HMRC sends out letters of encouragement for MTD

With just five months left until the first implementation of Making Tax Digital (MTD), HMRC is ramping up their communication and have issued the first batch of an estimated 200,000 letters to encourage eligible businesses to join the pilot.

The public beta phase of the MTD VAT pilot was launched by HMRC in October 2018. By signing up for the pilot, businesses will have a chance to start using the new service and test it, which in turn will help HMRC ensure the service is in good working order ahead of the April 2019 launch.

Letters have been issued directly to businesses (not copying their agents) explaining the changes to the way VAT records and transactions will need to be recorded from April 2019, inviting them to become part of the initial pilot.

Since 5 November, 20,000 letters have been sent out to businesses, with a further 180,000 letters to be issued week commencing 12 November. Two variants of the encouragement letters were sent in order for HMRC to monitor their effectiveness, both holding the same message but written in slightly different ways. Which version a business receives has been selected at random to ensure impartial results.

“While it was not cost effective to send copy letters, HMRC does recognise that it is important that agents are aware of the letters and what they say, so are happy for us to summarise the content.  Many of our members will use this as an opportunity to communicate with their clients about MTD and what they need to do to get ready” says Brian Palmer, Tax Policy Adviser at AAT and CEO of Tax Policy Advice.

A short summary of their contents below:

Version 1

The longer of the two, this letter explains that the way that businesses keep VAT and submit VAT returns to HMRC is changing. They clarify which businesses are eligible for this change and that those in scope will need to keep their records digitally, either using software or a combination of software and spreadsheets. There is also advice on how to join the new service, with links to help and advice on gov.uk.

Version 2

Gives a brief overview of the changes and explains that VAT is being modernised, and it is in the businesses’ best interests to be prepared. This letter also explains which businesses are in scope as well as providing helpful links and advice from gov.uk.

HMRC will continue to write to those within the scope of MTD for VAT and hope to achieve this by the end of November.

If you are looking for some more information on MTD for VAT, AAT have compiled a handy guide which can be downloaded here.

Can socialising outside of work have an impact on your career? 

You want to get home, but everyone else in the office is going for a ‘quick drink’.

Are you being sensible refusing the invitation? Or will you appear standoffish with your colleagues? And, crucially, will your reticence to socialise outside work damage your prospects at work?

The days of promotions being down to letting your boss win at golf may be gone. Added to that, stories of sexual harassment linked to work are increasingly common. So socialising outside work can be a minefield.

Let’s be frolleagues…

Many of us meet partners at work. A poll by the TUC said that, one in five of us find long-lasting love in the workplace. While the office environment – and the friendships that we make there – can lead to love, many relationships started at after-office events, whether the Christmas party, Friday night drinks or a team bonding session.

So going out with colleagues can boost your love life – but what about your career? It’s important if you are socialising with colleagues never to let your guard down. Corinne Mills, managing director of Personal Career Management advises:

“Social events can be fraught with danger: boundaries are blurred. You need to watch out that you don’t talk about things you wouldn’t discuss in the office. The pub is not the place to share confidential information: you must remain professional even at relaxed events.”

If you don’t trust yourself not to gossip inappropriately or express opinions you’d never own up at work, then it’s probably better to make sure you don’t drink so much your inhibitions go. Career coach Jenny Garrett advises:

“You must remain professional: whatever you do on a night out with colleagues will follow you to work the next morning and what you say will not be forgotten.”

However, not going out with work colleagues can be damaging not only to your social life but potentially to your career. Seeing colleagues outside office hours can be a good way to get to know people and to build friendships and work relationships – or ‘frolleagues’. And we all work better if we’re comfortable with our co-workers. A 2016 study from office design company Peldon Rose found that 91% of employees value friendships at work and two-thirds said social events were important in helping them bond with colleagues. What’s more, 80% said friendships made them more productive at work.

Good for you?

Going out with work colleagues could help you get that promotion.

However, Garrett points out:

“You do need to be good at your job first: socialising is not a substitute for doing a good job. But going out with work colleagues can be a good way to enhance your career. What’s really good about socialising with colleagues is that it lets them get to know you better and to find out things about you they wouldn’t otherwise know. For example, maybe you help out with a group at your church or are involved with a charity: your colleagues may not know about this, but they are skills which could help your career.”

Mills adds: “Social events can give you access to some people from the office you might not know well. You might find that someone you’ve only ever seen in the far distance of your open plan office has a really interesting job and if you connect with them socially, it could be a good career move for you.”

Garrett agrees: “Going to social events raises your profile, gets you known: remember, what’s important for your career is that people at work know who you are and can share a positive opinion on you. They can’t do that if they’ve never met you. It could make the difference between being considered for a project or promotion.”

Are you antisocial if you decline an invitation?

For some of us, even the thought of going out with colleagues is abhorrent.

