Your views: headaches await from deferred VAT scheme

Posted by & filed under Coronavirus.

Businesses have taken advantage of the VAT and income tax deferment schemes to ease pressure on their finances. But come next April, will they have the cash to pay it?

As businesses started to feel the pressure due to COVID-19, the government announced that businesses had the option to defer VAT and income tax payments to ease the pressure on their cashflows.

Under the VAT scheme, UK VAT registered businesses with a VAT payment due between 20 March 2020 and 30 June 2020 have the option to defer payment to a later date – no later than 31 March 2021. Income tax payments can be deferred to 31 January 2021.

Many businesses have taken advantage of the scheme, but as the lockdown continues, questions are arising around their ability to pay it come 2021. Accountants in practice give their predictions on how big an issue this will be.

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With a recession looming, Q1 2021 threatens disaster

Chris Conway, director and co-founder, Multiply Accountancy

There’s going to be a disaster situation come March next year.

A lot of businesses have kicked these payments down the line, and you’ve got to consider what has been kicked as well.

With VAT, you’ve got any payments between 20 March and the end of June, so if your payment was due on 7 June, that’s an April quarter, so you’ve probably had a terrible six-eight weeks, so your liability is likely to be smaller.

But if you’re at the earlier end of that window – your payment was due on 7 April – worst-case scenario and you’re a Christmas trader, you’ve just had the biggest quarter of your year. That becomes a nightmare, when you’re thinking about a potential recession coming.

Most of the businesses that are deferring VAT are having to defer VAT – they have to live hand-to-mouth. That’s probably a business where profits pay the owner’s wages. So how are they going to accrue surplus cash to pay back the VAT? I don’t think that they’re going to. I think it will be a very interesting time 12 months from now, when people are trying to arrange their time-to-pays, because they can’t pay the VAT.

Companies are taking these measures – tax deferment, CIBILS – then they’re just sitting there, they aren’t cutting their overheads. They’re hoping that things will just return to normal. Imagine a lot of people will end up paying their salaries with the income they bring in and will then go bust. I’ve already had some very difficult conversations with clients that will struggle to pay their VAT next year. We’re trying to help them manage it day-by-day.

Next steps: There isn’t much you can do, except make sure people know what’s coming – many businesses will have to take on more debt and will need to have some time-to-pay discussions.

Verdict: Businesses will struggle to pay their deferred VAT and income tax, and need to face reality now. and need to face reality now.

HMRC will be lenient so VAT deferment doesn’t cause issues

Rana Zubair, owner, Apex Accountants

I have a few clients who have deferred their VAT payments.

I think the lower amounts they will have to pay in subsequent quarters will compensate for the deferred quarter.

I don’t think that many will struggle to pay. I don’t think HMRC will pursue the businesses that will struggle to pay the VAT amount in full very aggressively.

HMRC has recently suggested that they aren’t going to take businesses to tribunal for the recovery of this VAT, so I think where there are any issues with payment, I think businesses will be able to reach a manageable arrangement with HMRC if needed.

HMRC has already relaxed VAT rules on things such as PPE, medical equipment and pharmaceuticals, so businesses in healthcare and pharmaceuticals will also have their VAT reduced.

Some clients have applied for a Bounce Back Loan, with no repayment in the first year.

They are using this to pay off their VAT debts and trying to repay as much of the loan as possible in the interest-free period.

Businesses will definitely keep monitoring their income and ensure that they are accruing VAT, but I believe it won’t be as big an issue as it might seem.

Next steps: The approach will vary from business to business, but we’re spending time to work out tailored plans and advice for each client.

Verdict: While some businesses will take on debt to pay off their VAT, it won’t be a big problem come the end of the VAT deferment period.

VAT deferment is a massive help, but needs management

Stuart Hurst, Regional Director,
Accounts and Legal

The deferred VAT payment was a massive relief for a lot of businesses when the craziness and uncertainty began.

The lockdown caught people and businesses off-guard; there was a feeling it was coming, but when it did come, it was very sudden.

A lot of clients had VAT bills of between £10,000-£20,000 on average, and they were the ones that were hit hardest. Companies with larger VAT bills tended to have larger cash reserves and more of a contingency plan.

The vast majority of owner-managed businesses have taken deferment, and it has created a significant amount of breathing space.

There’s still a concern for the future for those business owners, however. A lot depends on how quickly things recover.

Being able to stagger payments is great, but there’s still a need to catch-up. A lot of planning is needed on the cashflow.

We’re finding it’s still about looking at the next three months to ensure [clients] can keep their heads above water until we come out of lockdown.

While there is some long-term thought about how that VAT bill will be paid, things are changing and moving so much that it’s hard to look too far ahead.

We’re trying to plan with clients and ensure there is a saving mechanism there to ensure VAT payments can be paid. It’s very difficult.

There will still be businesses who will enter the first quarter of 2021 in a very precarious position in terms of their cash flow. The Bounce Back Loan Scheme is great and very easy to access, but again, it still needs to be paid back.

Editor’s note: Stuart has just moved jobs, and his comments mostly refer to his previous role as head of UK head of cloud accounting at UHY Hacker Young.

Next steps: Help clients manage cashflows, do a lot of hand-holding, and encourage them to take the bounce back loan where needed.

Verdict: The VAT deferment scheme is a great lifeline, but the situation is still precarious.

Update for employers: Coronavirus Job Retention Scheme

Posted by & filed under Coronavirus, HMRC updates.

The UK’s Coronavirus Job Retention Scheme has been extended until the end of October 2020.

The scheme is designed to help employers retain staff during the coronavirus pandemic, even if they are forced to temporarily shut their business. Employers will be able to claim a grant from HMRC to cover most of the wages of their workforce who remain on the payroll but who are temporarily not working during the coronavirus outbreak.

Which businesses are eligible?

Any employer in the country is eligible for the scheme, provided that it had a PAYE scheme in operation on 19 March 2020.

Where are the rules of the scheme set out?

The legal basis for the scheme is contained in a UK Treasury direction  (12-page / 243KB PDF). HM Revenue and Customs (HMRC) has published guidance on the operation of the scheme.

The Treasury direction differs from the guidance which employers have relied on from the opening of the scheme in some important respects, and should in theory take precedence over the guidance. However, as HMRC issued revised guidance after the Treasury direction was issued, and as HMRC’s online portal requires a declaration that employers have complied with the guidance rather than the direction, it seems clear that HMRC intends to act on the basis of the guidance, and it views the guidance as being in line with the Treasury direction.

What does the grant cover?

Employers may claim 80% of the normal pay of furloughed employees up to a cap of £2,500, plus the employer’s National Insurance contributions and minimum auto-enrollment employer pension contributions on that 80%.

The grant does not cover the cost of providing benefits-in-kind, and all sums received must be paid to employees in the form of money. No administration fee can be charged.

