HMRC Update – changes to phone lines and reporting income Posted 09/29/2023 by AAT Comment & filed under HMRC updates, Members. Plus – plastic packaging tax consultation, intelligent text messages, and VAT registration. Moving ‘at risk’ goods into Northern Ireland – Duty Reimbursement Scheme If a trader has moved ‘at risk’ goods into Northern Ireland, they may be able to reclaim duty paid. The Duty Reimbursement Scheme allows traders to reclaim duty that they have paid on ‘at risk’ goods, or they can apply for a remission of import duty that has been deferred. If they are not resident or established in the UK, they must get an agent or representative established in the UK to submit the claim on their behalf. Traders can apply to claim a repayment or remission of import duty on ‘at risk’ goods brought into Northern Ireland on GOV.UK. They can make a claim for goods brought into Northern Ireland from 1 January 2021 onwards, and they will need to show that the goods were not sold or used in the EU. Changes to reporting income from self-employment and partnerships From 5 April 2024, all sole trader and partnership businesses whose accounting year doesn’t end on or between 31 March to 5 April will need to report their taxable profits to us on a tax yearly basis. They may need to find out the details of their overlap relief if they don’t already know this figure. This needs to be done ahead of submitting returns for the 2023 to 2024 transitional year. On 11 September, HMRC launched an online form that allows individuals to get their overlap relief figure on GOV.UK. It has also published guidance about the changes to reporting income from self-employment and partnerships for the new tax year on GOV.UK. Overlap profits are profits that have been taxed twice. These can arise if a business uses an accounting date that does not align with the end of the tax year. Overlap profits create a corresponding amount of overlap relief, given in certain circumstances such as when a business stops trading. VAT registration is quicker, easier, and more secure through the VAT Registration Service From mid-November, customers should apply to register for VAT through HMRC’s online VAT Registration Service. Customers will no longer be able to submit a paper form to register for VAT unless they are exempt. Over 95% of customers already use the VAT Registration Service – it’s the quickest, most secure, and easiest way to register. Supporting its customers is a priority for HMRC and online applications for VAT registrations aligns with its ambition to increase the use of digital channels.It will continue to provide a service for customers who are unable to access and use these digital channels. HMRC continues to offer support through non-digital channels such as via telephone, including its needs extra support service. Customers can apply by post on a VAT1 form if they are exempt or if it is a specific type of registration. Customers can ask for a VAT1 form by calling the VAT Helpline on 0300 200 3700. Find further information about how to register for VAT, how to apply for an exemption from Making Tax Digital and how to register for VAT by post on GOV.UK. Over one million intelligent text messages sent to help customers resolve tax queries HMRC’s intelligent text message service has proven to be a useful tool in encouraging the use of our online services, and it’s now a key component of its business-as-usual activity. Since its launch on 19 January, over one million text messages have been sent to customers who called from a mobile phone. The service is helping customers resolve their queries quickly and easily online, with 38% not going on to speak to an adviser or calling back within seven days. The texts are triggered by the call reason, and they deliver links that provide immediate access to relevant online content which customers can use to resolve their query independently and at their own convenience. HMRC says “We are continuing to learn from, and improve, the service so it meets both our needs and our customers’ needs. We would value your support in encouraging your constituents to use more of our highly rated digital services.” Guidance changes and changes to services Certificate of Tax Deposit scheme closes The Certificate of Tax Deposit (CTD) scheme closes on 23 November 2023 and HMRC is encouraging individuals or their representatives with remaining certificates to contact its CTD enquiries team with instructions for their use. The scheme previously allowed individuals to deposit money with HMRC and use it later to pay certain tax liabilities. Customers in ongoing litigation can convert funds equivalent to disputed liabilities, as a payment on account. This protects existing late payment interest cover. Individuals should contact the CTD Team with details of the ongoing litigation. HMRC will also require individuals to provide an instruction for repayment of any remaining funds. It has published guidance on actions to take, and how to contact the Certificate of Tax Deposit enquires team, available on GOV.UK. Further guidance for customers paying their tax bill by Certificate of Tax Deposit is available on GOV.UK. Changes to the probate phone line From Monday 2 October, HMRC will no longer offer a dedicated probate phone line. If a customer has a probate query, they should contact HMCTS. If a customer has an inheritance tax query, they should contact HMRC. If a customer contacts the wrong phone line, both departments will do their best to help assist with the query. This will prevent customers from making an additional call unless it is absolutely necessary. HMRC says simplifying the phone lines will make things easier for customers, which is an HMRC Charter standards available to read on GOV.UK. Changes to the Agent Dedicated line From 2 October 2023, agents might wait slightly longer than normal to speak to an adviser on the Agent Dedicated Line (ADL), especially at peak times. However, HMRC remain committed to providing the right level of support for agents. To meet the challenges HMRC is facing, whilst providing agents with the right level of support, it will be introducing the following changes from 2 October 2023: No longer operate to a 10-minute service level on the ADL. Waiting times may vary depending on how many agents are calling at one time. HMRC says it knows that a high quality of service is important to you and removing the 10-minute call answering target will allow it to focus on improving the quality of service offered. Introducing information on call waiting times, allowing agents to make a decision based on current waiting times on whether they continue with their call, call back another time, or if they can, use a digital option to resolve their query. If agents call the ADL with a PAYE query, they will need to choose the PAYE option and their call may be re-routed. These changes are being made as part of the commitments set out in the HMRC Charter to support agents and their businesses, recognising the value tax agents bring to the tax administration system. Register for Self Assessment by 5 October 2023 HMRC is reminding anybody who is new to tax and who needs to complete a tax return for the 2022 to 2023 tax year to register for Self Assessment by 5 October. You can use its improved online tool to help people check if they need to send a Self Assessment tax return and register on GOV.UK. HMRC has also published step-by-step instructions on how to register if they’re self-employed or not self-employed on YouTube. Members can find out more about registering for Self Assessment in HMRC’s recent press release on GOV.UK. Plastic Packaging Tax – chemical recycling and the adoption of a mass balance approach On 18 July 2023, the government published a 12-week consultation on allowing a mass balance approach (MBA) for calculating the recycled content in packaging made from chemically recycled plastic waste, for the purposes of the Plastic Packaging Tax (PPT). If introduced, these changes will aim to create the right conditions for further investment in the UK chemical recycling sector. The consultation also considers the future of the exemption from PPT for the immediate packaging of human medicines if an MBA is permitted, and the treatment of pre-consumer waste as recycled material for the tax. Share your views about the Plastic Packaging Tax – chemical recycling and adoption of a mass balance approach consultation on GOV.UK by 10 October 2023.
