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Accountancy Services to Russian Entities to be Prohibited

SI 2022 / 850, Regulation 13 sets out the anticipated prohibition on UK entities (including their overseas branches) from providing accounting services to Russian clients.  In particular, a person must not directly or indirectly provide, to a person connected with Russia:

  • Accounting services;
  • Business and management consulting services; or
  • Public relations services.

Accounting services are defined as:

  • Accounting review services, which are services involving the review by a person of annual and interim financial statements and other accounting information, but excluding auditing services;
  • Compilation of financial statements services, which are services involving the compilation by a person of financial statements from information provided by a client, including preparation services of business tax returns when provided together with the preparation of financial statements for a single fee, but excluding such preparation services of business tax returns when provided as a separate service;
  • Other accounting services such as attestations, valuations, preparation services of pro forma statements; and
  • Bookkeeping services, which are services consisting of classifying and recording business transactions in terms of money or some unit of measurement in the books of account, but excluding bookkeeping services related to tax returns.

Business and management consulting services are defined as: advisory, guidance and operational assistance services provided for business policy and strategy and the overall planning, structuring and control of an organisation, which includes (but is not limited to) management auditing; market management; human resources; production management and project management consulting.

SI 2022 / 850, Regulation 18 sets out a limited exception, as follows:

The prohibitions in SI 2022 / 850, Reg. 13 (professional and business services) are not contravened by any act done by a person (“P”) in satisfaction of an obligation:

  • In respect of the provision of professional and business services by P to a person connected with Russia where those services are provided in relation to the discharge or compliance with UK statutory or regulatory obligations, such obligations not arising under contract; or
  • Arising under a contract concluded before 20th July 2022, or an ancillary contract necessary for the satisfaction of such a contract, provided that:
    1. The act is carried out before the end of the period of one month beginning with the day on which this regulation comes into force; and
    2. P has notified the Secretary of State no later than the day 10 working days before the day on which the act is carried out.

A further commentary on these new restrictions is provided by ICAEW on their website and our sanctions webinar provides a summary of the impact of financial and trade sanctions.

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