Putting the client at the heart of your practice
What it means
Putting the client first, or as some may put it, ‘at the heart of your practice’, means you are focusing on their needs. Building your practice this way means it will best serve their interests and be responsive to their needs.
Why is putting the client at the heart of your practice important?
Clients want to engage with accounting firms that not just understand their needs but are able to proactively help them support their business goals. Today’s business environment is competitive and requires organisations to always plan ahead. Coupled with this, are the increasingly complex regulatory requirements that clients have to adhere to when doing business.
Maintaining a good client relationship also helps build trust, which eventually leads to long-term client loyalty and healthy business growth for them and your practice.
How do you achieve it?
Maintaining an interactive and personalised environment is key to ensuring a great client experience. Digital technology is rapidly transforming client experience and reshaping the way a practice is managed, as well as how they interact with clients.
Clients, for their part, are becoming increasingly savvy in leveraging digital technology in their day-to-day lives – be it via the numerous apps they use on their smartphones through to interacting with others using social media.
Digital technology enables clients and firms to easily share information, enabling the accountant to be responsive to a client’s needs and bringing in the flexibility and proactiveness that clients leverage in their own businesses.
But only focusing on digitising the way firms interact with clients would fail to achieve much, without also reviewing and digitising practices’ back office. By introducing digital workflow technology in its operations, a firm is able to not only improve its employee experience and be more productive, but also sustain its goal of putting the client at the heart of its practice.
One Paper Lane is helping accounting firms of all sizes digitise workflow and automate their practice areas and client management work – one process at a time. You get more than cutting-edge technology with One Paper Lane, plus our willingness to work alongside firms, help them review and map processes and bring in custom solutions as needed.
Who we are and what we do
We are One Paper Lane, the digital process automation and collaboration platform of the future. We are launching in the UK at Accountex on stand 490.
Our technology will enable you to streamline, automate and improve your processes. It can work together with your existing software, apps and tech tools. Our specialists also help you implement these improvements.
We have already helped accountancy and other professional services firms increase productivity and improve both the client and team member experiences.
Visit us and our UK partner, practice advisers Foulger Underwood, at Accountex. Alternatively, for more details, contact Julia Whistler at [email protected]
Why building your accounting brand is more important than ever
Clients of accounting firms or sole practitioner accountants often suffer from buyer uncertainty and remorse and it is easy to see why:
People buy on emotion and justify on logic... how many emotional accountants do you know? 'Emotion' has been a dirty word in professional services.
It is only in the past 5-10 years that they have felt it necessary to inject personality into their communication and put some emotion into their messaging.
We are in a digital social economy where many service-based businesses give away some of their best work, to demonstrate their credibility and to educate the audience of their service proposition. Customers expect more than a transactional service, they expect a personable relationship.
Here are three areas where there is room for improvement in customer communications.
- The starting point is a negative experience such that prospective customers often:
- Feel forced to conform and comply although, by HMRC, your profession is a chink in the chain.
- Uncertain when to access accounting services, so do it late.
- Have unrealistic expectations of the cost of the service, linked to not knowing what you do.
- Lack of understanding of the full services available that could help their businesses grow.
This creates a barrier between customers accessing accounting services.
- Many accountancy firms sell what I call an ‘invisible’ box of services.
No one knows what goes on inside!
The higher the perception of undifferentiated commodity the lower the value. Professional accounting service firms must help customers by differentiating their brand. Giving accounting firm personality and showing customers the specific value to their business.
Besides word of mouth, prospective customers may not know how to make an informed choice between ‘me too’ accountancy firms. To them, many accountancy firms offer similar services, it is hard for customers to distinguish between the good and great. Customers lack the technical skill to assess accountancy qualifications and experience.
To prove this point, when I searched for the difference between chartered and certified accountants one answer was:
“A chartered certified accountant means that the accountant has received his/her qualifications the ACCA. A chartered accountant has received his/her qualifications through another governing body in the world. A certified accountant may also refer to chartered certified accountant UK.”
I remember when I started and managed a growing restaurant and bar business that employed over twenty full and part-time staff. I felt that I was working to pay PAYE, VAT, business rates, corporation tax. As soon as you pay one tax another came thick and fast, and there seemed very little break for the massive personal investment in people and property. I did not always get the right professional advice and it cost me. I was ignorant of the value of professional services, but they did not sell their value to my individual business, they sold the price for the 'invisible box'.