Where have all the bank managers gone? Posted 09/29/2023 by Annie Makoff & filed under Members. Bank closures are affecting clients and forcing accountants to fill the gap. High street banks have become something of an endangered species, with the closure or planned closure of over 5,000 high street banks since 2015. With more and more customers turning to online banking, there’s less demand for physical bank branches and banks are also looking to reduce business costs (overheads, salaries and so on). Inevitably, bank managers themselves are declining too. Back in 2019, Phil Hobden, at Wolters Kluwers wrote on LinkedIn that 55,000 bank managers had left the profession since 2008. Sharpen your tax skills Take our online masterclass to stay ahead. Find out more Despite this, there’s been a huge increase in small businesses – the Federation of Small Business (FSB) says the business population increased by two million between 2000 and 2022. Naturally, all these businesses require banking services, but with the decline in bank managers and high street banks, businesses and their accountants are experiencing huge issues. Not least because 20% of small businesses use physical branches as a ‘primary means of banking’, according to a House of Commons Library Research Briefing paper. Accountants who have taken on more strategic, advisory roles for clients in recent years are having to step in to fill the gaps left by high street banks. But even with a good accountant, small businesses still require authorisation from bank managers to access vital facilities and services. Some of the main issues businesses are experiencing include: Limited access to cash. Just one bank manager to cover one entire region, leading to huge delays for services, advice and support. Inconsistent advice or service accessibility through different channels (in branch, online, telephone or via Post Office networks). Inability to access online banking due to poor internet connectivity. Closure of high street branches creating an advice gap for small businesses. We spoke to accountants whose clients are having issues with banking services to find out what the pain points are and how they’ve been helping. It’s easier to contact me than the bank Julie Pocock MAAT Kingfisher Services Yorks Some clients have been struggling to access bank services recently. We are located in a small, but busy, market town in North Yorkshire, which has a thriving high street with many small, independent businesses. Unfortunately, all of the banks closed their branches here, leaving the town with no banking facility. The many cash-based businesses have struggled to bank their takings on a daily basis. The two cash point machines left in the town regularly run out of cash, especially during the tourist-heavy summer months. Businesses then lose sales if people cannot access cash and the business does’t have a card machine. Clients also report issues seeing their bank manager. Waiting for the appointment then traveling to another town several miles away to attend. It’s costly financially, and in terms of time. I have been approached with questions about overdrafts, loans etc, just because it is easier to ask me than contact the bank. However, there will soon be a new Banking Hub opening, which will enable customers of the major banks to carry out cash transactions and get help and support from a Community Banker service. Verdict: I answer questions about overdrafts and loans because it’s easier for clients to contact me than their bank. Small tasks have become a huge battle with the bank Samantha Perkin FMAAT, Director, Zamu and lecturer at Cornwall Business School The closure of bank branches has massively affected my clients, many of whom are still taking cash because they’re in the hospitality or charity sector. They have to get the cash into the bank but our nearest one is a 45-minute drive away. Bank managers are just non-existent unless you’re turning over several million. Traditionally, bank managers would scrutinise accounts so if a customer needed a loan, the manager would be able to see if the business was in good shape. Now it’s accountants who do this. Overdraft applications are done via computer now, so if you’re turned down because you don’t meet set criteria there is no one you can speak to. Clients then have to turn to more expensive long-term loan options when all they need is a short-term option. Charities in particular just don’t have a choice. They can’t do everything online and things which should be simple becomes impossible. One of my clients, a charity trustee, got married seven years ago and changed her name. She’s filled out the change-of-name form four times but has given up because it was just a huge battle with the bank. There is just no one to deal with these things anymore. I’d like to see a contact centre with named staff who specialise in specific industries. Then you’ll have someone who really understands the market and the customer’s account and what they need. Verdict: Small tasks like changing a name have become a huge battle with the bank. We need a contact centre with named staff specialising in specific industries. OnlyFans clients with limited companies can’t open accounts Andy Liston, Director, OnlyAccountants My clients are predominantly in the OnlyFans adult industry and experience huge problems with setting up bank accounts. They’re automatically rejected if they mention OnlyFans. Sometimes clients tell banks they work as ‘influencers’ instead, which is partly true, but as soon as banks see money coming in from OnlyFans, they close the account. I get weekly emails from clients saying their account has been closed or their application has been rejected. And many of these clients have been turned down for mortgages. There are a few online banks that specifically target the adult industry but they charge huge fees. Clients tell me it can be up to £25 just to pay an invoice and then they lose money on exchange rates, too. The issue is around risk. The adult industry is seen as a dangerous one, and there are human trafficking concerns, but this doesn’t usually apply to OnlyFans. OnlyFans themselves have extensive security measures before allowing anyone on the platform and they continually monitor the content. It’s also extra time and hassle for banks: I’ve had one bank manager say to me “Why would I take a week doing background checks on a potential customer when I can open a bank account for another customer instantly?” These issues mainly affect clients with limited companies. Self-employed clients usually use a specific personal bank account for business and you don’t have to go through the same application process, but it’s always on people’s minds that the bank could close their account at any time. Verdict: OnlyFans clients cannot open bank accounts and face resistance from bank managers who do not want to spend time on background checks. Sharpen your tax skills Take our online masterclass to stay ahead. Find out more
