100 years since women broke the accountancy mould
Following the centenary celebrations in 2018 of voting rights for women, 2019 marks 100 years since the next step towards female equality - the opening of the professions.
The 1919 Act
While some bodies had started to admit women in the months before 1919, it was not until the Sex Disqualification (Removal) Act 1919 that all professional accountancy bodies were forced to admit women.
Before that, bodies such as the Institute of Chartered Accountants of England and Wales (ICAEW) would not allow women to take articles (effectively enter a training contract).
The impact of World War One
The question of admitting women had been a recurring issue for the various professional accountancy bodies which had begun to establish themselves in the 1800s.
But it was not until towards the end of World War One after women had replaced men called to the front in offices and practices, that the profession finally started to take active steps towards admitting women.
One Scottish accountancy body began by allowing women entry to their bookkeeping classes in 1916, while the Society of Incorporated Accountants and Auditors (which merged with ICAEW in the 1950s), agreed to admit women in October 1918.
The first woman admitted to the ICAEW
After the 1919 Act, the first woman admitted to the ICAEW was Mary Harris Smith.
Aged 72, and having had her own practice for much of her adult life, she was finally admitted as a fellow some 30 years after the rejection of her first application on the grounds of her gender.
The first woman admitted on equal terms
After 1919 and Mary Harris Smith, there was a delay of a few years as newly articled women started the process of sitting exams and completing their minimum three or five-year period of training. (The training depended on their previous level of education.)
The first to complete all these requirements was Ethel Watts, who was admitted to the ICAEW in February 1924.
Who was Ethel Watts?
Ethel was the eldest daughter of a Metropolitan police officer. She attended Bedford college and then Royal Holloway before signing up for her articles in August 1920.
In later life she recorded that it was Sir Harry Peat (whose father Sir William Peat is the P in KMPG) who suggested that she should try accountancy as a career.
A practice of her own
After qualifying, Ethel worked for Sir Harry for a year before setting up in practice on her own account. After a short period in partnership with another lady accountant, she ran her own practice until she retired in July 1961.
Contributing to the ICAEW
Having established her practice, Ethel began to get increasingly involved with the ICAEW.
Her papers held at the Women’s library at the London School of Economics show her writing in 1934 to inquire why female students were still being seated separately from the men in examination halls.
By the 1940s it was Ethel that the ICAEW turned to when they needed a female perspective on equal pay.
In the 1950s she was the first woman elected to the committee of the London and District Society of the ICAEW as well as becoming involved in the Chartered Accountants' Benevolent Association (CABA).
In 1962 Ethel represented the ICAEW at the Eighth International Congress of Accountants in New York.
Female networks
Ethel understood the importance of networking and was instrumental in setting up the Women’s Chartered Accountants Dining society in 1945.
This enabled women in the profession to meet and network at a time when, as one member put it: "Women accountants feel rather isolated, like mermaids sitting on a rock."
The world beyond accounting
Ethel didn’t restrict herself to accountancy. She was active in the Labour movement, and also campaigned for equal pay and the separate taxation of men and women. For many years she was chair of the Fawcett Society.
The march of the women
In the decades following the Act, the number of women in the profession increased slowly. By 1949, the ICAEW had only 125 female members compared to around 15,000 men.
By the time Ethel died in 1963, a total of 433 women had been admitted to the ICAEW, with a further 120 women articled as clerks - representing around 4 per cent of the total student body.
Where are we now?
One hundred years later, there are tens of thousands of female professional accountants in the UK. Representation does though vary between the professional bodies.
Figures published annually by the Financial Reporting Council show that, as at 31 December 2017, the Association of Chartered Certified Accountants (ACCA) has the highest percentage of female members at 46 per cent. The ICAEW reported the lowest percentage of female members at 28 per cent.
On average, over all seven major UK accountancy bodies included in the report, 36% of members were female.
The position for tax
The future
How the gender balance in accountancy will evolve in the future can best be predicted from the student body.
Over the past 20 years the percentage of female students has gradually increased for all seven bodies, ranging from 43 per cent for ICAEW up to 57 per cent for ACCA.