- Customers are unrealistic because they are ill-informed.
Even after the initial service is provided, how can a client assess the quality of the submission? Did the firm find and apply all the relevant deductibles? How would a client know?
Customers have unrealistic expectations not only of the service but also the tax burden. Few people enjoy paying tax. The basic fact is that may customers are ill-informed, and this leads to widespread buyer uncertainty and a lack of trust. Send a personalised confirmation email of the service provided, this is an excellent opportunity to communicate value.
Rather than the above three areas being a barrier, they create opportunities for professional accounting services.
The accounting firm must create an onboarding and service delivery processes to remove barriers to their service and buyer uncertainty. Giving opportunities to deliver and even exceed customer expectations.
What required is education rather than persuasion in sales and marketing. The deepening of the relationship into a partnership is critical to building long-term and lifetime value. It is not a transactional service offered, but a trusted partner relationship. Customers can do their best work knowing they have a trusted professional accounting service in their camp.
Ensuring education is at the core of customer communication shows clients:
- The benefits of seeking an accountancy service early.
- What are the key differentiators between account services?
- Ways to access accounting service providers.
- Ways to communicate their expectations, issues, and desires with their service provider.
- What they should expect from service delivery?
- What they need to look for in early warning signs in their business growth journey.
- What they might be eligible for in deductions.
- A calendar of events or a personalised calendar of their submission deadline.
Your brand values and personality
- What other services benefits are on offer such as a loan, mentoring with example case studies?
Education of prospective customers and current clients will reduce buyer uncertainty and increase trust and loyalty. The better educated your client the higher they value your service.
When a customer perceives the accounting firms or sole practitioner accountant as the experienced professional that has solved a similar business problem for similar businesses. Reduces the risk in the decision to contract your service giving social proof with case studies and testimonials.
When many professional services are indistinguishable it is critical to brand and distinguishes unique element of your firm. Become a specialist practitioner working in one industry or with one type of client.
Building your brand is essential to help customers distinguish your accounting firm others. Survey your top 20% of clients on the attributes they look for in a professional accounting service firm. Find what differentiates your service from other competitors that they considered. When on-boarding customers, ask them what made them choose your firm, record their words and use their perspective to inform your firms brand statement. Researching what is important to your clients and building your brand around this clear communication of difference conveys what is unique about your firm. This will help to attract other similar customers.
Your brand must present brand values, emotionally engage new customers and reinforce why clients must remain with the firm over their lifetime.
Janice B Gordon is a Sage Business Expert, in Sage's TOP 100 Global Business Influencers 2017 ... and founder of Scale Your Sales. Janice will be sharing brand building strategies at Accountex on 2 May in the Sales and Marketing Theatre at 11am.
Is there a ‘best time’ to change accounting software?
Wondering when is the best time to change accounting software? Perhaps you’ve started your own accountancy practice, business is good and your client numbers look positive for the year ahead.
Maybe you’re using software which performs the basic functions, but have begun to realise its limitations as your clients become more complex.
Whether you’ve laid down the groundwork and researched various solutions, or are just in the early stages of considering a change – how do you know when the best time is to switch?
- When it syncs with your business growth plan
If you’re feeling a bit vague about this concept, then it is time to map out some key objectives and timescales in a detailed business growth plan. Even a sole practitioner should align any investment in software with forecasts for projected growth. Perhaps you are not yet ready for the switch and would benefit by waiting until it fits better with your business growth plan.
- When your current software holds you back
Perhaps you’ve used particular software in a previous role at a different firm, and know that certain tasks can be automated, taking up less of your valuable time. According to a recent Thomson Reuters survey of 345 UK accountants, 59% believe they will spend less time on personal tax compliance tasks over the next 10 years. A sure sign that you’ve outgrown your current software is when you’re spending more time in excel than your dedicated solution! It is sensible to select software with sufficient functionality and scalability which also has knowledgeable and UK-based training and support staff.