Finding an ethical balance in AI Posted 09/29/2023 by AAT Comment & filed under Artificial intelligence, Members. As AI develops, so do the ethical considerations that go with its use. We examine some of the questions accountants will face. Other articles in this series AI could be your junior colleague Partner with AI without risking it all Concerns about the rapid growth of AI prompted thousands of tech leaders, including X (formerly known as Twitter) owner Elon Musk and Apple co-founder Steve Wozniak, to sign an open letter calling for the training of powerful AI systems to be suspended in response to fears of a threat to humanity. While the increasing adoption of generative AI tools by accountants may not herald the onset of AI Armageddon, its use does pose several commercial and ethical risks that practitioners will need to grapple with. “Technology – especially AI – presents us with new ethical issues. Or perhaps the same fundamental issues we have always faced in new packaging,” according to former ICAEW president Paul Aplin, a former tax partner at AC Mole with 40 years’ experience. Discover how to use AI in accounting ethically Learn about accountability, transparency and privacy when using artificial intelligence. Find out more For instance, if you get an unexpected – and convincingly justified – answer using generative AI to advise a client, how far should you consider whether accepting that answer is ethical? “I think the answer is as it always was: I ask myself ‘do I honestly believe that this is the right answer?’ If I do, then I can proceed, if I don’t then I either ask for a second opinion from someone I trust or I simply don’t proceed,” Aplin said. “Over the years I’ve found that the ‘does it feel right?’ test is pretty reliable.” Privacy and data security Accountants have been finding innovative ways to use systems like ChatGPT (an algorithm that interprets questions and generates coherent, human-like answers). But they have been faced with ethical concerns about security and accuracy. One of the biggest challenges is the rights of content owners. AI systems may collect and process large amounts of personal data, raising concerns about privacy, the security of that data and the legality of its use. There are also concerns over employees uploading sensitive data. Several major companies have recently cracked down on the workplace use of AI services amid concerns that sensitive internal information is being leaked on such platforms. Bloomberg reported in May that Samsung Electronics banned the use of ChatGPT and other AI-powered chatbots after employees inadvertently revealed sensitive information to the chatbot. Amazon issued a similar warning to its workers in January, while JPMorgan Chase also restricted the use of ChatGPT amid concerns that it may face potential regulatory risks surrounding the sharing of sensitive financial information. “Data protection is critical,” Rob Hackney, tax manager at DSG Chartered Accountants, said. “There are fewer limitations on what we can do with company data but with individuals you need to make sure you have proper consent for any processing done on it.” Hallucinations and bias There are also major concerns around ‘hallucinations’, which are confidently stated untruths, which can often go undetected until it is too late. “The problem with generative AI is that the answers are so articulate and confident,” Aaron Harris, Sage’s chief technology officer, said. “We have to be absolutely certain that we are not using generative AI in a way that hallucinations can cause harm.” “There are fewer limitations on what we can do with company data but with individuals you need to make sure you have proper consent for any processing done on it.” AI algorithms can also inadvertently reflect biases in the data they were trained on, leading to discriminatory outcomes or unfair treatment. Generative AI adds to the known AI threat another dimension around accuracy and potential misinformation which puts the governance and accountability of model deployment a vital business focus, according to Hassane Ferdaous, digital audit partner, at PwC. He added that: “When you have interactions with customers, and you build in a solution that is AI-driven, you want to disclose to your client that the answers and services have been generated by AI.” Transparency Vsu Subramanian, who heads up Avalara’s AI initiatives, also believes that transparency is important when AI is used. For instance, he suggested that if accountants use AI internally, they should annotate their information to say it was generated by AI. “You still need to have those policies, people need to know where the information has originated,” Subramanian said. “Now that it is possible that some of it was generated by a generative AI system giving accountants and their clients new capabilities to scale, a layer of human validation is necessary to review and verify what has been generated.” According to Stuart Miller, head of product compliance and industry engagement at Xero, this could extend to disclosures included in engagement letters. “The use of AI should form part of the standard engagement letter and therefore becomes a task within the practices themselves to make sure their clients are aware they are using these tools,” Miller said. Some AI systems, especially deep learning models, are often considered black boxes, making it difficult to understand the rationale behind their decisions. Accountability “If you allow an all-knowing, very broad algorithm to maximise profit it is frightening to consider the actions it may take to achieve that objective including questionable ethical and environmental decisions,” Mark McDonald, senior director at technology research and advisory firm Gartner, said. Consequently, it is critical that accountants retain accountability for their decisions. Professional services firms will need to curate what they are using with both the public data, but also their internal model and keep pruning and checking that what it is producing is correct and accurate, according to James Osborn, chief digital officer at KPMG UK. “That accountability as an individual needs to be retained,” he added, noting that “it is simply a decision-making enhancer; it doesn’t reproduce you as a human”. The dilemma of AI supervision AI is volatile and complex. Safeguards are needed now, but developing the right approach is not easy. Here’s a comparison of the UK’s approach vs. that of the EU. UK approach The UK government will prioritise flexibility and make use of existing regulators. No/low legislation Establish a framework of principles and sector-specific regulations instead of umbrella legislation. Use existing regulators The likes of the ICO, the CMA, the FCA and Ofcom will provide non-statutory guidance and tools. Context-specific The overall framework will define AI, but regulation will be context-specific. Pros The approach will be agile and adaptable, allowing for quick adjustments to keep up with the evolving AI landscape. Cons Regulations may not be implemented in a cohesive manner, risking a piecemeal approach. This could lead to enforcement problems. EU approach The EU approach will be risk-based and legislative, addressing a hierarchy of possible threats. Unacceptable risk Applications that could harm EU citizens’ health, safety, or fundamental rights will be banned. Example: social scoring. High Risk AI that could cause harm will be comprehensively regulated. Examples: educational admissions or law enforcement. Limited Risk Other AI applications will receive a lighter touch, such as voluntary codes of conduct and labelling mechanisms. Pros Will cover a wide range of AI risks, set high standards and create harmonized rules for the EU. Cons The legislative process may be too cumbersome compared with the speed of AI’s development. Risk of inconsistent implementation by EU states. Key ethical threats Data privacy With excessive data collection and management, AI could inadvertently breach privacy protocols, leading to unnecessary exposure of sensitive information. Accountability If AI systems make mistakes or cause harm, determining who is responsible can be difficult. This presents a unique conundrum when it comes to liability. Bias and fairness AI algorithms can inherit and amplify societal biases present in the training data. For example, in credit scoring, an AI system can be biased against a particular group, leading to unfair outcomes. Transparency AI often operates as a “black box,” making it hard to understand how it arrived at a particular decision. This could potentially undermine trust in accounting services and output. Dependence Over-reliance on AI could lead to the loss of critical thinking skills that human accountants traditionally offer. For instance, while an AI system can analyse data faster, it might lack the ability to understand the context or nuances behind the numbers. Regulatory challenges AI can disrupt regulatory practices in accounting, challenging existing oversight and control mechanisms. AI may not fit into existing regulatory frameworks, requiring new laws and policies. Discover how to use AI in accounting ethically Learn about accountability, transparency and privacy when using artificial intelligence. Find out more