Overall, by 2017 the seven bodies combined reported that 49 per cent of their combined student body were female.
It therefore seems not inconceivable that in 2019, 100 years after the way into the professions was opened, the student body of future accountants could finally represent both genders equally.
How to create a winning exit strategy
In business, nothing quite beats that warm inner feeling that business owners experience when everything is going swimmingly and the money continues to roll in as expected, day in day out, week in week out and month in month out ... with no surprises upon approving and signing off the year end accounts.
They confidently, and perhaps smugly, review another successful year of trading and look forward to a repeat performance in the subsequent year.
From your aspect it’s a satisfied client and a “nice” bill paid promptly.
Ongoing upgrades
Many SME owners have already made the majority of their investment into their business some years previously and with the exception of ongoing upgrades and maintenance of buildings and plant there are few, if any, demands for a substantial cash injection over and above anything that can be met comfortably out of retained profits.
Sometimes the business owner reflects upon the current value of a lifetime's work, usually in their own mind or perhaps because they have received an unsolicited approach in the post from a business transfer agent seeking to drum up business.
The thought of selling up is usually a fleeting one which is soon brushed aside by the notion of losing a steady and reliable income.
Entrepreneurs
There are typically two sorts of entrepreneurs and where they are on the scale will likely determine their approach to selling.
First, there is the serial entrepreneur who may be starting-up or buying and reselling businesses every few years, typically after turning around a problem company or consolidating.
Secondly, comprising the majority of successful businesses, are those founded or built up by an individual over a period of decades and are the main focus of their owners’ lives. Within this category are people with two divergent needs.
Most common is the business owner who will be selling with a view to retiring, there being no "next deal" nor any participation in the labour force or wealth creation, but there is also the one who has enjoyed their time at the helm but is too young to retire and fancies doing something less demanding, what we now refer to as a lifestyle business.
Crux of the problem
Here's the crux of the problem that is responsible for so much lost sleep.
When is it time to hit the big red button and bale out, whatever one’s ongoing income requirements?
Let me be clear on one point here. I am not discussing a case of "calling the top of the market", where there is a frenzy of consolidation taking place at eye watering multiples. Such scenarios are often quite simply almost always "no brainers".
The heart of this discussion is through the lens of making sure the business owner has not left it too late to extract maximum value out of their business.
But what is meant by too late?
Let's start from the aforementioned premise that we are dealing an SME built up and developed over 25 years by its owners without any outsiders in the boardroom. It is turning over £3m per annum and yielding a net profit before tax of £0.7m with a balance sheet worth a net figure of £2.35m.
Very nice indeed but as with everything else nowadays the world is changing quickly and the old certainties have never been less certain in a shorter timeframe. Like their competitors this business has to run hard just to stay still and survive, let alone find ways to innovate and adapt in order to continue thriving.
So what is this business actually worth on the open market?
Balance sheet
Assuming a healthy exit multiple of 4.5x it would fetch a very handsome £3.15m for its owners which is in excess of the balance sheet.
But that would mean an instant end to the income of £0.7m per annum so our business owner will be sucking hard on his or her teeth and reckoning that it's probably worth waiting another 2 or 3 years THEN banking the £3.15m.
After all, what sort of return will £3.15m generate? A pedestrian 1.5 per cent on deposit or a heart-stopping racy but riskier 10 per cent if reinvested in another venture. Either way a far cry from the current 29.8 per cent return on capital employed being enjoyed.
Surely a fair assessment?
However, how certain is the business owner that the coming years will see profits maintained in the face of external headwinds? Brexit, Political earthquake at Westminster, Tariff Wars, Sector disrupter.
I am sure you can think of more scenarios to keep you awake at night. Not forgetting that our business owner is in their early 60s and not quite got the same drive and energy as in former years to keep thing running at full pelt, let alone grow earnings.
Okay, so perhaps these doomsday scenarios won't happen.
But in a few short years he or she will be heading for 70 and health tends to worsen with age, not improve as it would with a good Scotch.
Industry circles
So let's take a compromise view and hang on for 2 more years then and see how things look, while making tentative enquiries to business brokers and keeping a closer ear to the ground in industry circles.