“Not everyone is an extrovert’ says Mills. “But if the extroverts are out networking, the introverts sitting at home are potentially missing out, which could affect their careers.” She advises the best idea is to go along, but don’t stay long: then you won’t look standoffish and you should come across as a team player – albeit a quiet one.

Garrett adds: “You could partner with someone who is sociable – ask if you can go along with them. And I always suggest it’s a good idea to think of some small-talk questions to break the ice: people always like talking about themselves.”

She suggests that if the idea of a drink in a crowded pub is just too much to bear, why not suggest a one to one meeting such as lunch or coffee with a friend. It’s probably less risky than ending up in a dodgy karaoke bar in the early hours with your boss…

How pay ratios will affect the average worker

Large companies will soon have to reveal the pay gaps between their chief executives and average UK workers, thanks to new parliamentary laws.

Under the new rules, UK firms with more than 250 employees will have to disclose the salary gaps or pay ratios on an annual basis starting from 2020.

“Most of the UK’s largest companies get their business practices right but we understand the anger of workers and shareholders when bosses’ pay is out of step with company performance,” said Business Secretary Greg Clark, when the new legislation was announced.

“Requiring large companies to publish their pay gaps will build on that reputation by improving transparency and boosting accountability at the highest levels while helping build a fairer economy that works for everyone.”

The pay gap widens

According to research from the Chartered Institute of Personnel and Development (CIPD), the current mean pay ratio between FTSE 100 CEOs, for example, and the mean pay package of their employees is 145 to 1. The gap has widened from 128 to 1 in the previous year and the mean pay for a CEO across all FTSE 100 companies has increased by 23% over the same period, from £4.58 million to £5.66 million.

“It’s important to understand the scale of pay gaps within the UK economy. Why have they occurred and why are certain workers valued so much and other workers with different skills in different sectors valued differently?” says Luke Hildyard, director of independent non-party think tank the High Pay Centre.

“It [publishing pay ratios] will raise awareness amongst workers and that will raise a little bit of pressure to close the gap.”

To narrow the gap, firms have the choice of lowering the pay of top earners or raising that of the average worker. As chief executives are likely to be disinclined to reduce their salaries, says Hildyard: “It does create a little incentive to increase the pay of lower paid and middle-income earners – which is something we want to do as a country.”

The impact of publishing pay ratios on society

The disclosure of pay ratios could also prompt discussion about how society and employers’ improve the skills and bargaining power of lower-paid workers in order to address the gap.

“Hopefully the debate about executive remuneration will trickle down the rest of the organisation and there will be a fuller debate about what the organisation values in terms of employee behaviour, skills, performance and attitudes and how these, in turn, will be recognised and rewarded,” says Charles Cotton, the CIPD’s performance and reward adviser.

“Organisations must have open discussions with employees. When more money is being given in the annual pay round, they need to explain why this is happening and help them understand if this is appropriate.

“If you are able to justify your reward decisions and if they are based on logic and fairness you should be in a better position [than organisations were they aren’t].”

A need for different types of pay ratios

To fully understand remuneration culture at a company and understand the context of pay packages, AAT believes more than one type of ratio needs to be published: the ratio between the highest and lowest pay in the firm, the ratios between management tiers, and the ratio between the CEO’s pay and that of the median employee.

“The mean is easier to calculate but the median is a more meaningful metric,” writes Phil Hall, AAT head of public affairs and public policy, in January’s CPD guide.

“It is often argued that a hedge fund or investment bank would be likely to have a very high median pay level, and so their pay ratio may be low and therefore considered impressive. In contrast, a retailer with a large number or relatively low-paid shop floor workers would face the opposite problem.

“A comparison between the highest and lowest-paid employee would go way towards addressing this problem.”

Greater transparency of executive pay and how it compares to the rest of a company’s workforce will likely lead to a debate about other payments received by top earners, such as bonuses and long-term incentives that are supposed to reflect the performance of an organisation.

“This could raise issues around how performance is defined and whether success is down to the one person at the top of an organisation or everyone and therefore whether everyone should be recognised in a similar fashion,” explains Cotton.

The importance of transparency

In earlier CIPD research, only a third (32%) of employees surveyed agreed their CEO is rewarded in line with organisation performance and 59% cited high CEO pay in the UK as a demotivating factor at work. Experts agree that simply disclosing pay ratios may not go far enough for the average worker and the fight against income inequality.

In terms of stopping excessive chief executive pay, AAT’s own corporate goverenance survey in 2017 found that only 21% of AAT members felt introducing the disclosure of pay ratios would make a difference.

“If nothing else was done on top of the regulations being introduced so far, executive pay culture and practices and pay gaps would not be that different in five years’ time to what they are now,” says Hildyard.

In addition to the introduction of pay ratios, the government has also announced that companies will have to report on how their directors take employee and other stakeholder interests into account. Greater representation of employee interests at board level is a welcome move but for many critics falls short of introducing workers’ to company boards as previously proposed by Prime Minister Theresa May.