Work with AI without risking it all Posted 09/29/2023 by AAT Comment & filed under Artificial intelligence, Members. There are risks to be aware of and guard against as AI iterates rapidly. Other articles in this series: AI could be your junior colleague Finding an ethical balance in AI Working in partnership with AI represents a potential game changer for accountants. However, along with the exciting possibilities come concerning possibilities, such as job displacements, data breaches and algorithmic bias. Overreliance on AI may also overlook human judgment and creativity. Firms need to address these risks in order to thrive in this evolving landscape. Manage your AI risk Our e-learning module covers strategies and tools to address risks from artificial intelligence in accounting and finance. Find out more Pushing ahead In common with other large firms, PwC has piloted AI for the review of journals to look for anomalies, but Marc Bena, Digital Audit Leader at the Big Four firm, is cautious about how generative AI such as ChatGPT will impact accountants. “With any AI, the data behind it determines how good your outcome is going to be.” Tom Allison, Associate Director at Buzzacott, agrees that AI is definitely here to stay, and already changing the accounting landscape. “We’re excited by a thing called DataSnipper which is a tool that many others are starting to use, which looks fantastic,” he says. “If we send out a request for a batch of invoices, DataSnipper can tell whether it matches, and they’ve done all of your substantive tests for you. And that sounds brilliant to me because that’s the most boring part of the work.” Allison says AI will come into its own by helping to reduce the process-driven, handle-turning tasks – stuff that typically goes wrong thanks to human error, such as making sure things add up and cross reference correctly. “Removing that means you can spend more time on the harder, judgement things,” he says. AI here is not just making judgements, it’s purely helping improve the quality of how we read documents. Risky business Managing the risks of AI use will become a core skill for future accountants. Recent research from tech consultancy Cyberhaven has highlighted the increasing trend of employees inputting confidential company data in generative AI tool ChatGPT. It shows that as more workplaces begin to use ChatGPT for routine tasks, the risk of sensitive data being shared is growing too. Unsurprisingly, the problem is growing at a similar rate as ChatGPT’s penetration of working life. Since ChatGPT launched publicly, Cyberhaven says, 10.8% of knowledge workers have tried using it at least once in the workplace. And, as the figures for the percentage of employees using ChatGPT at work have grown from 5.5% in February to almost 11% in June, so the proportion of those pasting company data into the tool has grown, from 4.2% to 8.6%. That has already been reflected in the real world, with the news that Samsung discovered employees putting confidential data into ChatGPT, effectively handing it straight to its developer, OpenAI. This, apparently, included the use of ChatGPT to debug source code as well as “transcripts of internal meetings to summarise them”. Not surprisingly, Samsung banned employees from using ChatGPT shortly thereafter. However, it may be tempted to relax its stance now that OpenAI has launched ChatGPT Enterprise, a version meant for professional settings that counts PwC among its customers and boasts far greater security than its mainstream cousin. With any AI, the data behind it determines how good your outcome is going to be. Marc Bena, Digital Audit Leader, PwC Verifying output PwC’s Bena is clear that, if anything, as AI develops, accountants will be called on to verify and build trust even more, particularly to provide assurance of its output and ensure its veracity. “So the way we look at it as a firm is to ask, ‘What’s it going to do?’ Yes, it’s going to transform the way we deliver financial audit; there’s absolutely no doubt about that at all. “But I think it will also open up opportunities to do a wider scope of audit, whether it’s consultations, cyber, ESG – all the things that really matter to customers. “Ultimately, their question will be, ‘Can I trust that ChatGPT is telling me all this stuff? Is it sound, or do I need somebody to give me confidence that what’s going out is actually complete, accurate and valid?’. That’s why accountants will still be required.” Different platforms AI PlatformWhat it doesWho it might helpThe risksVIC.AIAutomate invoice processing by using its algorithms to process invoices and expenses that meet a certain confidence threshold to notify approvers.Accountants with large volumes of transactions in need of automation.As AI learns and spots patterns, it will inevitably adopt a subjective approach so accountants must beware and remain vigilant around inputs.DocytSearches through reams of data and creates workflows based on the content it finds.Accountants engaged with multiple clients and projects that require clarity over resourcing and scheduling.AI can’t fix broken processes, but it can improve slow or inefficient ones. So ensuring that workflows are already in coherent form will avoid exacerbating existing issues.Otter.aiActs as a meeting assistant, recording audio, syncs calendars, captures slides and summarises discussions.Anyone in a collaborative role aiming to work with functions outside finance.Anything that promises to faithfully record all aspects of human interaction will inevitably create risk of error, so once again sense checking remains critical.ChatGPTThe best known of the new generation of generative AI tools, ChatGPT is a chatbot that takes instructions from you and provides a detailed response.Accountants engaged in writing reports, proposals or correspondence.In some cases, AI can interpret information incorrectly or use insufficient or outdated information.Google CloudMost AML has some level of AI-driven transaction monitoring function. Google’s new tool claims to get rid of the need for human intervention and replaces it with a stronger and more intuitive algorithm.Any organisation with AML and KYC exposure.All algorithms rely on high-quality data to make accurate predictions. However, financial institutions may struggle with data quality issues, which may lead to false positives or false negatives. Manage your AI risk Our e-learning module covers strategies and tools to address risks from artificial intelligence in accounting and finance. Find out more
The accounts payable process has hit app overload. It’s time to destack. Posted 09/28/2023 by Apron & filed under Members. This content is brought to you by Apron. No one starts a business to spend five hours a week processing payments. Especially not the people who deal with them daily: accountants, bookkeepers and outsourced finance departments. The obvious answer? Automate. Soon you’ve got an AP stack — a pile of apps, each one ‘optimising’ a different part of the accounts payable workflow. In theory. In practice? It just doesn’t work. Here’s why. Adding apps isn’t a solution The payment workflow is already complicated. It’s complicated for business owners, and it’s even more complicated for bookkeepers and accountants working across lots of clients. As the AP app stack gets taller, that complexity grows. And the shocking news is: making something more complicated doesn’t make it simpler. More wallets. More problems Another common culprit when it comes to overloading payment workflows: wallets. Wallets seem like a great idea at first. They save you having to get into, and jump between, client bank accounts. But a wallet is just one more moving part added onto your workflow, and it comes with its own set of issues. Now you’ve got a wallet, you have to: Onboard clients (do Know Your Clients (KYC) checks, and collect documents like IDs) Set up a feed between the wallet and your accounting software Keep the wallet topped