Let's say in the intervening two years the steady rise in profits splutters, even just slightly and profits come in at £0.68m and £0.595m respectively . Nothing major has occurred on the macro economic front, just the loss of a couple of good contracts and the failure to replace them.
Well, the owner's lifestyle certainly won't have felt the dips but prospective buyers will certainly have taken notice.
We get to market 24 months later and the offers are coming in for what is a fundamentally sound business but the multiples offered are dropping to 3.75x 3 years average earnings - £2.47m . Not too bad because we've had the benefit of the two years' worth of earnings in the interim.
Fair enough, so let's tweak our scenario. The storm clouds have gathered on the economic front as well and profits come in the next year at £0.425m. Oh dear.
Trend of profitablity
Now the trend of profitability is heading south in an established pattern and best offer is coming is at 3x the average of the past 3 years net earnings - £1.7m. OK, so our resilient business owner looks back and sees that he or she has still come away with more overall - £3.4m instead of £3.15m.
Now let's chuck in a wildcard. The owner’s health has suffered as a result of the stress of falling profits and market uncertainty.
As the deal stretches out and it becomes clearer that the seller is getting much keener to "do the deal and be done with" , the due diligence will throw up all sorts of "issues".
And eventually our seller will be taking a multiple of 2.5x net profits, which, by the time it comes round to signing the contract have, fallen yet again to £0.295m and the average profit over three years has now dipped to £0.438m .
The proceeds from the sale are now £1.095 . The total over three years is now £2.665m against £3.15m but what if there is no buyer?
Remember – buyers face the same storm clouds and may have battened down their own hatches.
Far fetched
Far fetched? Not in my experience but why not ask your clients what they think?
Nobody knows what the future holds and often if pays to keep going but eventually there comes a point where that no longer holds true.
So, the take home here is to understand that just when you don't need it to happen, events can and do move against businesses to create the perfect storm. Many buyers out there specialise on sniffing out such opportunities and pouncing just at the right time. Our SME owner may no longer be “in the money” and possibly no longer “in the game”.
So perhaps when it comes to "calling the top of the market" sellers need to look much closer to home. That’s where sound advice from a trusted outsider, such as an accountant comes into its own.
Planning the exit for a business is always going to be more of an art than a science, with a hefty dose of good fortune but it pays to have the conversation with clients sooner rather than later, even if simply to get it on the radar for a future conversation, because you don’t want to be “too late”.
The table below uses the figures in this article and the yellow background is where the seller will reinvest at 10 per cent, the red being proceeds put on deposit at 1.5 per cent.
| Multiple | Proceeds | Income | Income | Income | Total | |||
| Sale time: | Of sale | Year 1 | Year 2 | Year 3 | ||||
| Now | 4.5 | 3.15 | 0.047 | 0.048 | 0.049 | 3.294 | ||
| 0.315 | 0.347 | 0.381 | 4.193 | |||||
| End Year 2 | 3.75 | 2.468 | 0.680 | 0.595 | 0.056 | 3.799 | ||
| 0.680 | 0.595 | 0.374 | 4.117 | |||||
| End Year 3 | a) | 3 | 1.7 | 0.680 | 0.595 | 0.425 | 3.400 | |
| b) | 2.5 | 1.095 | 0.680 | 0.595 | 0.295 | 2.665 | ||
FRC stats illuminate the accounting profession
I thought I'd share this informative article by Kevin Reed, a freelance journalist and consultant at practice advisers Foulger Underwood
There is little fanfare around the Financial Reporting Council’s ‘state of the accounting profession’ annual stats. This is, perhaps, because they show movement in accountancy – whether the number of students or ratio of the big firms’ audit to non-audit fees – as somewhat ‘glacial’.
However, the lack of reporting of the Key Facts and Trends in the Accountancy Profession’s statistics means that interesting and important indicators of the profession can be overlooked.
And for practitioners, understanding the direction of travel of the market beyond anecdotal evidence must be useful. You are numbers people, after all.
There’s a lot of ground to cover, so I’ll undertake this project in a series of articles. Firstly, let’s look at the institutes.
