AAT responds to Rishi Sunak’s budget to reboot the economy

Posted 03/03/2021 by AAT Comment & filed under Members, News, Policy.

Here we give the reactions of AAT – and accounting professionals – to the measures announced in the 2021 Budget.

The 2021 Budget has reduced the level of uncertainty and risk for many in the UK. It also includes some initial steps toward rebalancing the nation’s finances.

There is a cost too, both financial – another £65 billion is needed to support the economy – and also in terms of some extra complexity with taxes and grants.

Budget 2021: review and analysis

Join us for an in-depth analysis and review of the Chancellor’s latest plans to balance the Covid deficit and support struggling businesses.

Support for business

AAT members have been expressing their desire to see the ‘irreversible’ roadmap out of lockdown bolstered by a budget that settles the nerves of business owners.

Wide-ranging measures to support business will calm fears that up to 250,000 could fail. They include:

£5 billion for new Restart Grants – a one off cash grant of up to £6,000 for non-essential retail businesses; and up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England.
A new Recovery Loan Scheme will replace Bounce Back Loans, providing loans between £25,001 and £10 million, and asset and invoice finance between £1,000 and £10 million, to help businesses of all sizes through the next stage of recovery.
Business rates holiday for retail, hospitality and leisure to continue until June, then taper to 66%.
Reduced VAT for support tourism and hospitality will continue at 5% until the end of June, then rising to 12.5% until 31 March 2022.
The Coronavirus Job Retention Scheme will be continued until 30 September.
Employer apprenticeship incentives will continue with payments doubled to £3,000.
A super-deduction will allow businesses to cut their tax bill by 25p for every pound they invest in new equipment over the next two years.
Corporation tax will rise to 25% after two years, but with a tapering scale so only for companies making declaring profits of £250,000.

AAT response

Phil Hall, Head of Public Affairs & Public Policy, gave this assessment on behalf of AAT:

“The Government has recognised that small and medium-sized businesses are key to the UK’s economic recovery. We welcome the raft of measures announced to support them over the coming months, including cash grants to help businesses reopen this spring, the continuing business rates holiday and extending the VAT cut for the hospitality and leisure sectors.

“SMEs have been particularly badly hit by the pandemic and these measures will help them to weather the storm and get back on their feet.

“AAT is particularly pleased to see the furlough scheme extended to September, as well as the Chancellor’s commitment to investment in skills and training. This should also help more people around the UK to gain the skills they need to develop and thrive in their careers.”

However, AAT is disappointed that the Chancellor did not write off Bounce Back Loans for SMEs. In AAT’s view, this would have been a pragmatic step that would have hastened recovery.

Phill Hall explained:

“The Government has admitted up to 60% of these loans could be written off, with the Public Accounts Committee suggesting the figure could be as high as 80%. AAT has long recommended that all legitimate Bounce Back loans be written off. This is something that we will continue to press the Treasury to consider.”

More support for the self-employed

In keeping with prolonging the CJRS, the Self-Employed Income Support Scheme will be extended. Those who filed a tax return by last night and draw the majority of their income from self-employment will be eligible. This takes in another 600,000 people, including some who launched into self-employment last year.

“AAT has repeatedly called for more help for the self-employed during this crisis. We are pleased that the Chancellor has today confirmed millions of workers will have access to grants of up to £7,500 – claiming 80 per cent of average monthly profits up to a maximum of £2,500 a month,” said Phil Hall.

“Making an additional 600,000 self-employed people eligible by accepting claims from those who had filed a 2020 tax return is also something that AAT had campaigned for and very much welcomes.”

Corporation tax to increase to 25% by 2023

Corporation tax will rise from 19% to 25%, starting in 2023 – a necessary tax rise to pay off the cost of the pandemic.

“Our Corporation Tax rate will never be as low as the likes of Barbados, Hungary or Montenegro, but these countries are not the UK’s international competitors.

“We currently have the lowest Corporation Tax rate in the G20 and even with a small increase to 25% from April 2023, we will continue to enjoy a lower than average Corporation Tax rate amongst G20 countries – and still the lowest in the G7. This decision is one that strikes the right balance between raising substantial sums of money to invest in public services and pay down debt without stifling investment and innovation.”

To soften the blow, the new tax rate will only apply to companies making over £100,000 in profit. Firms making less than £50,000 profit will continue to pay 19%. Between the two thresholds a taper will apply.

Some commentators point out that while pragmatic, this step reverses the policy of simplifying taxes with flat rates.

Freezing personal tax thresholds

“Since 2010 the personal allowance at both the basic and higher rates has risen considerably, so much so that in response to the 2018 Budget, AAT stated that no further increases should take place. This was primarily because they are very expensive, disproportionately benefit higher earners and approximately three quarters of higher earners benefitting from an increase to the higher rate are male.

“AAT was already opposed to any further increases in the thresholds but this position has been solidified by the serious economic consequences of dealing with Covid-19. The Chancellor’s announcement today that personal allowances will be frozen at £12,570 and £50,270 until April 2026 is therefore an understandable, measured and necessary change that will bring in several billion pounds for the exchequer.”

VAT reductions and freezes for business

“Continuing with the reduced 5% rate of VAT for hospitality and tourism for an additional six months should help two of the most seriously impacted sectors of the economy, as will the subsequent interim rate of 12.5% for another six months after that.”

“Although the decision to freeze the VAT threshold at £85,000 for two years provides certainty for businesses, there is increasing recognition that a lower VAT threshold may be needed in the future. This is partly demonstrated by an AAT member survey last month, which found 37.5% of AAT members favour a reduction compared to 33% who want to retain the current threshold.”

Reactions from accountants

David Frederick, AAT President

Rishi Sunak has tried to create a balance between future issues and the economy by allocating funding as liberally as possible.

We saw him putting his arm around the UK Plc, stretching out to Wales, Scotland and Northern Ireland where he announced various projects for those regions.

The announcement to double incentive payments for apprenticeships is particularly interesting, as these should hopefully give opportunities to youngsters and those changing careers, assuming firms will be in a position to actually take it up.

But the greatest concern we all have is that although some may have got what they wanted – a little handout – there will be a long period of time where we will be paying for this. We need to recognise there will be some pain down the line. So while many things are frozen today, the longer term will tell the full story of Budget 2021.

Laurence Field, corporate tax partner, Crowe

The Chancellor has been trying to answer the question of who pays for £407bn of coronavirus spending and when. The answer is everyone, but not just now.

Increasing personal allowances and then freezing them, deferring an increase in tax on large companies until 2023 but allowing enhanced loss carry backs and super deductions for investment in innovation now – all suggest the Chancellor recognises there’s little point in taxing a struggling economy today.

But if it can start growing quickly in the next year or so, there will be more income and profits to tax later. Then the impact of the increases won’t be felt too much in the run-up to the next general election.

Jane Mackay, head of tax, Crowe

Fairness about who pays the bill and honesty around the parlous state of UK public finances were the key themes of the today’s budget. We can all welcome honesty about the concept of fairness, until we are the loser. The publication of tax consultations due on 23 March may well provide more visibility.

The 130% super deduction was unexpected and welcome as it will subsidise the cost of company investment and benefit high capital sectors such as manufacturing. However, the relief is worth only 21% and expires before the corporation tax increase to 25% in 2023. However, the reintroduction of small companies and marginal rate relief will soften the blow.

Joanne Harris, technical commercial manager, Nixon Williams

Sole traders will be pleased that the Chancellor has extended the SEISS scheme in line with the CJRS and confirmed a fourth, firth and final grant which will take us to September. They’ve now opened these to the recently self-employed.

But there was an opportunity in this budget to go further and consider the needs of freelancers and contractors with a limited company set-up, who have essentially been overlooked. The proposal on the table for a Directors Income Support Scheme (DISS) could have helped millions more people, but the government appears to have ignored this completely.

So whilst there were some positives, this budget has not helped the majority of the UK’s self-employed workers who will see an even greater squeeze on personal finances in the years to come.

Lucy Cohen, FMAAT, co-founder, Mazuma

The biggest news is that the forgotten three million self-employed now qualify for support. Further good news comes in the shape of the Restart Grant from April, especially for the worst hit industries. Bounce-back and CBILs are to be replaced with a recovery loan scheme so we will undoubtedly see initial teething problems.