up (which means coaching clients on how to do it, chasing them when they don’t, and dealing with the fall-out of empty wallets and missed payments) Reconcile yet another account And repeat… All of which means extra time, hassle, and one more security risk. Invoice approval software adds issues Once you’ve added a wallet, you usually need to add another piece of software. This one promises to automate approvals. Just think: no more missed payments and chasing clients… Except, these apps just don’t work. They’re too complicated for a lot of clients, and often add steps. To most of these approvals apps, ‘approving’ an invoice means checking it’s correct. But just because you’ve said an invoice is legitimate doesn’t mean you want to pay it straight away. Maybe: You need to manage cashflow You’ve already paid it and don’t want to do it twice You or your client have agreed some kind of custom payment plan with the payee, like instalments Because you still need to do the second type of ‘approving’ — giving payment go-ahead — these types of apps rarely save steps. All of which means clients usually give up trying to use them. Before you know it, you’re dealing with the same old emails and spreadsheets, and paying for software no one uses. The answer? Destack and integrate Most of the AP tools on the market focus on automating payment execution. But cleaning up the mess that is business payments means looking at the whole workflow — not just the last step. And the solution can’t be one more app piled on top of a creaking stack — it needs to integrate with the tools you’re already using. Which is exactly the thinking behind Apron — payment software that weaves into your workflow, without adding unnecessary extras. We built Apron to be a simple, functional layer that wraps around your existing accounting app, client banks and emails, and pulls them together. It tightens up every step of your workflow, and means payments happen in one place — start to finish. So you spend less time fiddling with apps, and more time thinking about the bigger pictures. Get your apron on Start now. “Of course, payments are a critical process within any business, and getting payments right means minimising time spent on clerical processes so you can spend more time on ‘value add’ activity, but getting payments right can create a powerful virtuous circle. Knowing where you stand with your payable bills makes forecasting and cash flow planning possible, which means you can operate your finances on the front-foot and use financial data to drive business decisions. We’ve found Apron to be a real ‘win / win’ saving clients time, reducing payment risk, improving cash flow visibility and improving the bookkeeping process.” This content is brought to you by Apron.
AI could be your junior colleague Posted 09/27/2023 by AAT Comment & filed under Artificial intelligence, Members. AI and accountancy could be a powerful mix. Are you willing to change the way you do things? Other articles in this series Work with AI without risking it all Finding an ethical balance in AI AI technology will develop at a rate we have never imagined. Because of this, sitting on the fence is unlikely to be a fruitful strategy. According to Mark McDonald, senior director at technology research and advisory firm Gartner, things are going to change more in the next 10 years than they have at any other time in the history of accounting and finance. Learn how to work with AI Our collection of masterclasses, webinars and e-learning courses can help you make the most of artificial intelligence. Browse our collection James Osborn, chief digital officer at KPMG UK, bills generative AI – deep learning models like ChatGPT that can generate original and realistic text, images, or other media from prompts – as “transformative technology”. 400% increase in knowledge worker’s productivity by 2030 Prediction by Ark Invest Big Ideas “I think it will infuse everything we do over the course of the coming years.” Osborn said. “The winners in this will be those with the richest internal data sets and the most employees who are willing to change the way they work.” But are we willing to change the way we do things? AI could be your sidekick Practitioners view AI as a sidekick to humans rather than a replacement (or even threat to humanity). “We see it applying to all our audit, tax, advisory and our internal uses pretty extensively,” Osborn said. “The practitioner becomes the co-pilot with the generative AI that is on your data, and they can prune and check and ensure that the model is good,” Osborn said. It’s hard to deny the thrill of seeing AI at work: instead of being faced with a blank sheet of paper, watching an AI mobile app spit out an article, email or report in under a second knowing it would have taken you many hours is definitely an eye-opener. “It’s great for a first draft. It’s like having an army of quite good people working for you 24/7. Imagine the leverage that can give a smaller organisation,” said one AI expert. Generative AI can also be a powerful aid in general research or generating creative brainstorming options. Even in the form of a mobile app for iOS or Android, AI can immediately boost personal productivity by at least 20%. It’s as easy as using Google and a lot more powerful, so it’s incredibly tempting for individual workers to start experimenting with the AI, with or without their employers’ encouragement. Perhaps employers are well advised to see what the technology can do and how to develop safe practices. How staff see the future of the workplace “If you plan on being in accountancy for more than five years, you have to change how you do things,” said Stuart Hurst, managing director at Accounts and Legal. “Staff are interested in this kind of tech. So if you want to hire the next generation of staff, you have to be moving into this field. And the final argument is to make more money! Fees are being squeezed, and wages are rising, but AI can improve margins and open up new services.” Almost nine in ten accountants believe that within the next five years, AI will play a crucial role in their ability to be an effective strategic business partner to their clients, according to research published in May by Intuit QuickBooks. And 95% of accountings intend to invest in new technologies in 2023, to the tune of an average £10,000 – £25,000 – with AI the most likely area of investment, according to Intuit. “It’s [potential is] definitely not over-blown, and we’re already using AI,” says Marc Bena, digital audit leader at PwC. “We’ve got technology called cash.AI where we audit cash using AI to read documents. That tool improves the quality of reading documents, translating end statements, reconciliations and doing the interim process of audit of cash.” However, Bena is at pains to point out that “AI here is not just making judgements, it’s purely helping improve the quality of how we read documents through Natural Language Processing (NLP).” Onboarding AI safely The main pathway for mid-sized accounting firms or finance teams to get started with AI is through off-the-shelf solutions. The advice from experts is to begin experimenting with low-risk, high-impact areas such as content generation or marketing, where there are no data privacy issues. It’s also wise to get employees to work in peer groups so they can swap learnings, spot risks and establish sensible boundaries. Big-name vendors in accountancy like Sage, Xero and Avalara are using various AI applications in their existing products. They are also beginning to tentatively enter the generative AI arena. “As AI evolves it is going to be accessible to everyone,” said Stuart Miller, head of product compliance and industry engagement at Xero. Sage recently launched its first generative AI capability – a tool modelled after an email inbox that automates workflows, assigns tasks and understands the intent of inbound emails sent to the accounting team. Alongside basic software, Rob Hackney, tax manager at DSG Chartered Accountants, says he is “seeing the beginnings” of smaller firms using