The expectation is that employers will need to continue to pay furloughed employees on their normal payroll dates, and will not wait for receipt of the grant before making payments. This pay must be taxed as normal.

Which employees are eligible?

The scheme will apply to people who have been designated by their employers as ‘furloughed employees’ for at least three weeks. An employee is a furloughed employee if three conditions are satisfied:

  • the employee has been instructed by the employer to cease all work in relation to their employment;
  • the period for which the employee has ceased, or will have ceased, all work for the employer is 21 calendar days or more; and
  • the instruction is given by reasons of circumstances arising as a result of coronavirus or coronavirus disease.

Employees who have had their hours reduced but who are still working will not be eligible, although this is likely to change from August onwards (see ‘what changes are expected?’, below). However, employees may carry out training and voluntary work provided that they do not provide services to or generate revenue for their employer or any linked entities. If they undertake training, they must be paid at least the National Minimum Wage for the training time.

Employers should ensure they have objective reasons for selecting who is furloughed and who is not. If the scheme permits them to alternate furloughed status between individuals, they should give serious consideration to doing that.

All employees who were in employment on 19 March 2020 are potentially eligible provided that the employer has notified HMRC of them on an RTI submission on or before that date. For employers which pay towards the end of the month, the RTI condition is likely to mean that no person recruited in March is eligible, and it may even mean that some people who were in employment on 28 February – the previously communicated eligibility date – are ruled out.

Those who started after 19 March or who had not featured on an RTI submission on or before that date are not eligible, subject to the TUPE point below. Where employers have no work for new starters to do, they will need to agree to defer the start date or pay notice to cancel the contract.

HMRC has confirmed that employees who transfer to a new employer under TUPE after 28 February 2020 are eligible and may be furloughed.

The scheme applies to all employees whether full-time, part-time or on zero-hours contracts. Apprentices are also covered. The scheme also applies to any other person paid via PAYE, including company directors and agency workers (if the agency pays them via PAYE, in which case it would be the agency who could furlough them).

The self-employed are covered by an alternative Self-employed Income Support Scheme.

What changes are expected?

The government recently announced that the scheme will be further extended until the end of October, but it could take until end of May for further details to emerge. The scheme will continue as at present until the end of July.

From August – October, the following changes are anticipated:

  • all sectors will still be able to access the scheme;
  • part-time work will be possible;
  • businesses will have to start “sharing the cost” of furlough, but employees will continue to receive 80% of their wages. The proportion that employers will be required to contribute is yet to be confirmed.

How does an employer make an employee furloughed?

An employer can only claim the grant in respect of furloughed employees. The employer must notify the employee in writing that they are furloughed, and must keep a copy of that communication for at least six years.

The Treasury direction provides that, to be furloughed, an employee must have been instructed by their employer to cease work, and that this is the case “only if the employer and employee have agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment”. This appears to mean that only those employees who have consented in writing to cease all work are eligible under the scheme. This requirement was not included in the original guidance, and many employers have furloughed on the basis of deemed consent – especially where they are paying full pay – or relied on a contractual lay-off clause or agreement with a trade union.

It remains to be seen whether HMRC will decline claims from employers which do not have express written consent from employees, particularly as such action could be subject to judicial review on the basis that employers had a legitimate expectation based on HMRC’s guidance that express consent was not required. As indicated above, HMRC seems to intend to rely on the guidance even though, strictly speaking, the Treasury direction takes legal precedence.

Consent is also strongly recommended from an employment law point of view. As well as addressing the eligibility concern, this would guard against the risk that employees on whom furloughing is imposed could claim a sum equivalent to the reduction in pay through an unlawful deduction from wages claim as well as the risk of an additional PAYE liability.

Can employees on other types of leave be redesignated as furloughed?

This is an area in which specific advice will be needed. The guidance indicates that those who are self-isolating or ‘shielding’ may be furloughed “for business reasons”, but not simply because they are sick or self-isolating. The Treasury direction, however, appears to take a harder line and provides that those eligible for statutory sick pay (SSP) may not be furloughed, unless and until the SSP has expired.

Finally, the guidance confirms that employees who are unable to work due to caring responsibilities, such as childcare, can be furloughed.

Can employees take annual leave during furlough?

The Treasury direction has failed to clarify how furlough interacts with annual leave, but the latest guidance confirms that leave can be taken during furlough. Holiday pay must be paid at the “usual” holiday pay rate.

On 13 May, the government issued additional guidance on holiday entitlement and pay during coronavirus. Employers will also want to take note of the ACAS guidance on holiday pay, as employment tribunals will take that into account.

Annual leave

It is clear that annual leave will continue to accrue during furlough, confirming what was stated in the HMRC guidance. There remains ongoing debate about whether an employer can require an employee to take leave, as well as the employee being able to choose to take leave.

As per the ACAS guidance, employers should first seek to encourage employees to take holiday. Many employees receiving 80% of pay on furlough would be happy to take holiday, as 100% of holiday pay is paid. On balance, our view is that employers may be able to mandate that leave be taken. The guidance does indicate that is a valid point, but it also encourages employers to take account of factors such as shielding.

Bank holidays

Where a bank holiday would normally have been taken as annual leave, the employer can either assign the bank holiday as a day of annual leave or defer the bank holiday and allow the employee to take that day at another time.

Pay

The government guidance envisages calculation and payment of holiday pay in accordance with current legislation: see the government’s general guidance on holiday entitlement.

Carrying leave forward into future holiday years

The guidance sets out a number of factors to be considered when assessing whether it was reasonably practicable for an employee to take leave in the current holiday year. These are indicative, and there may well be additional factors for your business. The guidance also notes that employers should do everything they can to ensure leave is taken in the current year.

Notwithstanding that the position with regards to the grant of leave has been clarified, there are potential employment law issues about whether leave can be taken, so employers should seek legal advice. 

Can employers alternate who is furloughed?

Many employers have considered this as a fair means of introducing and managing furlough. This is permissible provided that each individual is furloughed for at least three weeks on each occasion. Alternating may also help alleviate a feeling of unfairness on the part of employees who are working, particularly where the furlough payment is 100% of usual pay.

Can furloughed employees work for someone else?

If their existing employment contracts permit them to, employees can take on new work for other employers during furlough provided that the new employer is not linked to their current employer. You will have noted the government’s very recent statements about furloughed employees helping with the harvest. Employers who are furloughing employees should make their position on alternative work clear in their communications with employees.

Can an employer re-hire and furlough employees?

The updated guidance makes it clear that employers can do this for employees who were employed on 28 February 2020, but who left before 19 March. However, employers are not obliged to do so. They could only furlough re-engaged employees if they have no work for them to do.

What counts as pay for these purposes?

For salaried employees, pay is their pay for the last pay period on or before 19 March 2020. For employees whose pay varies, their pay is the higher of the pay from the equivalent pay period last year or the average pay for the previous tax year.

