Is there appetite for mutual recognition of qualifications with Europe?

Accountants discuss the potential benefits for accountancy should Europe and the UK agree to recognise one another’s professional qualifications.

In their election manifesto, Labour pledged to reset relations with the EU and ‘secure’ a new mutual recognition agreement for professional qualifications. This would help ‘open up’ the professional services sector and improve the UK economy.

Since then, the Labour Government have taken steps to strengthen ties with the EU in the hope of getting a better Brexit deal for Britain.

The previous mutual recognition of professional qualifications agreement with the EU finished in January 2021 with the end of the Brexit transition period. 

It remains to be seen whether any new qualifications-related agreement can be reached and even if achieved, it may not necessarily include the accountancy profession. So far, the focus has been on lawyers, architects and bankers. An EU diplomat recently told i news they would not allow the UK to ‘cherry pick’ Brussels institutions and rules.

Although AAT has members all over the world, AAT qualifications are not automatically recognised in some areas.

In fact, speaking back in 2021, AAT’s then-CEO Mark Farrar said: “We have yet to clarify the process by which we could develop automatic recognition of AAT qualifications in other countries. But it is hopeful that there will be a pathway to securing further understanding on the services sector and mutuality of professional qualifications.”

Currently, accountancy practices with EU-based clients face significant barriers. If an accountant carries out accountancy work on behalf of an EU-based client, their work may not be valid in their client’s jurisdiction.

Equally, an accountant wanting to live and work in an EU country may have to requalify as an accountant. We asked accountants for their views on the mutual recognition agreement: how the sector benefitted and what they’d like to see in any future scheme.

Re-introducing the agreement could address sector skills shortages and provide more opportunities for UK accountants

Ellis Harris-Boulter MAAT, Founder and Director, FieCo Accountancy & Marketing and AAT Tutor

The Professional Qualifications Act 2022 revoked the EU framework for bilaterally recognising qualifications. It introduced a new, regulator-focused approach which placed the onus on individual regulators to recognise overseas qualifications – or not – with the exception of certain qualifications, primarily in healthcare.

The original agreement benefited accounting practices by enhancing the pool of available candidates for roles, especially in industries such as Production Accounting given their severe shortages. It also made life easier for fully qualified accountants. And it gave UK-based accountants more opportunities abroad and encouraged the hiring of specialists.

UK-based accountants continue to work with EU clients, and the UK-EU relationship is continually evolving. So supporting frameworks that minimise friction and collaboration is a really good thing. With talk of a UK-EU reset under the new government, the shared recognition of qualifications is something I can imagine being a fairly politically inexpensive move to improve the relationship, with little cost to either side and most likely with public support.

This might be just one way to secure a brighter future in the relationship we hold with our continued largest trading partner.

Verdict: Re-introducing the mutual recognition of professional qualifications agreement could address skills shortages in the sector and provide more opportunities for UK accountants.

A new agreement would be beneficial for small UK firms wanting to expand internationally

Aaron Westgate, Chartered Accountant and Accountancy Teacher

I would welcome a reintroduction of the mutual recognition of professional qualifications agreement. It would provide a much-needed contribution to the recruitment shortage we have seen for a number of years. It would also support skills shortages for smaller UK firms wanting to expand internationally, particularly in light of the increasing regulatory focus on joint and transnational audits.

A key challenge will be where qualifications primarily reflect the local market needs. Therefore additional assessment mechanisms will be needed to bridge the gap between the knowledge and skills assessed in each qualification. Significant resources will be needed to carefully assess each qualification to maintain the quality, though the in-depth process will be highly beneficial to learn from respective qualifications.

Verdict: A new agreement would help address the sector’s recruitment and skills shortages and benefit small UK firms wanting to expand.

A new agreement would make little difference in practice

Natalia Micu AATQB, Freelance Accountant and Management Accountant, Novenary

While I was working in the EU prior to 2021, I didn’t have any issues with my professional qualifications because they were recognised internationally. However, since working in the UK before and after 2021, I found that my EU professional qualifications weren’t recognised by recruitment agencies.

Within my accountancy practice, I’ve had no issue working with EU businesses because they are interested in my experience rather than diplomas. Some challenges I have experienced so far include: being aware of and up-to-date with EU countries’ legislation, language barriers and the accountancy software used.

I think re-introducing mutual recognition of professional qualifications wouldn’t make a huge difference. What’s important while working in the UK is having a UK professional qualification. That’s what recruitment agencies are looking for regardless. If you don’t have a UK professional qualification, no recruitment agencies would acknowledge your experience or EU professional qualification.

Businesses work with accountants based on their experience, skills and qualifications, not just one or the other. Yet for accountants with just a professional qualification, EU or UK, it’s still experience which is important.

Verdict: A new agreement would make little difference as clients require experience first and foremost, and UK recruitment agencies prioritise a UK qualification.

Annie Makoff is a freelance journalist and editor.