Six changes to the Accountants or Finance Assistant apprenticeship standard Posted 08/14/2024 by Marianne Curphey & filed under Apprenticeships, Employers, Students. The Level 2 Accounts or Finance Assistant apprenticeship standard has been refreshed after five years. Here’s what you need to know about version 1.4. This article discusses the refreshed standard and its implications for AAT students and employers. It includes updated guidance on the new skills and knowledge needed around business awareness, office etiquette and communication skills, and a new end-point assessment that aligns directly with the AAT Level 2 qualification. The new standard for the Level 2 Accounts or Finance Assistant occupation and end-point assessment (EPA) plan went live on 1 July. The standard has been refreshed to ensure the candidate must pass the AAT Level 2 qualification to complete the apprenticeship qualification. That’s to avoid potential issues around students passing one but not the other. There are three qualification routes available: via AAT, via The Institute of Certified Bookkeepers and via the Institute of Accountants and Bookkeepers. The biggest change to the Accounts or Finance Assistant occupational standard is around the end-point assessment (EPA). The update also accounts for modern methods of communication, changes to working practices, flexibility and inclusivity, professional dress standards, business and office culture and sustainability awareness. Why was the update needed? The apprenticeship is considered the entry-level apprenticeship for the accountancy sector, and is relevant to those working in both practice and industry. The apprenticeship standard covers a wide range of roles in different sectors and industries, from smaller firms to large employers. Roles include carrying out accounting and finance tasks, creating financial statements, data entry, reconciling figures, double-entry bookkeeping, and handling accounts payable and receivable. Completion of the standard lays a solid foundation for a successful career in accountancy. It develops essential knowledge, skills and behaviours that pave the way to progression in further levels of learning and increased responsibility and role in the workplace. The benchmark for the new standard was developed by the Institute for Apprenticeships and Technical Education (IFATE) in consultation with members of IFATE’s Trailblazer group. Samantha Vigus, Partner at Mitchells Chartered Accountants, is chair of the AAT Level 2 Trailblazer Group and says it took a year of discussions and debate to update the standard. Trailblazer groups help develop occupational standards in association with feedback from employers, students and training providers. This means that the standard is specifically designed to meet the needs of employers and students. “We were refining and updating the 2019 standard to bring it up to modern standards and incorporate new working practices,” says Samantha. “The AAT Level 2 accounting course is a great starting point and a highly valued apprenticeship for young people and career changes who want to get into accountancy. This means it is popular and a high number of students start the course annually. We wanted to ensure the standard reflects this.” Main changes to the apprenticeship standard 1 It aligns the end-point assessment (EPA) Previously, learners would need to achieve the mandated qualification pre-gateway and then sit a structured interview and in-tray test. Now, with the support of IFATE’s integration policy, one qualification is held back and is assessed as part of the end-point assessment. This final qualification is taken after the structured interview. This ensures that learners complete the end-point assessment, which makes the EPA more appropriate for the level of learning. Samantha says: “The assessment will be more streamlined and aligned with the Foundation Certificate in Accounting (for AAT students this is Level 2). This avoids a potential scenario where the apprentice passed their AAT Level 2 but did not complete the apprenticeship. That was bad for training providers, because it was showing on their records that they had a number of people that hadn’t finished the apprenticeship, and it was bad for the students, who had an incomplete qualification.” 2 The qualification is future-proofed The standard recognises there is now a greater emphasis on the role of technology in accounting. It defines the duties of the assistant accountant as being able to “Use finance and accounting software packages to accurately input and manage data to contribute to routine accounting tasks. Handle data and digital technology in line with cyber and data security requirements, using data securely and safely, including backing up data.” Samantha says: “We have future-proofed the skills, knowledge and behaviours to reflect the new requirements around using financial and accounting software, cyber security and data security. While we want to incorporate this into the qualification, we also made sure that for employers we were covering the essential basics such as double entry bookkeeping, which will then give them the skills to move forward onto future AAT levels as well.” 3 Communication skills and behaviours are updated In the five years since the standard was last defined, much has changed in the way we work and communicate. Especially around remote working, virtual meetings and using more informal channels – which bring their own benefits and risks. The new standard requires students to use “language tailored to the audience and different media methods with an appreciation of the risks and benefits to the business of social media and other digital applications.” Samantha says: “Back in 2019 it was unlikely that you would communicate with your boss via text, but things have changed. Whether it is an email rather than a formal letter, or a text rather than a phone call, methods of contact have changed, so we needed to adjust the standard to reflect that.” In addition, the standard says apprentices need to: “Communicate with internal and external stakeholders using appropriate methods and professional language. Examples may include letters, phone, face-to-face, e-mail, video call, online chat functions etc.” 4 Duties of the apprentices are clearly defined Accounts apprentices carry out accounting and finance tasks. These tasks support creating items such as financial statements and other data. While much of their work is supervised, they will be expected to understand how to reconcile, do double-entry bookkeeping, and handle accounts payable and receivable. Among the duties that the standard sets out are: “Rectify errors in financial and accounting data, escalate problems beyond their remit as appropriate and reconcile transactional data to minimise the chance of errors in financial and accounting outputs such as sale and purchase invoices, sale and purchase orders, bank statements and payroll.” Apprentices will also need to plan and review their workloads with their supervisor to ensure accuracy and efficient use of time. 5 Diversity and inclusion are built-in Modernising the standard means recognising that understanding ethics, diversity and sustainability are key components of accountancy training. The standard requires knowledge of the “Principles of corporate social responsibility (CSR), ethics and sustainability regarding finance and accounting. Approaches to diversity, inclusion and cultural awareness and their impact on finance and accountancy activities.” Samantha says: “It is about using inclusive and appropriate language, learning about appropriate dress and behaviour, and showing pride in their work. We had a lot of discussions around dress code. Back in 2019, appropriate dress for an accountant would probably have been a suit, but life has moved on. In the end, we said it was about demonstrating personal pride in the job through appropriate dress.” 6 Employers have been consulted throughout The role of an accountant has changed over the past 60 years and will continue to evolve and develop. Employers have been a key part of the consultation process for the new standard as they are the ones who are helping to shape the new generation of accountants as they work and study on the job. Samantha says: “The apprentices will have a variety of roles depending on where they work. In a small firm, an AAT Level 2 accounting apprentice will have lots of different tasks, whereas in a large specialist firm their focus may be narrower. “Having lots of employers in this discussion helps because it gives us a diverse group from which to draw views and feedback. We had feedback from student groups, and from the training providers who could see each cohort of new students as they arrived. We also had input from the Institute of Certified Bookkeepers, and the Institute of Accountants and Bookkeepers.” Further information Follow this link to read the new Assistant Accountant standard, which became active on 1 July.