Similarly, the AAT has argued that pay ratios should be mandatory, imposed on companies and apply to chief executives’ reward packages as a whole, in order for the average worker to truly feel their benefit.

Eyes on the prize: how to stay motivated

Procrastination is the thief of time – so don’t let it steal your dreams for your future.

Are you finding it difficult to keep motivated in your studies? Can you feel your enthusiasm waning? If so, what kind of actions can you put in place to ensure you don’t get discouraged or side-tracked from getting your AAT qualification?

The rhythm method

We often talk of being an early bird or a night owl. But that’s not just a way of explaining your habit sleeping habits. It’s all down to your hypothalamus.

The hypothalamus is part of your brain that controls your circadian rhythms. These determine how you feel over 24 hours – when you are at your most alert (and hence most likely to study productively) and when you are at your sleepiest. Most of us are alert in the morning: so this is the ideal time to tackle your most difficult work – and it’s likely to stick.

However, you might find you work even more efficiently if you spend your first waking hour after breakfast exercising: this is because first thing in the morning, there is an increase in stress hormones in your bloodstream called the cortisol awakening response.

This makes you wake up for the day ahead, but it also impairs the retention of long-term memories. So it’s not the best time to study. Leave that until an hour or so after waking: the prime time for work is for most of us between 9-11am. Use the afternoon – when most of us are at our most lethargic – for planning or less-intensive brain work.

However, your circadian rhythms might be different: you need to find what works for you – that’s the good thing about distance learning: you set your own timetable.

What’s your goal?

If you’re distance learning, it can be hard to stay motivated because you won’t have the day to day physical interaction with other students. But you can get your motivation back: first, you have to examine what it is that’s causing yours to be missing. And that means deciding what your goal is in studying.

Helen Bartimote is a Chartered Occupational Psychologist and a specialist in coaching psychology. She says that fundamentally, you need to work out why you are taking a qualification the first place.

“Is it intrinsic motivation – do you find the work you are doing, the goal you are aiming at, personally enjoyable? Or is it extrinsically motivating: that means you are not studying because you enjoy the subject but because you want to get something in return”.

Don’t assume that if your reason for studying is extrinsic rather than intrinsic that’s a bad thing. Keeping your mind on the prize – staying on the course, taking your exams so that you’ll get a qualification – is as good a reason for studying as is active enjoyment of the subject.

A good way of boosting your motivation is to reward yourself when you’ve completed something. At school, you get gold stars for good work: so give yourself the adult version: it can be as simple as meeting a friend for a coffee. It just needs to be something you’ll look forward to doing and is not related to work.

Giving up giving up

If you still lack motivation, you need to consider other factors.

Is it that you haven’t got a good work/life balance? Are you feeling overwhelmed, stressed or discouraged? Are you having difficulty sleeping or are you just feeling tired the whole time? And are your relationships suffering?

Then maybe you need help from those close to you. Start off by talking to fellow students: distance learners can feel isolated but these days thanks to technology, you can connect with peers via online forums or email. You might find that others are facing the same motivational challenges you are: feeling you’re not the only one can help you keep going through tough times.

If you’re working while studying, then talk to your employer.

Bartimote explains: “It is always a good idea to talk to someone if you’re feeling stressed by your workload. You may find that your employer can help by offering you flexibility at work. At home, you may need to consider how you manage day to day demands while focusing on your course. For example, could you discuss with partners, friends and family if there are any tasks that they may be able to help out with? Remember, asking for help can be a sign of strength and not weakness.”

Resource of the day

Podcast: Listen to how a surprising career path in finance came from a chance interview.

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Reimagining audit

For many years, the audit function was essentially a number-crunching role; one where accounts were scrutinised or calculations challenged, with the aim of ensuring reporting accuracy and safeguarding a client’s or business’s reputation.

Yet as the world becomes riskier, the role of audit is now evolving, and auditors are increasingly expected to take on a more strategic position. “Audit has evolved significantly in recent years, with an increased emphasis on understanding the specific risks faced by the organisation and tailoring an audit approach that effectively addresses these risks,” says Jon Roberts, partner and head of assurance at Grant Thornton UK. “Audits are now more diagnostic with far more emphasis on the planning.”

This is the case for those focusing on internal audit too, rather than client-facing work, says Sally England, director of Hays Audit, Risk and Compliance. “Internal audit professionals who are just entering the sector can now expect a role which involves balancing the need to identify and reduce risk with appreciating the commercial demands of the business,” she says. “The impact they may have can really change the financial and operational strategy of a company.”

New skill set for auditors

As such, modern audit professionals need to have a range of skills in addition to the core numeracy attributes which have always been essential. “The modern auditor is part-accountant, part-detective and part-data scientist,” says Michelle Hinchliffe, head of audit at KPMG. “We are on the lookout for expert coders, data analysts and tech specialists.”