- When the time of year permits
Few in this industry experience a definitive lull in workload at a certain time of year, but many accountants looking to change accounting software choose to do so at year-end. This is because it presents a clean break before starting reports for the new year. However, this may not be for everyone because staff may be engaged with all the usual year-end tasks. Making the switch when you have the bandwidth to give it your full attention is advised – getting your data ‘fit’ for migration is a project which is worth doing beforehand to save yourself time later down the line.
- When you can get a good deal
Who doesn’t love a good bargain? We certainly do, which is why we have a great deal for on our efficiency packs for new users. Be sure to do your research for the best long-term deal and watch out for high price hikes year-on-year which tie you in.
- When you have had enough of your current provider!
Whether you have had enough of poor customer service, extortionate price hikes and/or your account manager seems to always be on holiday, then today is the day to start looking for an alternative. If you’re tired of using several non-integrated providers, start looking for a more efficient solution for your growing practice.
Speak to us
If you think the time is ripe to make the switch, find a software provider you can trust who can convert your client data with minimal disruption to your business. Learn from accountants who have changed their accounting software successfully and have benefited from industry-leading local support.
A personal guide to the UK's accounting software landscape (Part 1)
You can be crippled by too many choices especially if you don’t know what your goals are - Chip Kidd, US graphic design legend
Despite landing in the UK only recently (four weeks ago), I’m on a mission to depict the current landscape of software available to accountants to help them improve their practices through better visibility, efficiency and/or automation.
My goal here is to break down and understand just how many pieces of software are out there to help paint a picture on what firms can do in 2019 to build their tech stack successfully in the UK.
Here's Part 1 of my personal guide:
There is a lot of software to choose from out in the UK marketplace and even with the ones listed, there’s a good chance I’ve missed some off the list. (Apologies in advance).
What I have done for you is broken down the core software into four categories used by what I’ve observed as innovative and progressive accounting firms in the UK, so that you can see where each of these tools fit in your practice.
The biggest challenge I see with accounting firms across Australia, the UK and the US is that they don’t know what they want when they start looking.
They don’t have an existing process or they have no idea of what changes they want to make to their tech stack and why.
It also leads a firm to think that they just need to digitize their existing process - which I 100% completely disagree with. Read more here to understand why.
Before I really dive in, it’s important to note the only reason you would want to change your tech stack is because you actually want to bring in automation, systemisation and scalability into your firm.
Whether that be to enhance your client experience or to gain visibility into your operations at an in-depth level.
If you have no interest in changing or achieving anything along these lines, then you really must ask yourself why are you looking or even contemplating changing from your original tech stack.
So where do you start?
Cloud Accounting Software
Start with your cloud accounting software. What are you using internally with your clients. If i had a preference, I would try and choose just one piece of software to use internally, and that would be either Xero or QuickBooks Online.
These are the two biggest platforms globally, boasting the biggest ecosystem of app partners and importantly they are more likely going to work with the workflow tools that you’ll need to use in your practice.
It also means you only need to train your team on one product, attend one set of conferences, roadshows - you catch my drift. Now this works really well for the small to midsize practices (up to 500 clients) not so well for larger firms that already have an established base of desktop clients.
Even to this point, my first goal as a larger firm (1000 clients and more) would be to get as many clients to a cloud software as soon as possible.
All the benefits are there, real-time reporting enables real-time conversations which means you can do a better job helping your clients not go bankrupt and avoid the iceberg well in advance of ever seeing it at the last minute.
All the technological investment happening in this space, is all geared towards cloud products. Very little to none is invested into desktop accounting software other then an annual update and new TAX / VAT Tables. All the innovation is headed to the cloud and having all your clients in the cloud will help meet your MTD obligations.
My recommendation: Xero or QuickBooks
Client Onboarding & Payment Collection
- Practice Ignition
- Accountancy Manager
- GoCardless
- GoProposal
Now being completely upfront and transparent, I’ve worked with the Practice Ignition team for quite a while now but I want to try and paint a transparent picture for you the reader, so that you can make up your own mind and decide what works best in your firm. After-all this piece isn’t intended to be a sales pitch, but educational content.
Client onboarding can mean a lot of things to different people, it’s the place where you price your services with your clients, create proposals, send your engagement letters, set your clients on automatic payments and depending on your workflow it has the potential to automate your receivables, eliminate your debtors, forecast your revenue and deploy jobs into your workflow.