But the budget currently is built on assumptions, so what’s the back-up plan if things don’t open as quickly as they are predicting? Sunak is talking a lot of rebuilding the economy but the narrative suggests that the treasury is still in survival mode – a contradictory and worrying place to be.

Nigel Morris, MAAT, employment tax director, MHA MacIntyre Hudson

Extending the furlough scheme until the Summer is certainly the right call. We will all be paying for the cost of the Covid-19 support measures for a long time, so an extension won’t massively increase this bill.

But the Chancellor also needs to think about job support over the long-term, not just for now. With the rise of new Covid-19 variants other lockdowns in the autumn or winter can’t be ruled out. The UK should think about drawing up plans for a more long-term but less generous retention scheme until we are totally clear from the pandemic.

James Poyser, CEO, inniAccounts and founder, offpayroll.org.uk

Today’s Budget didn’t delay IR35 reforms as expected but introduced a targeted Anti-Avoidance Rule (TAAR). Now HMRC can track down bogus schemes that are designed to get contractors operating falsely outside IR35.

But the most exciting change is that to section 61V (and Regulation 22) which relates to providing fraudulent information and includes information provided by any UK-based party in the labour supply chain. The liability will now rest with the party that provided the fraudulent information and not the client. This could reduce the perceived risks end clients have with dealing with contractors and as such it could be a real turning point.

James Foster, technical commercial manager, SJD Accountancy

It’s great to see the confirmation of a fourth and fifth SEISS grant and it’s also welcome news that the newly self-employed will be able to apply for both of these grants.

But the ongoing issue of no support for contractors and freelancers working through limited companies continues to be overlooked. These self-employed workers are ineligible for the SEISS and were originally pointed towards the CJRS but may only be eligible if their business operates a PAYE scheme, while dividends could also not be claimed for. Once again, contractors and freelancers have completely fallen through the cracks.

Martin Bown MD, My Management Accountant

For business, it seems a sensible budget, with a clear outline of continued support. The furlough extension to September will be welcomed by many businesses while rates relief and sector-specific VAT support is also welcome along with an increase in minimum wage and increased incentives to recruit apprentices.

The longer-term plans: clarity around no decrease in personal tax allowances, freezing of the VAT registration threshold, tapered increases in corporation tax rates from April 2023, the new ‘super deduction’ encouraging investment and initiatives like Help to Grow Management and Help to Grow Digital all seem like positive steps to help the small business community.

Dan Stopp, UK accounting manager, Bokio

Given the extreme amounts of borrowing required during the pandemic, it is unsurprising that tax hikes were a key subject of this year’s budget.

However the proposed increase of corporation tax from 19% to 25% in 2023 is of some concern. While it’s good news that the smallest businesses won’t be directly impacted, this 6% step-up will certainly make scaling a limited company far less attractive.On the flip side, the announcement of the government’s new ‘Help to Grow’ scheme is welcome news. With a pledge of £520m, small and medium-sized businesses will benefit from the chance to invest in discounted digital tools, something that is vital given the widespread shift to online service.

David Fort, managing partner, Haines Watts, Manchester

The budget was a sensible approach. The slow withdrawal of business support over time and no immediate tax rises will be a relief to many of our clients.

The Chancellor has also shown a real commitment to levelling up the North and he’s balanced the books without stifling recovery. Now more than ever, businesses need this certainty, so the support packages that were announced were a welcome surprise.

In terms of a price to pay, I’d say through gritted teeth, it’s fair. It’s a decent trade-off and was definitely the right tone to set. The new 130% relief for capital expenditure is very welcome and this will accelerate innovation and investment.

Terri Halstead, tax partner, Haines Watts, West Midlands

What has gone under the radar with a lot of commentators is a temporary extension of carry-back of trading losses from one to three years and covers the tax years 2020 – 2022. This will generate refunds for many business owners and companies.

Overall, the Chancellor has given a lot away whilst admitting that he will need to recoup the spending in taxes later. We may get a further insight into his plans for the future on March 23rd, which is the UK’s ‘Tax Day’ when the Government publishes a range of tax-related consultations that will signal long-term Government policy. One thing is certain, taxes are set to increase.

How cyber criminals are picking off accountants at year-end

Posted 03/01/2021 by Marianne Curphey & filed under Cyber security, Members.

The following is an extract from a webinar by Gabrielle Fontaine and George Kizis of SmartVault, showing the growing risk to accountants.

Over the past 12 months, the number and frequency of data security breaches among firms of all sizes have massively increased. Accounting professionals are especially vulnerable to cyber attacks because they deal with finances and handle sensitive client data.

Cyber criminals aim to “follow the money”. While some want to hack into systems just to wreak havoc, for most the main goal is to swindle and make money.

Accountancy firms are in the top three organisations that cyber criminals target. This means accountants have to be especially vigilant, and ensure that our systems are up to date, our policies are robust and our people are alert to the risks and trained to spot them.

Webinar: cyber threats and responses

Learn strategies to defeat the growing threats being aimed specifically at accountants in this webinar by Gabrielle Fontaine, bookkeeper and small business consultant. Sponsored by SmartVault.

View webinar

Why do criminals target accountants?

Criminals are choosing to target government organisations, medical organisations, and accountancy firms, in that order. Accounts handle a lot of sensitive information and deal with finances, and that information is valuable to criminals because they can sell it or use it, or they can defraud other people.

No firm is too small to be targeted and all accountants are at risk. Your practice is not too small to be at risk, especially now, because risks have increased and our world has changed due to the pandemic. Organised crime has moved online.

With the need to use a remote workforce, there has been a 300% increase in cyberattacks on accounting practices of all sizes. Attackers are sophisticated and often strike when accountants are busy and have deadlines to meet, such as at year-end or when tax return deadlines are looming.

According to Accounting Today, “With the increase in the remote workforce and ongoing COVID pandemic, there has been a 300% increase in cyberattacks on accounting practices of all sizes.”

In addition, the UK Cybercrimes Trends 2020 by HMRC shows a sharp spike in cybersecurity breaches in 2020.

The Cyber Security Breaches Survey, which is a quantitative and qualitative study of UK businesses and charities says that cyberattacks have evolved and become more frequent.

“Almost half of businesses (46%) and a quarter of charities (26%) report having cyber security breaches or attacks in the last 12 months,” it says. “Like previous years, this is higher among medium businesses (68%), large businesses (75%) and high-income charities (57%).”

What methods do the criminals use?

Criminals seek to expose the vulnerabilities in our systems. Accountants are handling a lot of sensitive information but working from home.

One common method of hacking is “phishing” emails. Another is ransomware, which encrypts data until a ransom is paid. Malware can spy and collect data from your system without you even being aware of it.

There are two recent examples where cyberattacks were targeted at small accountancy firms, and they illustrate the threats and dangers to companies in the accountancy field.

Budget 2021: review and analysis

Join us for an in-depth analysis and review of the Chancellor’s latest plans to balance the Covid deficit and support struggling businesses.

How two accountants fell prey

A common theme is that the attacks start with phishing emails that appear to be from clients.

Take the example of Pillow May, a small accountancy practice in Wiltshire. The owner received an email that appeared to be from a client requesting payment of an attached bill.

The message was so plausible it even sounded like it was from the client concerned. The firm paid the bill, and it cost them thousands of pounds, not knowing it was a fraudulent email and a false invoice.

The firm used turned this destructive experience as a spur to transform its approach to cyber security completely. But it was a lesson learned the hard way.

A second case study started with a similar pattern but led to a far more severe breach. The victim was an accountancy practice that also provides insurance to accounting professionals.

Despite being trained to email risks, an accountant with the organisation was taken in and opened a phishing email. That response opened the way for the criminal, who then sent a file supposedly containing tax information. The message was highly convincing and, because it arrived in the busy tax period, slipped through.

The unwitting accountant opened it, releasing malware onto the company’s system. The programme was able to access – and steal – confidential information, which was then used to access bank accounts and send fraudulent emails to the individual’s contacts.

Which firms are most at risk – large or small?

Smaller firms are now being targeted because large corporations have the deep pockets to invest and update their cyber protection. Smaller companies are a softer target – their systems are easier to crack.

