Scientists are worried about the second wave of coronavirus (Covid-19) infections, but the attention is also on the second wave of what hits business. There’s the small matter of the government paying for all of the measures put in place to ease the economic pain of the lockdown. Will it be through taxes? NICS? There’s an opportunity to do something quite dramatic with tax, though I suspect timescales and admin might get in the way. And of course, Brexit, which seems so far away now, is still looming on the horizon, as much as we’d rather not add that to the list of today’s challenges.
The next hit to businesses and the economy is likely to land in the first quarter of 2021, when all of this comes home to roost – in addition to the requirement for businesses to pay their deferred income tax and VAT payments originally due in 2020. While HMRC has said it will be lenient to those that still cannot pay, we’re likely to see more companies going under, and more still taking on debt, as they struggle to find the cash to pay it. It’s a ticking economic time bomb when times are already tough.
We have eight million people furloughed and two million people unemployed. As the furlough scheme winds down, we will see more redundancies across the board. This will not just go away when lockdown ends. The road is, unfortunately, longer than that.
Accountants in industry and practice have found themselves taking on much more of a hand-holding, monitoring and strategic role in the middle of all of this. Businesses need the support of their accountants more than ever, and in turn they have had to modernise – and modernise quickly. Advisory phone calls and check-ins are happening on a monthly, sometimes weekly, basis. That brave new world of the accountant as a proactive trusted advisor has arrived practically overnight.
Those who have run with new technology are coming through this in a better position than those who haven’t. It’s absolutely highlighting the need for new skills and training ahead. Of course, there’s a danger that in the process of coping with Covid-19, businesses shut everything down – including skills development. I’ve seen first-hand in another sector that if everybody does this, you can see the gap in skills for a decade or more. It puts a hole in the system.
When this downturn is over, businesses are unlikely to want to revert back to the old ways of doing things. The value of that proactive, digitally-aided accountant will be very clear. We must make sure we have the skills – and the willingness to learn – to meet that demand, or we could be left trailing behind the rest of the world.
Mark Farrar is the Chief Executive of AAT.