Whilst it’s a relatively new category for the accounting industry specifically, I’d argue that you’ve got some really talented people trying to solve a common problem.
Accountancy Manager, being a workflow and lodgements platform, does tackle client onboarding, but I would say the key strengths come from it’s workflow and management of clients. Feel free to investigate and see if it can suit you.
GoProposal, a relatively new player to the market but have definitely made a splash and impact with the firms using their platform. Focusing heavily on helping you calculate your fee’s with your clients and creating a proposal and engagement right in front of them. Integrating directly for one off invoices in Xero, QuickBooks and then Karbon and Senta for workflow.
Practice Ignition allows you to price your fees with your clients, collect client direct debit information upfront in your proposal, forecast your revenue, automate your engagement letter and then integrate with tools like Xero, QuickBooks for your cloud ledger. Xero Practice Manager, Karbon and Senta (Via Zapier). Effectively rolling multiple functions into one platform. Pricing, proposals, direct debit payments, forecasting and job deployment.
GoCardless, direct debit kings and queens for the United Kingdom. GoCardless have a huge market share for recurring payments and recently raised $75 million to expand their product internationally. If you weren’t already using something like Zurich or Practice Ignition, then you may consider something like a GoCardless to set up your clients on fixed fees link to your Xero or QuickBooks software ledger.
Look out for Part 2 of my guide ... coming to a screen near you soon.
BrightPay Connect’s new client upload and approval features
We are very excited to announce the launch of two new features as part of our BrightPay Connect package.
About BrightPay Connect
BrightPay Connect is an add-on to BrightPay that provides a secure, automated and user-friendly way to backup and restore your payroll data to and from the cloud. The cloud add-on also provides a self-service dashboard for employees and employers to log in and access their payroll data; as well as enabling employees to directly request things like annual leave and updates to their personal details, which are then synced automatically to the cloud.
The two new features were designed with bureau users in mind allowing these users to securely send payroll entry requests and payroll approval requests to the clients, changing the way payroll bureaus interact and communicate with clients.
Most importantly the client collaboration features will save hours of valuable time that accountants and bureaus spend rectifying inevitable mistakes in each payroll. Sounds great, right? That’s because it is! These two new features are called Client Payroll Entry and Payroll Approval.
Payroll Entry Requests
The Payroll Entry Request allows clients to securely upload their employee’s hours saving bureaus hours of administrative time and negating data duplication. Clients can easily enter employee hours on their BrightPay Connect employer dashboard. Additions and deductions that have been set up by the bureau in the payroll software can also be selected by the employer. Only additions and deductions that are already set up in the payroll software can be selected for an employee.
Clients also have the ability to add new starters through the payroll entry feature. The client can enter new employee or starter details on the Payroll Entry Request, including name, address, date of birth, NI number, email address, phone number, Tax Code, NI table letter, start date, starter declaration and if a student loan deduction plan is applicable. Once the Payroll Entry Request has been submitted by the employer and checked by the bureau, the new employee's details will be automatically downloaded and added to BrightPay payroll software on the bureau’s desktop.
Payroll Approval Requests
The Payroll Approval Request allows bureau users to securely send their clients a payroll summary before the payroll is finalised. Clients can then review and authorise the payroll details for the pay period through their online employer dashboard. Ultimately, your client will be accountable for ensuring the payroll information is 100% correct before the payroll is finalised. Additionally, there is an audit trail of the requests being approved by the client.
Paul Byrne, MD of BrightPay had this to say:
“It has been great to see BrightPay Connect evolve into something that accountants and their clients will get such great benefit from. In my previous life, as an accountant in practice, I was familiar with just how difficult it could prove to get clear and timely instructions and sign off from clients in relation to their payroll. Connect would have really helped me back then!”
Benefits for bureaus
The payroll entry and approval feature integrates directly with BrightPay Payroll, meaning the transfer of data is automatic and immediate. This process allows payroll clients to electronically view and check the payroll summary before the payroll is actually finalised. As the payroll data checks and approval are conducted by the payroll client themselves, this will result in increased accuracy and a reduced need to make edits after the payroll has been finalised.