A security breach can cripple your business so make sure that all your software is updated. One small false step can lead to a disaster so revisit the basics on how to protect yourself cybersecurity. Here are some vulnerabilities you should consider:

Using WiFi on the move: Be aware that if you use mobile devices where you are using public Wi Fi you are at risk for what is called “eavesdropping” where the criminal has access to your private information because you are using an open Wi Fi system. Using a VPN system can protect you again this.

Staff working from home: are your staff keeping their browsers and all their software up to date, including operating systems on their laptop and phones?

Passwords and security: How are you handling our passwords? Use different passwords for different logins and make them difficult to guess. Do not put them on sticky notes on your computer. Do not put them in a spreadsheet on your computer. A good solution is to use a program that manages your passwords. Also do not use the built in Password Manager that is in your browser because that is more easily hacked.

Be alert to human error: Overall, 95% of data breaches can be traced back to human error at some level, so accountants need to continue to stay educated about the risks and stay aware. Take a look at your workflow, take a look at all the apps that you are using and the data that you’re handling. What is the path that your data follows through as you are handling taxes, payroll and bookkeeping?

Data storage: Where is your client data stored, is it being stored locally is it being backed? What devices are staff using? Who else has access to their devices and what kind of protection is in place? Don’t give everybody administrative rights. Think principle of least privilege, which means, think about what do staff need access to in order to do whatever they’re doing – and do not give free access to important data to everyone.

Cybersecurity insurance: this is not cheap but I believe that all accounting professionals should have it as the threat posed is so great.

Interested in finding out more and learning how to protect your business from cybercrime? Watch the webinar.

7 things to do if you’re struggling with learning online and lacking 1:1 peer contact

Posted 03/01/2021 by Sophie Cross & filed under Students.

If you’re missing being able to speak to your friends after class to share notes and chat through the work set, you are not alone, and these feelings are entirely normal.

There is a light at the end of the tunnel now when it comes to attending in-person classes, but we don’t know for sure when that will be yet. In the meantime, don’t suffer more than you have to. These seven ideas could help ease the stress that comes from that lack of face-to-face contact.

1. Stay in touch with your peers

Even though talking on the phone or online just isn’t the same as in-person, try to keep in touch with your classmates outside of online lessons. No doubt everyone feels the same and would like someone else to chat to about their studies. Drop a classmate a text or an email to get a conversation started.

2. Get involved with AAT Discussion forums

There are over 18,000 discussions on the AAT Discussion forums for AAT students, so you’re bound to find some interesting topics to read about and contribute to. It’s a great place to ask a question or start a conversation. You can chat about your AAT studies, revision tips or your plans after you’re qualified. You can sell old textbooks and even find a study buddy.

3. Plan an event

Plan a virtual event with other students. You could test each other or plan something fun like a quiz evening. If you live near any other students, see if they fancy a walk to chat about your studies together. It could also be an excellent idea to plan something for the future to look forward to, like meeting up for a drink when you can.

4. Organise a call

Phoning people up has become a bit of a lost art. But one that has reemerged with the pandemic and can’t be underestimated. Phone calls and video calls can help you feel connected and can break the monotony of the day. You could even have a video call study

session for an hour or two together online where you both work simultaneously and are there if the other has any questions.

5. Be social on social

A great way to get involved in groups and networking on social media platforms is by encouraging other people and helping them out when you can. What goes around, comes around, and you can then ask other people to help you. At first, you will feel like the newbie, but if you keep showing up with positivity, then you will forge real friendships with people in no time at all. There are some great AAT forums out there for AAT students as well as bitesize content available on Facebook and Instagram.

6. Start your own thing

Think of what would help you right now because no doubt it would help other people too. Someone just needs to start it, and that someone could be you. You could start an online weekly study club, a Whatsapp group, a Slack channel or a regular group video call. You only need one or two other people to get something going.

7. Ask for help

Think about how you feel when somebody asks you for assistance with something, and you help them. It feels great, doesn’t it? Almost everybody enjoys helping somebody out, so by asking for help, you’re doing someone a favour. Whether it’s help with a topic you’re stuck on, a practice exam question, or you just fancy a chat, just ask.

If you’re feeling a bit lonely, do take some action and don’t suffer in silence. By reaching out to someone, you will help them too.

Accountants increasingly optimistic over lockdown exit strategy

Posted 03/01/2021 by Annie Makoff & filed under Coronavirus, Members, Road to Recovery.

Accountants share their hopes – and concerns – following the Government’s lockdown exit plan announcement.

Prime Minister Boris Johnson last week set out his ‘irreversible’ roadmap out of lockdown, which involves a cautious four-step approach to lifting restrictions, with several weeks between each stage. Progression to subsequent stages can only happen if the four key tests are met:

Successful roll-out of vaccination programme across the country.
Vaccinations continue to reduce hospitalisations and deaths.
Infection rates remain stable and/or low.
No new variant has emerged.

Budget 2021: review and analysis

Join us for an in-depth analysis and review of the Chancellor’s latest plans to balance the Covid deficit and support struggling businesses.

The first stage, the re-opening of schools, is due to start on 8 March, followed by further easing on 29 March (still stage one), which will end the ‘stay at home’ rule. From this date, up to six people will be allowed to meet outside or in private gardens (the rule of six), outdoor sports facilities will be allowed to open, and weddings with up to six guests can commence.

Roadmap key dates for businesses include:

12 April (stage two): The following businesses can re-open: all shops, hairdressers and beauty salons, gyms, libraries, indoor and communities centres, along with zoos and theme parks. Weddings with up to 15 guests can commence.
17 May (stage three): Pubs, restaurants and other hospitality businesses can open indoors, along with hotels and B&Bs, museums, theatres and cinemas. Live events and performances will still have a limit on the numbers of attendees.
21 June (stage four): Nightclubs can re-open. All other social restrictions will be lifted from this date.

While this exit plan has been broadly welcomed, there has, to date, been a distinct lack of detail.

The Coronavirus Job Retention Scheme was due to expire in April, but Chancellor Rishi Sunak is widely expected to extend it until later in the Summer.

We asked accountants what this roadmap will mean for their clients and what business support packages they’d like to continue or be extended.

Businesses are rejuvenated but remaining cautious with plans

Claire Bartlett, director at Arden Bookkeeping

There is great excitement from all businesses that the end is nigh, and they will be able to begin trading as normal once again. A lot of my clients have had to find new and alternative ways to generate sales revenue through lockdown, often involving social media and live videos. Most are keen to continue this after lockdown, which I think is great.

The furlough scheme has by far been the most beneficial scheme to all our clients and one that is still very heavily depended on. There is, however, some trepidation not to get hopes up just yet, as things can change dramatically, as we have seen before. But definitely, they are cautiously planning for the next stage in their business.

Next Steps: Now is a good time for businesses to re-evaluate their business model and think about the future.

Verdict: Businesses have felt rejuvenated by the roadmap out of lockdown and are starting to plan the next stage.

Roadmap brings clarity and optimism to clients, but continued government support deemed essential

Matthew Thorpe, Managing Partner of Haines Watts, Hornchurch

Businesses have been crying out for clarity for many months. Now, this roadmap brings that clarity. However, the biggest concern for me is the risk of releasing too soon and having to back-peddle. Business owners have shown super-human resilience and flexibility to get through the last ten months. It would be devastating to see them fall at the final hurdle because they have made plans and taken costs on with a view to opening and trading as normal, only to be closed again.

Many clients have experienced huge cash flow problems, so they will need to build momentum quickly to survive. Engaging staff, opening premises and taking the cost that goes with it on too soon could be detrimental.

There is also a wider concern over how the landscape will look. Will commercial landlords see companies continue to reduce office space? Has the high street changed irreversibly? Will people have the same disposable income to spend on leisure and hospitality? Nobody knows for sure, but it seems highly likely that many areas of our economy will be changed forever.

Next steps: It’s easy to get swept up in the excitement of re-opening, but the road to recovery is sure to go through peaks and troughs. So have a flexible approach, set clear spending limits and ensure monitoring is robust. Set clear expectations and trigger points, then stick to them.

Verdict: The roadmap brings clarity, but there are concerns that restriction lifting may be temporary and detrimental to businesses.

There are signs of fresh optimism

Lee Meredith, Associate Partner at Haines Watts, West Midlands

Generally, there is a new-found sense of optimism among our clients. Many have been under severe pressure whilst coping with the lockdown restrictions – this roadmap changes all that.