complex AI. “Primarily at this stage it is the quantitative elements of it rather than going into what is more complex areas where there is advice or more qualitative conclusions coming out of it,” Hackney said. How large companies are doing it The larger accounting firms have started experimenting with the use of generative AI. PwC and KPMG have both announced plans to invest heavily in the coming years, working with Microsoft and others to automate aspects of their tax, audit, and consulting services. For instance, KPMG has partnered with Blue J to launch an AI tax analysis tool in the UK that will enable KPMG’s tax team to accurately predict tax scenario outcomes and reduce the time spent searching for and analysing tax legislation and case law. Similarly, by infusing data analytics and AI into the audit process, auditors will be able to focus on higher-risk areas of audit, analyse transactions on a more granular level and perform audits on a more real-time basis. PwC has also been forging strategic partnerships with Silicon Valley firms that are pioneering the development of generative AI, such as Harvey, an AI startup built on OpenAI and ChatGPT technology. The platform uses natural language processing, machine learning and data analytics to generate insights on various aspects of legal work, including contract analysis, regulatory compliance, claims management, due diligence, and advisory and consulting services. Hassane Ferdaous, digital audit partner, at PwC, said the firm’s work with Harvey is “bridging the gap” between large language models that are available to the public and those that can be leveraged by business. “We see generative AI as a significant augmentation of the capabilities of our people and adding value to our clients and our markets,” Ferdaous said. “The knowledge base that we have about audit and tax can augment the AI models. And that is more powerful.” Develop the skills to partner AI Mark McDonald of Gartner believes in the new AI-driven environment accountants will be expected to analyse information and understand what is happening, why it happened and what is going to happen in the future. “That is not something that arithmetic helps us with. That is something the field of data science is better suited for,” McDonald said. “The financial professional of the future will need to have skills that combine accounting and finance knowledge with statistics and programming.” KPMG’s Osborn believes accountants will need to develop the art of ‘prompt engineering’ – feeding the right information and questions into the model in order to get meaningful or accurate results. Your critical thinking will be necessary Critical thinking is also key. Adam Williamson, AAT’s head of professional standards, said one of the problems with generative AI is the risk that “if you ask slightly the wrong question and you get an answer that looks like it could be realistic but is wrong”. “That is where you need assurance. You still must do that critical thinking. The actual using of the tool is not the issue, it is the outcome, it is what you do with the information that you are being given,” Williamson said. Indeed, while AI may take on boring, repetitive, and tedious tasks, it will not replace the human factor of relationship development, and the accountant’s role as a trusted business adviser. Viewing AI as a junior colleague may be helpful. It needs clear instructions and any work it produces needs to be checked as it can misunderstand, get things wrong and occasionally even make things up. The best thing accountants can do is be tech savvy about how AI is going to be used in the profession, Vsu Subramanian, who heads up Avalara’s AI initiatives, said. “It is good to have an AI 101 and demystify what AI is. Once you do that it will start to make sense, you will be a more informed and more valuable accountant to the future of the profession because it is going to transform and you want to be part of the transformation,” he said. Human judgement Most tools like DataSnipper will have embedded AI engines that learn patterns and react accordingly. However, it’s not just about knowing which buttons to press: “All the way through the process you have to use your judgement,” says James Hadfield, head of audit at Top 30 firm Menzies. He’s an enthusiastic adopter of a tool called Inflo, which automates a range of audit and accounting tasks. This includes journal testing, the basic audit activity designed to detect fraud and where management has overridden controls. Hadfield says even in that example, for accountants using AI tools, there can’t be any substitute for good judgment and informed risk management. “When you’re setting the risk parameters of that you need to be thinking about, what is an unusual entry for this particular company?” he says. “It might be something that’s been entered by a particular person, or posted on a weekend, or anything anomalous. So even with tech it’s not as simple as just clicking buttons – you still need to know what to look for and how to use the tech in the most effective way.” AI’s CV How AI can support finance professionals. Automating routine tasks: AI can manage repetitive tasks like data entry, invoicing, payroll, tax preparation and reconciliations, thus freeing up accountants to take on more advisory roles. Risk and fraud detection: Machine learning algorithms can analyse vast amounts of data for unusual patterns or discrepancies, enabling early detection of fraud or other financial risks. Predictive analysis: AI platforms can analyse historical data and provide predictive insights on trends, cash flow forecasts and other relevant metrics that facilitate decision-making. Real-time reporting: AI allows accountants to generate real-time reports, enabling organisations to make data-driven decisions quickly. Regulatory compliance: AI can understand and be updated regarding the dynamic landscape of financial regulations. Taxation: AI systems can provide a resource for tax regulation interpretation and guidance. They can help accountants analyse complex tax laws and create a detailed tax strategy. Accountants’ future skillset How accountants will adapt to thrive alongside AI. Technological Skills: This includes understanding the basics of programming, big data management, and AI algorithms to comprehend how technology can influence and form their work. Data Analysis: AI can be used to process a large amount of data to extract useful insights. Therefore, data analysis skills can help accountants understand and interpret data obtained from AI tools more effectively. Critical Thinking: Human judgment is still an indispensable part of the job. Accountants will need to interpret and make strategic decisions based on the information provided by AI. Adaptability: Being adaptable and open to changes will help accountants stay up to date with new technologies and their applications. Understanding of AI Ethics: Accountants must understand the ethical implications of using AI, such as data privacy and security concerns. Problem-solving: AI can provide solutions, but the ability to define problems clearly and apply the AI tools effectively still rests with the accountant. Continuous Learning: AI in the field of accounting is still developing, requiring accountants to pursue continuous learning to keep up with new updates and tools. 