Essentially, the client payroll entry and payroll approval features are built to seamlessly work together. However, both features can also be used as standalone functions, i.e. the bureau may only wish to use the payroll entry feature enabling their clients to upload timesheets and employee hours.
Data protection?
And how about those 4 letters we all love to hear? Yes, that’s right GDPR! How do these new features stand up to GDPR regulations? Well, these features actually offer an additional layer of GDPR protection for your clients’ payroll information:
- Confidential employee information will be exchanged between you and your client through a secure online portal, reducing the need for emails containing sensitive personal information.
- It eliminates the need for bureaus to manually re-enter the employee data into the payroll software, reducing possible errors of manual data entry.
- Payroll bureaus will have full control over the data, while their clients will have full ownership of the data verification and approval before finalising.
- Access to BrightPay Connect is protected by username and password with role and permission based access for each user.
How to define your practice’s client strategy
To deliver an articulate, cohesive service offering, practice owners need to define who they want to serve and who they don’t.
Without doing so, practices risk being left behind – as others set a direction of travel and leverage the latest technology to achieve their goals.
So, what does the process of defining client/service offering look like?
Well, the starting point is to understand what your current client base looks like – and this is usually easier said than done. Think carefully about where you hold information, how to access it and then present it in a way that is transparent - and comparable.
You must then take stock of your current offerings, and contextualise in relation to the clients, including:
- What services are being offered; and to which sector? Which are most profitable?
- What is the menu-driven pricing for those services?
- Are there opportunities to develop additional services for this client?
- Which clients are difficult?
- What technical expertise is required to service your clients?
- Have you found ‘hidden’ sector specialisms?
- Which clients are price-sensitive?
This will lead you to a point where you understand your client base – certainly by sector and/or other types of segmentation (profitability/service provided). And now, you can take a more structured approach going forward – which may even include becoming much more niche, by vertical sector or by offering.
There are then further steps to take.
Marketing, for example, must be broached. If you’re looking to push your payroll services, you may look to automate as much of the payroll process as possible – including a centralised technical/clerical team - to free up managers for business development.
If you are to expand certain offerings then outsourcing may create flexibility in pricing and scale. There are also other big issues to face, such as dropping clients that don’t fit the profile of your developing practice.
You also need to set a strategy for the practice as a whole - which will mean a deep understanding of your staff and partners ambitions, skillsets, and future direction. That’s a conversation for another day…
If your practice is facing up to these issues ->
We’d be delighted to speak to you about client strategy, and other areas of focus for your practice. Come see us on stand 490 at Accountex on 1-2 May. If you’d like to speak to us beforehand, please email Julia Whistler at [email protected].
Foulger Underwood are a team of M&A and strategy consultants focused on the accounting, legal, trust and corporate service and wealth management sectors.
The demise of emailing payslips
Whereas there is nothing in the GDPR legislation that states it is no longer permissible to email payslips, that doesn’t mean you can email payslips without protecting the information you send.
When it comes to being GDPR-compliant in a payroll bureau, you might think that you only need to password protect all the payroll reports and payslips. However, there is a strict process that needs to be followed.
If you choose to email payslips, you need to ensure that they are all password protected and sent directly to the employee’s chosen email address. It is very important that a unique password is used for each employee, as using the same password is for all employees could be considered a breach of GDPR.
And besides providing secure encryption on all payslips, once they are sent, then the payslips need to be deleted from the server of your payroll software provider.
But sharing the information securely is not the only thing that you need to do to make sure that you are GDPR-compliant. Making sure you put all the necessary steps in place to avoid cyber attacks, keeping secure copies of the data in case of theft, fire or damage to the computers and providing employees with a way to easily update the information their employer holds about them are other important GDPR requirements.
Secure portals
Putting a system in place that takes into account all these requirements can be time consuming. Instead, secure portals can simplify the payroll process and offer the most secure environment to protect the employees’ information. Secure portals offer the maximum level of security and compliance with GDPR and make the payroll process much easier since they automate payslip distribution and eliminate the need to email payroll reports each pay period.
Besides the ability to securely send and store payslips and other sensitive payroll documents, self-service portals also have other advantages such as providing employers and employees with an easy way of remotely accessing information. Additionally, self-service portals make it easy for employees to request leave, keep track of their personal information and update it when necessary, and they also keep a secure backup of all the payroll records.
