of the above in more detail, please do not hesitate to contact Gary Allan at ‘’, Compliance Consultant at ComplyCraft Consulting Ltd.

Corporate and Private Client eNews

The latest edition of our Corporate and Private Client eNews is now available and covers the following topics:

  • Government to overhaul audit market
  • HMRC pauses on some R&D repayments
  • FRC reports on discounting
  • Share sale proceeds under scrutiny
  • CCAB updates money laundering guidance
  • HMRC target umbrella company fraud
  • IFRS 17 adopted by UKEB
  • Fraudulent SDLT claim
  • No changes to FRS 101
  • FCA looks to improve UK listing attractiveness
  • FRC illustrates good practice
  • And finally… cessation of interactive P11Ds

Click the button below to download this week’s edition, or read our previous editions here.


Corporate and Private Client eNews

The latest edition of our Corporate and Private Client eNews is now available and covers the following topics:

  • Points mean penalties
  • Accountants to be banned form Russian work
  • Increase in tax interest charge
  • Capital allowance regime under review
  • Penalties on non-resident tax promoters
  • You are not alone
  • RJA pushes for rates reform
  • FRC Lab’s report on the supply chain
  • TPR targeting suspects
  • Audit reform confirmed
  • Moscow Stock Exchange loses status
  • and finally… quick on the filing

Click the button below to download this week’s edition, or read our previous editions here.


Marketing Manager – Services


  • End to end management for in-person, virtual and hybrid events
  • Research, negotiate and manage key sponsorships
    • Leverage key sponsorships which provide access to our target markets
    • Leverage events to create opportunities for relationship development/sales dialogue
    • Alongside the Marketing Managers and Head of Marketing and Business Development, create an evaluation matrix for sponsorships and apply for all relevant sponsorships
  • Responsible for the management of target lists. Ensure information is up to date with a clear action plan in place.
  • Marketing representative for service line meetings
  • Pitch relevant and topical themes for the events and communication schedule
  • Liaise with the Marketing team to ensure communications and events are executed to plan
  • Produce ROI reports for all events and communications, which are aligned to the strategy
  • Working with the Marketing Managers and Head of Marketing and Business Development, map out BD plans for the financial year
  • Budget management including an assessment of cost vs. benefit of all activity to ensure that resources are used in an efficient and effective manner
  • Supporting the Head of Marketing and Business Development on the overall marketing strategy.


  • Responsible for the service line client care programme
  • Campaign management:
    • End-to-end management of campaigns, including planning, preparations, launch and close
    • Budget management
    • Reporting on results and ROI
  • Management of the service lines key account programme
    • Working with the Head of Marketing and Business Development, implementation a plan to target the department’s key clients. Identify which are the most appropriate clients for growth and cross selling opportunities.


  • Evaluate the commercial viability of service line bid opportunities and make justified recommendations as to whether opportunities should be pursued.

Corporate and Private Client eNews

The latest edition of our Corporate and Private Client eNews is now available and covers the following topics:

  • LCCI finds a cautious outlook
  • Remuneration trust tax avoidance settlement
  • Challenged or challenger?
  • IR35: HMRC 1 Taxpayer 0 but still playing
  • FRC publishes an audit firm Governance Code
  • Lords criticise IR35
  • FRC finds shortfalls in slavery reporting
  • FRC consults on audit firm registrations
  • UK Trust Register
  • And finally… UKEB makes first adoption

Click the button below to download this week’s edition, or read our previous editions here.


Effectively managing foreign exchange exposure during times of market volatility

It is clear that volatility has been impacting businesses and, given the prevailing macroeconomic events, it’s reasonable to consider this will continue throughout the remainder of 2022 and moving into 2023, posing significant volatility risk. Some of these risks include global inflationary pressures creating unpredictable shifts in monetary policy around the world, the resurgence of COVID-19 in China with a subsequent lockdown in Shanghai, and the ongoing Russian invasion of Ukraine, which is exacerbating the already unstable energy market.

Many of the recent and present market risks have led to a strong US Dollar. The US Dollar Index, which measures the Buck’s value versus a basket of other major currencies, has been trading at its highest level since May 2020 – the height of the pandemic*. It’s also becoming increasingly expensive to hedge as the US Federal Reserve is on an aggressive interest rate hike cycle, potentially at the cost of economic growth.

Given the Eurozone’s close geographic position to Ukraine, its reliance on Russian energy, and slower adjustment in monetary policy, the shared currency has been heavily sold, reaching multi-year lows versus the US Dollar and Pound Sterling*.

Meanwhile, the Pound Sterling has been losing ground, as the Bank of England has repositioned itself in a slightly more dovish position, stating growth concerns as the cause. The Pound Sterling has experienced several years of selling pressure moving from Brexit to COVID-19 and is now seen as a risk-on currency.

In reality there are many variables, some of which we’ve touched on above and are totally uncontrollable. While exchange rates can fluctuate dramatically in times of geopolitical risk and monetary policy divergence – of which the latter appears to have no short-term solution – the impact of FX volatility on known exposures to foreign currencies can easily be smoothed through effective planning and risk management.

Having a strong cash flow forecast and understanding of foreign currency exposures is important when looking to implement an effective hedging strategy.

Once these fundamentals have been established, hedging can be beneficial for businesses wanting to:

  • Protect their bottom line
  • Effectively plan in accordance with budgets
  • Smooth the impact of FX volatility
  • Take advantage of favourable exchange rates

With volatility expected to remain high, businesses with an FX requirement should consider speaking to a currency specialist to discuss how they could help mitigate currency risk. For more information, please contact Alex Chernoff at

*Correct as of April 2022 

Corporate and Private Client eNews

The latest edition of our Corporate and Private Client eNews is now available and covers the following topics:

  • FRC updates on accounting standards review
  • National Living and Minimum Wages increased
  • UKEB to review intangibles accounting
  • You can’t have your flapjack and eat it zero-rated!
  • FRC issues three-year plan
  • New proposed ISA 600 exposed
  • HMRC warns of tax avoidance schemes
  • RPDT commences
  • And finally… Time to Pay

Click the button below to download this week’s edition, or read our previous editions here.


Corporate and Private Client eNews

The latest edition of our Corporate and Private Client eNews is now available and covers the following topics:

  • Spring Statement
  • Interest rate on late tax payments increased
  • Former footballer found to be offside on tax
  • VAT rate increases for hospitality
  • Likely increase in IR35 compliance activity
  • Legal arbitration for COVID-19 rent disputes
  • Tax relief for home working
  • Mandatory climate related reporting commences
  • Licences subject to tax checks
  • And finally… MPs not confident over tax debt

Click the button below to download this week’s edition, or read our previous editions here.


Get in touch