What the MTD for ITSA delays mean for accountants

Posted by & filed under Making Tax Digital, Members, Tax.

There’s now more time for small businesses to prepare, but some accountants fear their efforts to improve software have been wasted.

The Government has announced a minimum two-year delay to Making Tax Digital for income tax (MTD ITSA) and mandation will now take effect from April 2026 at the earliest for certain groups.

The previous April 2024 date ­- ­which had already been postponed due to the pandemic – would have required self-employed individuals and landlords with income of over £10,000 a year to report quarterly earnings. But under latest postponement announcements, a phased approach will now take place.

The latest timelines for MTD for ITSA involve:

  • April 2026: Businesses and self-employed individuals earning over £50,000 will be mandated to join.
  • April 2027: Businesses and self-employed individuals earning over £30,000 will be mandated to join.
  • For businesses and individuals earning less than £30,000 a year, there are no further dates set for joining. Instead, the government will carry out a comprehensive review on MTD and its impact on small businesses.

The delay is likely to come as a welcome relief to accountants and businesses, many of whom have been working towards MTD transition and testing software. But it may also be a source of frustration due to time and resources spent on preparing for MTD only for it to be postponed. We spoke to accountants across the UK about the impact further extensions are likely to have.

The delay raises more questions than it answers

Clare Bowen, Director, Monahans

Whilst the premise behind the delay is clear, it provokes more questions than answers:

With those turning over more than £50,000 coming under the rule in 2026, what happens if someone turns over £45,000 in 2025 and is then likely to reach £60,000 the next year?

And why delay those with a taxable turnover above £85,000 who have already been following MTD for their VAT returns? These people are already on the system, ready to go.

That said, this delay has brought a clear sense of relief that the original strategy of bringing everyone under the same rule simultaneously has been abandoned. Grouping accidental sole traders in with intentional and professional ones was impractical.

Then there’s the issue around basis periods: sole traders choose their year-ends, but MTD requires reporting at the end of March/beginning of April. There isn’t any logic in having a year-end in one period and then reporting on it in another. It will generate scenarios where companies are paying tax on 18, 19, 20 months’ worth of income rather than 12, and situations where businesses are reporting on data that hasn’t even happened yet.

There are however, indisputable frustrations about the thousands already spent on the creation of plans for clients and segmentation efforts based on the information and criteria they had. Now that HMRC has moved the goal posts, this work will need to be redone.

Next steps: The government should utilise this breathing space to speak to accountants, businesses and experts who live and breathe this topic. HMRC need to be talking to people on the ground to identify issues and solve problems.

Verdict: Grouping everyone under the same rule was impractical so there’s relief the original strategy has been abandoned. HMRC need to take this time to speak to experts and address issues.

Some businesses may deprioritise MTD for ITSA

Hayley Benn, Senior Healthcare manager and member of national making tax digital (MTD) team, MHA MacIntyre Hudson

Businesses and accountants have invested time and money into transitioning to MTD so while some may see the extension as a relief, others will feel frustration.

We have been working hard to prepare and support our clients for the 2024 deadline, with some already starting the process of signing up to digital software.

Software companies meanwhile, will see the delay as a waste of precious resources. Teams have been established to deal solely with the project and given there will inevitably be changes to the way MTD will be run come 2026, much of the work already complete will have to be redone. Companies have invested a lot into assisting individuals with new software and in training. Some may have worked business models around MTD, which may now need to be reworked.

On a positive note, the change of threshold is welcomed, as it does mean that smaller landlords are less likely to sell up to avoid the administrative burden, leading to more rental properties being available to let.

Next steps: The delay may cause many businesses to deprioritise and potentially forget about the MTD transition. The Government needs to be more vocal about MTD and provide more support to accountants and businesses to create certainty over the changes. Trust has been broken on various levels and it is going to take time to rebuild it.

Verdict: The delay may result in some businesses deprioritising or forgetting about MTD for ITSA. HMRC needs to use the time well to provide more support and certainty to accountants and businesses.

Make use of the extra time to properly prepare for the MTD for ITSA transition

Claire Lea, Director and Head of Advisory Tax, Prime Accountants

The delay benefits self-employed individuals and small landlords, providing them with extra time to focus on their businesses through this turbulent period.

However, it’s a source of frustration for software companies that have put in a lot of effort to ensure their systems are ready for MTD. They need certainty from HMRC and improved communication so they can better utilise their resources.