Studying the stats
The ACCA has grown 17.6% in member numbers between 2013 and 2017 in the UK*, compared with 5% growth for the ICAEW. However, the ICAEW still has many more UK and ROI members, at 126,560 compared to the ACCA’s 94,622.
But while the ACCA’s overall numbers have skipped up, it has negative growth (-3.7%) in UK students over that period, while the ICAEW has upped student numbers by 35% between 2013 and 2017.
Globally, the ACCA has by far the upper hand. It has 414,562 students worldwide, compared to the ICAEW’s 27,866. Notably, CIMA has increased students worldwide by 4% to 127,241 during that period.
Attaining membership
There has been much work on both the ICAEW and ACCA qualifications during recent years, but it’s interesting to note that the ICAEW has seen a decline in students attaining membership in the last two years – down 2.7% in 2016/17. The ACCA has increased its number by 5% in the last year. While difficult to create a link between quality of students vs. quality of training and qualification, it’s an interesting set of numbers nonetheless.
And where do these students and members work? While the UK is, anecdotally, a big stomping ground for the ACCA in smaller practices, globally more than 60% of its members are in industry and commerce – just 21% in practice.
Practice v Commerce = Students v Members
In contrast, more than three-quarters of ICAEW students are in practice, which falls off to under 25% following qualification. Though we know that the big accountancy firms see qualifieds move into industry, there’s clearly an opportunity for smaller practices to consider how to attract them following their studies.
The ICAEW’s female member numbers have stayed stubbornly low – at 28%, compared to 46% for the ACCA. So, if looking at the gender balance in your practice then – based on those factors - there will likely be more ACCA members on the jobs market, than from the ICAEW.
The ICAEW has improved its proportion of female students – to 43% in 2017 from 39% in 2013, which will have gone towards the small improvement in female member numbers.
Age gap
The ACCA has a younger member/student distribution than the ICAEW – more than a quarter are under 34 and a further 25% are under 44. Only 38% of ICAEW members and students are under 44.
However, there is another important aspect when it comes to time: how long has the student been studying? Worldwide, more than a fifth of ACCA students have been studying more than five years, compared to 5% of those with the ICAEW. Does this mean ACCA students aren’t as good as the ICAEW’s? Again, caution must be taken in what to read from these figures. We don’t know the background or circumstances of these students, and the FRC itself notes that there is “no common basis” to determine the length of time between registering as a student and achieving the requirements for membership.
Turning to technicians
Finally, let’s take a look at the ‘technician’ qualification offered by the Association of Accounting Technicians – a qualification that can provide a route into the other accounting organisations. These numbers have dipped across the board.
Growth in member numbers for the UK and ROI was -5.2% between 2014 and 2017. Student numbers fell 9.3% during that period.
Under-25s represent the majority of AAT students, at 35%, while more than 30% are in the 25-34 age bracket.
Conclusion
At a time of unprecedented technological and client-focused change upon the accounting profession, understanding where the next generation of accountants is coming from, how long they take to study, and which bodies are producing them, is vital.
Does audit experience matter for your practice? Or time spent in commerce? Do you think younger students and institute members are more important than experience?
And, finally, do you need qualified accountants? Are you better hiring people with broader or more 'people'-focused abilities? A topic for a future blog of mine, for sure.
These considerations, among others, will determine the profile of potential candidates for your practice.
Kevin Reed is a freelance journalist and consultant at practice advisers Foulger Underwood.
Change the question to get a different answer
It’s frustrating when you want to help a client improve their business but they just won’t take your advice.
The explanations I hear range from “they don’t want to pay for it” to “they’re just not interested” but, while I accept that some clients aren’t really business people at all but simply workers doing a job, I don’t accept that the majority of a typical client base fall into this category.
We see business as important and so we see the advice that we give clients to improve their businesses as very important. However, clients don’t necessarily see it the same way.
To many, their business is not a priority in itself but more a means to an end.
Other dreams
They work hard at their businesses in order to fulfil other dreams. Typically these will be related to their family and to creating a better world for them but could equally be for a collectable car, a sick relative, a change of lifestyle.