But businesses are still wary that this roadmap is far from certain. Mutations to the virus, issues with the vaccination programme, and many other variables could all derail or affect the planned re-opening.

Until now, the furlough scheme has been beneficial, not only preserving jobs, but actual businesses. It’s helped retain employees and helped businesses remain a going concern. CBILS and bounce back loans have also played a key part in managing cash flow.

So what business needs now is for this support to continue until we, as a country, are free from the effects of the pandemic. If assistance is shut off too soon or at too severe a rate, the economy could still falter. Many businesses are at a knife-edge and, until lockdown restrictions are fully lifted, will not be able to be self-sustaining. It will take a lot of companies months, if not years, to get back to the position they were in before Covid-19.

Next steps: Our job as accountants has meant going beyond the traditional compliance function and using our skills as business advisors to help with business plans and to assess cash flow projections and forecasts critically. It’s about being on hand to give clients comfort that they have a trusted advisor alongside them.

Verdict: The roadmap has given optimism, but business support must not be cut off too soon as many companies are still on a knife-edge.

Food and drink businesses are nervous around potential ‘bumps in the road’ out of lockdown

Phil Mills, Head of Food & Drink, Old Mill

Many businesses have had an extremely changing twelve months, and getting it right in the recovery phase will be critical.

Some of our clients in the hospitality and food and drink sectors have been affected by the re-opening and then closing of the economy, which has caused them huge headaches when trying to plan in terms of managing stock levels, spoilage, etcetera.

There’s a level of nervousness as the uncertainty means that it’s trickier for them to navigate this next phase. The big risk is that nothing is set in stone. Businesses are concerned about potential ‘bumps’ along the road impacting cash flow and their ability to trade.

Cash reserves are running very low, so it’s crucial that the government doesn’t abandon them. With unemployment rising to its highest level since 2016, the prospect of redundancy is still a real threat for many workers. The Chancellor has a delicate balancing act to perform to keep these firms going.

With loan guarantees, the business rates holiday, the furlough scheme and the reduced VAT rate for hospitality businesses all coming to an end, there are huge levels of interest in what Mr Sunak will do to support beleaguered business owners.

Next steps: We’ve been encouraging clients to embrace digital platforms wherever possible, as it has made a real difference for us as advisers in interpreting what’s happening in the business on a day-to-day basis and guide them accordingly.

Verdict: Nervousness among food and drink clients who have struggled with cash flow and stock spoilage, so more business support is needed.

The roadmap is a ‘moving target’ and lacks detail

Chris Tate, business advisory director, Moore South Accountants

The roadmap is somewhat helpful in indicating timings. However, it lacks detail as to the specific restrictions on businesses that will continue to apply. Therefore it is difficult for businesses to plan. It is also contingent on several variables and therefore remains a moving target.

In terms of business support, many, but not all, of the Government support measures are non-sector specific. As a result, some sectors are receiving support that arguably they don’t need, while those hardest hit are not receiving enough support.

Next steps: The government need to begin weaning off general support measures and focus on sector-specific support packages for those sectors which continue to be impacted by ongoing restrictions.

Verdict: Roadmap remains a moving target due to several variables, and support available doesn’t go far enough to help those sectors which are struggling more than most.

Restriction easing can’t come soon enough, but support measures desperately needed

Rob Wardle, head of tax, Azets in the North West

SMEs are the backbone of the UK economy, and for a significant number, the current situation has become business-critical. The re-opening of the economy can’t come soon enough.

A perfect storm is looming in the next few months when furlough comes to an end, and banks start demanding repayment of loans deferred under the repayment holiday scheme. Banks will also look to recover CBIL and BBLs loans arranged last year. Time and cash are key to prevent a large number of distressed businesses from closing.

The economy needs the Chancellor to go further with support measures, and the most effective way is to ease business taxes.

Azets has outlined some essential measures that would help provide SMEs survive into 2022 and beyond:

Extend the 5% VAT hospitality rate beyond March 2021
Extend the business rates holiday beyond 2021
Encourage recruitment by reducing employers NIC (currently 13.8%) for the first year
Support youth recruitment a further reduction in employers NIC
Support start-ups with a 10% Corporation Tax on turnover up to £500,000
Encourage investment by doubling the annual investment allowance to £2m
Encourage investment in technology with 200% capital allowances on eligible items up to £1m
Help for the self-employed who did not qualify for SEISS
Extend the current stamp duty holiday
Support entrepreneurship by maintaining lifetime capital gains relief at £1m

Next steps: We’re urging businesses not to bury their heads in the sand and instead seek help from professionals. By planning for various scenarios, including extended Covid restrictions, Brexit disruption, preparing realistic trading forecasts and having up-front conversations with suppliers, landlords and lenders, firms will be better placed to navigate the challenging months ahead.

Verdict: The Chancellor must go further with support measures in his Budget to ensure business survival.

Everything you needed to know about Scottish accountancy apprenticeships

Posted 03/01/2021 by Christian Koch & filed under Apprenticeships, Employers, Scottish Apprenticeships.

The theme of this year’s Scottish Apprenticeship Week (1-5 March) is ‘Business Backing Talent’. If there ever was a time that Scottish firms could help support the prospects of young people – the social group most likely to be hardest hit by the economic fallout of Covid-19 – then it’s clearly 2021.

Page contents
How can an accounting apprentice benefit my company?
Who pays for apprentices?
What apprenticeship is right for my firm
Foundation Apprenticeship in Accountancy (FA)
Modern Apprenticeship in Accountancy (MA)
Case study: Edinburgh-based Zen Consultants
“Apprentices have been an absolute blessing for my business”

Apprenticeships are not all about companies philanthropically giving youngsters a leg-up into the workplace; these new-starters can contribute just as much to the businesses employing them. Not only can they play a key role in post-Covid-recovery roadmaps for businesses, but they can also boost productivity, bring new ideas and make loyal employees. What’s more, with the Scottish Government funding a large chunk of their training costs, they’re extremely affordable too.

Today, Scottish employers take on 29,000 apprentices every year, which includes many starting out in their accountancy careers. As we’ll find out here, they can bring many benefits…

How can an accounting apprentice benefit my company?

They’re productive

Three-quarters (75%) of Scottish businesses who have hired apprentices believe their new learners have boosted productivity. Dylan White, partnership & delivery manager at Skills Development Scotland, believes this is because “apprentices don’t cost organisations much in terms of time and money, plus because they’re learning on-the-job, they’re constantly using these skills in the workplace.”

Organisations can also place existing employees onto an apprenticeship, giving them the opportunity to learn new skills and acquire formal accounting qualifications.

They’re cost-effective

If you hire a modern apprentice, Skills Development Scotland (SDS) will contribute towards their training costs. You won’t pay anything at all if you support foundation apprentices. For more on funding, scroll below.

They can increase staff retention rates

Apprentices are staunchly loyal: 90% of them remain in their workplace after finishing their apprenticeship, while 80% of companies running schemes report a rise in staff retention. The reason behind this is simple, says White: “For many apprentices, it’s their first real experience of a workplace. If you’re an employer who takes care of their development, they’ll make a commitment to you too. Quite often [apprentices say]: ‘why would I want to work anywhere else?’”

They’ll make your team more dynamic

“Many Scottish companies face the challenge of an aging workforce, which is a real business concern,” says White. “Bringing in apprentices introduces new ideas and ways of thinking. Many businesses have opened up new customer bases because employing apprentices helps them understand younger people better, therefore helping them connect with different customers.” Indeed, 72% of Scottish businesses report staff morale has been boosted since apprentices have joined their team.

They can boost the development of other employees

Existing employees can develop leadership skills by mentoring or supervising modern apprentices. “If there’s somebody in the team who has the potential to become a manager, mentoring a foundation apprentice can help them develop those skills,” says White.

Who pays for apprentices?

If you support a foundation apprentice, there’ll be zero cost to you (the employer) as the apprentice will still be at school.

For a modern apprentice, you will have to pay a wage for your employer, which must be at least the national minimum wage or higher.

However, Skills Development Scotland will contribute towards the cost of training and assessing apprentices, with this payment usually paid directly to the learning provider. The amount you’ll receive depends on the type and level of apprenticeship, plus the age of the apprentice. For example, a SCQF Level 8 accounting apprentice aged 16-19 will receive £3,200 from SDS (with the company topping up the rest). Find out more on the SDS contribution table here.

