The Association of Chartered and Certified Accountants (ACCA) has expressed serious reservations over proposals by the Manx government to introduce a simplified company vehicle, citing a lack of accountability and shareholder protection in the new company rules, the Isle of Man Online has reported.
According to the Isle of Man government, the new Manx corporate vehicle, or ‘NMV’, is designed to be simple and inexpensive to administer and to meet the Island’s obligations in terms of the commonly adopted benchmarks of international standards.
The concept, developed following a study of company law around the world, is scheduled for introduction early next year and will coincide with the Isle of Man’s move to a zero rate of corporate tax. NMV companies will be available in addition to existing Isle of Man companies, which will be retained.However, Keith Woods, president of ACCA Isle of Man, is concerned that under this proposal, there would be no requirements for audit, or any independent verification of accounts submitted to it for tax purposes. This, he says will place an unnecessary burden on the Income Tax Division, and on information supplied by local trading companies.
"Consequently ACCA anticipates that significant reassessments will be carried out in light of the zero tax policy, that is available to limited companies in the 2006/07 tax year for those companies incorporated under the new legislation," Mr Woods noted.
The ACCA IoM president also pointed out that with a lack of onus on directors to convert accounting records into financial statements, shareholders will also be disadvantaged.
"The purpose of the new vehicle is to make incorporation and administration of a company more cost effective than out offshore competitors, but this will undoubtedly mean more expense being incurred in legal fees drafting complex agreements," Mr Woods stated.
"This could drive business away from the Island, when the intended purpose of the proposed bill is to create new business," he warned.
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