Technology is also making up an increasingly significant part of the role, as auditors switch from more of a reconciling role to a more analytical and data-based approach. The Hays UK Salary & Recruiting Trends 2019 Guide, for instance, found 40% of accountancy and finance employers now say there is an increased need for operational and technical skills, rising from 27% last year.

“Today’s auditors need to be analytical, problem-solving and critical-thinking individuals,” says Mark Edmonson, president and CEO of accounting technology firm Inflo Software. “To succeed, they need to have a commercial mindset and be prepared to develop strengths as an advisor and trusted consultant to their clients, which means they need to be able to interpret and translate the rich data that technology can provide, and use that to drive decision-making.”

Making artificial intelligence a priority

Auditors of the future will need to make use of technologies such as artificial intelligence and machine learning to meet the expectations of clients, believes Stuart Cobbe, customer success manager at MindBridge Ai. “The emphasis will shift from carrying out audit work to a greater focus on the design of audit tests,” he predicts. “Auditors are going to need to exercise professional scepticism to a greater degree. This will involve spending more time in identifying the questions that need to be asked before the audit. Planning audits will become less about dates and tick-boxes, and more about investigative research. This will be particularly evident in the audit work around subjective or difficult-to-assess balance.”

In the longer-term, technology could see some junior tasks disappear altogether, says Edward Haigh, director of Source Global Research, which means those entering the profession need to have other skills.

“Technology holds with it the possibility not only that the audit model will be disaggregated, but also that many of the entry-level jobs to the profession may be automated,” he says. “Clients continue to want a high-quality audit from a reputable supplier, but what they increasingly want is for auditors to add value by analysing data and offering insights into their business that extend far beyond the traditional remit.”

Other, more traditional skills are also essential, however. “Core audit technical skills still remain and competences that have always set a good auditor apart are just as relevant,” says Roberts. “For example, good emotional intelligence, an enquiring mind, a thirst for knowledge, problem-solving and teamwork are all attributes of a good auditor. Good time management is also imperative to any audit.”

Internal audit requirements

In internal audit, softer skills such as being able to engage, negotiate, challenge and collaborate with stakeholders across the business are vital, says England. “Language skills are also becoming increasingly important, especially for internal auditors whose role is focused on the EMEA region,” she adds. “Typically EU languages are requested, in addition to Mandarin and Russian, and a good level of proficiency in a second language can often set you apart from other professionals.”

Overall the market for audit professionals remains buoyant, says Edmonson. “The bigger firms have reduced their graduate intake in audit, but are taking on additional graduates in more specialised areas such as data science,” he says. “Demand is strong for auditors, in particular at the qualified levels where the big four firms are often recruiting from mid-tier firms to top-up their reduced intakes at lower levels.”

This has led to average salary increases of 1.6% over the last year, according to the Hays UK Salary & Recruiting Trends 2019 Guide, slightly below the average rise seen for accountancy and finance professionals at 1.8%. “Salaries have risen, in part, due to an increasing need for experienced audit, risk and compliance professionals, as organisations look to mitigate the risks to reputational damage carried by the proliferation of online media, as well as the potential for heavy fines related to GDPR and other recent legislation,” says England.

Retaining talent

But the sector is facing a struggle to hold on to talent, with individuals often tempted into industry, analyst, and corporate finance roles, meaning firms need to do all they can to attract and retain people. “To attract more people into the profession, firms need to consider the growth prospects and opportunities that they are offering,” says Cobbe. “It’s crucial that people are offered the time and resources to sharpen other skills that wouldn’t have been traditionally expected from an auditor. Those working for proactive firms where technologies are removing onerous tasks from their workload are freed to focus on providing greater value for clients and given greater fuel for a more fulfilling and successful career.”

The Hays survey, though, also hints at an issue the industry needs to address, with 32% of people in the sector ranking work/life balance as the most important consideration other than salary when choosing a job. “Positively, 54% of accountancy and finance employers offer part-time working options to staff, and a further 49% allow professionals to work remotely or from home,” says England.

Roberts admits this is something that organisations have to manage if they want to retain top talent. “It is true that during the ‘busy season’ people will work very hard and during this time it is important to strike the right balance between being supportive and giving individuals autonomy to work and manage their own time accordingly,” he says.

With all the new elements of the job, a career in audit remains attractive, arguably more so than ever, suggests Edmonson. “Audit has always been a strong initial step on the career path and the more analytical, problem-solving skills auditors are now acquiring earlier in their career improves future progression opportunities,” he points out. “Few careers offer an inside perspective on such a variety of business models.”

10 ways to reward yourself for your hard work

Recognising your accomplishments, no matter how small.

Spending time to reflect on the work and commitment that has lead to these results, is not only a powerful motivator, it also cultivates a sense of gratitude. What’s the point of working hard if we never enjoy it?

So with this in mind here are some of our favourite ways to reward ourselves for hard work.