Alternatively, businesses can choose to deliver apprenticeships internally (rather than using a learning provider). SDS will then send contribution payments directly to your company.

If your organisation’s annual salary bill is more than £3m, you will already be paying into the apprenticeship levy. This means you can apply for up to £15,000 towards the cost of training your workforce through the Scottish government’s Flexible Workforce Development Fund.

Other financial incentives available include:

Apprenticeship Employer Grant (AEG): this £15m grant was recently established to help support employers and young people affected by Covid-19. It will provide £5,000 for employers hiring or upskilling a 16-24-year-old (and those aged up to 29-years-old who are disabled, care-leavers or from a minority ethnic group) or £3,500 for employers hiring or upskilling apprentices over 25-years-old. More info here.

Adopt an Apprentice: if you hire an apprentice who’s recently been made redundant, you will receive £5,000 to help cover wage and recruitment costs.

Access to Work: If you hire an apprentice who has a disability, or a long-term physical or mental health condition, you will receive financial assistance for equipment, software and travel costs (taxis etc).

What apprenticeship is right for my firm?

In Scotland, AAT accounting apprenticeships are available in two different qualification levels: Foundation and Modern.

Foundation Apprenticeship in Accountancy (FA)

Age range: 16-18-year-olds attending school.

Duration: One-two years depending on the school/college

How it works: The apprentice takes their FA alongside other school subjects, usually their Highers. During the FA, each pupil completes a work placement of one day a week in the Sixth Year (S6) to help complete units from the AAT Award.

Accountancy skills learned: preparing management accounting information; advanced bookkeeping; analysing accountant information; final accounts preparation; preparing financial accounting information; indirect tax; recording data in the ledger; professional ethics.

Qualifications earned: AAT Advanced Certificate in Bookkeeping

Core skills learned: communication, problem-solving, information and communication technology, numeracy (all SCQF Level 4).

Cost: None. The learner is still at school, so the only commitment from employers is your time.

Why consider a foundation apprentices for your firm: Upon finishing the apprenticeship, students will be equipped with the skills and knowledge to enter the workplace as a trainee accountancy technician. “Many businesses support the foundation apprenticeship to identify potential recruits for modern apprenticeships,” says White . It’s also a brilliant way to support your local community too.

Note: You can’t hire a foundation apprentice because they’re still at school. However, you may recruit them after they’ve left.

Modern Apprenticeship in Accountancy (MA)

Age range: 16+

Duration: 9-12 months

How it works and skills learned:

The MA is available at three levels:

Level 2

Skills learned: bookkeeping controls and transactions; elements of costing; using accounting software.

Qualifications earned: AAT Foundation Certificate in Accounting

Jobs for Level 2 modern apprentices: accounts administrator; accounts assistant; accounts payable clerk; purchase/sales ledger clerk; trainee accounting technician; trainee finance assistant.

Level 3

Skills learned: advanced bookkeeping; final accounts preparation; management accounting: costing; indirect tax; ethics for accountants; spreadsheets.

Qualifications earned: AAT Advanced Diploma in Accounting

Jobs for Level 3 modern apprentices: accounts assistant; accounts payable and expenses supervisor; accounts payable clerk; assistant accountant; audit trainee; bookkeeper; credit controller; finance assistant; payroll administrator; payroll supervisor; practice bookkeeper; tax assistant.

Level 4

Skills learned: management accounting principles such as budgeting and decision & control; preparing financial statements of limited companies; accounting systems and controls. MAs also have the option to study business tax, personal tax, external auditing, cash and treasury management or credit management.

Qualifications earned: AAT Professional Diploma in Accounting

Jobs for Level 4 modern apprentices: accounts payableand expenses supervisor; assistant financial accountant; commercial analyst; cost accountant; fixed asset accountant; indirect tax manager; payments and billing manager; payroll manager; senior bookkeeper; senior finance officer; senior fund accountant; senior insolvency administrator; tax supervisor; VAT accountant.

Cost: You will have to pay the MA’s wages (which must be at the minimum living wage or above), plus any employment costs and equipment. However, the Scottish government (through SDS) will contribute towards training costs.

Why consider a modern apprentice for your firm: A modern apprenticeship gives students industry-recognised qualifications, as well as equipping them with workplace-ready accounting skills.

Case study: Edinburgh-based Zen Consultants

“Apprentices have been an absolute blessing for my business”

Saj Sharif is founder/CEO at Edinburgh-based Zen Consultants. Here, she tells us how hiring apprentices has helped double her team…

“A couple of years ago, I found myself in a tricky situation many business-leaders might recognise. The client base at Zen Consultants, the practice I founded in 2006, was suddenly growing. However, I didn’t have enough employees to deal with this increased workload.

So I started hiring, of course. Yet, many of these hires struggled to fit in with Zen’s business culture; some failed to pass the probation period. I was confused: why weren’t these experienced people fitting in?

A business associate suggested that I hire an apprentice. At the time I assumed apprenticeships were for people who wanted to work in construction, not accountancy. However, after doing some research, it dawned on me that apprentices would give me the chance to handpick the young recruits I wanted. Not only would have a clean slate, but they could be trained in the culture of the firm.

Today, apprentices make up half my six-strong team at Zen. Since I first took on my fist member of staff in December 2015 (who’s now being upskilled on the Modern Apprenticeship), the business growth has been unbelievable: we’ve more than doubled our client portfolio.

Along the way, I’ve discovered apprentices are incredibly energetic and motivated. Their fresh minds bring some wonderful ideas into the firm; I’ve constantly been surprised about how switched-on and sharp they are. It helps keep our working environment young.

I’m now running a 10-week online programme for foundation apprentices, who work with me online every Thursday afternoon. I’m planning on recruiting one of them once they finish their education, before training them as a modern apprentice.

If you run a practice or head a finance team, supporting foundation apprentices puts you in an advantageous position. Because I’m getting to know these students over a 10-week period, I’m getting a beautiful insight into their personalities (plus who hands the work in!), which will help with the recruitment process. The online programme uses a mock template for interim accounts, which was designed by our 18-year old modern apprentice at Zen: proof of how valuable apprentices are!

I’m such a big champion for apprenticeships (I’ve even persuaded my teenage daughter to pursue a filmmaking apprenticeship). They’ve been an absolute blessing for my business.”

Getting started

As an independent body, AAT can help you decide on the right apprenticeship for your business.

Get in touch with AAT’s employer team now and get your free employer guide to learn how an apprenticeship could benefit your business.

Free employer guide

How apprenticeships are benefitting Scottish employers and trainees

Posted 02/25/2021 by David Nunn & filed under Apprenticeships, Scottish Apprenticeships.

Scottish Apprenticeship Week gets underway this week with the theme of “businesses backing talent”. It’s all about raising awareness of employers providing people with opportunities to advance their careers in areas like bookkeeping and accountancy.

But apprenticeships are a two-way street, creating value for both trainee and employer.

Modern Apprenticeships are an excellent route for individuals to develop high levels of skills and professional knowledge while increasing their financial independence.

At the same time, they provide apprentices opportunities to make a difference in the workplace and contribute to business performance.

Benefits to employers

Tax Assist and Johnston Carmichael are two Scottish employers that have found excellent results using apprenticeships in conjunction with qualifications from the Association of Accounting Technicians (AAT).

AAT is an internationally-renowned awarding body specialising in skills-based accountancy and finance qualifications of differing levels. A training provider can combine these in an accounting apprenticeship programme to meet the needs of the business.

“The AAT qualification provides a good grounding in the fundamentals of accounting,” says Lynne Walker – Head of Business Advisory at Johnston Carmichael. “And whilst doing the qualification alongside on-the-job training, you can really see our students developing business skills which are vital in their roles as our advisers of the future.”

Richard Lambert, Director at TaxAssist West Edinburgh, agrees: We’ve developed a relationship with AAT because the qualifications are practical.

Responsibility

Tax Assist gives its AAT apprentices technical roles immediately, says Lambert. “Typically, an apprentice will start by running our technical admin. This means doing all the liaison with Companies House, HMRC and other bodies, getting answers to client queries and relaying that information to the customer’s contact so they can pass it on to the customer.