Unfortunately, the Treasury direction has introduced uncertainty as to what constitutes pay. Although the guidance provides that pay does include regular payments which employers are obliged to pay their employees, such as past overtime and compulsory commission payments, the Treasury direction casts doubt on this.

It is clear that discretionary commissions and bonuses are excluded, as are benefits in kind. Where employers operate salary sacrifice, only the post-sacrifice pay may be claimed. The grant may not be used to subsidise the cost of providing benefits under the sacrifice scheme. However, HMRC has confirmed its view that the Covid-19 outbreak is a ‘life event’ which may warrant changes to the salary sacrifice scheme. Before deciding to make any change, employers will need to bear in mind that even if they do make a change then they can only claim for the salary as it was on 19 March. Employers should ensure that any such changes are implemented in accordance with employees’ contractual rights.

Employers do not need to top-up the 80% in order to qualify.

Employees earning more than £37,500 will receive less than 80% unless employers agree to top up.

How do employers claim?

The HMRC portal through which claims must be made came into operation on 20 April 2020.

Employers are only able to claim every three weeks.

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What are the employment law risks?

In these circumstances, it is important not to overstate the employment law risks. The practical risk of claims must be much-reduced given the wider issues people are facing and the financial cushion provided by the scheme. The more important issue for most employers will be to ensure that they comply with the scheme rules so that they may successfully claim back employment costs.

In particular, if employers agree to top up to full pay, the risks ought to be negligible. Nevertheless, employers need to at least be aware of the potential claims they may face.

The scheme must be implemented in accordance with employment law. There will be no statutory right to designate an individual as furloughed.

Where there is a contractual lay-off clause, employers are in a strong position to benefit from the scheme. They must use objective criteria for deciding who should be furloughed.

Where there is no contractual lay-off clause, employers will still need an individual’s consent to being furloughed. Without that consent, an individual could claim breach of contract or unlawful deduction from wages to recover the lost income if the employer does not top up to full pay; constructive dismissal; and potentially a protective award for failure to consult in the run-up to dismissal. The individual may also be ineligible for the scheme.

Given that the scheme only has limited time left to run, imposing the change through dismissal and re-engagement is unlikely to be an attractive option save for people with very short service. It would also attract negative PR.

Therefore, employers should consider how they could obtain consent to reduce the legal risks. The most obvious route is to run a voluntary scheme and perhaps to offer some form of top up to the scheme payment. Where employers have collective bargaining, they should talk to the union first before launching the scheme.

With people increasingly nervous about leaving home, and many now facing childcare difficulties, voluntary schemes should be successful. If anything, the issue may be that they are over-subscribed.

Employers should ensure they have objective reasons for selecting who is furloughed and who is not. If the scheme permits them to alternate furloughed status between individuals, they should give serious consideration to doing that. In theory an employer could face breach of trust and confidence or discrimination claims from people who are not furloughed but who want to be, or from those that are and who miss out on pay (because the employer is not topping-up). An objective selection process should provide a strong defence to such claims.

If employers still want to implement redundancies, care should be taken to consider whether the option to furlough is a reasonable alternative to dismissal, in order to reduce the risk of unfair dismissal claims.

Further risks arise in the context of disciplinary and grievance handling during the period of furlough. 

Our guide, Coronavirus: advice for UK HR professionals, contains more information about ACAS guidance on this topic and further issues to consider for businesses.

What should employers do now?

Employers should consider furloughing as soon as possible – the sooner they furlough, the sooner wage costs will be covered by the grant.

We strongly recommend that employers seek written consent for furloughing.

If furloughing will mean selecting some people in the same role to come to work and some to stay at home, employers should devise fair criteria to select who falls into each group. Where too many people volunteer for furlough, we believe it would be lawful to give preference to those who are vulnerable.

Employers must retain a copy of the furlough notice and consent for at least six years.

They should also consider what position they wish to take in relation to annual leave.

Finally, employers should consider the impact of the reduction in pay on salary-related benefits. For example they should check the terms of life insurance schemes to see whether this would impact on cover.

About the author

Jon Fisher is a partner at Pinsent Masons. This article is reproduced with permission from Pinsent Masons’ website.

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Practice versus industry: should you switch?

Posted by & filed under Career.

With top accountancy qualifications, the world is your oyster. You can work abroad; move across companies and sectors and indeed branch out from a pure accountancy role onto other career paths.

The major decision is whether you want to work in practice or industry or switch from one to the other. So what are the pros and cons of both?

Moving around

The image of accountants being predictable, steady accountant spending their career at the same job – even the same desk – is one from fiction, not real life. Accountants move jobs, direction, and career paths regularly as they climb the ladder. The biggest move most make is from practice into industry.

Practice means working for an accountancy firm, be it a small concern (even self-employed) or a huge multinational. Industry means working for a company or organisation – anything from a huge local authority to a small manufacturing company – usually in its accounts department.

Key take away: The great thing about having accountancy qualifications is that you can move between job types and sectors easily.

Practice can be perfect

Working for an accountancy firm has many advantages. Career progression paths may be defined so you know how you’ll climb the path. You’ll also be surrounded by other accountancy professionals, so you can learn and be mentored by others.

Working in practice means you’ll be dealing with a range of clients so you won’t want for variety in your work. You could have clients working in many different sectors and industries. But Gary Darlington, senior manager at staffing business Walters People says: “Practice can be more traditional, with a more structured approach. Industry can be a bit more flexible and it’s more of a meritocracy: do well and you could be promoted faster than you might in practice.”

Key take away: Practice can offer a lot of variety and you’ll also learn from others at work

Advantages of industry

If you work in accountancy within industry, then you’ll be immersed in one business or organisation. You won’t be pulled in different directions by a variety of clients. You might also find it easier to change focus – many chief executives started out on the accounts side – and as one of the designated financial experts you may find your views and ideas are acted on. On the flip side you might miss the interaction with other accountants.

In addition, the career path in industry might be less well defined. In practice, you might expect to reach partner level after five or more years: the career progression is less structured in industry.

Key take away: If you’re interested in a particular sector – be it media, education or anything – then you can work as an accountant in your chosen industry. And you might end up with a non-accountancy role

Should I swap around?

While many will start their accountancy careers in practice over your career you might well move between practice and industry and back again. But will moving around damage your prospects? No, says James Brent, Director at Hays Accountancy & Finance. “It’s difficult to say whether some will suit practice rather than industry as there is so much variation in practice in terms of size, types of clients and range of specialisms. 

“As it’s tricky to generalise, remember that all experience whether it’s in practice or industry is valuable to your career. In today’s working world, it’s fully accepted that professionals will have a variety of jobs across industries and functions.” Darlington adds: “On the whole, it is easier to move from practice into industry than the others way round, simply because you have that precise skill set gained from your time in practice.”