Binge watch a box set

Haven’t had time to actually get around to watching The Bodyguard, Stranger Things, or Mindhunter? Why not have a Friday night in with some friends and whip up some delicious cocktails and chocolate and coconut popcorn and see how many episodes you can get through.

Weekend warrior

Ignore the pile of laundry and your shopping list. Go and have a 48-hour adventure. Why not discover a beautiful walking trail, have lunch at a country pub and rummage through some vintage stores or even book a last minute flight to a nearby city. Flights to typically warm destinations like Rome and Barcelona have great deals off season.

Learn something new

Have you always thought about taking a photography class, learning to play the guitar, creating a flower arrangement or doing a cocktail making course? Find a local class and treat yourself. Learning new things has been shown to make adults happier by improving self-confidence, providing opportunities to connect with others and encouraging creativity.

Get physical

Go for a run, take a yoga class, lift some weights, go swimming, do a Britney-inspired dance class – whatever gets your blood pumping without thinking too much. Exercise is a great way to release some endorphins and relieve stress. You’ll come back renewed and reinvigorated.

Retail therapy

Check out a thrift shop or a vintage store and rummage for hidden gems. Why not look for test tubes to turn into vases or vintage trays and posters to decorate the house. Have a trip to the flower market, enjoy the banter of the stallholders and buy yourself a bouquet of flowers for a bargain price. Or visit your local farmer’s market and pick up fresh bread, locally grown vegetables and homemade jam for a beautiful afternoon tea.

Cooking something from scratch

Have you ever wanted to make your own pasta, baklava or sushi? With our busy lives, we often don’t get the chance to spend more than 30 minutes cooking a meal. Treat yourself to an afternoon on the weekend, cooking something you’ve always wanted to make but never had the time for. Cooking from scratch also gives you a deeper appreciation of the ingredients you use and the time spent with loved ones over a meal.

Sleep in

Indulge by staying in your pyjamas all morning, curled up with a good book and a cup of tea. Give yourself a pass from running around and doing all the things on your to-do list for just a few hours. Snuggle under warm blankets and daydream, eat breakfast in bed and drift in and out of sleep.

Call someone you care about

Can’t remember the last time you caught up with that friend that you always mean to call? Put time aside when you know you’re both free and have a long chat, catching up on all the fun, silly, sad, wonderful, brilliant things that have happened since you were last together.

Deny and reward

Try a little stick and carrot to stretch your motivation. Think of a something you enjoy – like using social media, a walk in the park, or playing a favourite game – then reserve it as a reward for after you achieved a minor study goal, such as reading a module or doing a spaced learning exercise.

As Winnie the Pooh observed, there’s a moment before you eat the honey that’s even better than eating the honey itself. Anticipation will increase your pleasure and give positive reinforcement to the discipline of achieving daily or weekly goals.

Make something with your hands

Slowing down and spending time making something with your hands can result in a sense of flow – the feeling that comes from concentrating on something so intently that it quietens all the other chatter in your mind. It feels effortless and calming. Making a terrarium, creating a photo album, putting together homemade beauty products, gardening or pickling vegetables are all ways that you can use your hands to make things for yourself.

Resource of the day

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Whoops, we got our days in a bit of a muddle – the video session will take place on 11 November so don’t worry you haven’t missed out. Come back on 11 November for some top study tips from Premier Training.

Next Up: How to stay motivated

Browse the full range of AAT study support resources here

The ultimate crash course in Excel – part 5

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Excel tips: Ultimate crash course series


In part five of this series we look at how you can ensure your spreadsheets look great and display data the way you want. Formatting your spreadsheet is vital to ensuring that data is displayed clearly and that information stands out where necessary. There are many different aspects you can format to achieve this. Below we’ll look at a few examples.

Column width

In the following video, we explore how to adjust the width of columns in our worksheet.

Borders and shading

Borders and shading can be used to highlight information and make it distinct from the surrounding data.

 Fonts

It’s important to use an appropriate font type and size for the task at hand.
Format painter It would be very repetitive to have to go through the same steps on every cell you’d like to format in your spreadsheet. One solution is to use the Format Painter which takes the formatting from the currently selected cell and applies that same formatting to another cell or set of cells. It’s probably the BEST formatting shortcut you will ever learn, and it can be used across the whole MS Office suite:

Fill handle and flash fill

If Format Painter hasn’t blown you away, then these two top tools will! The fill handle and flash fill are both tools which act as shortcuts to completing rows and columns of data. This is useful when you have a formula or pattern which you want to apply as it saves you from having to copy and paste multiple times. The fill handle can also be used to number rows or columns of a table.

