Irony reigns supreme in the accountancy industry
Written by Ian Moss: Is it me or is there a hint of irony running through the world of accountancy this week?
First, the ICAEW's excellent Economia website evoked some rather unpleasant imagery with this headline 'Big Four “feasting” on Carillion “carcass”, say MPs'. Fair comment, I suppose, when you consider their combined fees for 'handling' the whole affair totalled about £72million.
I came away from the article thinking how unpopular the "Big Four" must have become in the corridors of power. Then, less than 24 hours later, I spot this story: "Government brings in Deloitte to monitor Interserve... The Cabinet Office has tapped the Big Four firm to monitor struggling support services and construction group Interserve." Hmmmm.
Sexual inequality
The subject of sexual inequality has been in the news a lot recently. So it was no real surprise to see this: "Firms must sign Women in Finance charter, say MPs" But barely had I finished reading that when I came across this one: "EY appoints Barton as head of global tax... Kate Barton has been appointed as the new global tax leader at Big Four firm EY."
Finally, I was left mulling over this: "Social bonding and the cachet of being a member of the Big Four elite creates familiarity between auditor and audited and potentially undermines professional scepticism, according to new research."
I'm glad it's the weekend!
Q&A: Amanda C. Watts, TwentyTwo Agency (2018)
Amanda C. Watts is founder of TwentyTwo Agency, an Amazon bestselling author, mentor for Virgin Start-Up and creator of The Relationship First Method™. She'll be sharing her proven marketing strategies for maximising sales and referrals at Accountex Summit North.Read more
A call for clear HMRC direction on VAT import taxes
Recent press surrounding the proposed controversial changes in VAT on goods imported from the European Union after Brexit will no doubt be a keen discussion point for many businesses. If the changes currently passing through parliament become a reality, it could result in some 200,000 UK firms, who are required to import goods as part of their core business, having to find a solution to covering the cost of VAT duties upfront.
Presently, UK firms who import machine parts or any goods ready for sale from the EU can register with HMRC to bring them in free of VAT. They simply register the VAT charge and reclaim it, as VAT is only added to the price of the product when it’s sold to the final customer. Once the UK leaves the EU, however, that could change, and by frontloading VAT, it will no doubt create additional cash flow burdens for UK businesses, along with potential delays to the customs process.
Greater assurances on import taxes
The British Retail Consortium, which represents 70% of the UK retail industry indicates that there are potential mitigation measures to be considered, including suggestions that the Treasury either provide greater assurances on VAT deferment schemes, look to introduce postponed accounting periods for VAT payments, or alternatively, that businesses explore revolving credit facilities with banks and other financial providers to navigate these changes.
Either way, as a nation with great history in trade, it’s vital that whatever the outcome, both our ability to trade and the success of our economy must be protected.
With Brexit front of mind for business leaders, it feels like another blow for small businesses and the pressure is on for government to quickly remove the uncertainty and provide businesses with clarity around this subject. Whilst changes remain a possibility however, businesses should look to explore the options available to them to meet these obligations.
LDF’s short-term business loans can be used for a variety of businesses purposes, including assisting small business owners to spread the cost of VAT. We continue to help thousands of business to spread the cost of essential outlay such as Corporation Tax, Personal Tax and VAT every year.
Written by Peter Alderson, managing director of LDF. Exhibiting at Accountex, Stand 298.
Is the HMRC on a fishing expedition?
A new law allows government departments to investigate your financial affairs if they can’t see where your wealth came from. So does this mean HMRC can now go fishing in your tax records when it wants to?
Tax inquiries. There are strict rules that say when HMRC is entitled to start an investigation, or inquiry as they are now referred to. It is allowed to make a relatively small number of random checks into self-assessment tax returns, otherwise it must have a reason to start an enquiry. “Unexplained wealth orders” (UWOs) widen these powers.
Wealth v income. Since 1 February 2018 UWOs can be used to allow government departments, including HMRC, to investigate an individual’s financial affairs if it appears their wealth isn’t backed up by sufficient income to justify it. However, HMRC can’t act on a whim; UWOs will only be issued if:
- You own assets worth £50,000 or more; and
- HMRC, or other government departments, can prove there are “reasonable grounds” to suspect something is awry.
Vague condition
Only then will the High Court (Court of Sessions in Scotland) issue a UWO. In our view “reasonable grounds” is a rather vague condition and it probably won’t be difficult for HMRC to convince a judge.
Untested. Only time will tell how HMRC will make use of UWOs, and the willingness of the High Court to assist, but at face value our view is that they don’t offer HMRC an easy way to start a fishing expedition.
Written by Duncan Callow of Indicator-FLM. Exhibiting on stand 786 at Accountex 2018.
Ireland prepares to launch new pension laws
Written by Karen Bennett of BrightPay. Ireland is set to introduce pension legislation that will compel all employers to offer workplace pensions to their employees. This might seem like a radical idea to the Irish workforce but automatic enrolment has been largely successful across the world in countries such as Australia, New Zealand and the UK.