Key take away: Moving between industry and practice is a good way of testing the water and will only enhance your marketability.

What’s best for me?

 Ask yourself some questions. Do you, for example, value variety more than anything? You might suit practice with its range of clients. Or do you want a clear career progression with determined salary levels – again, practice might be perfect. But do you want to branch out away from accountancy and see yourself doing something different in the future? And do you thrive on the buck stopping with you, without having lots of other accountancy experts around you? Industry could be for you.

Darlington adds: “Working in practice is amazing from the technical perspective: you gain skills which will make you attractive to employers.  It can be tough: you’re going to be working in a busy environment with different clients to service. However, if you work in industry you will probably gain more commercial experience which will make you attractive to employers.”

Salary levels

A recent survey* found that the average salary for accountants in industry is higher – with both the lowest and highest salaries better in industry than practice (£20,000 versus £11,975 and £400,000 versus £225,000) but these are figures from 2018. However work-life balance was better for practice accountants, who work fewer hours a week.

Key take away: Think about whether salary or work-life balance is more important to you 

All experience is good

While it is probably easier to move from practice into industry than the other way around (but if you make sure you keep up to date with changes in accountancy and software then it will be less of a potential concern) it’s not difficult. And a varied CV will boost your marketability. Brent adds: “It’s definitely a good idea to include a wide range of experience on your CV. You can go into detail on the different clients you have audited, mention the industries, the names of the companies, their turnovers and what you have done. 

“Even presentations to financial directors, managing directors, or business partners are worth mentioning. This experience will help a potential employer see how you have contributed to your organisation.” And Darlington adds: “From a recruiters’ point of view, all experience which adds to your CV helps. It’s a very competitive job market out there for accountancy specialists: anything you can do to make yourself stand out from others will be invaluable.”

Summary

What suits one person won’t suit another, but it does make sense to try both practice and industry out. There is nothing to be lost moving between the two: indeed you’ll only enhance your employability. Click here for more advice.

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HMRC advises agents of sick pay rebate scheme launch

Posted by & filed under Coronavirus.

The Government will launch the coronavirus Statutory Sick Pay Rebate Scheme on 26 May.

The scheme will enable employers with fewer than 250 employees to claim coronavirus-related Statutory Sick Pay (SSP). Tax agents will be able to make claims on behalf of employers.

Employers can use the scheme if:

  • they’re claiming for an employee who’s eligible for sick pay due to coronavirus
  • they had a PAYE payroll scheme in operation before 28 February 2020
  • they had fewer than 250 employees across all PAYE schemes on 28 February 2020

The repayment will cover up to two weeks of the applicable rate of SSP, and is payable if a current or former employee was unable to work on or after 13 March 2020 and entitled to SSP, because they either:

  • have coronavirus
  • are self-isolating and unable to work from home
  • are shielding because they’ve been advised that they’re at high risk of severe illness from coronavirus.

To prepare to make a claim, employers should keep records of all the SSP payments they wish to claim for.

Brian Palmer, tax advisor to AAT commented:

“The speed of the launch of the Coronavirus Statutory Sick Pay Rebate scheme is to be welcome as is the fact that tax and payroll agents will be able to will also be able to make claims on behalf of their clients.  All in all this is a much needed good news story in this most testing of times.”

More information

For more information about eligibility and how employers (or agents  on their behalf) can prepare to use the scheme, please visit GOV.UK and search ‘Check if you can claim back Statutory Sick Pay paid to employees due to coronavirus (COVID-19)’.

How the furlough scheme is creating challenges for different sectors

Posted by & filed under Coronavirus.

Some sectors are struggling more than others with the workings of the furlough scheme, and will face different challenges returning to work.

The furlough scheme has been a lifeline for individuals and businesses. But managing it can come with headaches. Here we look at five sectors with very different challenges.

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Construction and materials

  • Commercial work has dried up
  • Domestic work is returning, albeit at a lower volume
  • The three-week furlough has resulted in missed work
  • Firms plan to rotate which staff are furloughed

Construction firms have struggled with the minimum three-week furloughing period. With that initial period now over, firms are weighing up whether they should keep staff around or furlough them again, risking missed contracts.

Dan Heelan, business services director of accounting firm Heelan Associates, says that among the larger firms, there is uncertainty about how best to proceed. “An electrician client of mine said to me: ‘I want to advertise that I’m open because I don’t want to miss opportunities, but if I furlough someone it’s got to be for a minimum of three weeks.’ Now we’re through that period, so he could call them back any time that he wants, but what if it’s just for one job?”

This is the case for most of Heelan’s construction clients. While domestic work is picking up a little as the lockdown eases, larger commercial work has been slower to return. The work in construction and construction-related manufacturing is extremely reactive, so workloads are particularly difficult to predict.

Most companies are planning to put their people on a furlough rota. It’s a slight logistical headache made worse by the uncertainty and lack of control that has become a feature of this economic downturn.

“If this was the 2008 crisis, they’d be able to deal with demand, they can make a decision,” says Heelan. “In this crisis, you don’t have the ability to test. If you bring a guy back and you’ve made a mistake, you’ve got a very finite time before you’re spending a lot of money very quickly.”

Construction’s view on the 60%, part-time furlough

  • Furloughing people part-time could give firms some much-needed flexibility
  • There are concerns about the contributions required from businesses
  • If companies are required to put even 20% into furloughed wages, redundancies will increase

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Media and events

  • Businesses providing services to media and events production have no work
  • Companies at the end of the production cycle, such as film editors, will be out of work for longer than others
  • Firms in this sector are more likely to backdate their furlough periods
  • There are concerns that the furlough scheme will be phased out too soon

While headlines have been given over to the actors and musicians that have lost work, there is an entire ecosystem of businesses, from construction to catering, that specialise in media and events production work.

Kaziu Gill has seen this from both sides of the fence. He co-owns both Lime Green Accountancy, which works with a lot of media and events agencies, and Sine Digital, a marketing agency which works predominantly with theatres. “[Sine Digital] has been hit very, very hard, and we had to furlough a number of staff.”

For businesses in this sector, the aim is to get the most out of the furloughing scheme as possible. You can backdate the furlough scheme to the first of March, but companies are concerned about proving that their claim is valid. HMRC has said that it will retrospectively check claims; it is inevitable that once those checks start taking place, that there will be questions over some claims.

The advice for companies in media and events is all around cashflow, stopping unnecessary expenses, and waiting out the storm.

However, for businesses that are able to think outside of the box, there are opportunities to be found. “We actually formed a group of like-minded businesses going through the same problems,” says Gill of Sine Digital. “We’ve actually managed to generate some business out of that. So there is a bit of optimism now.”