What’s stopping small clients from investing? Posted 08/08/2024 by Annie Makoff & filed under Members. A lot of worrying factors, according to accountants. Rising business costs whether it’s raw materials, energy bills, inflation or increased rent are disproportionately affecting small businesses and SMEs. Larger businesses on the other hand, usually have the cash reserves and resources to swallow cost increases. Increased costs are one reason why some SMEs are struggling to grow and invest – but there are other barriers, too. Busy schedule? Fit learning around your responsibilities, with our on-demand events. Find out more PayPal’s 2024 Business of Change Report surveyed over 500 SMEs. It found that nearly half are pessimistic about their ability to grow and scale up over the next two years due to the difficult economic climate but also because they’re lacking in-house ‘technical expertise’. Other reasons given included: Industry competition (35%) Changing consumer behaviour/fewer consumer purchases (37%) Insufficient marketing funds (21%). But research from Purbeck Personal Guarantee Insurance in July actually found there was an increase in the number of small businesses looking to invest. They found that more small businesses applied for finance to support growth initiatives in Q2 2024 than at any other time over the past three years. Even so, increased business costs continue to be a huge barrier for growth. It falls increasingly to accountants to play the role of business advisors to help and support small business clients through financially lean times. We spoke to accountants in practice and in industry to find out if their small business clients are looking to invest and scale up – or if there are barriers preventing them. Businesses are having to endure inefficient, older technology rather than taking a chance on investment Ellis Harris-Boulter MAAT, Founder and Director, FieCo Accountancy & Marketing and AAT Tutor Any time you want to think about how businesses act, I like to think about how we all behave in our daily lives. With high interest rates and difficult inflationary pressures continuing (note service sector inflation continues to be 5.7% as of June 2024, despite the overall level fall), we’re more reluctant now to buy a new car, and quicker to ignore that strange noise coming from the fridge. In times of uncertainty, businesses are the same. My clients are generally following this exact pattern: enduring inefficient, older technology and avoiding committing to investment, in favour of building reserves and securing their position in the market. Businesses have adapted to disastrous and untenable circumstances since 2020. These include the coronavirus pandemic, Russia’s invasion of Ukraine, skyrocketing electricity bills and a cost of living crisis supressing consumer spending, to name a few. Right now, to me there doesn’t seem like a quick-fix to encourage growth. The new government has an almost insurmountable challenge to drive the growth they rely on so very much to avoid tax rises or a return to austerity. Every small business owner I’ve spoken to is gritting their teeth and looking forward with a respectable, but not exactly confidence-inducing, steely resolve. Right now they need hope, and a period with just a modicum of certainty. It’s a big ask to get businesses to take a chance and invest right now, even with great long term benefit. Verdict: Many businesses are gritting their teeth and enduring inefficient, older technology – taking a chance on investment for them seems like too big a risk. A ‘test and measure’ mindset can help build confidence Sara Daw, Chartered Accountant and Co-Founder, CFO Centre Small business owners are remarkable individuals, often starting their organisations against the odds. They have specialist skills but when it comes to scaling businesses there’s much they don’t know. There’s a lot to navigate between this lack of knowledge and the current uncertain economic, fiscal and political environments with higher interest rates. The additional pressure to optimise technology and automation for productivity gains can lead to doing nothing and investment paralysis. The main concerns I see are: fear of failure and unmitigated risk lack of financial resources limited knowledge and expertise about how to grow a business, particularly with the multitude of technological advances available access to the right talent who would know how to scale organisations. I’d encourage business owners to continuously adopt a ‘test and measure’ mindset to build their confidence in investing while simultaneously managing risk. This innovative approach involves investing the smallest amount possible to prove concept, carefully measuring outputs, and doing more if it works but changing tack if not. They should also tap into their networks to learn from mentors with proven track records and gain referrals to trusted professional experts who can guide their decision-making. Verdict: Small businesses fear failure and unmitigated risk and lack financial resources – but adopting a ‘test and measure’ mindset can help build confidence. Investment activities will be delayed until the new tax and legislative regime is clearer Todd Davison, Chartered Accountant and MD, Purbeck Personal Guarantee Insurance We have been running a Quarterly monitor assessing SME sentiment around current trading conditions and business finance since Q1 2021. In Q2 2024 we found that 19% obtained business finance to help fuel growth initiatives. Whilst this appears low, it is the highest proportion since our quarterly monitor started. The majority of our customers are obtaining business finance (31%) for working capital purposes. For example, managing cash flow within the business to monitor supplier payment and credit control cycles. Labour has indicated plans to cap corporation tax at 25% for the duration of its parliamentary term. It will include a new tax roadmap, including a permanent full expensing system for capital investments and enhancing the annual investment allowances. It’s possible that some SMEs, in the build-up to the general election, delayed investment activities and will continue to do so until the new tax and legislative regime is made clearer. The high inflationary environment of late 2022 and 2023 may have also delayed spending. Margins have been squeezed within business, especially given continued effects of late payments on cash flow. As inflationary pressures begin to ease, confidence should rise and encourage SMEs to invest capital into growth initiatives. Business confidence has risen in Q2 2024. The British Chamber of Commerce shows that 58% of firms expect an increase in revenue in the next 12 months. It also showed that business conditions were returning to pre-pandemic levels when measured by sales and cash flow. Verdict: SMEs may be delaying investment activities until the government’s new tax and legislative regime is made clearer. Small businesses are trying to protect cash flow Paul Guise, Director, Prime Accountants Group Some small clients are hesitant about investment for a number of reasons. There’s uncertainty around the economic landscape due to the change of government and there are concerns around high interest rates. Typically, investment requires lending and that is currently very expensive. With the change of government, rumours are circulating about the October budget and a change to some headline tax figures. We don’t know what that looks like yet, and that might be holding small businesses back. Ultimately, businesses have got to protect their cash flow and are possibly inclined to look after their cash to keep something for a rainy day. Small businesses need some tax incentives and interest rates to come down. The Super Deduction Capital Allowance Scheme (now closed) helped a lot of companies with plant and machinery acquisition, for example. We also need to incentivise businesses, but I think we are looking at the government tightening belts in some way. The government is ramping up the rhetoric around housebuilding, which is a massive kick to the housing industry. So some sectors are talking big around investment, but others are being more cautious. We have also got to think about the global picture. Recent news about the US economy stuttering could have a huge effect worldwide, as it is possibly tipping into recession. There is a lot of uncertainty across the world, not just in the UK. Verdict: Small businesses are concerned about economic uncertainty and are trying to protect cash flow. Temporary tax deferrals, banking incentives