Avoiding cyber threats… and fines!
Self-service portals does not only make GDPR processes much easier, they also eliminate the risk of being fined with up to €20 million or 4% of annual turnover of the previous year, whichever is higher.
BrightPay Connect automatically backs up payroll data every 15 minutes when the payroll is open, and again when you close down the employer file and all the backups are available to be downloaded and restored if necessary.
This means that the portal always keeps a secure copy of the payroll files in the cloud, protecting the data in case of cyber attacks and making it possible to restore it should something happen to the physical equipment, such as any damage to the computers.
Accurate records
GDPR specifies that individuals have a right to have inaccurate personal data rectified, or completed if necessary. The BrightPay Connect portal makes all the personal data held by their employer visible to the employee, who can easily edit approve leave requests and update contact details for employees.
When the employee information is incomplete or inaccurate, for instance, should their phone number or postal address change, employees can easily update their details from the portal, which they can access 24/7 from any device, such as PCs, Macs, tablets or even their smartphone via the employee smartphone app.
Limited access to data
To be GDPR compliant, all the payslip information should only be available to payroll processors, only when it is strictly necessary for processing the payroll. With BrightPay Connect, users can be set up so that they only have access to the information needed to complete their assigned tasks.
Stay GDPR compliant with BrightPay Connect. Find out more HERE.
One week to go ... MTD countdown
Intuit QuickBooks has revealed the findings of its tracker research examining small business readiness for the government’s Making Tax Digital (MTD) law change.
The deadline for businesses to implement this biggest tax legislation change in a generation is in just one week, on 1 April.
But the results indicate that many small businesses are not ready and almost a fifth are unaware of the new legislation:
- Only 25% of small businesses have already taken all the necessary steps to become compliant with MTD
- Just 82% of small businesses have heard of MTD
- 24% of small businesses believe they are not yet compliant with MTD
- 15% of small businesses still claim to be keeping paper receipts
The ongoing research has been taking a regular pulse of MTD readiness for small businesses across the whole UK. The latest figures show a huge shift in attitude, with an increase of over 50% of businesses believing MTD will have a positive impact on their business.
Separate economic analysis commissioned by QuickBooks from specialist behavioural economists Volterra Partners predicted a Productivity Payout of £6.9bn for UK small businesses as a result of MTD.
Volterra modelled a so-called ‘digital snowball’, leading to as much as £57bn gain for the country over the next five years as a result of MTD, open banking and legislation changes along with better training and support for small businesses.
For small businesses, there is still a way to go; over half of businesses expect to be compliant with MTD by the end of March. Thirty per cent anticipate they will become compliant in April, and 17% anticipate becoming compliant in May or later. Businesses must be compliant by the time of the submission of their first VAT return period starting after the 1 April implementation deadline by using HMRC recognised software such as QuickBooks.
Chris Evans, VP and UK Country Manager at Intuit QuickBooks says: “We understand that for some businesses, the transition to digital will not be without stumbling blocks. However, it presents a huge opportunity to streamline operations, drive efficiencies and simplify tax. It will enhance cashflow management and allow them to get paid faster and access capital to grow, powering prosperity across the UK.”
To assist with the transition to digital bookkeeping and to help those affected, QuickBooks has set up a dedicated MTD support service via its freephone MTD hotline; 0808 168 4248. Additionally, there is lots of extra information, videos and tutorials about MTD available HERE.
How to keep up with audit technology
Audit technology is a hot topic and continues to change the way firms work. But how’s an audit firm to keep up? Here we look at major audit tech trends and cover what firms need to know.
- Artificial Intelligence
When it comes to AI, anyone could be forgiven for dismissing it as a buzzword. Whilst this tech is in its infancy, it’s already relevant.
A great example of AI being useful in audit is the IRIS Ai Auditor, based on software developed by MindBridge, that applies machine learning and other AI techniques to help auditors identify data anomalies and risky transactions within a company’s financial data. This is currently being used at several large UK accountancy firms.
For smaller firms, you’ll be able to leverage the learnings from the current trials of this cutting-edge technology. The activities at large companies are acting as a sandbox for the future of this tech. By keeping your ear to the turf, you can act on these innovations at the right time, rolling out projects that have been tested on your behalf.