Media and events’ view on the 60%, part-time furlough:

  • It’s being introduced too soon
  • Firms are concerned they will have to take on debt to pay the excess
  • The phase-out should be based on business performance
  • That it might be unfair on harder-hit sectors

Non-profit sector

  • Most sources of funding are no longer available
  • Charities are turning to digital technology for fundraising efforts
  • They may lose existing grants as projects cease to continue
  • Organisations are furloughing up to 90% of their staff

“Furlough has been a godsend for the charity sector,” says Stuart Hurst, chair of the UK cloud accounting group for UHY Hacker Young, who is trustee of Warrington Wolves and involved in charities such as Warrington Disability Partnership and Age Concern. Some charities have furloughed 90% of their staff.

Due to the nature of funding in the non-profit sector, where grants are delivered for specific uses of specific periods of time, there has been a lot of worry about what will happen to the reserves organisations currently have. In most cases, grant providers have been lenient and allowed that money to be used outside of its original intentions, but in some, there are some protracted talks over whether organisations can keep the money. “Some of those grants consist of several years worth of payments that have been put in jeopardy,” says Hurst.

For non-profits, particularly those with low reserves, the plan is to keep staff furloughed until there’s more clarity. “I would see them leaving it going until the end of June, and possibly until September/October time on a part-time basis. They will absolutely max the use of that.”

Non-profits have used the time to innovate and embrace digital solutions, which has given them a route to a new audience. As silver linings go, it’s faint, however. “Most charities do not have huge reserves – they have between three to six months worth of spend, which in the grand scheme of things, is not very much.”

Non-profits’ view of the 60%, part-time furlough scheme:

  • The furlough scheme, in some form or another, should keep going
  • Organisations will need to rely on reserves to make up the shortfall, which will deplete quickly
  • Smaller organisations are already looking at making redundancies

Agriculture

  • Farms that supply supermarkets are still bringing in revenue
  • Suppliers to the restaurant and hospitality sectors are suffering the most
  • Smaller farms that supply wholesalers are now going direct to supermarkets
  • Others are selling directly to consumers, at a local level
  • For smaller farms, furlough isn’t really an option
  • Larger agriculture businesses are furloughing people where they can

For many businesses in agriculture, furlough isn’t really an option. They are either family-run, or they need people to be able to keep their farms going. While some expenses, such as machinery purchases, can be halted, the day-to-day costs involved in keeping the farm running – feed and fertiliser, for example – can’t be stopped.

Farmers feel largely forgotten in government measures, most of which either don’t cover their industry, or don’t quite work for the business model. Furloughing has been used where possible, but for most farms, the solution is to find a new source of revenue. A lot of this involves reverting to past practices: selling local, and cutting out middlemen.

“They’ve started approaching the supermarkets directly,” says Ghanshyam Vaswani, whose firm, 24Budha, works with a number of farms. “They are also organising farming fairs – once a week or fortnight, they organise an outdoor market along with other farmers, where they can sell their produce directly to consumers in a socially distanced way.”

Vaswani is helping clients to identify where they can cut expenses, negotiating where possible on behalf of clients to fix prices. “We’re also extending bookkeeping services to them in these difficult times, and we’re waiving our fees on that work.”

Agriculture’s view of the 60%, part-time furlough:

  • For smaller farms, part-time could be a better option than three-week furlough
  • Farms supplying commercial sectors will struggle to afford additional contributions
  • Furloughed staff from other sectors could benefit some farms, filling the shortage of fruit and vegetable pickers

The furlough scheme has been great, but one size can’t fit all

Despite the issues that businesses have had in managing furlough, the consensus is that the furlough scheme has been a great measure overall. It is bound to fit some sectors more than others, which is where accountants can help clients manage furlough more effectively.

For the next stage of the furlough, at the 60% rate, there is optimism that it will provide businesses more flexibility as they work their way out of lockdown. In the meantime, all most companies can do, no matter the sector, is wait.

4 steps for overwhelmed accountants to survive and thrive

Posted by & filed under Coronavirus, Run your business.

Ashley Leeds, Head of Growth at The Accountants Millionaires Club, shares how to beat the overwhelm of isolation, remote working, and financial crisis.

How are you getting on in this pandemic? 

Are you feeling overwhelmed and like you just want to shut the door on the world? 

I frequently talk to small accountants who are not members of our club, and I see many who are struggling at this crazy time.  It’s often the person who set up a small practice as a side hustle to help friends and then got busier with word of mouth so left the day job and now has a practice.

If you are overwhelmed and have too much work, it is so easy for the crisis to become an excuse. It’s so easy not to bother with marketing or reaching out to clients.

It doesn’t have to be like this. Even with too much to do, you can free up some time to get things done and relieve the pressure and maybe even get some new clients.

So, how can you get out of this situation?

You need to: plan, get a routine and have some processes.

But first, there is an essential step you mustn’t overlook. You need to look after yourself.

Step 1 – take care of yourself

I have been here too. You have so much work you feel there’s no option but to power through until it’s done. 

However, until you look after yourself, you’ll struggle to see a way through things. 

Improve the environment

Make sure your work environment is conducive to work.  I appreciate that we are making do and maybe working from a dining table, but you need to have a set-up that’s comfortable. 

Can you pop to your office and get your chair?  Could you even return to the office for a couple of days a week?

You also need to take regular breaks. It’s easy to say, and even easier to ignore.

But if you don’t do this, you’ll become less productive and your problems will be exacerbated. 

Plan your well-being

Make sure that you get at least a 20-minute walk at lunchtime, more if you can.  Also, plan to get away from the desk and do something that you enjoy. 

For me, this has been playing my guitar. It doesn’t really matter what it is, so long as it takes you away from it all and releases endorphins. That way you’ll be refreshed and ready for the afternoon stint.

Drink water often. I know you’ve heard this before, but it’s good for you. And if you drink a lot of water, then you’ll need to visit the bathroom more often.  Make a point of using the facilities on a different floor, so getting up and using the stairs.

Finally, reach out to someone who can help, it could be a family member, a colleague or maybe one of your peers.  By just having a chat and sharing how you feel you’ll have another viewpoint and things will not seem so challenging.

Step 2 – plan what needs to be done

As a busy professional it is too easy to just get on with the billable work, but you need to think outside the box and look at the bigger picture. 

Contact your clients

I see accountants who are growing their businesses, even during this pandemic. It’s because they are making time to reach out to all of their clients to offer support, guidance or just a shoulder to carry on. 

Your clients may be feeling much worse than you right now. Many cannot see a way out of this, even with lockdown restrictions being eased a bit.

If you are too busy being busy, you’ll never be able to help them. They’ll be feeling left out, overlooked or not cared for. What do you think they will do as a result, when they have a bit more time on their hands?

Free up time

Plan how you can free up time.  Look at outsourcing, can you delegate, do you really need to do that set of accounts today?  If you can plan what you do, you’ll find some free time to start getting in touch with your clients and be able to prioritise the right jobs and get clarity.  Can your team help you?  Do they know how you feel?  Regular contact with your team will help you share the load and enable you to all be more efficient.