and grant programmes are desperately needed Simon Michaels, CEO, HW Fisher’s Business Solutions The innate entrepreneurial flair of small business owners is being challenged in this current market. Such business owners have appetite for risk but even they are questioning whether this is the right time to look for new opportunities or other investments. The adage ‘cash is king’ is as strong today as it has ever been. Economic uncertainty has pushed businesses to retain cash where they can, ensuring sufficient working capital to weather a market downturn. In addition, increased interest rates and general business costs have resulted in less working capital and consequently fewer surplus funds to invest in non-core projects. Only a few years ago, businesses were encouraged to borrow. Interest rates were at an all-time low, and banks were freely lending ‘affordable’ loans. Fast-forward two-to-three years and these loans are no longer so affordable. Borrowing costs have increased significantly resulting in high interest, large monthly payments and consequently, less available cash. This has created the perfect storm with pressure on sales coupled with increased monthly costs. I’d like to see: Temporary tax deferrals to improve cash flow for young, struggling businesses. Further banking incentives to provide low-interest or interest-free loans for SMEs with cash flow issues. Developing targeted grant programs to support SMEs in sectors hit hardest by economic downturns, such as retail and hospitality. Faster payment cycles and better cash flow will be achieved by introducing prompt payment initiatives by large companies and government agencies. Implementation of extended tax payment plans to reduce immediate tax burden on SMEs. Verdict: SMEs have less available cash and high monthly costs. Temporary tax deferrals, banking incentives and grant programmes are desperately needed. Busy schedule? Fit learning around your responsibilities, with our on-demand events. Find out more
Could you win an AAT Impact Award 2024? Posted 08/06/2024 by AAT Comment & filed under AAT news, Members, Students. We’re once again looking for inspirational people across AAT. Raise your profile and help us celebrate the community’s hard work and successes by submitting your story. This year, we’re excited to present our first in-person AAT Impact Awards. We’ll be continuing to celebrate the achievements of inspirational people from across the AAT professional member community. The Impact Awards is a unique opportunity to recognise those inspirational people who are making a difference and spotlighting those unsung heroes. The awards ceremony will take place at AAT Connect, a new and fresh event, celebrating all things AAT, on Friday 8 November 2024 at The Brewery in central London. Here, our winners will be presented with a unique Impact Award trophy and celebrated alongside peers and colleagues from the AAT community. Who can enter the AAT Impact Awards? The AAT Impact Awards are free to enter and open to all members. We’re looking for inspirational professional members, from every designation, region, and background. You can nominate yourself or somebody else. There are nine Impact Award categories to be won, plus the AAT Past President’s award. Read them all to see if they describe you or somebody you know. How to enter The awards are free to enter and all you need to do is provide your details and answer two questions. Tell us about your inspirational story (Max 300 words). Describe how you meet the awards criteria (max 400 words). Please make sure you have all your information to hand before starting your award entry as you won’t be able to save your progress or amend your answers once submitted. Award submission deadline: Tuesday 3 September 2024. Award categories AAT Excellence Award The AAT Excellence Award will be presented to an individual who has been hugely impactful in their career to date. They’ll be able to demonstrate how they’ve influenced change in their business, for example, spearheading sustainability initiatives or a rapid progression through the ranks. Enter AAT Excellence Award AAT One to Watch Award The AAT One to Watch award acknowledges and celebrates an individual who is early in their career but has already made an outstanding contribution to their workplace and has shown exceptional progress in both their skills development and studies. Enter AAT One to Watch Award AAT Inspiration Award The AAT Inspiration Award will be presented to someone who has inspired others to level-up in their careers. It will be someone who goes above and beyond their remit with passion – supporting peers, colleagues, students or mentees and encouraging them to achieve their best. Enter AAT Inspiration Award AAT Influence Impact Award The AAT Influence Award will be presented to someone who has helped spread the word about AAT’s value to influential people in the industry – advocating to others how AAT increases the resilience of our profession, drives up standards, and helps businesses succeed. Enter AAT Influence Award AAT Triumph Award The AAT Triumph Award will go to someone who has had to overcome several challenges and obstacles along their AAT journey, demonstrating personal resilience every step of the way. Enter AAT Triumph Award AAT Global Champion Award The AAT Global Champion Award will be awarded to someone who has helped to widen the impact of AAT and/or drives the standards of the profession, across borders. Enter AAT Global Champion Award AAT Professional Member of the Year (MAAT/FMAAT) Award The AAT Professional Member of the Year (MAAT/FMAAT) award recognises an AAT full or fellow member who has demonstrated outstanding achievements and success in their role since 1 April 2023 to date. They will have shown a commitment to their personal development and have utilised their AAT membership to help drive their success. Enter AAT Professional Member of the Year (MAAT/FMAAT) Award AAT Professional Member of the Year (AATQB) Award The AAT Professional Member of the Year (AATQB) award recognises an AAT bookkeeping member who has demonstrated outstanding achievements and success in their role since 1 April 2023 to date. They will have shown a commitment to their personal development and have utilised their AAT membership to help drive their success. Enter AAT Professional Member of the Year (AATQB) Award AAT Licensed Member of the Year Award The AAT Licensed Member of the Year Award recognises an AAT licensed member who has demonstrated outstanding achievements and success since 1 April 2023 to date. They will have shown a commitment to their personal development and have utilised their AAT membership to drive their personal success and the success of their practice. Enter AAT Licensed Member of the Year Award AAT Past President Award The Past President’s Award celebrates the outstanding commitment and contribution to AAT’s strategy by an AAT professional member. The award recognises members’ achievements in enhancing the prestige of AAT in the industry and beyond. Members can nominate themselves or others to get a chance to celebrate the achievements of unsung ambassadors who we might not get to see otherwise. Nominated members cannot be currently serving on AAT council or have been an AAT President. Enter AAT Past President Award Why enter the AAT Impact Awards? You could… Be recognised for the impact you’ve had as a finance professional, in business and those around you. Be presented with your award at AAT Connect on Friday 8 November 2024. Be the proud recipient of a unique AAT Impact Awards trophy. Be an ambassador for how the AAT community is making an impact locally and globally. Book your place at AAT Connect Once you’ve submitted your nomination, if you’re an AAT professional member, don’t forget to book your place at AAT Connect so you can take full advantage of what the day has to offer. Find out more and book today Privacy information Read specific details about the AAT Impact Awards in this sub-section of our privacy policy. For further details please read AAT’s privacy policy detailing how we’ll handle your data. Please note, if you’re nominating someone else, nominees will be contacted however we won’t disclose any details of the nominator. Personal data submitted as part of your nomination will not be shared with third parties unless required by law or with consent. Nominations will be judged by an independent panel of AAT staff to select winners. Once submitted, we’ll retain your nomination and the data within it for six months for unsuccessful nominations and 12 months for winners.