Giving the client things to do within their business has little impact if their goals lie elsewhere. Indeed, they can be seen counter-productive to the client, taking up more time and money that they want to spend instead on other personal things.
To get a more positive response, you need to link your advise to what really matters to them so that they can see where the true benefits end up.
Business goals
For example, rather than asking a client about their business goals, ask instead what matters to them more than anything else in the world. Get them talking about their lives and sharing their personal goals. Then, by understanding those, you can introduce their business into the conversation but within the context of their personal world.
Advice to improve their cash flow becomes more about the money they can spend on the family holiday. The strategies for effective management become more about spending time with the kids.
The most effective strategy we ever used for ‘converting’ clients to a more business advisory mindset was to show them how to manage their resources in order to get a family holiday the following year. When advice equals tangible, meaningful benefits then clients will pay and come back for more.
Get to know their personal world, not just the business one.
IRIS widens education reach with BioStore deal
IRIS Software Group today announced the acquisition of BioStore, a leading provider of identity management and cashless catering solutions to UK schools and businesses.
BioStore’s solutions are used by over 3,000 UK schools and sixth form colleges to improve and streamline access control and how catering services are delivered.
The acquisition extends the IRIS education portfolio, providing solutions to manage all aspects of school management, including finance, assets and communications.
School efficiency
Its ability to deliver a step-change in school efficiency and achieve value for money in the use of resources is a prime objective of many Academy and Academy Trusts.
BioStore will sit within the IRIS Education Division, which includes PS Financials financial management; Results Squared asset management and communications; and ParentMail online payment and parent engagement, which includes the prominent messaging apps, Looked After Call and Truancy Call.
More than 11,000 education organisations use IRIS solutions, which provide essential software to 60 per cent of UK academies and 82 per cent of large multi-academy Trusts.
Four million parents
IRIS also connects schools with over four million parents and guardians and sends over 300 million messages each year from schools to parents and guardians, helping to keep them informed and process payments for dinner money and other school items.
Kevin Dady, IRIS CEO, says: “BioStore has developed some game-changing technology for the education sector and I’m delighted to welcome the business to IRIS.
"Our mission is to help all education establishments become more efficient and productive by reducing administration and delivering services that benefit schools, colleges, students and parents. This acquisition is yet another step in helping us achieve this goal.”
Innovate further
Nigel Walker, managing director of BioStore, says: “We’re delighted to be part of IRIS Software Group where we can create even tighter integrations between our respective award-winning portfolios and innovate further.
"Together with IRIS we can offer schools and businesses an end to end solution, which creates value by making budgets go further.”
Who's making it less taxing for 200,000 start-ups?
More than 200,000 start-up businesses have been given a helping hand by the HMRC.
A streamlined company registration service, set up by the tax office and Companies House, aims to navigate the red tape hampering entrepreneurial endeavour.
So, when registering with Companies House, groups can also sign up for tax and HMRC’s digital obligations.
Industrial strategy
The change, which launched last year, removes the need for businesses to send duplicate information to both offices.
It's part of the government’s industrial strategy to reduce administrative burdens on small businesses.
Mel Stride, financial Secretary to the Treasury, says: “It’s never been easier to set-up a business in the UK. Reducing the administrative burden on small businesses is all part of this government’s commitment to support small business growth and cement Britain’s standing as a ‘Global Britain’.
Simplified process
“HMRC and Companies House are working hard to make business registration and tax easier. Previously the same information would need to be entered into a number of different platforms to register a company and register for tax, we have simplified that process.
"The government is committed to ensuring we can deliver a modern, digital tax system for all businesses and their agents supporting them to get their tax right and reducing the amount of tax lost through avoidable error.”
Backbone of the UK
Small business minister Kelly Tolhurst adds: “British small businesses, and the entrepreneurial spirit behind them, are the backbone of the UK economy employing over 16 million people up and down the country.
“Through our modern industrial strategy we are making it easier for small businesses to grow and flourish by investing in modern industries, infrastructure and skills, and making it easier to access finance.