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What drove practice success in 2023? Five insights from Xero’s industry report Posted 09/26/2023 by Xero & filed under In practice. This content is brought to you by Xero. Business boomed for accountants and bookkeepers across the UK – despite global economic uncertainty and soaring inflation rates. According to Xero’s 2023 industry report, 72% of practices have reported increased revenue and a growing client base in the last 12 months. This coincides with the increased use of cloud-based software, which has delivered a range of financial and non-financial rewards for practices. But some practices aren’t getting the most out of digitalisation. In fact, many are missing out on the time savings, service diversification, and growth opportunities that come with fully integrating cloud-based software. To help you benchmark your practice and identify opportunities for growth and development, we’ve spoken to over 600 accountants and bookkeepers from practices across the UK. Here’s a taste of what we learned. UK industry performance: A snapshot Accountants and bookkeepers have shown immeasurable resilience over the past 12 months – withstanding economic uncertainty, the battle for talent, and regulatory change. Based on our conversations with UK practices, we identified five headline insights on working experiences, performance, and what’s driving success: Practices of all sizes are growing – with an average of 31 new clients added per practice in the last 12 months. Service portfolios are expanding, and practices believe their new service offerings are to thank for increased profits. 95% of practices have adopted cloud-based software, but not all are using software to its full potential – particularly smaller practices. Practices that report increased revenue and profit tend to use cloud-based software for multiple tasks (not just one). The benefits of cloud-based software are real. From improved client services and more time for billable tasks to greater job satisfaction and more time saved on manual admin. Getting the best out of practice tools The outlook is positive, but there’s plenty of room for growth. Practices of all sizes can benefit from better software integration – and taking full advantage of the features. For example: our research shows practices only use connected bank feeds for 37% of clients, data capture tools for 31%, and payment tools for 30%. Yet, practices using payment tools with clients are more likely to report an increase in profits than those who don’t. It’s clear to see that accountants and bookkeepers already have the right tools for the job – they just need to take advantage of them. We explore how you can do just that in this year’s industry report, uncovering: Which factors contribute to practice growth and success How practices are diversifying their service offerings to boost revenue How to improve business performance and productivity with cloud-based software – so cloud adoption (literally) pays off To discover how to make cloud-based software work harder for your practice, deliver a better service for clients, and provide higher quality work – read our Accounting and Bookkeeping Industry Performance Report today. This content is brought to you by Xero.
Could you be an award winner? Posted 09/22/2023 by David Nunn & filed under Apprenticeships, Employer newsletter. The AAC Apprenticeship Awards celebrate the achievements and innovations of employers and providers who are committed to apprenticeships. Here’s an overview of the categories and three reasons why your organisation should enter. Award categories Apprentice Employer of the Year This award acknowledges organisations that have shown outstanding commitment to apprenticeships within their workforce. Regardless of the sector or size of the company, employers who have successfully implemented apprenticeships and provided diverse opportunities to apprentices are eligible for this recognition. By showcasing your organisation’s dedication to nurturing talent and fostering growth, you can inspire others to follow suit. Apprenticeship Champion of the Year Individuals who have made a remarkable impact on the development and promotion of apprenticeships are celebrated through this award. Whether they have contributed locally or nationally, from a subject-specific or sector-wide perspective, these champions have gone above and beyond their ordinary duties. By highlighting the efforts of such individuals, the AAC Apprenticeship Awards encourage others to strive for excellence in their own roles. Apprenticeship Provider of the Year This award pays tribute to the outstanding work of a single apprenticeship provider. Irrespective of their type, apprenticeship providers in the UK can demonstrate their commitment to delivering high-quality programs with positive outcomes. Successful applicants will showcase their dedication to widening participation and their ability to go above and beyond to support both apprentices and employers. This recognition not only enhances the provider’s reputation but also inspires others to deliver exceptional apprenticeship experiences. Legal, Finance & Accounting Apprenticeship Provider of the Year These awards recognise the excellent work of a provider in this specific sector. Providers will need to show that they deliver high-quality apprenticeships and go the extra mile for their apprentices. They will also need to show how they promote apprenticeships in this sector and support wider participation. The Awards recognise activity up to the end of July 2023. Apprenticeship Equality, Diversity & Inclusion Provider Recognition Award This award recognises apprentice providers who have made a remarkable effort to increase the diversity and inclusivity of their apprentices and their organisation’s workforce. This award focuses on those organisations that can prove a commitment to ensuring fairness and opportunity for everyone. They aim to eliminate prejudice and discrimination based on any protected characteristics of an individual or a group of individuals. The Widening Participation Recognition Award This award recognises the outstanding activity of a provider or employer in widening participation with their apprenticeship offer. Organisations must demonstrate how they have successfully led a campaign to fully embrace apprenticeships and recruit apprentices from different backgrounds and circumstances, such as long-term unemployed, ethnic minorities, non-native English speakers, ex-offenders, special educational needs, gender or disabilities. 3 benefits of entering the AAC Apprenticeship Awards 1. Recognition and Prestige Being acknowledged as an award-winning apprenticeship employer or provider enhances your reputation within the industry and among potential apprentices. This recognition can help attract top talent and demonstrate your commitment to nurturing the workforce of the future. 2. Networking Opportunities By participating in the awards, you gain access to a network of like-minded professionals and organisations. This presents valuable opportunities for collaboration, knowledge sharing, and staying up-to-date with the latest trends and best practices in apprenticeships. 3. Showcasing Best Practice Entering the AAC Apprenticeship Awards allows you to showcase your organisation’s successful implementation of apprenticeships and its positive impact on apprentices and employers. This can inspire others to adopt similar strategies and contribute to the growth of apprenticeships on a national scale. How to Enter Nominations for the 2024 AAC Apprenticeship Awards are now open, with a deadline of noon on Friday, 13 October. Simply visit the official AAC Apprenticeship Awards website and follow the guidelines provided to submit your nomination. Be sure to provide compelling evidence of your organisation’s achievements, commitment, and impact in your chosen category. Photo credit: izusek
Charity digital filing goes live Posted 09/22/2023 by AAT Comment & filed under Members. Charities will have to file annual returns via the Charity Commission’s new digital account service as legacy system is closed. The newly-launched My Charity Commission Account service, which most charities have now been invited to sign up for, was launched on 31 July and is designed to improve accessibility and reporting processes for charities. This means that the current digital filing services will be switched off and all returns will have to be filed via the individual charity’s dedicated account. The Charity Commission described the move to My Charity Commission Account as charities’ “front door” into the commission, where they will submit any remaining annual returns for 2022 and all annual returns for 2023 onwards, and engage with the regulator’s wider digital services.