Fill handle

The fill handle appears at the bottom right-hand corner of a selection of cells: This small square at the bottom right corner of a selection can be used to extend the contents of the selected cells to new cells, with Excel using the content of the selected cells to guess the content you require in the new cells. This video shows the use of fill handle with more than one column:

Flash fill

In the following video, we are going to explore how to use Flash Fill to complete rows and columns of data:

Time and date formatting

Depending on what data is being used for, or what your personal preference is, it is useful to be able to display dates and times in a variety of formats. Luckily, Excel provides a wide range of built-in formats and allows you to create your own, so you can display dates and times whichever way suits you without having to type them out each time. Excel includes a wide range of different date and time formats. The built-in formats are shown with an asterisk depend on the global Windows regional settings in the Windows Control Panel: Alternatively, you can specify your own format using the Custom option. The available codes are as follows for dates: Most of these are self-explanatory but note that the use of one letter (d,m) will not include a leading zero, whereas using two (dd,mm) will. Four ds or ms give the day or month name in full and five ms just give the first letter of the month name, which might be useful if you have 12 very narrow month columns. This is the equivalent for times: This time we’ll pick out the [hh] format. If you just format a time, or date with a time, using h or hh as part of the custom format, then it will only display hours in excess of multiples of 24 (i.e. only the hour element, ignoring days). Using the square brackets forces Excel to display the full numbers of hours including the days. You can also format a date within a text string in Excel using the TEXT() function and the above custom formats, for example: =TEXT(A2,”dddd, dd mmmm yyyy”) Now you know about formatting, there’s no excuse not to have incredible looking spreadsheets. Look out for part six where we are looking at THE ESSENTIAL formulas that you need to know in Excel. It’s a lesson you won’t want to miss! AAT students and professional members can access a wide range of Excel resources and training.

Bridging the gap between education and career

Once you have qualified as an accountant or a bookkeeper, what should your next step be? How much training can you expect in your first job, and is there any opportunity for further study?

We look at the options you can potentially take – from apprenticeship, training contract or learning on the job.

The opportunity to learn on the job

If you’re a graduate or you have just qualified, you will be thinking carefully about your next career step.

Your first job in accountancy or bookkeeping can give you a good grounding in the practical application of the skills you have been studying and enable you to benefit from the experience of your co-workers.

If you are looking at alternatives to university and want to fast-track your chartered status, a good option is an accountancy apprenticeship.

With an apprenticeship, you’ll be able to start earning straight away, rather than accruing student debt, and you will also get the same benefits as an employee, including a holiday allowance.

You can study for a recognised accounting qualification while gaining skills on the job and learn, earn and practice at the same time.

Keep your options open

So what should the next step be? For those who have just qualified, employers will be keen for them to hit the ground running as soon as possible and as such are likely to offer good training packages alongside a job offer, says Lee Owen, Director at Hays Accountancy & Finance.

“Training is a really important consideration for accountancy and finance professionals,” he says. “There are many ways in which employers can provide training support to their employees, be this through external training towards professional qualifications, on-the-job training or mentoring.”

Newly qualified accountants are currently in demand, so the majority of employers are open to candidates with and without experience.

“There are lots of opportunities currently available for candidates who are at the start of their career to progress rapidly,” he says. “The right behavioural traits and attitude are often what employers seek to hire alongside an ability to learn on the job.”

Think about your tomorrow

“When you are looking at your future career, think about tomorrow, not just about today,” says Phil Douglas, a qualified Chartered Accountant who has overseen UK, European and US operations at large firms such as Enterprise Rent a Car and who is now managing director at Compleat Software, which provides financial and accounting software to businesses.

“Employers should know and understand that when they take on an apprentice that person will need to be mentored.”

If you go for a first job rather than an apprenticeship or training contract, you can expect higher salary and expectations but also more pressure, he says.

Developing your career

“I think it’s always best to get qualifications and experience on to the CV so I would recommend looking for a job,” says Chris Littlewood, senior accountant at inniAccounts.

“Apprenticeships should be helping people towards that goal, but you may find you limit your options if you don’t consider jobs too.”

The job could be entry level but would help give perspective to your studies.

“Accountancy is a continual development industry so there is always an opportunity to progress further and gain further qualifications,” he says. “Think about what happens after you complete each stage of your training.”

Time for further study

One important consideration is the balance between the demands of the job and the need for additional study.

“Accountancy practices offer varying levels of support from full day release inclusive of revision time to minimal support such as just a day off for the exam,” Chris Littlewood says.

“Generally, you should expect to be self-motivated and be disciplined to take what you learn on the job into evening classes, and, if necessary take holiday to cover any revision time required if that time isn’t already provided by the firm – or you think you’d need extra.”

Find out what’s expected and what’s included in terms of managing your time when you are considering employment options.

A good employer will offer relevant practical experience where possible to line up with examination topics because they want you to do well. They may even go as far as offering mentoring and study support in-house.

For most employers, the support depends on the available resources and capacity to manage the time-off the employee will need to pass their exams.

What are employers looking for?

“In our recruitment process we are looking first of all at the individual’s personality – are they going to be able to integrate into the team and are they flexible in their learning patterns? Says Phil Douglas.