Skills reforms a promising start Posted 08/02/2024 by Adam Harper & filed under Members, Policy. Why Labour’s Skills England pledge looks good for accountancy. The four weeks since the general election have been as busy as one might expect. Following the decisive result, power transferred to a new government swiftly and seamlessly. Labour then set about the business of enacting the first of the policies outlined in its manifesto. All of that activity culminated in a comprehensive King’s speech, delivered to parliament on 17 July. Among the many items announced, the new Skills England Bill took its place alongside other Labour manifesto commitments to be rolled out over the next 12 months. The speech signalled that Labour’s pledge to create a new overarching body, Skills England, would indeed go ahead. It also announced that the DfE would “Undertake a short pause and review of post-16 qualification reform at level 3 and below, concluding before the end of the year.” The signs are that this government is taking reform seriously. It has pledged that Skills England will “bring together businesses, providers, unions, mayoral combined authorities (MCAs) and national government to ensure we have the highly trained workforce that England needs”. Reform timing matters It’s encouraging to see this issue so prominently positioned on the government’s agenda. The new education secretary clearly recognises the time required to get a Bill on the books and reforms in place is considerable, so has acted with speed to get the ball rolling. And timing matters on this. Given the backdrop of poor coordination across government and regulators, the previous timetables associated with each of these reforms required in some instances awarding bodies to potentially have to redevelop qualifications very early in their lifecycle. We’re pleased that the previous government’s plans to defund qualifications overlapping with first-wave and second-wave T levels have been paused. AAT has applied for extension to adult funding, should the reform go ahead, and will receive a response after this pause. That decision provides a welcome opportunity for us to make our voice heard on future plans and to help ensure policy is designed with coherence and clarity in mind. That pause, if used wisely, could end up saving a lot of time and cost further down the line. Consolidating skills bodies But of course, the devil will be in the detail. It is telling that the government plans to subsume IfATE into Skills England. That points towards a desire to bring skills policy under one roof, with emphasis on coherence, clarity and – hopefully – delivery. That would suggest that the current system, where various bodies oversee disparate parts of the skills framework – sometimes complementing each other, but often not – has been viewed by the new government as no longer fit for purpose and is ripe for reform. So, we welcome the move towards a single skills body that feeds into the government’s broader industrial and economic strategy. As one of the UK’s leading awarding bodies, AAT has always maintained that technical qualifications are vital to supporting growth. Technical qualifications deserve respect But it’s also true to say that for too long technical qualifications have been relegated to second-class status and denied parity of esteem. This needs to change, and at AAT we believe it’s vital that funding is protected for post-16 qualifications that have a clear employer demand and strong learner outcomes. The move to better promote technical and vocational education and to set it on an equal footing with higher education is very much welcome. Especially given businesses have been repeatedly calling for skills that better meet their needs. Meeting employer needs Employer demand is crucial. Ultimately the development of skills programmes has to serve a wider economic purpose – that is to provide employers of all kinds with adequately qualified employees to meet their needs. And while government, academia, training providers and professional bodies are vital stakeholders, we must maintain our focus on employers and their needs. It’s something we have held central at AAT, and will continue to do so. Conclusion Of course, these reforms can’t solve everything overnight. We still require investment in other areas, particularly in pushing for greater financial literacy in young people as well as developing a more digitally savvy workforce. But it’s a good start. And, taking an optimistic view, the developments since the election are leading towards a more coherent skills policy. It may, at long last, create an effective and joined-up framework for the next decade or more.
Is there appetite for mutual recognition of qualifications with Europe? Posted 08/01/2024 by Annie Makoff & filed under Employers, Members. Accountants discuss the potential benefits for accountancy should Europe and the UK agree to recognise one another’s professional qualifications. In their election manifesto, Labour pledged to reset relations with the EU and ‘secure’ a new mutual recognition agreement for professional qualifications. This would help ‘open up’ the professional services sector and improve the UK economy. Since then, the Labour Government have taken steps to strengthen ties with the EU in the hope of getting a better Brexit deal for Britain. The previous mutual recognition of professional qualifications agreement with the EU finished in January 2021 with the end of the Brexit transition period. It remains to be seen whether any new qualifications-related agreement can be reached and even if achieved, it may not necessarily include the accountancy profession. So far, the focus has been on lawyers, architects and bankers. An EU diplomat recently told i news they would not allow the UK to ‘cherry pick’ Brussels institutions and rules. Although AAT has members all over the world, AAT qualifications are not automatically recognised in some areas. In fact, speaking back in 2021, AAT’s then-CEO Mark Farrar said: “We have yet to clarify the process by which we could develop automatic recognition of AAT qualifications in other countries. But it is hopeful that there will be a pathway to securing further understanding on the services sector and mutuality of professional qualifications.” Currently, accountancy practices with EU-based clients face significant barriers. If an accountant carries out accountancy work on behalf of an EU-based client, their work may not be valid in their client’s jurisdiction. Equally, an accountant wanting to live and work in an EU country may have to requalify as an accountant. We asked accountants for their views on the mutual recognition agreement: how the sector benefitted and what they’d like to see in any future scheme. Re-introducing the agreement could address sector skills shortages and provide more opportunities for UK accountants Ellis Harris-Boulter MAAT, Founder and Director, FieCo Accountancy & Marketing and AAT Tutor The Professional Qualifications Act 2022 revoked the EU framework for bilaterally recognising qualifications. It introduced a new, regulator-focused approach which placed the onus on individual regulators to recognise overseas qualifications – or not – with the exception of certain qualifications, primarily in healthcare. The original agreement benefited accounting practices by enhancing the pool of available candidates for roles, especially in industries such as Production Accounting given their severe shortages. It also made life easier for fully qualified accountants. And it gave UK-based accountants more opportunities abroad and encouraged the hiring of specialists. UK-based accountants continue to work with EU clients, and the UK-EU relationship is continually evolving. So supporting frameworks that minimise friction and collaboration is a really good thing. With talk of a UK-EU reset under the new government, the shared recognition of qualifications is something I can imagine being a fairly politically inexpensive move to improve the relationship, with little cost to either side and most likely with public support. This might be just one way to secure a brighter future in the relationship we hold with our continued largest trading partner. Verdict: Re-introducing the mutual recognition of professional qualifications agreement could address skills shortages in the sector and provide more opportunities for UK accountants. A new agreement would be beneficial for small UK firms wanting to expand internationally Aaron Westgate, Chartered Accountant and Accountancy Teacher I would welcome a reintroduction of the mutual recognition of professional qualifications agreement. It would provide a much-needed contribution to the recruitment shortage we have seen for a number of years. It would also support skills shortages for smaller UK firms wanting to expand internationally, particularly in light of the increasing regulatory focus on joint and transnational audits. A key challenge will be where qualifications primarily reflect the local market needs. Therefore additional assessment mechanisms will be needed to bridge the gap between the knowledge and skills assessed in each qualification. Significant resources will be needed to carefully assess each qualification to maintain the quality, though the in-depth process will be highly beneficial to learn from respective qualifications. Verdict: A new agreement would help address the sector’s recruitment and skills shortages and benefit small UK firms wanting to expand. A new agreement would make little difference in practice Natalia Micu AATQB, Freelance Accountant and Management Accountant, Novenary While I was working in the EU prior to 2021, I didn’t have any issues with my professional qualifications because they were recognised internationally. However, since working in the UK before and after 2021, I found that my EU professional qualifications weren’t recognised by recruitment agencies. Within my accountancy practice, I’ve had no issue working with EU businesses because they are interested in my experience rather than diplomas. Some challenges I have experienced so far include: being aware of and up-to-date with EU countries’ legislation, language barriers and the accountancy software used. I think re-introducing mutual recognition of professional qualifications wouldn’t make a huge difference. What’s important while working in the UK is having a UK professional qualification. That’s what recruitment agencies are looking for regardless. If you don’t have a UK professional qualification, no recruitment agencies would acknowledge your experience or EU professional qualification. Businesses work with accountants based on their experience, skills and qualifications, not just one or the other. Yet for accountants with just a professional qualification, EU or UK, it’s still experience which is important. Verdict: A new agreement would make little difference as clients require experience first and foremost, and UK recruitment agencies prioritise a UK qualification.