"Anyone thinking of starting a new business in 2019 should check out the huge wealth of government advice and support available, and go for it.”
How wealth tax tweaks could raise £7bn a year
It's rare in polite circles to hear talk of tax rises. The idea of charging richer people extra for good public services (certainly as a mainstream concept) pretty much bit the dust at about the same time Margaret Thatcher hit the scene.
So it was interesting today to see a discussion about wealth taxation in Accountancy Daily. I mean, it's not exactly a bastion of left-wing politics!
Philip Hammond could raise £7bn a year by 2022-23 just by making tweaks to five wealth taxes according to Torsten Bell and Adam Corlett of the Resolution Foundation.
Significant progress
They say: "Raising taxes is never easy. Raising taxes with the government’s slim parliamentary majority is harder still, and raising taxes on wealth in those circumstances, given our diverging senses of fairness, is not a walk in the park. But that does not mean it does not need doing, and the good news is that significant progress can be made despite these constraints.
"There are three reasons it is needed. First, one of the biggest challenges facing our country is how to fund the rising cost of public service provision as the population ages.
"This demographic headwind and wider health cost pressures are set to increase the price tag of the current welfare state by £36bn a year by 2030, and £84bn by 2040.
"Second, we need to manage those pressures while avoiding the danger of further suppressing living standards growth for the working age population, which has already been the main victim of both the financial crisis and the long-lasting productivity slump that has followed.
Completely flat
"Third, wealth in the UK has grown significantly in recent decades while tax on it has remained completely flat. Since the 1980s wealth has surged from three to nearly seven times our GDP (or £13 trillion). It is simply a bigger feature of the modern UK, relative to income, than our political economy likes to admit."
Torsten and Adam believe progress can be made across five areas. Here are their views:
1. Limit entrepreneurs’ relief
"Entrepreneurs’ relief has cost £22bn over its first 10 years, giving a very small minority huge capital gains tax cuts with no evidence of anything to show for that huge bill. Worse still, new figures from the Office for Budget Responsibility (OBR) show that the annual cost is now projected to rise from £2.6bn in 2018-19 (more than is spent on school sixth forms) to £3.9bn in 2023-24."
2. Tweak council tax
"Everyone knows council tax is in need of reform or – in our view – replacement, being more like the poll tax it was meant to replace than a genuine property tax. In Scotland the Greens have said that (further) reform of the tax would be the price of their support for an SNP Budget. Indeed Scotland has already made baby steps in the direction of a fair (proportional) property tax, with increases for the top bands of council tax and an increase in deductions for low earners.
England, they say, is stuck with the most regressive system in Britain. "Even just copying the marginally improved Scottish structure in England and Wales, would have raised an extra £1.1bn in 2015-16, while £0.7bn could be raised by removing the single person’s discount from the top bands. If those options are too scary, councils could also be given their own flexibility to increase the relative taxation of more expensive properties in their area (with some power over the multipliers that determine council tax rates for different bands of properties)."
3. Tighten up inheritance tax
"Inheritance tax manages to be a hot potato despite only a tiny minority ever having to pay it: one of the reasons why we’ve suggested replacing it entirely. But some changes could be made in the here and now without affecting most people. In 2020-21 people will be able to pass on £1m tax-free. Stopping there rather than continuing to increase the thresholds with inflation would be very sensible and raise £200m a year by 2022-23."
5. Fairer pensions tax relief
"There’s a case for completely reforming pension taxation, such as moving to flatter rates of tax relief or looking at the £17bn employer national insurance tax break for pension contributions.
"But a smaller change would be to reduce the maximum generosity of the tax-free lump sum. The current ability to take over £250,000 tax free is worth up to £119,000 to an additional rate taxpayer, £105,000 to a higher rate payer, £53,000 to a basic rate payer and nothing to lower income pensioners who’d be below the personal allowance each year anyway.
"That’s very generous, very regressive, and a strange incentive not to stagger your retirement income. Capping the tax-free lump sum at £40,000 would raise £2bn a year while leaving three quarters of future pensioners unaffected."
Sir Jon Thompson, knight of the HMRC
A new year's honours list that recognises 1960s model Twiggy and ex Monty Python globetrotter Michael Palin also has space for the country's top tax official.