“Then we look at the qualifications that they have and their career path to date.”

He says that being yourself and being open and honest make it more likely that you can secure a job – you are not expected to have the answers to everything or to have never made a mistake.

“In our interview process we look at challenges that the candidate has faced. If they are young and not had much career experience we ask the about their Saturday job and what they contributed to it, what the challenges were and how they overcame them. You don’t need to be like the candidates in The Apprentice TV show who claim never to have made a mistake and always think they have made the right decisions.” Research is important, too, he says.

“We had a recent interviewee who knew that we were a software company with a relaxed dress code, and so he came in jeans and trainers for the interview. That immediately got my attention because he had understood the culture of our company and thought about how to fit into it. It is all about your research and why you want the job.”

New qualified accountants often worry that they will be expected never to make mistakes, but Chris Littlewood says a good employer will help mentor and develop you.

“Employers are aware that the theoretical study does not always apply to the real world and will develop employees with this understanding in mind. Of course, if the role is more senior and comes with supervisory responsibilities then candidates will be expected to have the appropriate experience.”

The benefits of being a self-starter

A positive and enthusiastic attitude is vital at the start of your career, says Lee Owen.

“You want to be seen as proactive and be the person your manager and colleagues can rely on and are happy to work with,” he says.

“Make sure to take personal responsibility of your career right from the very start and make every effort to stay up to date with the skills employers need now and also in the future.”

“Whatever the role, in my experience, employers like to find candidates that are actively managing their own progression and have the drive to self-manage,” Chris Littlewood says. “This includes personal development such as taking note of where there is a knowledge gap that, if they closed would help develop the business further, as well as the skills that would ensure greater compliance – ie putting in place processes and measures that ensure errors do not occur.”

Put together a career plan

Lee Owen says the first step towards managing your career is to establish an achievable, comprehensive plan.

• Make an honest assessment of your professional strengths, interests and weaknesses. For example, which areas do you excel in, and which require development?
• Create realistic and clearly defined statements of your future career goals. Writing down your goals for five or even three years from now may seem far away but once you know where you want to be, it’s much easier to figure out how to get there.
• The world of work is changing so it is important that you stay commercially aware by attending industry events and stay on top of industry news and changes in legislation.

“It’s important to undertake additional qualifications that could be beneficial to your career and see if you can undertake any training either in-house or by an external provider,” he says.

7 Ted Talks to inspire you, even on the lowest day

There are times when we all need a pick-me-up.

If you’re feeling overworked, overwhelmed or simply over it, we’ve got seven powerful Ted Talks that will motivate you, even on the hardest days. From the power of vulnerability to what makes a good life, we’ve got you covered with talks from some of the most inspiring speakers around the world.

1. Brené Brown: The power of vulnerability

Dr Brown has spent 16 years studying shame, vulnerability, courage and empathy. Her Ted Talk on vulnerability is one of the most viewed. Funny and emotional, she teaches us that when we truly believe we’re enough, we stop screaming and start listening.

2. Dan Gilbert: The surprising science of happiness

Harvard psychologist Gilbert, challenges our beliefs about what will make us happy. Backed by research, he argues that we can be happy even if things don’t go as planned.

3. Kelly McGonigal: How to make stress your friend

If you’re looking for ways to get rid of stress from your life, then this talk is for you. Instead of defining stress as the enemy, health psychologist McGonigal urges us to see it as a helpful response, whilst introducing us to ways we can reduce stress altogether.

4. Robert Waldinger: What makes a good life? Lessons from the longest study of happiness

Waldinger is Director of the 75 year old Harvard Study investigating adult development. In this talk he reveals key lessons from the study and offers practical tips on how to achieve a fulfilling life.

5. Simon Sinek: How great leaders inspire action

In this powerful talk, Sinek shares how some of the greatest leaders have inspired those around them, including Martin Luther King, Jr., and the Apple founders. His model for successful leadership starts with you really believing in something and communicating that message to others.

6. Dan Pink: The puzzle of motivation

Pink challenges the effectiveness of traditional rewards as motivators in the workplace. By examining various rewards, Pink explains why we need to come up with a new way of running our businesses and how leaders can motivate their teams more effectively.

7. Andrew Solomon: Love, no matter what

In this incredibly moving talk, writer and lecturer on psychology Solomon reveals how identity can be affected by the diagnosis of an illness. Solomon goes on to discuss illness with astonishing insight. “People engage with the life they have, and they don’t want to be cured or changed or eliminated — they want to be whoever it is that they’ve come to be,” he says.

Resource of the day

AAT Comment has study tips for every qualification, with advice to help you study more effectively. Check out our flashcards, tutorials and study advice.

Next Up: 10 ways to reward yourself for your hard work

Browse the full range of AAT study support resources here

From zero to hero: tax in the gig economy

The gig economy is expanding – recent ONS figures suggest that zero hours contracts have tripled since 2012.