MTD for IT: What businesses and accountants need to know Posted 08/01/2024 by AAT Comment & filed under Making Tax Digital, Members. This content is brought to you by Sage The MTD for IT timeline has shifted. Find out how HMRC’s new phased approach will affect all small businesses. Digitalisation of tax is a huge focus for the UK government. Making Tax Digital (MTD) for VAT is already running and demonstrating the benefits of digital working for many businesses. The next milestone will be rolling out MTD for Income Tax (MTD for IT) for self-employed individuals and landlords. MTD for IT was previously due to be introduced from 6 April 2024 for sole traders and landlords with an annual qualifying income over £10,000. HMRC has recognised this requires a significant change in working while we’re in a challenging economic climate. It has therefore decided to change the mandation threshold as well as shift to a phased roll-out from 2026. In this article we’ll cover all the updates you need to know as well as who can get involved in early testing over the next year. What is MTD for IT? Making Tax Digital for Income Tax is a new way of reporting income and expenses which will replace the Self Assessment returns for sole traders and landlords. It will require the taxpayer or their agent to: use software that is compatible with Making Tax Digital for IT keep digital records of business transactions send quarterly updates to HMRC which summarise those business transactions Separate quarterly updates will be required for UK property, foreign property and each of your self employments provide details of any tax and accounting adjustments and reliefs to finalise your taxable income from property and self-employment provide details of other income sources and other information such as tax allowances and reliefs you wish to utilise that would have previously been included on your self assessment tax return confirm the information you have provided is ‘complete’ by making a ‘Final Declaration’ by 31 January the following year. Where are we at now with MTD for IT? It was announced in a written ministerial statement on 19 December 2022 that the launch of MTD IT would be pushed back, and the income threshold increased. At the same time, the government announced a review of smaller business needs, to consider whether it makes sense to bring those under the £30,000 income threshold into MTD. HMRC is now taking a phased approach: self-employed businesses and landlords with an income greater than £50,000 will be required to comply with MTD for IT from April 2026 those with an income greater than £30,000 must comply from April 2027. The inclusion of general partnerships has been postponed with a commitment to introduce MTD at a later date. The aim is to provide more time for businesses, particularly those with the smallest incomes, to adapt to the new ways of working while also allowing HMRC more time to thoroughly test the process for all users. It is right to take the time to work together to maximise the benefits of Making Tax Digital for small businesses by implementing the change gradually. It is important to ensure this works for everyone: taxpayers, tax agents, software developers, as well as HMRC. Victoria Atkins, Financial Secretary to the Treasury What else has changed with MTD for IT? At the Autumn Statement on 22 November 2023, the Outcome of the Making Tax Digital Small Business Review confirmed MTD for IT will not be extended to sole traders and landlords with income less than £30,000 for now, but the government will continue to review this decision. The changes to the scope of MTD for Income Tax, primarily the increase in the threshold from £10,000 of annual qualifying income to £30,000 means that the impacted taxpayer population has been cut by more than half and now stands at 1.75 million. Here are the other changes announced at the update: The period covered by each quarterly update within a tax year will move from standalone to cumulative. This means that taxpayers will not need to resubmit a historic update in the event there is an error or an amendment and instead the most recent quarterly update will overwrite the preceding one. This is expected to significantly simplify the process of making quarterly updates especially when historical errors are identified. The End of Period Statements for each source of income will no longer be required. Those of you who have followed the developments of the MTD policy will remember that originally there was an additional submission between the quarterly updates and the finalisation of the return in order to confirm the completeness of the self-employment and rental income. In reality, this submission was somewhat redundant because you could continue to adjust the income until the finalisation of the tax return. It added unnecessary complexity and ambiguity for taxpayers and as such HMRC has removed it to help simplify the process. There will be relief for landlords of jointly owned property. They can opt to keep less detailed digital records and opt out of submitting expenses within quarterly updates. The question of how landlords of jointly owned property would comply with the record-keeping and submission requirements of MTD has plagued the programme since its inception. So HMRC has again simplified the design by introducing the easement and effectively taking the problem off the table. HMRC will develop a solution to allow multiple agents to engage in the process for a single taxpayer. The so-called ‘multiple agents’ conundrum has been another key issue in the MTD design. Essentially, the move to quarterly reporting AND end-of-year reporting for multiple income streams could result in taxpayers wanting to use more than one authorised agent. That’s not something HMRC’s backend systems can currently support, but it has committed to implementing a solution ahead of mandating that will support this. Specific exemptions will be introduced for foster carers and individuals without a National Insurance number. The Furnished Holiday Lettings Tax Regime will be abolished from 6 April 2025. This will help to again simplify reporting. Together, these changes address many of the unknowns and concerns around the MTD for Income Tax design and policy that led to the delay. HMRC now believes it is in a much better position to move the programme forward to a testing phase. What is the private beta and how does it work? HMRC had previously paused its pilot testing of the programme prior to the delay announcement in December 2022. But it relaunched private beta testing of MTD for IT on 22 April 2024 and is currently encouraging agents to sign up. It is also possible for taxpayers to sign up directly. Testing has been relaunched as a ‘private beta’ for tax year 2024/25 meaning that testing will be at a smaller scale. The programme director of Making Tax Digital, Craig Ogilvie, told attendees at the Festival of Accounting and Bookkeeping in March that HMRC is focusing on “quality not quantity” for tax year 2024/25. It’s also worth noting that whilst HMRC has addressed many of the key issues around the policy and design of the programme, the functionality will be implemented iteratively. This means that whilst all the required functionality to support all taxpayers will be in place for April 2026 it won’t all be in place for day one of the beta testing. Therefore, not all taxpayers are eligible to sign up for the 2024/25 private beta testing. To be eligible for private beta, you (or your client) must: have a tax year that runs from 6 April to 5 April (or 1 April to 31 March if your software can support this) ensure personal details are up-to-date with HMRC be a UK resident have a National Insurance number have submitted at least one Self Assessment tax return be up-to-date with tax records and payments. You cannot sign up voluntarily if you: have a High Income Child Benefit Charge (HICBC) have a payment plan with HMRC are a partner in a partnership claim Married Couple’s Allowance claim Blind Person’s Allowance are bankrupt or insolvent are a Lloyds underwriter, a minister of religion or an MP receive income as a foster carer or are in a shared lives scheme receive income from a trust receive income from a jointly owned property receive income from a furnished holiday let are subject to a compliance enquiry use ‘averaging’ arrangements because your profits vary between years (for example you are an artist, farmer, or writer). There are a few important things to consider for anyone thinking about voluntarily taking part in the 2024/25 private beta testing: You will not be able to claim carry-back losses, change accounting period or change accounting method during the period of testing. You can join part way through the tax year but will have to retrospectively submit quarterly updates from the beginning of the year. So if you’re not quite ready to join now you can still sign up later in the year. If you change your mind and no longer want to take part in the beta testing, you can leave and return to the usual self assessment process (however you will still need to join MTD from April 2026 if you are mandated.) HMRC has confirmed that those taxpayers participating in the beta will be subject to the new MTD for Income Tax penalty regime which is a ‘points’ based system similar to the regime