“We develop relationships with our apprentices, and we invest in them,” he says. “An example is someone we recruited recently who left a position where they had nothing to do but file papers. Here, they have responsibility, combined with support. The individual is learning about personal tax, has started doing simple sets of accounts and within 15 months is doing real work, which relates to their qualifications.”

Apprenticeships are suitable for people of any age, including existing employees. That said, both Johnston Carmichael and Tax Assist have found it beneficial to create school leaver programmes.

How apprentices benefit

Dimitris Paganopoulos, an Audit Assistant at Johnston Carmichael’s Elgin office, came up through the JC Futures programme, joining the firm after his sixth year of secondary school.

“I really like the experience and knowledge I’m gaining towards my career and AAT qualification through the JC Futures route. I’d definitely recommend an apprenticeship if you’re like me and extremely sociable! It’s a brilliant way to meet a vast network of business connections whilst progressing your career from a young age.

“I have been able to gain knowledge and experience of the accountancy world that can’t be taught from a textbook. I’ve found AAT to have a very effective study structure, which is especially useful when you’re balancing studying alongside working.”

Graduate route

Robert Lamb, Business Advisory Assistant, is another beneficiary of the JC Futures programme. His journey started in 2018 with the AAT foundation bookkeeping certificate with AAT before moving onto the Graduate Apprenticeship route with Robert Gordon University.

“The JC Futures programme was a really attractive option for me as it opened my eyes to the fact that you can still achieve specialist and professional qualifications without having to go into full-time education. The ‘hands-on’ approach is the best way for me to learn, and I’ve been able to gain valuable experience in the accountancy sector while also becoming financially independent at a young age.”

Get started

Accountancy practices have been quick to realise the benefits of apprenticeships, but businesses increasingly recognise how they can help them build out their finance teams.

As an independent body, AAT can help you decide on the right apprenticeship for your business.

Get in touch with AAT’s employer team now and get your free employer guide to learn how an apprenticeship could benefit your business.

Get Your Free Employer Guide

A guide for accountants to the Brexit deal and life after the transition period

Posted 02/24/2021 by AAT Comment & filed under Brexit, Members.

On 31 December 2020, the UK officially left the EU single market and customs union, following the end of the Brexit transition period. One week before, on Christmas Eve, the UK and EU announced a trade deal that would ensure tariff-free access to EU markets for British businesses, which has since been voted into law by parliament.

However, there will still be significant changes to business and financial processes. Finance professionals need to understand how these will impact their own business processes, as well as those of clients.

Even small businesses that export or import to the EU will be affected. So will those employing EU workers, or sending workers to visit EU states.

Headlines

Government announces £20 million SME Brexit Fund to ease the burden of customs processes

Brexit Webinar: VAT for imports and exports

This webinar will bring you up to speed on the significant changes to the movement of goods from Great Britain to the EU, how goods are reported, and the conditions for zero-rate goods exports, plus the Northern Ireland protocol.

Customs processes
VAT
Financial reporting
People and travel
Data protection
Resources
Latest updates

Customs processes

The Brexit trade deal ensures tariff-free and quota-free access to the EU, one of the world’s biggest markets. Essentially, it means that both sides can continue trading in much the same way as they did before.

EORI number

In order to move goods in or out of the UK, businesses will need a UK EORI number (Economic Operator Registration and Identification). This should be prefixed with the letters ‘GB’. HMRC has automatically enrolled companies that are VAT registered, and have traded with Europe. Firms below the VAT threshold need to apply online. The process is simple and should take less than 10 minutes. More information here.
Businesses that don’t have an EORI number can expect increased costs and delays. For example, if HMRC can’t clear a company’s goods at the border, the business may need to pay storage fees.
An EORI number won’t be needed if the business provides services only.
Action: check if your organisation needs an EORI number.
In order for an organisation in the EU to receive goods from a UK supplier, they will also need an EU EORI number. More information here.
Action: check trading partners have an EORI number.
If you move goods between Great Britain (England, Scotland and Wales) and Northern Ireland, you will need an EORI number that starts with XI. However, you can’t get an XI EORI without obtaining a GB EORI first. More information here.
You won’t need an EORI number to move goods between Northern Ireland and Ireland (which is in the EU).

Customs declarations

Customs declarations need to be made for any goods entering or leaving the UK.
Making customs declarations can be complex, so businesses are advised to appoint appoint a customs agent or freight forwarder to handle this on their behalf.
Alternatively, businesses can do this themselves using specialist software or online via the Customs Handling of Import and Export Freight (CHIEF) system. Businesses can also make a simplified frontier declaration when importing goods.
In the Brexit deal, the UK and EU both agreed to support the efficiency of cross-border trade in terms of documentary clearance and transparency. However, a significant amount of bureaucracy is still expected.
Action: decide who will make the customs declaration. Do any further procedures apply?

Common and Union Transit

Companies that depend upon moving goods using tight deadlines within the UK or EU should check out Common and Union Transit. This will enable them to transit goods more rapidly as it doesn’t require customs declarations and duties at each border crossing.

Rules of origin

The United Kingdom and the European Union have agreed to 100% tariff-free trade, meaning there will be no tariffs or quotas on the movement of goods between the UK and the EU.
However, the deal only covers ‘originating goods’ (ie those produced within the UK or EU). The ‘rules of origin’ regulations means that products will attract tariffs if more than 40% of its pre-finished value was either not of British origin or from a non-EU country. UK firms must self-certify the origin of exports to the EU.
More information here.

Duty deferment account

Organisations that regularly import goods from the EU can apply for a duty deferment account, which allows payment of customs charges once a month, instead of paying for individual consignments. Having a deferment account can help a business ensure high-value shipments are cleared quickly and simply during customs checks.

Assigning responsibility

Consider making a person in the business responsible for leading customs planning. In general, staff need to understand the processes involved in shipping goods around the EU. HMRC has a useful guide here.
The government has made £16m available for businesses to help train staff in dealing with customs processes. You can find a list of training providers here.

Northern Ireland

Northern Ireland will continue to follow EU single market rules for importing/exporting goods.
This means that there will be customs procedures for goods transiting between the UK and Northern Ireland.
There will be no changes in how Northern Irish goods move from Northern Ireland to Great Britain. But customs declarations will needed for any goods brought into Northern Ireland from Great Britain.
For more information, check out HMRC’s guide to moving goods in and out of Northern Ireland.

Government reliefs and financial assistance

There is funding available from the government that could help businesses with customs declarations, such as customs warehousing and inward-processing relief.
For a list of grants and how to apply for them, see here.

Contact details and more information

HMRC’s Brexit page.

HMRC helpline: 0300 322 9434
HMRC textphone: 0300 200 3719
HMRC webchat

VAT

UK businesses now have to apply VAT to trading with EU countries in the same way as when trading with non-EU countries. EU countries will also deal with the UK as they do with countries outside the EU.

Postponed accounting

Businesses that are registered for VAT in the UK are now able to use postponed accounting. This means that businesses won’t need to pay import VAT when their goods arrive at the British port or airport. Instead, they’ll need to account for it on their VAT return. This will apply both to imports from the EU and non-EU countries.
This could be advantageous for some firms (especially those with cashflow issues) but could cause extra paperwork six months down the line for others.
There will no changes to how VAT is treated on goods moving between Northern Ireland and the EU.
More information here.

Registering for VAT in EU countries

Businesses may need to register for VAT in the EU country that they sell to. More information on the European Commission website.

Distance selling

Distance selling means selling goods/services through digital, TV, mail order, phone or text messaging.
If a business ‘distance sells’ to the EU, they should register for VAT in the country that they are selling to. This is even more important if the total value of goods exceeds the distance selling threshold for that country (€35,000 for most EU countries).

VAT on digital services

The UK has now withdrawn its VAT Mini One Stop Shop (VAT MOSS) scheme, which enabled British digital companies to declare sales and pay VAT in the EU, rather than the painstaking process of doing so in each individual member state). All final returns for MOSS should be submitted by 20 January 2021.
Businesses that provide digital services to customers in the EU can still use VAT MOSS, but they will need to register for VAT MOSS in each EU country where they sell services. More information available on the European Commission website.
Alternatively, businesses can opt to pay VAT in each member state where they sell digital services to consumers. Again, see the European Commission website.