Step 3 – get a routine

At the moment many people are getting hammered by emails. 

Block out some time in your diary for processing emails and DO NOT look at emails outside of this time.  You then need to put on an autoresponder saying that you are checking emails twice a day because of the extra work and that you’ll get back within a specific time period. 

Everyone understands that things are crazy now, so will not be upset if you are honest.  This will then allow you to concentrate on things right now and get focused. 

Even better why not forward ALL your emails to a member of your team and they are to only send you emails that ONLY you can do.  How much time would that save you?

Reach out on social media

Other useful routines include regularly posting on social media. 

Your clients and prospects have more time on their hands so they are surfing the net. 

Are they seeing anything from you?  Social media keeps you front of mind and enables you to be in touch with many more people than just an email or phone call.  By setting aside a bit of time each day, you’ll be seen.

Step 4 – improve your processes

Ensure you have processes in place to make all these things work. 

Every time you do something, make sure that you follow a set path and write down what that process is. This then means you’ll find the quickest and easiest way to get the job done. 

With proper processes in place, anyone in your team can then do that job, rather than it just being YOU.  This way delegating becomes easier and as you take on new staff it is really easy for them to get productive and taking the weight off your shoulders.

Keep challenging everything that you do.  If you are repeating yourself is there someone in your practice that can do it for you?  Different signatures in your emails can save you from keeping typing the same thing over and over again.  What about looking at Zapier?  This clever app will automate many routine things that you do.

While you are in challenging mode, ask if there is anything you can you stop doing? 

If you write down a diary or journal of everything that you do today have a look at the end of the day to see where your time has been spent and then audit this to do something different tomorrow. 

Just the simple act of writing things down will get you questioning what you are doing and enable you to look at things with a different perspective.

Summary

By just following these simple steps you will start to find things getting easier and better.

I know it’s tough at the moment but there is much you can do by simply taking time to reflect. 

About the author

Ashley Leeds is the Head of Growth at The Accountants Millionaires Club where he works with practice owners to help them grow their business with less stress through coaching and advice that he has gleaned from working in the accounting space since 2007.

You connect with Ashley via LinkedIn.

Responding to the Pandemic: Scenario Planning and Forecasting

Posted by & filed under Coronavirus.

On 19th February 2020 the world seemed like a fairly predictable place.

Brexit had been “done”, the general election was over and a clear majority government had won the vote, the stock market was performing well, austerity was coming to an end, Trump’s trade wars with China were calming down, oil prices were strong and spring was in the air.

But between 20th February and “Black Thursday” – 12th March 2020 – the entire world was turned upside down in what most analysts and observers are agreeing will be the single most devasting socio-economic event since World War 2: the coronavirus pandemic. Stock markets saw the biggest crash in over 30 years, interest rates were slashed to zero, football leagues were shut down, pubs and restaurants closed, borders closed and the world went into lockdown as daily death rates from Covid-19 became the grim statistic which told the tale of the unraveling pandemic.

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2020 is, without doubt, the year of uncertainty.

How do organisations, and we as accountants within organisations, respond to such uncertainty? Does this uncertainty mean bad news for all concerned? What, for an accountant, does “uncertainty” mean?

Frank Knight, one of the most eminent economists of the 20th century wrote in 1921 (8 years before one of the biggest stock market crashes of all time): “Profit arises out of the decisions made under the conditions of uncertainty” – in other words, it is uncertainty which provides the very foundations out of which profit can emerge and grow.

The uncertainty presented by the coronavirus pandemic undoubtedly presents a terrible situation for many organisations – think P&O Cruises, TUI Travel, Wagamama restaurants, PureGym, Virgin Airways, cafes, football clubs, concert venues, hairdressers, festivals etc.

An opportunity to flourish

But for others, it has presented a situation where their business model has flourished and grown – Netflix, Amazon, Ocado, Dominos, Zoom, Fedex, Deliveroo and many more have seen unprecedented demand for their products and services and share prices are UP by well over 30% in some cases. Socially, medically, physically, emotionally – the pandemic is a and situation, that goes without saying.

But we are accountants and this article is looking at the pandemic from a commercial perspective, through the lens of scenario planning/forecasting, and from this perspective, the present uncertainty provides the basis for both downside AND upside performance. The concepts of scenario planning and forecasting cannot be properly understood without appreciating this fact.

Definitions

1. Scenarios

A scenario, in this context, is a potential future set of circumstances which can be imagined and rehearsed for today. It is a “vision” of one possible future which might emerge out of the current uncertainty. Maybe, after the pandemic, people will never want to mingle in public to the degree they wanted to before and social distancing will become a permanent feature of human life – that’s one possible scenario.

On the other hand, maybe people cannot wait to get back to mingling freely and maybe public places will be completely packed out once people, hungry for social intraction, are released from lockdown – that’s another possible scenario.

Maybe after the pandemic people will feel so financially insecure they won’t go on another holiday until 2023 or later; or, maybe, as soon as lockdown is over everybody will rush out to take advantage of 0% interest rates and go on the biggest holiday they can find. Nobody knows what the “true” scenario will be now, here in the present – that’s what makes it a scenario – but if we try to imagine all possible scenarios then we can begin to imagine how we would need to operate within each one.

2. Scenario planning 

Scenario planning is the method used for “seeing” the different scenarios which may become reality. This is sometimes described as a “macro” activity as it is looking at the big picture, trying to look from the present into the future to see what a range of possible futures might look like. These scenarios are then “rehearsed” for effects, impacts and implications.

3. Scenario forecasting 

Scenario forecasting refers to the specific commercial activities (all of them inevitably bearing financial consequences and therefore of specific interest to us) which the business will undertake in each of the scenarios which have been “seen” and rehearsed. This is sometimes described as a “micro” activity level as it looks at detailed, tangible actions and financial impacts rather than “big picture” stuff.

Scenario Planning

Scenario planning looks at potential futures – but how many futures is enough futures? Experts say two is always a bad number (it leads to an “either/or” mentality which is often unhelpful) and three is even worse (it’s too tempting to just go for the “middle ground” scenario) so the technique involves thinking of four future scenarios based on two “uncertainty pairs”. Overall, the process involves 5 steps:

  • Identify the driving force of uncertainty (eg. Brexit, trade wars, 9/11 or ….. Coronavirus)
  • Identify two critical uncertainty factors affected by the driving force: eg
    • “Hardness of Brexit”/“Strength of the Pound” (Brexit uncertainty)
    • “Customer demand”/“Lockdown period” (Coronavirus uncertainty) 
  • Draw a 2 x 2 matrix with 4 scenarios based on your uncertainty factors
  • Define/understand the implications for your business based on all 4 scenarios
  • Perform Scenario Forecasting for all 4 scenarios

Assuming we are looking at Coronavirus, let’s start with Step 3:

Step Three: Construct the scenario matrix:

First, we draw a 2×2 matrix and we label the axes based on our uncertainty factors from Step 2 – these are derived through discussion within the organisation, based on the two most uncertain factors of the driving force. For coronavirus these could be “How quickly will the lockdown end to enable markets recover and get back to normal?” and “What will happen to customer demand when the lockdown does end?” (there are no ‘right’ answers to choosing these factors – each organisation will be different and must choose the factors most relevant to them).