- Data Analytics
There is overlap with AI here, as a lot of AI tools enhance data analytics. This tech consists of tools that quickly extract, validate and analyse large volumes of data. The tools are applied to complete populations, i.e., 100 percent of transactions, and they can be used to support judgements, draw conclusions or provide direction for further investigation.
Data visualisation is another useful part of analytics. This is simply a way to present data that makes it easier to analyse it, bring it to life and help people understand the significance of the findings. Improved data-visualisation interfaces means that data analytics can be used by non-specialists.
- Distributed Ledger Technology/Blockchain
Are distributed ledger technology (DLT) and blockchain the same thing? Not exactly. DLT is built on some of the ideas and philosophies of blockchain. In fact, a blockchain is a type of DLT.
A DLT is a database of records that is not stored or confirmed by any one central body. What makes it different to blockchain is that the implementator has greater control over it, which makes it a more feasible project in the short term. Many idealists, however, see it as a step towards blockchain and a fully decentralised world. Any data which is stored in this way is encrypted and distributed across a network of different servers.
A great example of this tech in action comes from a pilot at Ernst and Young. The EY Blockchain Analyzer helps EY audit teams gather an organisation’s entire transaction data from multiple blockchain ledgers. Auditors can then interrogate the data and perform analysis of transactions, reconciling and identifying transaction outliers. The technology has been designed to support testing of multiple Cryptocurrencies and several other crypto-assets managed or traded by exchanges or asset management firms.
What can you do today?
You may think, “Why should I care about this? I can live with how my firm operates now.” Perhaps the most important reason is that your competitors care. You can't afford to lose clients to firms that use tech to provide a superior customer experience. But you don’t have to do everything at once. Look for small wins. Changing your mentality and developing a digital philosophy for your firm is a big first step.
Confirmation will be at Accountex to help get you started. Please visit us at Stand 865!
Transferring property into a trust – tax implications TaxAssist
Blog 3 -
Trusts are created for a number of reasons but with reference to property that reason is invariably for protection.
The beneficiary may become unable to manage the property themselves or become mentally incapable of doing so or be a minor who is unable, as yet, to take on responsibility for the property themselves; the donor may wish for the property to remain within the family which might not necessarily be the case should the beneficiary become bankrupt or divorce.
Whatever the reason there are capital gains tax (CGT) tax implications on the transfer of property into the trust because the settlor is treated as having disposed of the property as a gift at ‘market value’ at the date of transfer. The ‘market value’ rule applies because the settlor and trust are deemed to be ‘connected’.
'Hold over’ relief may be available which effectively allows a chargeable gain to be deferred (‘held over') and passed to the recipient of the gift (in this case, the trust itself) until either the property is sold or transferred out of the trust or the trust ceases. The charge is on the increase in value from the date of transfer into the trust and the final sale proceeds as usual, but the CGT ‘hold over’ amount is added to the final amount payable. Broadly, where trusts are involved, ‘hold-over’ relief is only available on a transfer that gives rise to an inheritance tax (IHT) liability (such as a gift of property into a 'discretionary' trust) or on the transfer of business assets. The settlor must be UK resident for this relief to be claimed.
Should CGT be charged the calculation is after deduction of the annual exempt amount for trusts, taxed at 18 per cent (20 per cent if the transfer is of residential property).
No CGT is charged on the transfer of property into a trust created on death (a 'Will Trust'). In addition, for the purposes of any later CGT liability, the acquisition cost by the trust is deemed to be the value at the date of death, thereby creating a ‘tax-free uplift’ in the base cost of the asset.
'Will Trusts' are treated as being a disposal of part of the estate’s assets subject to the Nil Rate Band and seven-year rules. In addition, any estate which includes a property that at some time during its period of ownership had been occupied by the deceased as a main residence, downsized to a less valuable home, sold, or given away after 8 July 2015, qualifies for an additional allowance named the Residence Nil Rate Band' ('RNRB) so long as the residence is transferred into a specific type of will trust; e.g. an IPDI trust for a lineal descendant (or their spouse/civil partner).
HS295 Relief for gifts and similar transactions (2015); TCGA 1992, s 165