Over 900,000 people now work some or all of the time this way, compared with just 190,000 just seven years ago.

So what do businesses need to know about employment law and tax responsibilities when they take on gig workers? What do the workers themselves need to know? And what are the impacts on accountants and bookkeepers?

What is gig working?

Martin Brown is Director at PKF Francis Clark. “The first issue is to define what we mean by gig working – because it covers different things that have different tax implications.” As a society we’re experiencing a move towards more freelancers, “and with that, a move towards an economy based on more fluid and part-time working arrangements.” This, inevitably, brings tax implications.

There are pros and cons of zero hours-based contracts for both provider and engager. To take the classic example of an Uber driver, you have flexibility and are able to work times and hours that suit you; and from the engager’s point of view, you don’t have to pay hours when the demand isn’t there. However, the risk for the worker is that you can’t guarantee work if you need a certain amount of income; and the risk for the engager is that you can lose good workers when you need them.

“We need to use the word ‘engager’ rather than ‘employer’,” explains Brown. “It’s important not to use words like ‘worker’ and ‘employer’ casually – because from a tax point of view, those definitions have very particular meanings.” A person hired by an organisation can be an employee, can be self-employed, or can be a worker. We might describe ‘workers’ as a halfway house between the first two categories. “They have some of the employment law protections than an employee would; but not necessarily all of them.”

Yet although there are three statuses for employment law, there are only two statuses for tax. This complicates matters – “you can have someone who is for employment law purposes an employee, but for tax purposes has to fit either into the category of employee or self-employed.” And as an engager, you have the responsibility to check. “If you’re a worker, should you have rights to sick pay and holiday pay? Are you getting the right level of national minimum wage?” If you’re an employee, this data will be on the payroll and there will be checks and balances in place to ensure that people are getting paid correctly. “But if you send in an invoice, there are rarely those systems in place to ensure you’re being paid correctly; and the paying party is responsible for getting it right.”

Know the difference

The advice for bookkeepers and accountants – and indeed, for all businesses considering taking on zero-hours workers or using freelancers – is to be aware of these complications and know the difference between the categories.

But, “it gets more complicated,” says Brown wryly. “So far we have three scenarios. If you count as an employee you will be taxed via PAYE and Class 1 National Insurance. If you’re self-employed, you will be taxed via income tax which is not deducted at source, and pay Class 4 NI at a lower rate. The third scenario is that you are self-employed for employment purposes, but employed for tax purposes.

People who are self-employed but whom the company does not engage directly – such as those with a personal service company – fall into this category. Here, the obligation to assess what tax you should be paying falls on the provider, not the engager. “The trend towards doing this is concerning HMRC because of the reduced tax take associated with personal services companies. They pay tax at corporation tax rates, and then put the profits back into the company.” This means that HMRC “is taking less tax overall than if the same work had been done by an employee or a self-employed person.”

Accounting for differences

How can you tell whether you should be regarded as an ‘employee’ or not – is it the amount of time you work for the company? “No. It’s not that straightforward.” Ultimately, whether you are employed or self-employed comes down to who takes the financial risk. “Say I have an engagement to provide a thousand hours a year of services to an end user,” Brown says. “If I produce sub-standard work and I then spend two thousand more hours fixing it, it’s my cost and I would be regarded as self-employed. If, however, I do the thousand hours as agreed and then the engager solves the problems or pays me overtime to fix them, then from HMRC’s point of view you would be in the territory of an employer.”

On the other hand, “if I decide not to turn up at a fixed hour, or send someone else along in my place, these are indications of self-employment.” For Brown, the important thing to remember is that “there are a lot of factors to look at, and the weight you give to one factor is not definitive.” Again, the advice is to be aware of the differences, and act accordingly.

Does Brown think this situation is too complicated, and does HMRC need to address it?

“Yes – and indeed things may well change in the very near future.” For example, “there is a scheme for the construction industry whereby if you meet certification standards as a supplier, the engaging party can pay you gross and they make the tax payment for you. If you don’t have this certification, you suffer a withholding tax deduction, which you can only claim months later when you fill in your tax return.” This creates a precedent that could be used more widely in future. “However, this is not frictionless. It creates an administrative burden because there are different payment statuses for different people. Rolling that out more broadly may lead to resistance.”

A continuing trend

Ultimately, “it is a very complicated, and this is a huge policy issue. There are reasons for individuals to choose to move in the self-employed direction – on balance, as an individual you do pay less tax.” Recent attempts to address the imbalance between the National Insurance payments self-employed people make compared with employees have caused problems, with the counter-argument being that self-employed people take on more risk by not being guaranteed work. “Are you better off being employed, or self-employed? It’s debatable.”

Should there be different tax rules for different types of employees? That’s debatable too. The take-out for bookkeepers and accountants is to be aware of the different rules, and be careful that when you take on “gig workers”, both the company and the provider know their obligations.