Once the matrix is complete, we then think of appropriate names for our 4 scenarios – again there is no “right” answer to this and many practitioners choose quirky names like mine below:

Step 5: Scenario forecasting (appropriate actions are rehearsed)

Scenario 1: Jungle Survival:

In this scenario we imagine a future where the return to normality is slow, perhaps there is a second wave of infections, lockdown continues, social distancing is a long-term norm and, as a result, customer demand for our products is very weak. This is a crisis situation where demand for what we sell is low and there is no sign of an upturn in the market. The industry may enter temporary or even permanent decline and many organisations will cease trading. What is the accountant’s role in relation to the relevant appropriate actions in this scenario? Well, consider the following:

  • Identify breakeven point for all product lines and cut those which cannot breakeven
  • Review aged debtor reports, tighten up on credit control
  • Consider debt factoring/invoice discounting to liquidate receivables
  • Direct product profitability analysis – cut loss-making / low-profit products
  • Customer profitability analysis – cull loss-making customers based on Activity-based Costing
  • Supplier relations – analyse lower cost suppliers or lower cost supply chain solutions 

Scenario 2: Cloudy Day:

This is where the general recovery from the pandemic is quick, there is a “V” shaped return to normality across the stock market, lockdown ends, there is a very effective cure which comes along quickly, no further outbreaks and society shows a willingness and an ability to get back to normal straightaway; however, demand for our products does not follow this trend and sales remain in the doldrums. The accountant’s role here would include:

  • Identify cost cutting opportunities to enable us to drop the price to stimulate demand
  • Tighten budgets on existing cost centres to consolidate liquidity
  • Exploit data for lower cost marketing to drive traffic to our business
  • Identify low cost sources of finance for investment in product relaunch/innovation
  • Revise hurdle rates for projects – invest only in projects with immediate/quick payback

Scenario 3: Conquest:

This is a positive scenario in which the world is slow to return to normal (therefore many organisations will be in the Jungle Survival scenario) but demand for our products is really strong. We are in an atypical situation – thriving within an overall situation of gloom and slow growth. As the pandemic continues and lockdowns are extended with no sign of a vaccine on the horizon, demand for what we are offering is growing and revenues are strong. In this scenario we as accountants should be focused on:

  • Setting KPIs for monitoring customer satisfaction
  • Pricing strategies – increase prices where demand will accept it and assess elasticity
  • Acquisitions – conduct benchmarking analysis to identify targets for takeover
  • Headhunting – cost/benefit analysis of recruiting extra staff from rivals
  • Raise finance, balance gearing and invest for growth

Scenario 4: Rushing Bulls:

This double whammy of good news (very quick recovery from the pandemic plus strong demand for our products) may look like the perfect scenario but it brings with it dangers of over-trading: allowing the organisation to grow too quickly in terms of sales and profit without the underlying balance sheet structure or cashflow to sustain it. Having been locked down for weeks/months, society charges ahead in a spending spree and we get carried along for the ride – but the challenge is to manage that ride and not be thrown off onto the horns. Relevant activities here could include:

  • Ensure receivables days ratios are always lower than payables days ratios
  • Raise appropriate long-term finance for growth (low cost, fixed rate, long-term debt)
  • Build barriers to entry to secure consistent sales (loyalty schemes, invest in brand)
  • Lock in customers with multi-year contracts
  • Recruitment with flexibility – zero-hours, casual work, short-term contracts
  • Monitor cashflow regularly, maintain cash buffers, review liquidity ratios and margins

Benefits and Drawbacks

The benefits of performing scenario planning/forecasting now are plentiful. Firstly, most obviously, it will reduce the element of surprise in the future as you will have effectively rehearsed the future before it happens, so managing the actual events facing you down the road will not be as bad as if they hit you unawares.

Secondly, it allows you to communicate your situation and potential outlook with relevant stakeholders (such as banks or employees or shareholders, for example) who may appreciate knowing a “worst-case” and “best-case” scenario at the very least. Finally, it can assist greatly with financial planning as steps can be taken now to ensure finances are in place to exploit scenarios with upside uncertainty, and also to mitigate the damage of scenarios with downside uncertainty.

However, there are some problems with this whole activity too. Obviously, there is the time (and cost) of actually constructing the scenarios in the first place – especially difficult to justify sometimes given that in reality there will only be ONE future which transpires and all other imagined scenarios will come to nothing.

But there are also question marks over how many scenarios to consider – we have looked at a model which produces 4 scenarios but maybe an organisation could imagine 6 or 8 or 20 scenarios, all different enough to justify a “rehearsal”. Or, even if you stick with 4 scenarios in the method described above, how do you decide on the two uncertainty factors around which your scenarios will be built.

Conclusion

Scenario planning and scenario forecasting is not an exact science, nor is it an attempt to perform magic by seeing the future. It is, at heart, a risk management tool for dealing with uncertainty. It is a widely used technique with many merits but, like any tool, the output which it yields will only be as good as the human input which guides it.

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10 key resources to future proof your skill set

Posted by & filed under Students.

New research has revealed what the accounting workplace will look like in the future, and what you will need to be part of it.

Developing extra skills above and beyond your studies is a smart move that will make you more valuable to employers 

In the fast-changing working environment of an accounting technician, continuous professional development is vital. While your accounting qualification will set you on the right track, additional skills in the areas of communication, data analysis, and advisory-based services will also be extremely important as you seek to further your career.

The work will change and tasks will be replaced. But computers will not do away with the need for financial understanding. Knowledge of basic accounting and bookkeeping will remain the number one skill.

Automation and a new approach 

A finance manager for Boots UK told researchers: “As more suppliers sign up to electronic invoicing, and the core systems become more established and uniform within companies, there should be a need for fewer junior ledger staff. A number of roles will become redundant, but some new roles will be created.”

Also on the positive side, the machines that will be doing some of the work you do now will provide additional tools that enable you to do more with the rest of your skills. “It won’t be the case that there will no longer be accounting technicians,” says Jonathan Millet, CEO of Block3, a blockchain technology company. “You are the last line of defence, and you can use this technology as a mechanic would. So, you are there to tweak it and to iterate and improve on where it’s allocated.” 

It’s worth bearing in mind that the emphasis you put on each skill area should depend on where you are based. UK respondents placed higher importance on communication skills compared with those outside the UK (65% vs 37%). Outside of the UK, the emphasis is on analysis, with 60% of overseas accountants dubbing it “extremely important”, 
versus 51% in the UK. 