for MTD for VAT with penalties for both late filing and late payment. However, HMRC has confirmed you will not incur any filing penalties for late submission of quarterly updates during the testing period. This exemption does not apply to the online ‘Final Declaration’ due 31 January. This means you can still accumulate points under the new penalty system for submitting your online ‘Final Declaration’ late. You will still be subject to late-payment penalties while taking part in the beta, and these will be calculated using the new MTD method. This method calculates late-payment penalties as a percentage of outstanding tax and will apply if your payment is more than 15 days overdue (whereas the current regime begins after 30 days). So depending on the amount you owe, this could result in significantly higher penalties. You will have the benefit of extra support from HMRC, which in a letter to agents said “by joining the testing programme, you will have access to the dedicated MTD Customer Support Team to help you successfully transition to MTD for Income Tax and handle any issues. For those who join testing in 2024 to 2025, the team can also support the individual, or their agent, with some of the individual’s wider personal tax affairs (individual PAYE and Self Assessment matters) for the 2024 to 2025 financial year.” The other key element to a successful beta is the availability of third-party software, without which, participants won’t be able to make submissions. HMRC is hopeful that software providers will get on board early and support the programme to ensure successful end-to-end testing and ensure taxpayers and their agents have choice within the market. The providers and their products that are currently participating and have been through the recognition process are listed on the HMRC software choices pages. What will happen after private beta? If the current criteria rule you or your clients out from taking part in the private beta, make sure to check back next year as many restrictions will be dropped to expand testing further from April 2025. Testing will ramp up in April 2025 to a large-scale public pilot testing programme. This is in advance of mandated participation from April 2026 for sole traders and landlords with income above £50,000. HMRC hopes to encourage voluntary early adoption of MTD. It will continue to collaborate with users and address challenges throughout public pilot testing. What accountants need to do now First, you’ll need to discuss these changes with every client who will be impacted by MTD for IT. If you think a client would make a good candidate for the 2024/25 private beta testing, make sure to step them through the process and explain the implications of joining the voluntary programme. Once you’ve talked them through it, make sure to get their consent. You will need this consent before you begin moving forward with the registration process below. All agents need an Agent Services Account (ASA) to be able to access MTD services and make submissions on behalf of their clients. Think of this as similar to the Government Gateway login. You will only need one ASA for your firm. Once you have one you can set up your staff with administrator or assistant logins to use the account. Your firm may already have signed up for an ASA when you registered to submit MTD for VAT returns or Trust Registration Service returns. The next step is to ensure you have compatible accounting software to be able to submit quarterly updates on behalf of your clients. Sage Accounting is currently one of the few products on HMRC’s list of approved providers that is ready to use right now if you wish to sign up clients for beta testing. Once you have MTD compatible software you can sign up eligible clients for MTD for IT. Here is the information you’ll need for the sign-up process: client’s full name date of Birth National Insurance number business start date or the date your client started receiving income accounting method (cash or accrual basis) the tax year your client would like to start using MTD for IT. Once completed you’ll need to provide the client’s authorisation. You can do this either by signing in to the Agent Services Account and following the steps, or you can copy over the client’s existing authorisation for self assessment from your HMRC online services for agents account to the ASA. This content is brought to you by Sage
Warning: Emerging threats in accountancy Posted 07/29/2024 by AAT Comment & filed under Anti-money laundering, Members. New money laundering, terrorist financing and proliferation financing risks are emerging in the accountancy sector. Criminals continue to exploit new and existing technologies and services to carry out illicit activity. This is reflected in the recently updated Accountancy AML Supervisors Group (AASG) Risk Outlook. The impact of money laundering is devastating. It enables serious organised crime such as modern slavery, drug trafficking, fraud, corruption and terrorism. The updated AASG Risk Outlook now includes additional information around new risks and continued emerging threats, including: cryptocurrency proliferation financing Register of Overseas Entity verification services supply chain risk TCSP services trade sanctions umbrella companies. What does this mean for AAT-supervised firms? AAT monitors how its supervised firms are complying with their AML obligations during our practice assurance monitoring activities and desk-based reviews. All accountancy and bookkeeping firms and Trust or Company Service Providers (TCSPs) should now review the AASG Risk Outlook, ensuring their firm-wide risk assessment and customer due diligence procedures fully incorporate the risks posed to the sector. A comprehensive risk assessment is key to understanding the risks to which a business is exposed. By knowing and understanding the risks, accountancy firms can work with HM Government, law enforcement, and the professional body supervisors to make criminal exploitation difficult. Where can I find more support? AAT has published guidance, checklists, and templates to assist our supervised firms’ compliance with the Money Laundering Regulations. We also operate an AML helpline, offering advice on all aspects of complying with the Money Laundering Regulations, such as how to report suspected illegal activity. AAT supervised firms can contact the helpline on +44 (0)20 7367 1347 or at [email protected].
How to recruit based on potential Posted 07/26/2024 by Christian Doherty & filed under Employer newsletter, Employers, Members, Recruitment. Without experience, it’s hard for early-career recruits to prove themselves. Here’s how to find, and close the deal on, high-quality employees. It’s never been easy finding, recruiting and retaining talented people in accountancy. But with the after-effects of a global pandemic, a cost of living crisis, rising university costs and a general atmosphere of volatility have challenged accounting practices like never before. And, unlike hiring senior accountants with full CVs, recruiting those in the early stages of their career requires a bespoke approach that focuses less on experience and more on potential. Amy Carter leads the recruitment team at Leeds-based practice Kirk Newsholme. She says without past experience to assess, recruitment in early careers becomes about making sure that candidates have a good fit for the firm. “I think that’s key.“ Finding those candidates has led Kirk Newsholme to focus on connecting with local schools and colleges to open up the talent pipeline. “We tend to run an event every year which we call an insight evening. I know other firms do things like using a week of work experience to sort of identify good candidates. And we’re looking at doing a bit more of that ourselves.” Holistic approach to assessing candidates Carter’s work reflects a growing acceptance among firms that successful recruitment requires more than just a job ad and a competitive salary. She has spearheaded the development of a long-term process that sees potential hires attend insight evenings, meet staff members, ask questions and get a sense of what a career in accountancy might involve. “We’ve built that up over a number of years now where we’re in quite a good position and we do get a really good number of applications coming through,” Carter says. Once potential hires have been identified, the focus then falls on the interview process and getting a good feel for that person. “And that starts with a good CV and a good application and making sure that we are selecting the best ones that come through because we do get an awful lot.” Jez Brooks’ role as Early Talent Manager at Moore Kingston Smith (MKS) involves managing the recruitment of AATs, ACAs – which are typically graduates – as well as a tax program. So they’re also recruiting for ATT, CTA, and also for ACACTA. “So the majority of it is graduate recruitment, but probably about 20% of our program is school leavers, level 4 AAT stuff.” While MKS still uses traditional interviews to assess candidates, Brooks says the process prioritises more than just basic technical skill. “It’s absolutely not about experience. Instead, it’s competency-based, it’s strengths-based, it’s about transferable skills. So we’re still looking for team building, relationship building, communication, willingness to learn. We also want drive and a passion for the subject, the company and the industry.