VAT refunds

British businesses claiming EU VAT incurred on or before 31 December 2020 must submit their claims through their HMRC portal by 31 March 2021.

Northern Ireland and VAT

Because Northern Ireland’s border with the EU remains open, UK import VAT will need to be paid on any goods imported into Great Britain (England, Scotland and Wales) from Northern Ireland. HMRC must be informed about any goods.
EU VAT will need to be paid on any goods entering Northern Ireland from Great Britain (however, this can be deferred via postponed accounting).
Imports/exports between the European Union to Northern Ireland will follow current EU procedures.
More information here.

Financial reporting

There will be some changes to corporate reporting.

When preparing annual accounts, companies will need to use ‘UK-adopted international accounting standards’ instead of ‘EU adopted IAS’ for financial years beginning on or after the 1 January 2021. When preparing accounts for financial years before 1 January 2021, companies can continue using EU-adopted IAS.
UK-incorporated parent companies with a subsidiary or presence in a European Economic Area (EEA) country will need to check the reporting requirements of that particular member state.
Public interest entities such as banks or insurance firms will have to follow disclosure and transparency rules issued by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA).
UK companies will also need to appoint a UK-registered audit firm.
More information on the HMRC website and the Financial Reporting Council website.

Company Law

UK businesses with a branch operating in the EU will become a third country business in the event of no-deal, and so will need to comply with the laws in those countries.

Accounts

Accounts will need to be prepared using ‘UK adopted IAS’ instead of ‘EU adopted IAS’ for financial years beginning after the UK leaves the EU. Initially, standards will be the same, but may later diverge – more information.

Audit

UK companies will need to appoint a UK registered audit firm. An individual UK registered auditor will need to sign the audit report on behalf of the firm.
Some rules relating to approving individuals and firms for registration as auditors will change. Find out more about auditing after Brexit.

Disclosures

The Financial Reporting Council is encouraging companies to be specific about the threats they face from leaving the EU.
Recent advice to finance directors and audit chiefs says challenges should be disclosed, along with details of actions taken or planned.

People and travel

Workforce

Any business reliant upon EU nationals should encourage these staff members to apply for the EU Settlement Scheme so they can continue to live and work in the UK. They must apply before 30 June 2021.
British businesses can still hire staff from EU. But employers will also need a sponsor licence to hire workers from the EU, EEA and Switzerland. Details on how to get a sponsor licence here. A sponsor licence isn’t needed for Irish citizens.
Employers can continue to carry out the same Right to Work checks for EU/EEA/Swiss citizens that they currently do (e.g. inspecting their passport or identity card). However, from 30 June 2021, they will need to follow the government’s new Brexit rules.

Qualifications

Under the Brexit deal of 24 December, there will be no more automatic recognition of qualifications for many professions, including accountants and auditors.
Fourteen EU member states including Germany, Italy, Spain and the Netherlands will recognise professional accountancy and bookkeeping qualifications without any restrictions.
However, 13 other EU countries, including France, Denmark and Greece, have specified that British accountants, bookkeepers and tax advisers will need to undertake an ‘economic needs’ test.
The situation is tougher for auditors. In France, Italy and Portugal auditors may need to be resident in order to practice, while in other countries, they may need to re-qualify.
The UK will continue to recognise the accountancy and bookkeeping qualifications of EU member states without imposing any reservations or tests.

Travel

British nationals must have at least six months left on their passport (which also must be less than 10-years old) in order to travel to EU countries. UK passport-holders will no longer be able to use the EU queue at the airport and borders.
Tourists won’t need a visa for stays of less than 90 days to EU/EEA countries. However, they may need a visa or permit if they wish to stay longer, work or study, or for business travel. For more information, consult the travel advice for each individual country.
The European Health Insurance Card (EHIC), which allows British passport-holders access to free healthcare on the continent, will still be valid in the EU until it expires. It will be replaced by a global health insurance card (GHIC), which you can now apply for here.
Business travellers won’t need a visa if visiting the EU for a business meeting or attending a conference. However, they may need a visa or permit if they are transferring from a UK branch of a company to its office based in an EU country, selling goods/services to customers in an EU country or providing services as a self-employed person.
Free mobile phone data-roaming will end. However, mobile providers such as EE, O2 and Vodafone have announced they won’t reinstate roaming charges.
These rules don’t apply to Ireland.

Data protection

Most of the data protection rules affecting small to medium-sized businesses and organisations will stay the same after exiting the EU.

The UK is committed to maintaining the high standards of the GDPR (General Data Protection Regulation) and the government plans to incorporate it into UK law after Brexit.

No EU contacts or customers – where a business does not receive personal data from the EU, little or no additional work will be required to prepare for data protection compliance after Brexit.
Businesses that receive data from the EU – where an organisation receives personal data from contacts in the EEA, extra steps will be needed to ensure that the data can continue to flow after Brexit.
Businesses will need to comply with both UK and EU data protection regulations after Brexit if they have an office, branch or other established presence in the European Economic Area (EEA), or if they have customers in the EEA.

Data protection information

The issue of data protection is still unresolved.
The EU is currently undertaking an ‘adequacy assessment’ of the UK to establish whether the country has a sufficient level of data protection. If the UK is found to be ‘adequate’, then personal data should flow as freely as it did before.
However, this is likely to take some time. The quickest data adequacy agreement struck between the EU and another country took 18 months (a deal with Argentina).
A six-month ‘bridging mechanism’ has been put in place. During this time, personal data will continue to transfer freely between the UK and EU countries.
More information can be found here.

Resources

Brexit – webinar resources

Brexit Webinar: VAT for imports and exports The EU VAT e-commerce package (Sponsored by SAGE 11/12)

Brexit Webinar: VAT for imports and exports

HMRC customs and borders help webinars

An Exporters Guide to Brexit

Customs and VAT post the transitional period

Brexit Resources – Northern Ireland

Accounting for VAT on goods moving between Great Britain and Northern Ireland

10 Key steps to be ready in Northern Ireland

VAT & Northern Ireland – Guide

VAT & Republic of Ireland – Guide

Brexit and customs – Northern Ireland – Guide

Brexit and customs – Republic of Ireland – Guide

The British Chambers of Commerce has a free checklist.

Latest updates

11 February

SME Brexit Fund

HMRC will give grants available small and medium-sized UK businesses that need support on customs duties and VAT.

Up to £2,000 will be available for professional advice or support staff training for businesses with fewer than 500 employees and a turnover of less than £100m can apply. Applications can be made online soon at the following link.

24 December

Free Trade Deal

The document containing the full details of the EU-UK trade deal can be found here.

16 December

Binding Origin Information

The Government has published new guidance warning that Binding Origin Information decisions issued by the UK or for EORI numbers starting GB will not be valid in the EU from 1 January 2021. BOI is a European Union (EU) wide system that allows parties to obtain a binding decision from an individual EU Member State on the origin of its goods. These decisions are legally binding throughout the EU.

8 December

Taxation (Post-transition Period) Bill

This new Bill will make provision for goods in Northern Ireland and their movement into or out of Northern Ireland, including the imposition and regulation of new duties of customs.

28 October

Completion of customs import declarations updated

HMRC updated help and support guidance for traders getting ready for Brexit. It now includes a link to register for a new webinar concerning the completion of customs import declarations.

23 October

Help with customs declarations in a no-deal Brexit

HMRC has updated its list of customs agents and fast parcel operators who can help submit customs declarations in a no-deal Brexit.

Read more about getting someone to deal with customs.

22 October

HMRC Brexit preparation guidance updated

HMRC has updated its Brexit preparation webinar guidance, aimed at traders preparing for Brexit.

Click to register for the next live webinar about getting ready for Brexit and the transitional simplified procedures that have been added.

17 October

Fears over VAT and Customs block deal

DUP opposition makes no-deal more likely

16 October

HMRC accelerate 95,000 firms onto simplified import procedures

HMRC has automatically registered 95,000 businesses for simplified import procedures. Known as Transitional Simplified Procedures (TSP), these should allow most traders up to six months to pay import duties and submit customs declarations

VAT guidance for EU businesses updated

The government has updated its guide for EU traders importing from the UK to include post-Brexit section.

Bringing goods to the UK from the EU through RORO ports

HMRC has updated its online guidance for businesses using roll-on roll-off (RORO) locations to transport goods to the UK from the EU in a no-deal Brexit.