Communication 

Understanding accounting techniques has no value if accounting technicians are unable to communicate that understanding. That’s why effective communication skills are the most essential thing that accounting technicians need to learn, insists Mark Lee, an accountant, and futurist for the sector. “Whether you’re working in practice or finance, you need to be able to communicate knowledge, information, and numbers to your clients,” he explains.

Khaled Ghalayini, a global business development executive at banking software company Temenos, agrees. “A set of soft skills, such as adaptability and excellent human interaction, coupled with technical knowledge including key data analytics form the necessary combination of skills for the success of accounting technicians in the future.” 

Practice makes permanent 

Computers will be able to do a lot more than they can at the moment, and the speed at which they’re developing is ever-increasing, Mark adds. “However, there are some things that they won’t be able to do. The sooner you can upskill yourself in order to future-proof your career, the better,” he says. “People who can drive a car make it look really easy, but in reality, it takes time to learn. That’s the same with communication – it looks easy, but it isn’t. Practice doesn’t make perfect, but it does make permanent.” 

To improve your communication skills, try: 

  • Communicating for Professional Success – an online short course run by writer, lecturer and consultant, Anna Faherty. 
  • Certificate in Presentation and Public Speaking Skills – a short course run by the London School of Business and Finance. 
  • Making Monthly Reports Worth Reading – an online short course run by Ross Maynard, fellow of the Chartered Institute of Management Accountants. 

Data analysis 

Data analytics is essential – as is context, says Alastair Barlow, co-founder of Flinder, an accounting practice that has modelled itself as a modern finance function. “With the pace of change at the moment, accountants will need some transformation skills,” he states. “There will be a need for accountants to introduce new technology, with the skills that come with that – change management, data integration, and so on.

System implementations should appear on your CV somewhere. Mid-level accountants will also need to have an understanding of commercial sensibilities and business needs because ultimately, finance must be closer to the rest of the business.”

If accountants develop a skill set in data, says Alastair, they will become significantly more attractive to employers. “You want to be able to understand that data and be able to have better conversations with the business about the business, not about finance,” he adds.

A reliable source of knowledge 

David Elms, customer experience director and co-founder at StatementReader, undertook extracurricular database and data analysis projects to explore and develop his interest in data analysis. He very quickly became the ‘go-to’ Excel expert within his team, which gave him the edge during appraisals and promotion opportunities at work.

“I became a reliable source of data analytics knowledge, and I was seen as a significant asset to the firm,” David explains. “In fact, my previous company started introducing me to senior stakeholders when they needed data advice.” 

To improve your data analysis skills, try: 

  • Data Science for Executives – a five-day intensive course run by the London School of Economics and Political Science. 
  • Analysing Statistics with Excel – a one-day seminar run by the BPP Professional Education Group. 
  • Data Analysis for Accountants: Power BI – an online short-course run by Paula Guilfoyle, Excel and Power BI specialist and accountant. 

Advisory 

Increasing numbers of accountancy firms are moving towards advisory-based services in response to client demand and the commoditisation of compliance functions. Research from Wolters Kluwer Tax and Accounting last year revealed this so-called “advisory evolution” is also driven by clients needing help to navigate their business through uncertain times.

Dean Shepherd, lead product manager for compliance at Wolters Kluwer, says the current climate presents a real opportunity. As uncertainty is a genuine problem, a good adviser can help clients future-proof their businesses. At the same time, clients now expect proactive, real-time advice and insight. 

“Clients want more than just numbers,” says Lynne Walker, head of business advisory at Johnston Carmichael. “Do they want to know the numbers? No, they want to know the reasons behind the numbers and what they can do about it.” 

Embracing advisory 

Accounting businesses that fail to embrace advisory could face a “dramatic fall in revenue”, warns Steve Freeman, head of motor at MHA MacIntyre Hudson. With compliance increasingly replaced by automation and AI, firms will have a “race to the bottom” in terms of value. “Firms who don’t embrace advisory will just become dinosaurs.” 

Within a few years, clients will need less help with everything that accountants have typically done in the past, says accounting futurist Mark Lee. “AAT advisers have to understand that what the client really wants is advice on how to grow their business and manage their finances,” he says.

“AAT members are better placed to be those advisers than chartered accountants are, perhaps because of the difference in syllabus, but also because AAT marketing attracts a particular type of accountant. I think they’re more likely to adapt faster than chartered accountants.”   

To improve your advisory skills, try: 

  • How to Win New Business and Develop Relationships – a one-day course run by the BPP Professional Education Group. 
  • Improving Business Profits – a short online course run by John Taylor, a specialist author and lecturer.  
  • Commercial Skills for Finance – a one-day course run by the  
  • BPP Professional Education Group 

Further reading:

Top tips to prevent financial crime during the Coronavirus crisis

Posted by & filed under Coronavirus.

While the accountancy profession comes to terms with the challenges of Covid-19, regulators have recognised the need for flexibility when outlining their ongoing expectations.

It is important that there is no let-up in standards of professionalism, and in levels of financial vigilance, particularly with new criminal threats developing, but it is understood that certain requirements simply cannot be met. Face to face checking of the identification of new clients is just one example of this.

Guidance from the Financial Conduct Authority

The Financial Conduct Authority (FCA) has published guidance on their expectations relating to financial crime systems and controls during the ongoing restrictions and cover issues such as; reprioritisation of certain activities, ongoing customer due diligence reviews, access to customer information, client identification verification, and regulatory reporting.

Members are advised to ensure that they remain up to date with all current regulatory guidance, and more information can be found on the FCA website here.

Further reading:

Updates to Coronavirus Job Retention Scheme guidance (18 May)

Posted by & filed under HMRC updates.

This is a record of changes made to HMRC’s Coronavirus Job Retention Scheme guidance in the week ending 15 May 2020.


HMRC page: Check if you can claim for your employee’s wages through the Coronavirus Job Retention Scheme

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HMRC page : Check which employees you can put on furlough to use the Coronavirus Job Retention Scheme


HMRC page: Work out 80% of your employees’ wages to claim through the Coronavirus Job Retention Scheme

  • Non-discretionary payments clarification to better explain what meets this criteria. Wording tweaked.
  • Non-discretionary overtime payment clarification to better explain the distinction here.
  • New wording setting out what periods a claim should cover and how far in advance claims can be made
  • Examples from this page separated out into supplementary HTML document, no change to content.
  • Moved the ‘After you’ve claimed’ section from this page to the service start page where it sits better and makes more sense for the user.
  • Link to BEIS Holiday Entitlement guidance added to Holiday Pay Section.
  • https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme


HMRC page: Examples for ‘Work out 80% of your employees’ wages to claim through the Coronavirus Job Retention Scheme’


HMRC page: Claim for wages through the Coronavirus Job Retention Scheme