“ Using tech to streamline recruitment drives In common with a growing number of practices, Brooks reports that technology is a growing part of MKS recruitment process. “One of the lessons of COVID was that it showed us that we can move online,” he says. “The last intake, we had just over 140 hires, which works out at about 35 applications per hire. So that’s a lot of processing that requires a lot of whittling down through the stages to get there. “So tech is part of that, and we’re now starting to embrace technology in terms of our assessments and being able to process that many applications and make sure that we can get through it in a timely fashion. Everyone wants to get a response in a few hours even. So if you just leave it to human processing power, it takes longer. “So actually we do an awful lot more online and while I think it’s still important that you have a face-to-face meeting with people that you’re recruiting where you possibly can, all those initial stages, right the way through even to assessment, can be done remotely. I think the use of tech in that certainly helps.” Creating a career path Jack Armstrong, Client Director at Richardsons Chartered Accountants in Oxfordshire, agrees that embracing technology is vitally important, both for attracting talented candidates and managing the assessment process. But, he says, while salary and flexibility are valued by younger candidates, there’s no substitute for offering a compelling career path. “We put ourselves within London catchment in terms of salary, but we don’t necessarily pay London salary wages. But something that’s really, really great with a firm like ours is the training involved.“ Armstrong explains that Richardsons have designed an intake system that prizes variety over specialism. “Our hires won’t just be working doing one specific area – accountancy or tax or audit; instead, they’ll be doing a little bit of everything.“ “That’s because we appreciate when a 16, 17, 18-year-old is just fresh out of school or college, the world is their oyster. They don’t really know what they want to do. And if they kind of think that they really want to be an accountant, then we need to show them there are so many different aspects of accountancy”. Getting the hire over the line Of course, finding and attracting candidates is one thing, but actually getting the hire over the finish line can be a challenge. “I think we tend to see a lot of young people coming through now who possibly have a bit less loyalty once they’re committed to something,” explains Carter. She reports a definite trend of candidates accepting an offer only to change course at the last minute. “It doesn’t happen a lot, but we are noticing it does happen,” she says. “It can happen two to three months after somebody’s accepted an offer, when you’ve closed off your recruitment process. That can be a real headache because you still need someone for the role. “I know that other firms are seeing a lot of that as well. It’s really important to make sure that I’m in constant contact with them over the summer to make sure that they don’t slip away.” In response, Carter’s team has developed a process to ensure candidates stay attached to the firm between hire and start date. “We run meet-the-team days over the summer where we get them all in to meet each other and the team, just for half a day, maybe go out for a coffee. And then they know where they’re coming on day one, they’ve met some people there, and it all starts to feel a bit more familiar for them.” Ultimately, we want somebody who’s got a little bit more than just technical skill – we want a bit of personality as well. And I think that’s why it’s important to have met these people several times across the year.”
Now is the time for VAT simplification Posted 07/25/2024 by Annie Makoff & filed under Members, Tax, Tax reform. Accountants argue that the change of government brings a unique opportunity to simplify VAT. There’s been a lot of talk of VAT simplification lately. Professional bodies have been calling for HMRC to address SMEs’ disproportionately high tax cost burden. Talk has ramped up since the change of government, with many suggesting now is the time to make significant changes to the system. This problem is a global one. Many EU member states have already taken steps to address it, implementing a voluntary ‘SME scheme’. This is only eligible to EU member states (therefore not the UK). The scheme works by exempting EU-based SME businesses with turnover below a certain amount. Each EU member state is free to set its own threshold, so it varies considerably. Currently, the the threshold in Greece is €10,000, while in Italy the threshold is €85,000. From January 2025, new amendments to the EU-wide scheme will be implemented. These will include a set standardised maximum threshold of €85,000 and extending the scheme to EU-based businesses that operate in other EU member states – providing annual turnover does not exceed the threshold. Many hope it won’t be long before a similar scheme comes to the UK. Indeed, there are calls for the government to re-introduce The Office of Tax Simplification which was abolished in 2023. Previous tax simplification options explored by the Office of Tax Simplification included: Lowering the VAT threshold. This would bring higher numbers of businesses into the VAT system, so it’s fairer overall with no cliff edge. However, it’s likely to have implications for economic growth. Increasing the VAT threshold, which would remove the tax burden of more SMEs but stunt business growth. A ‘smoothing’ mechanism to reduce tax burden on SMEs. That would include a ‘time-limited reduction in VAT Flat Rate scheme for newly-registered businesses and a financial taper’, as suggested in Office of Tax Simplification, Value added tax: routes to simplification 2017 report. So what do financiers think? We spoke to accountants and bookkeepers for their views on VAT simplification and what they’d like to see. Introduce a significant VAT registration threshold Dougie Todd, Partner and Co-Head of VAT, haysmacintyre The momentum behind the new government could make this the ideal opportunity to consider changes to or simplification of elements of the current UK VAT regime. However, as we’ve seen with recent attempts to introduce changes to the VAT legislation (‘pasty tax’ and changes to the VAT treatment of womens’ sanitary products, for example), the government needs to carefully consider any significant changes to liabilities of specific products. In addition, the recent increase to the VAT registration threshold from £85,000 to £90,000 highlights that it is more beneficial to small businesses to maintain turnover under the threshold to retain 20% of their income. Instead, VAT simplification could include: Introducing a significant VAT registration threshold (for example £500,000) which would benefit small traders by allowing them to retain an extra 20% of income. Increasing the threshold for the Capital Goods Scheme (it’s been at £250,000 for a number of years). An increase to the threshold would allow small and medium size businesses to invest in capital works without additional VAT compliance burdens. Extending existing VAT zero-rating certification to include private housebuilders (in addition to charities and social housing providers) to allow them to recover VAT incurred on the development of social housing. The benefits of these simple changes are to encourage employment and investment by SMEs. It also makes the system fairer and less subject to fiscal drag. None of these changes could be considered a ‘tax cut’ but would make the VAT system work more fairly, provide certainty for businesses and support the government’s stated aim of encouraging growth and investment. Verdict: Introduce much higher VAT registration threshold to allow small traders to retain an extra 20% of their income. Break down barriers with an introductory level of VAT with a lower registration threshold Kirsty Nash MAAT, Licensed Accountant, Tiny Shark Accounting With a new party in power and the nation braced for change, now could be the time to simplify VAT. The tax is often criticized as overly complex by business and accountants alike and it may be stifling the growth of UK businesses. With approximately half of all businesses in the UK not registered for VAT (or PAYE), there is a clear opportunity for the government to capture a wider audience with the tax. Reducing the burden of entry is vital however and any changes made need to help and assist small businesses. I love the idea of having an introductory level of VAT, with a lower registration threshold. It would encourage involvement in the scheme and break down the current barriers faced by small businesses. This could involve a ‘small business tier’ of VAT with mandated use of existing flat rates and annual submissions for simplicity. Once a business is in the scheme, purchases will have an element that can be reclaimed which could encourage more spending and investment. And even more so when there is no incentive to cap revenues and to bunch under £90,000, the new registration threshold. Beyond new or small business, VAT veterans would surely welcome a simplification