Gemma Heard announced as winner of AAT’s Past Presidents’ Award 2023 Posted 09/22/2023 by Marianne Curphey & filed under AAT news, Members. The award is presented by the outgoing President to a member who has made an exceptional contribution, or brought credit, to AAT by their service or example. Gemma Heard, founder of GEM Accountancy and GEM Consultancy UK in Cornwall, has been named as winner of the Past Presidents’ Award for 2023. The award recognised her innovation in keeping the accountancy profession relevant, her work in driving up professional standards and her contribution to helping businesses be robust and responsible. Years of experience Through her established accountancy practice in Cornwall, Gemma has worked to support local business owners, coach them on how to grow their business, advised them during the pandemic, and offered innovative new accountancy products and services. Having lived and worked in the UK, Australia and Spain, Gemma has 20 years’ accountancy experience and is helping businesses with strategy to help them cope with change and challenge in their business and personal lives. “I love coaching and people, and I love numbers, so combining these two aspects in my job are perfect for me,” she says. Gemma showed an early aptitude for coaching, having begun teaching at the age of 15 when she became a black belt and British champion in Tae Kwon Do in just two years and began to take her own classes. She says martial arts gave her resilience, a strong work ethic, personal integrity and a determination which has carried her through professional and personal challenges. “The discipline and the ethics that I learned in martial arts from a young age and the self-control and resilience I was taught are all valuable skills which transfer into business,” she says. Gemma’s approach Gemma supports and equips small business owners in the UK through her Consultancy Practice. She also runs a Bossing Business series to help people identify their professional business goals. She is deeply committed to a personal approach to client management and believes that being approachable and relatable and establishing trust with clients helps them to achieve the best results. “It is really important to understand how people’s personal circumstances have a bearing on how their business is performing,” she says. “The more I worked with owner-managers, the more it became clear to me that whatever was going on outside of their business was impacting the numbers that I was seeing. Being able to discuss this with clients has built a relationship of trust and integrity.” She also set up the Female Entrepreneurs Network Cornwall group which she was actively involved in before she had to leave to spend more time caring for her father, who has dementia. How AAT has helped in Gemma’s journey Like many AAT students, Gemma found studying for the qualification “life-changing” and enjoyable, although hard work. She had been working for a photography firm and wanted to get a qualification to back up her experience. She worked full time, studying AAT at night school. After qualifying, she joined a chartered practice, where her boss explained that she had got the job because of her AAT qualification. “The commitment to high standards promoted by AAT gave me the professional recognition and the confidence to succeed,” she says. Having been born in Australia but growing up in England through her teenage years, Gemma was keen to return to the country of her birth. She lived in Australia for seven years. Whilst the AAT qualification is not currently formally recognised in Australia, her competency and professionalism immediately got her noticed by her new employer. “I was working for a company that owned shopping centres and the headquarters was in Sydney and from the beginning I made a big impact thanks to my AAT training,” she says. “I was getting great feedback from head office and I realised that AAT was really making a big difference to my career. In less than two years from being qualified, I was being given a lot of responsibility, I was promoted, and I doubled my salary.” Professional standards Gemma returned to the UK in 2018 and set up her own business, just as Covid hit the UK. As a result, she spent a lot of time helping businesses cope with the challenges that came with lockdown. She is dedicated to maintaining professional standards in the accounting profession and puts great emphasis on ensuring clients receive the best service. “I am consistently talking about the best in class method for clients, helping empower and elevate them to be the best at what they do in financial terms,” she says. “Professionalism is one of my core values. I am also dedicated to building responsible businesses. The majority of people want to run their business in a compliant way and I can help them by removing the fear and enabling them to put their best foot forward in their business.” Gemma was elected to AAT member status in October 2009, and was granted Licensed Member status in August 2019. She is a member of the Cornwall branch and is active in networking and helping small businesses around the St Ives area where she lives. Enhancing AAT’s prestige In March this year, Gemma was shortlisted from 35,000 businesses in the FSB Federation of Small Business Southwest Awards. “My accountancy practice was recognised for delivering excellence and keeping our profession relevant by building engaging communities both on and offline,” she says. She shares educational resources for business owners on how to remain compliant and successful. Gemma encourages others to get into accountancy, promoting AAT as the best route. She believes in collaboration and is currently mentoring a newly qualified AAT bookkeeping member in how to build her business locally. “It has been an amazing journey with AAT,” she says. “I started in a little seaside town in Cornwall doing studies at night school and only a few years later I was on the other side of the planet, putting those skills into practice. “AAT has been with me through my whole career as an accountant, and the qualification has been genuinely life changing and given me so many opportunities. I am proud to be part of AAT and winning this award is the pinnacle of my career.”