Arise Sir Jon Thompson, who took on the £200,000-odd-a-year chief exec job at HMRC in 2016.
Incidentally, I'm not sure how that salary stacks up with the "services" to the taxpayer knighthood tag. (Although if you compare £200k with the eye-watering £5.7m average annual bonanza for an FTSE 100 company CEO, it does start to look like a real pittance.)
Anyway, I'm sure the knighthood will give Jon some much needed momentum as he attempts to steer MTD for VAT through the Brexit labyrinth and absorb some of the criticism of the "unfair" and "pernicious" retrospective loan charge. Among other HMRC challenges in 2019.
Tax chief in the prizes
In other HMRC news, 5,542,000 or-so taxpayers have about three weeks or so to complete their self assessment tax returns before the 31 January 2019 deadline.
More than 11.5 million 2017-18 tax returns are due and HM Revenue and Customs (HMRC) expects the vast majority of taxpayers to complete their returns and pay any tax owed by the end of the month.
Returns online
About 52 per cent of taxpayers have already filed their returns, as of 31 December 2018, and more than 5 million have completed their returns online.
Financial secretary to the Treasury, Mel Stride, says: "It is encouraging that around 52 per cent of taxpayers have already completed their self assessment tax returns. With less than one month to go before the deadline, there are still many people that need to act now. HMRC is encouraging all Self Assessment filers to complete their returns by 31 January and is offering support every step of the way."
Angela MacDonald, HMRC’s director general for customer services, adds: "The self assessment deadline on 31 January is fast approaching, but there is still time for customers to file their tax returns online and on time to avoid any unnecessary penalties.
If you are completing self assessment for the first time or are yet to start your 2017 to 2018 tax return, there is a wide range of support and guidance available on GOV.UK to help at every stage of the tax return process.
HMRC's top 10 prosecutions
HMRC has revealed some of the more extreme cases of tax crime that it tackled last year. It makes for interesting reading.
Fraud investigations led to 671 people being convicted over the past 12 months. In addition, HMRC has charged another 919 people and taken on 746 criminal investigations.
This year’s top 10 prosecutions:
- One of the UK’s most wanted tax fugitives, who spent more than 11 years on the run and owes more than £53m, ended up in jail after he was caught in Canada.
- Five fraudsters falsely claimed £13m in tax repayments and facilitated around 900 bogus visa applications, were sentenced to a total of more than 31 years in jail.
- An eight-strong tobacco smuggling gang that brought more than 2 million illegal cigarettes into the north-east were jailed for a total of more than 26 years.
- A tax consultant, who fled the UK before he could be arrested for masterminding a conspiracy to steal £6.9m from construction workers’ pay packets, is finally in prison. David Michael Hughes travelled to Chile, Dubai and Cyprus to evade justice but was eventually arrested at Heathrow airport after arriving from Istanbul.
- Father and son tax fugitives are behind bars after being captured in Spain and extradited to the UK. The £1m VAT fraudster son tried to avoid jail by fleeing to France in a light aircraft, while his accomplice father escaped by ferry, before they both headed to Spain.
- A company boss who was jailed for trafficking fighter jet parts to Iran in violation of weapons of mass destruction controls. Alexander George shipped military items, including Russian MiG and US F4 Phantom parts, to Iran through various companies and countries.
- The manager of a well-known male stripping troupe, who was sentenced in her absence for tax and benefit fraud is now behind bars after more than a year on the run.
- A church leader from Luton who lied about charity donations to fraudulently claim £150,000 Gift Aid repayments, was jailed for four years.
- A businessman who masterminded a £9.8m VAT fraud to fund his lifestyle of flash cars and a luxury Spanish home, was jailed for nine years. Jason Butler used money from the fraud to fund his collection of supercars, including a Ferrari Fiorano FI, a Ferrari 360, a Mercedes SL350 and a Lamborghini Murcielago. He also 'owned' a Rolls-Royce Silver Shadow, a speedboat, a home in Marbella and 96 properties in Leeds
- A company director who funded his hobby, racing high-powered sports cars in races across Europe, through a £450,000 tax scam. Simon Atkinson was already under investigation by HMRC for anti-money laundering offences when officers unearthed the six-figure tax fraud, which he used to finance his passion for racing Lamborghinis in competitive motor tournaments
The official press release says: "HMRC’s Fraud Investigation Service continues to bring in around £5 billion a year through civil and criminal investigations."