of the various rates, rules and exemptions. This is a much more daunting task however and one that may require a fundamental revisit of the tax. Verdict: Implement an introductory level of VAT with a lower registration threshold to break down barriers faced by small businesses. VAT simplification needs to balance revenue needs and business and economic incentives Mike Webb, Associate, Wellers VAT plays a crucial role in the UK’s tax landscape, contributing significantly to government revenue, but the current system can be complex and burdensome for businesses. This is due to the threshold, which is the highest in the EU and OECD. This creates a ‘cliff-edge’ effect where businesses just below the threshold may avoid growth to stay under it. There are a few ways the policy could be simplified. Reducing the threshold. This could minimise the drag on economic growth as there would be less incentive for businesses to stay under the ‘cliff-edge’. Instead, it means they can actively pursue growth. However, it would bring more businesses into the VAT system. Raising the threshold. Alterantively, the threshold could be raised to something closer to £100,000. Some say this will encourage suppressed economic activity, although the problem of a ‘cliff-edge’ remains. Spread out VAT payments. This could ease the immediate liability of having to pay once a business crosses the threshold. This helps alleviate the pressure on businesses that haven’t needed to deal with this cost before, allowing them to continue to pursue growth alongside making VAT payments. Overall, simplification has several benefits. It provides more incentive for businesses to grow instead of hovering just below the threshold. This will also improve revenue collection for the government by reducing the number of businesses escaping VAT. It will also reduce administrative burden so more time can be spent on the business instead of on paperwork. A simpler and more transparent VAT system will enhance the UK’s attractiveness for investment which will be good for UK economy, too. Overall, it could be a positive reform as long as it strikes the right balance between revenue needs and economic incentives, businesses and individuals. Verdict: VAT simplification could be positive as long as it balances revenue needs and business and economic incentives. Work with businesses to agree on VAT simplification rules Richard Staunton, VAT Partner, Gerald Edelman I think everyone in accountancy would welcome VAT simplification. The bigger issue though is whether simplification will lead to certainty. There are many areas of VAT which are complicated and subject to discussion through the courts. Most weeks there is a development that subtly changes how an area of VAT is treated. That’s not helpful for a business where there may be doubt over whether VAT should or should not be charged – that additional 20% might be the entire profit margin! Ensuring that all businesses have certainty and a level-playing field though would surely encourage entrepreneurship. Since Brexit, the UK is in a position to fundamentally make changes to the VAT system that it couldn’t when in the single market, so there is clearly an opportunity here. There were previously rumours that the Office of Tax Simpliifcation was considerating a stepped approach, reducing the threshold. For example VAT at 10% might be levied at say £60,000 to £80,000 and then 15% from over £80,000 to £100,000 and so on. It would solve one issue but would actually increase complexity not simplify things. Alternatively, there is another area which could be looked at. Work on houses which have been empty for two years have a 5% VAT rate but it isn’t always easy to prove that the property has been empty. Also, the 5% isn’t always recoverable but rules could be tweaked and simplified to allow that. Not only would that encourage businesses to carry out more projects but it would also result in additional housing which is one of the governments targets. A win-win? Verdict: Overall, a good approach for VAT simplification would be for HMRC to work with busineseses and agree on rules for complicated areas.
Green Catalyst: Integrating ESG and Sustainability into Modern Accountancy Practices Posted 07/22/2024 by Green Catalyst & filed under Members. This content is brought to you by Green Catalyst. In the ever-evolving landscape of business and environmental responsibility, Green Catalyst has emerged as a pioneering consultancy. The mission? To embed sustainability into the core of the accountancy profession, enabling practices to confidently support the wider business community and positively contribute towards Net Zero 2050. As the world shifts towards greener practices, Green Catalyst is here to support and ensure that accountants are not just participants, but leaders in this crucial transformation. The Vision Behind Green Catalyst Green Catalyst is designed to address three vital topical streams: Cyber Management, Sustainability/ESG (Environmental, Social, and Governance) and FinOps. The company’s founder, Robert, recognised early on that all three streams contribute towards an organisation’s Sustainability, and the heart of Green Catalyst lies in its commitment towards Sustainability and ESG. Additionally, current focus emphasised the pressing need for the accountancy profession to integrate within their operations and this foresight positions Green Catalyst as the go-to consultancy for accountants aiming to stay ahead of regulatory trends and client expectations. Why Sustainability Matters Now Sustainability isn’t just a buzzword; it’s a critical component within modern business strategy. With global warming and climate change making headlines, the urgency for sustainable business practice has never been higher. Metrics and data overwhelmingly support the need for change, and Green Catalyst is here to guide accountants through this complex landscape. Robert emphasises the importance of personal involvement and understanding in sustainability. It’s not just about implementing green practices at work; it’s about embracing these values in daily life. Whether it’s reducing agricultural consumption (less red meat and dairy products), opting for eco-friendly transportation (electric vehicles or one less flight), or “green” home improvements (solar panels, heat pumps, improved insulation), the shift towards sustainability starts at a personal level. Green Catalyst aims to assist you and bring this personal commitment into the professional realm, ensuring that the profession can confidently lead their clients towards a greener future. Training and Support for Accountants One of the standout features of Green Catalyst is its comprehensive online training platform. Recognising that not all accountancy staff have the skills or confidence to discuss ESG and sustainability with stakeholders, Robert has developed tailored training courses. These courses equip accountants with the knowledge and skills to speak confidently about sustainability, offering clients valuable insights and guidance. Moreover, Green Catalyst provides support in sustainability disclosures, helping accountants navigate future regulations with ease. The consultancy offers generic email templates, to enable small practices to communicate their sustainability efforts to clients, fostering transparency and long-term relationship trust. Building Partnerships and Relationships Green Catalyst is not just about providing services; it’s about building meaningful partnerships. Robert envisions a collaborative approach where accountants can work with Green Catalyst, without the fear of losing their client base. Through non-disclosure agreements and affiliate partner relationships, Green Catalyst ensures that accountants can offer enhanced ESG/Sustainability services, without compromising their client relationships. As testament to its commitment to a tangible environmental impact, the consultancy will pledge to plant a tree for every active client on-boarded. This initiative, in partnership with Carma, underscores Green Catalyst’s dedication to making a real difference and actively contributing towards Net Zero 2050. Thought Leadership in Sustainability Green Catalyst aims to position itself as a thought leader in the realm of sustainability. The consultancy offers insights and guidance on how to bring sustainability into smaller practices, filling a crucial skills and talent gap in the market. Conclusion As the world progresses towards sustainability, we all have an important part to play and Green Catalyst is here to ensure that accountants are not just keeping up, but leading the charge. With comprehensive training programs, robust support systems, and a commitment to building meaningful partnerships, Green Catalyst empowers accountants to integrate sustainability into their practices confidently and effectively. Embrace the change, lead with confidence, and make a real difference in your practice and beyond. Together, we can create a more sustainable world, one accounting practice at a time. Join Green Catalyst on this journey towards a Net Zero 2050 greener future. For more information on sustainability for accountancy practices please visit https://www.greencatalyst.co.uk Email:- [email protected] Telephone: 07397 108752 This content is brought to you by Green Catalyst.