9 October

Movement of Irish goods in a no-deal Brexit

HMRC has published guidance on how excise goods will be moved to and from Ireland in a no-deal Brexit.

Moving excise goods from Northern Ireland to Ireland in a no-deal Brexit

Temporary tariff regime

The Government has updated the temporary tariff regime if the UK leaves the EU without a deal.

Lower tariffs on HGVs entering the UK market;
Adjust tariffs on bioethanol; and
Apply tariffs to additional clothing products.

Building a cyber security plan of action for your business

Posted 02/23/2021 by AAT Comment & filed under Cyber security, Members.

Sarah Lyons, Deputy Director for Economy & Society, the National Cyber Security Centre (NCSC) – sets out the fundamentals of staying cybersecure.

Over the past year, businesses in the UK have adjusted to new ways of working and are using the internet more than ever before. According to a report from the Centre for Economic Performance, more than 60% of businesses are using new technologies since the beginning of the pandemic. This is happening in almost all industries – including accounting.

The increased use of email, online payments and collaboration software has brought great benefits to the Finance and Accounting sector, but it does come with risks. Early in the coronavirus pandemic last year, we published guidance for businesses on securely making the transition to organisation-wide home working.

Knowing which measures to take to improve our cyber security isn’t always straightforward, though. There is a lot of information out there and sifting through this to find relevant guidance can take a lot of time and effort.

At the NCSC, we have launched a new tool that will help businesses access cyber security guidance that’s relevant to them. After responding to questions on their current IT practices in the new Cyber Action Plan, they will receive tailored advice on how to improve their cyber security, based on the responses given.

The Cyber Action Plan recommendations stem from the six practical, actionable steps from the technical experts at the NCSC that protect us from the majority of online crime:

Use a strong and separate password for your email
Create strong passwords using 3 random words
Save your passwords in your browser
Turn on two-factor authentication (2 FA)
Update your devices and apps
Back up your data

The behaviours underpin the cross-government Cyber Aware campaign, and you may hear our radio advertisements in March urging businesses to use the Cyber Action Plan.

For accountants and business owners more widely, cyber security should be a priority and I’d strongly recommend visiting cyberaware.gov.uk. We would encourage them to familiarise themselves with the site’s guidance and test themselves against the Cyber Action Plan. It will only take a few minutes to enter the information and it’s free– but it might just provide the priceless knowledge needed to better protect them and their businesses from cyber criminals.

If you would like to improve your cyber security further visit the small business pages on our website. Here you can access a range of resources and guidance created specifically for small business owners.

How the AAT Bursary scheme is helping me switch careers

Posted 02/23/2021 by Hannah Dolan & filed under AAT news, Bursary scheme.

When Inga Gumuliauskiene found out she was one of 10 individuals accepted for the AAT Bursary scheme – launched last year to coincide with the association’s 40th birthday – she cried with joy.

“Being chosen for the AAT Bursary has given me my confidence back and given me new hope for the future,” she says. “I don’t know how to thank the AAT for this opportunity to have a rewarding career.”

Inga’s story

A former manufacturing engineer, Inga arrived in the UK from Lithuania with her son in 2006 after her marriage broke down. Unable to find work in the manufacturing sector, she took a job as a retail clerk – an area she still works in today.

However, in 2019, disaster struck when Inga was involved in a car accident that left her unable to walk. “The accident did not seem that serious initially, but one day soon afterwards I woke up and just couldn’t walk,” Inga says. “It was a huge shock.”

She has since been diagnosed with a Functional Neurological Disorder which means she may need crutches to walk for the rest of her life. “The doctors don’t know whether my condition is permanent or not, but needing crutches is a problem in my work because it involves quite a lot of walking around,” she says. “So once I realised I was going to have to live with walking difficulties, I knew I needed to find a desk job of some kind.”

A passion for numbers

“I had joined an AAT Facebook group a couple of years earlier because I have always liked working with numbers and was interested in potentially doing some AAT qualifications so I could change my career,” she says.

“When I saw a post about the AAT Bursary scheme, it was like a lifeline.

“I researched the scheme and sent in my application, and when I received an email saying I had been accepted a few months later, I cried with joy because having this opportunity to study is like being given a second chance in my life.”

Starting out with AAT

Since being chosen as an AAT Bursary recipient, Inga has started studying for her AAT Foundation Certificate in Accounting (Level 2).

“When it came to choosing how and where to study, I picked an online course run by Kaplan because it’s easier for me to study at home,” she says. “I have passed all the exams so far with scores of more than 90%, which I’m really proud about.”

She is impressed by the level of support she has received, without which she wouldn’t have been able to start her journey as an AAT student.

“Through the scheme, I’ve received funding for one year’s AAT membership, plus all the training and exam fees,” Inga says. “I’ve even had my textbooks provided.”

Starting her own business

Now, she’s focused on building a career in accountancy – and maybe even opening her own practice one day.

“This Bursary is my chance to move forward and learn new skills that will allow me to support my son and I financially in the future,” Inga adds.

“My dream is to become a full AAT member and open my own accountancy practice one day, but the next step is to find some work experience in the financial sector.

“Then I can hopefully go on to study for my Level 3 and Level 4 qualifications.”

About the AAT Bursary

AAT is committed to improving social mobility within accountancy – ensuring dedicated individuals can succeed in the sector regardless of their personal circumstances.

So to celebrate its 40th birthday, the association launched a scheme offering bursaries to 10 financially disadvantaged students keen to study towards an AAT qualification.

The scheme was open to UK residents aged 16 or over, and included a range of AAT accounting, bookkeeping, and business qualifications – from the Access Award in Bookkeeping (Level 1) and the Foundation Diploma in Accounting and Business (Level 2) for 16 to 19-year-olds to the Professional Diploma in Accounting (Level 4).

For those accepted, it covered all the costs involved in taking the relevant qualification, from the training provider’s fees to the textbooks required – up to a maximum of £5,000 per student.

In other words, it offered a potentially life-changing chance for 10 people who would be unable to pay these costs themselves.

As Adam Williamson, Head of Professional Standards at AAT, said at the time: “At a particularly challenging time for the UK, the AAT Bursary provides a fantastic opportunity to change the lives of individuals who need financial support.

“AAT qualifications are globally recognised and give thousands of people the chance to start an exciting career in finance. “We believe this scheme will add to our success stories.”

Thank you to Inga for sharing her courageous and inspirational story with us. AAT is proud to have been changing lives for more than 40 years, and is thrilled to be able to assist AAT Bursary recipients such as Inga to achieve their dreams of working in accountancy.

AAT launches Learning Pathways pilot scheme to supercharge your CPD

Posted 02/23/2021 by AAT Comment & filed under AAT news, CPD, Members.

AAT has launched an exciting new idea in professional development – CPD Learning Pathways.

Designed to take the hard work out of planning CPD, CPD Learning Pathways help you acquire vital skills and understanding through a series of carefully planned and structured content.

The initiative has started with a trial pathway for FMAATs in one of the most sought-after subject areas – Finance Business Partnering.

AAT aims to use this trial to test and hone the CPD Learning Pathways concept before making it available to the wider membership later in the year.

How Learning Pathways work

Each Learning Pathway includes a syllabus of 10 related modules, which will be released over the coming months to give you paced development.

Every module delivers a deeper understanding of a crucial element of the subject, and by releasing them over time, they allow you to develop your skills in a manageable, schedule-friendly way.

Finance Business Partnering – for FMAATs

The Finance Business Partnering CPD Learning Pathway is free of charge and exclusive to AAT FMAATs.

Two modules can be accessed right away:

Introduction to Finance Business Partnering
Connect & Collaborate – relationship-building, influencing and negotiating skills

More will be added as the pathway unfolds.

How to access the pathways

CPD Learning Pathways are being made available through AAT’s new Lifelong Learning Portal.

AAT developed the Lifelong Learning Portal to deliver a modern, personalised platform to support professional learning. It was launched successfully to students last year and is now being introduced to AAT members.

If you are an FMAAT, you will be able to log in to the Lifelong Learning Portal access the new learning pathway resources.

Access pathway

Stay up to date

As new modules become available, we’ll let you know via the AAT News newsletter, so look out for updates on new releases and check the syllabus in the pathway introduction to see what’s to come.

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