Two-thirds of private-sector workers in Ireland have no pension provision. Auto enrolment stems from a need to boost employees' pension pots in preparation for their retirement. It is currently not feasible for the Irish government to sustain and fund the growing population of the older generation.
Roadmap for pension reform
Leo Varadkar, Irish prime minister, said: "This issue has been long-fingered for too long, and now that the economy is recovering strongly we must act decisively, and we will publish a five year roadmap for pension reform before the end of the year.”
Just like we saw here in the UK, Ireland will make auto enrolment the law and change the current legislation. The objective is to enable every worker in Ireland to have access to a workplace pension scheme. Auto Enrolment is probably the most effective way to get a large body of workers saving towards their retirement. If auto enrolment is introduced, it will go a long way to boosting retirement savings in Ireland.
BrightPay will be exhibiting at Accountex Summit, Stand 33.
Related articles
How will auto enrolment work in Ireland?
·Auto Enrolment Planned for Ireland by 2021
New Automatic Enrolment Pension System to be in place by 2021?
Auto enrolment is being brought to Ireland
Top takeaways from the World Congress of Accountants
The World Congress of Accountants (WCOA2018) was held in Sydney, Australia, this month. With the theme of Global Challenges, Global Leaders, it highlighted how global issues are driving change in the accounting profession that will change the role of accountants in the future.
Three areas that are going through significant change at a global level at the moment are the economy, demographics and technology.
According to historian Professor Niall Ferguson of Harvard university, Brexit and the rise of populist and extremist governments is creating financial upheavals that will challenge the global economic order for a long time to come.
Looking to history, he argued that there will be an increasing need for good standards of business conduct in the future to maintain business confidence and safeguard against corruption.
Critical role to play
The accounting profession has a crucial role to play in this new world. But our role will extend beyond ensuring individuals and business are compliant, to making sure that we all do the right thing.
At a demographic level, we’re already seeing the impact that baby boomers are having on the ageing sector, but there is less discussion about the effects of the baby bust. The Australian government has been counter-acting this decline in national fertility rates with immigration.
According to Bernard Salt, these demographic changes will continue to drive every aspect of our lives. If we’re going to share in the prosperity to come in the future, Salt believes that people need to become knowledge workers.
Future generations
We need to upskill and train our future generations in technical skills that have global application. According to Helen Brand, CE of the Association of Certified Chartered Accountants (ACCA), the accounting profession is ahead of the game because we have a common technical language that is already global, but there’s still much more that we need to do to keep up with the rate of change.
One of the most important factors driving the need for new skills is technology. A hot topic at the WCOA2018 was artificial intelligence (AI) and its potential to transform how accountants work.
Kriti Sharma, VP of AI for Sage, highlighted small businesses spend a shocking 120 days a year on administration. This is an area where she believes AI can make a real difference in the near future.
Value added tasks
Another is in compliance, which Carol Barnay Head of AI R&D programmes at Xero believes will become something that is done passively in the background. This will leave accountants more time to focus on value-added tasks for their clients.
To thrive in this new world, we all need to develop new skills. Matt Tindale, managing director of LinkedIn Australia and New Zealand, highlighted that core professional technical skills like accounting, management, finance, reporting, auditing and even Excel remain the backbone of the accounting profession.
Essentials for the future
But technology and data analysis skills are emerging as essentials for the future. This includes knowing things like python, javascript, customer relationship management tools, strategy and digital marketing. The only constant skill that accountants require both today and in the future was communication.
These skills agree with a survey that the ACCA took of its members that highlighted the professional accountant of the future needs vision, ethics, intelligence, creativity, emotional intelligence, digital savvy and experience.
My key takeaway from the WCOA2018 was that the skills that accountants have relied upon in the past will no longer be enough. To face the future we need to take stock of the changes that are occurring at a global level and grasp the opportunities before us.
Being aware of how the economy, demographics and technology will change our industry is the first step in starting to prepare your organisation for the changes ahead. I believe this will change our industry for the better, which means it’s an incredibly exciting time to be part of the accounting profession.
Q&A: Steve Pipe, AVN (2018)
Next up in our new speaker Q&A series is Steve Pipe — researcher, author and practice strategist at AVN.Read more
Q&A: Chris Astle, Think Forwards (2018)
First up in our new series of speaker Q&As is Chris Astle, CEO of Think Forwards, CFO of eWaterPay, and Resident CFO at Finance Director Magazine.Read more
Bloomsbury Professional to host Tax Conference in Manchester in April
At a time when confidence in the future of owner managed businesses is in decline, particularly in relation to revenue and profitability, this new one-day conference from Bloomsbury Professional focuses on the opportunities offered and threats imposed by the current tax regime, particularly in relation to recent changes.Read more
Accounting professionals discuss the future of the industry
The 2017 Accountex visitor advisory board brought together a group of accounting professionals from around the UK to our headquarters in Brighton. The day, led by sales manager Rachel Gregory and event director Zoe Lacey-Cooper, started with a themed discussion about the various challenges and opportunities in the accounting industry, which was closely followed by a networking lunch and some interview discussions. Find out what the attendees are looking forward to most about Accountex 2018 in our short video round-up from the day...