Mel Stride, Treasury financial secretary, says: HMRC’s investigative teams have been working hard to crack down on tax crimes in the UK, and hold those who would cheat the public revenue to account. The range of cases in this year’s list demonstrates how HMRC will always tackle fraud and can prosecute anyone who steals from the public or breaks the rules - from smugglers to potential arms dealers.
Simon York, director of the fraud investigation service, says:As these cases show, HMRC can and will tackle the most serious tax crime and breaches of sanctions whether committed by organised criminals, professional advisers or wealthy individuals.
We remain resolute and relentless in our determination to level the playing field and bring tax criminals to justice on behalf of the majority of citizens who pay their tax to fund vital public services.
HMRC uses the full range of both criminal and civil powers to investigate tax cheats and continues to be successful in around 90 per cent of criminal cases it brings to trial. However, work doesn’t stop there – HMRC always looks to recover the proceeds from any crime committed to secure the funds for the public purse.
The backbone of accountancy
Accountancy practices are advisory practices. Not sure? Just ask an accountant for advice and see for yourself.
As Elaine Clark says: “I guess the only fault about compliance accountants is that, generally, they do not shout about how good they are at what they do and the services that they provide. They just do it!”
As I travel around talking to small practice accountants I find them inquisitive, knowledgeable, dynamic, literate and caring.
They use all these qualities for the good of clients, their clients’ families, their clients’ staff, their own staff and their own families, and I think it fair to say the good of the country as a whole.
Quiet majority
We are the quiet majority that actually make the system work for millions of taxpayers – and HMRC and HM Treasury.
We are the backbone of the profession, we deal with the nitty-gritty of the system, we handle the day-to-day interactions and we even take the flak from clients when things go wrong (even though very often what has gone wrong is out of our control).
I’d go so far as to say we are the backbone of HMRC as well, and I’m not exaggerating. Just imagine how much harder their job would be if all the errors they made that we put right had in fact to be resolved by them rather than us.
Heartbeat of the profession
While we are the backbone of the profession, we are also its heartbeat – we feel the pulse of businesses throughout the land, we help make the adjustments that save many from problems, and also help them drive forward their planned growth.
It’s what we do, it’s part of our DNA, and no one who has never been in practice will have experienced the highs and lows that we experience, not just from our own practice but from the businesses and taxpayers that we help.
They can look on from the outside and cheer us along, but they will never feel what we feel, they will never enjoy the successes we have, they will never will develop the bonds with clients and their families that we have.
Twittersphere
Yet the so-called ‘twittersphere’ and ‘blogosphere’ are full of all sorts telling us that compliance is dead and we can only exist as an advisory practice.
This statement alone shows exactly how little they know about what we do and how we do it. It shows their ignorance of the work of thousands of accountants across the UK who work tirelessly and with great professionalism and ability.
They are already advisory practices, but just happen to be advisory practices that don’t use the software or systems that they are trying to sell us.
‘Compliance disparagers’
We are accountants, we are important, we understand our clients. Do the "compliance disparagers", as Elaine calls them, "understand us?
The answer is for me a resounding no – and yet they feel it is perfectly reasonable to tell us what is or is not the future, simply because they give themselves a fancy title like "futurist" or "commentator".
And, of course, because the internet allows for self-publicity on steroids they constantly shout loud and long about how easy accountancy would be “if only…”
Supporting you support your clients
The ICPA supports accountants in practice: our motto is “Supporting you support your clients”. We know how important you are, we know how hard your job is, we know how hard you work and we will never disparage what you do.
We are the backbone of the profession, and while others talk about accountancy we just get on with the job of being the very best accountant we can be.
This is always worth remembering – the naysayers will actually never be that because they are not accountants.