What should you expect from 2022?

There are some well-known challenges awaiting this New Year – and a few that are less obvious.

Repayment of Bounce Back Loans and VAT deferments are just some of the issues to contend with.

But businesses have become more fleet of foot and know how to adapt in rapidly changing situations.

So, what will 2022 look like for UK businesses? And what should they be doing do to future-proof their strategies and operations? We spoke to several accountants to find out.

Cash flow forecasting and business planning will be critical for survival in 2022

Bobby Lane, CEO, Factotum

Cash flow forecasting and business planning is going to be absolutely critical next year. Businesses have benefited from generous government loans and now they have to start thinking about repaying these from a cash flow perspective, so forecasting is essential.

MTD for all VAT-registered businesses too is going to be impactful. Businesses must ensure they’re fully prepared and ready to migrate to digital platforms with the right processes in place. 

My hope overall is that we start to see some stability in 2022. Businesses were only just starting to come out of survival mode post Summer, but the last few weeks have set this back.

We’ve also been dealing with multiple issues all at once: Brexit, the pandemic, supply chain issues, increasing raw material prices and so on. It’s likely we’re going to see continued uncertainty in the supply chain as well as staffing. Businesses need to start breaking down all these challenges into bitesize chunks and deal with them as they arise.

Next steps: It’s all about planning. Businesses, including accountancy practices, need to take the time to think about what they want for themselves and clients and have a plan in place. A rudderless boat floating on the sea isn’t going to help anyone: challenges will come thick and fast so planning and preparation is going to be key.

Verdict: Businesses must focus on cash flow forecasting and business planning to prepare for the year ahead and potential challenges.

Businesses must place stronger focus on environmental and social issues

Andy Rich, Managing Partner, HW Fisher

As we head into 2022, businesses are starting to look forward. However, this is against a backdrop of global supply issues, inflationary pressures, high energy prices and labour and trade shortages.

Companies will need to invest in more storage facilities in the medium term as the just-in-time model of delivery looks to be coming to an end.

Inflation will likely be transitory but is thought likely to exceed 4% next year so companies will need to increase their prices whilst predicting elasticity and reaction of consumers.

From an environmental and humanitarian perspective, we have a huge opportunity (and responsibility) to apply our experience to the fight against climate change. Accountants can help ensure directors face up to their responsibilities by reviewing accounting disclosures around environmental issues and how well clients are looking after their people.

Next steps: Focus on environmental issues and allyship. There is sometimes a fear of getting it wrong, with many people- worrying about saying the wrong thing. But as a firm, we believe allyship is about being kind and compassionate and of course, listening.

Verdict: Businesses need to play a bigger role in environmental and social issues in 2022.

Plan now for next year’s tax strategy to maximise tax savings

Joanne Thorne, Technical Compliance Manager, SJD Accountancy

There are a lot of changes to look out for in 2022 including:

• Increase in National Insurance contributions and Dividend tax, which increase by 1.25% from 6th April 2022.
• Making Tax Digital (MTD) for smaller businesses, including self-employed (sole traders) and landlords who are VAT registered.
• HMRC are also updating their penalty rates for late return or payments of VAT from April 2022.

Covid has brought about many changes we would not have expected whilst accelerating some that were already in the pipeline. In addition, the true impact of Brexit is only now being felt, in terms of supply chain and staff shortage issues, and the IR35 reform came at the worst time for the majority of workers and their clients.

Businesses also need to review any covid-created debts and assess new strategies for continuing in a world that can literally be turned upside down following a ten-minute address from the prime minister.

It is no longer enough to just assess our own internal risk if we are to successfully ride the wave of change, contingency planning is essential.

Next steps: Start next year’s tax planning strategy for clients now: There’s still time to maximise tax savings for the 21/22 tax year, and so booking a call ASAP with clients means you can potentially squeeze in any further savings before 5th April 2022, as well as discuss their requirements for next year. This ensures accountant and client are singing from the same hymn sheet from day one of the new tax year.

Verdict: Plan for next year’s tax strategy now to maximise tax savings.

Annie Makoff is a freelance journalist and editor.