Accountants and individuals still need to prepare to ensure a smooth transition for when MTD for ITSA finally arrives and need to work together to ensure record keeping and processes are digitised. This is especially important for those that currently handle manual records.

Next steps: The Government should ramp up campaigns to increase awareness and advise how businesses can prepare for a smooth transition. It could also provide IT training for those who use manual records or need assistance with digital records.

Verdict: Delay will be a relief to some but MTD for ITSA preparation is still needed to ensure smooth transition. The Government should reach out to those that need assistance with the transition.

HMRC’s changes will be frustrating and potentially costly

Lee Murphy, Managing Director, The Accountancy Partnership

Many businesses and their finance departments have put processes and software in place to make the switch to digital seamless. Significant time and money has been invested preparing for these changes. Delays to the official introduction could mean that new tech and accounting processes need to be drastically changed or scrapped altogether, so many will feel let down by the Government moving the goalposts again.

Next steps: Entrepreneurs should still make the move to digital bookkeeping in good time to make sure they’re familiar with new systems before the change is imposed on them. Digital accounting can be more accurate and save time, freeing you up to run a successful business. Our own research has shown that almost two-thirds (63%) of SMEs are already storing their financial records and expenses digitally, which is positive to see.

Verdict: There will be frustration that HMRC have moved the goalposts again but businesses should still make the move to digital bookkeeping in plenty of time, and can benefit from doing so.

The delay undermines work and time that has already been invested, but it’s important not to become complacent

Joanne Thorne, Technical Compliance Manager, SJD Accountancy

Many now have extra time to prepare and better understand the changes MTD will bring. However, the delay also somewhat undermines the work and time that has already been invested.

Accountants are already challenged with accurate forecasting. Recent government U-turns, numerous fiscal statements and now the delay and changes to MTD criteria will make it harder for businesses to trust that the Government will not push this delay back further – or make further changes.

Many software companies will be disappointed by this news as they have likely been forecasting bigger uptake on MTD-compatible software. The change could also mean that software will need to be updated by 2026. Anyone who has already purchased new software may be considering cancelling or reducing their fees, which will again be disappointing for software developers.

However, the delay to MTD does not mean that people cannot start to voluntarily implement digital software, which may help avoid unnecessary panic and anxieties when MTD becomes mandatory.

Next steps: Accountants and their clients should not become complacent. Despite the postponement, it’s advisable to make use of this extra time now so that everyone can acclimatise to how the changes may impact them before the change becomes mandatory.

Verdict: The delay undermines work and time that has already been invested, but it’s important to use the additional time to get used to the digital system.

The delay will allow more time for software developers and HMRC to test their systems and address any bugs

Chris Whyles, Associate Director of Saul Fairholm

The general consensus amongst our clients is that the delay is very welcome. Businesses do not feel that MTD ITSA is of any benefit to them: it represents further costs and an increased administrative burden.

The delay provides us with additional time to educate our affected client base, not only about the ramifications of the legislation but also about how this might impact their future accountancy fees.

And for software providers, a prolonged window for testing and addressing any algorithmic bugs is a good thing.

Next steps: HMRC should utilise the extra time to test their systems and API interface, relentlessly. To test it, to test it again and to test it some more. Businesses and professional advisory firms need regular and clear updates from HMRC and should have access to a myriad of help articles and webinars to assist in the transition.

Verdict: The delay will allow more time for software developers and HMRC to test and retest their systems and address any bugs. HMRC must take the extra time to build up support and resources.

We’ve been excited by MTD for ITSA and understand that delay is necessary

James Poyser, CEO of Provestor and innAccounts

We’ve been excited about MTD. Yet the very reasons why we got excited are perhaps the very reasons why it’s been postponed. For clients and accountants to get the benefits of MTD, change was needed. We were geared up to restructure our teams and processes, to introduce automation to drive efficiencies and lower fees, driven by MTD.

We were exceptionally interested in appealing to the one-third of those in scope for MTD who don’t have an accountant today – we wanted to win them over with our low-cost MTD service, and start to have advisory conversations with them.

If we didn’t make these changes then MTD would simply feel like ‘more work to be done’ by accountants. And, in the end, this perhaps was one of the contributing reasons to the postponement and increase in thresholds.

There are great benefits to MTD, that are worth the wait. The capabilities of the MTD APIs that HMRC has created are brilliant and presented a real opportunity to smooth out the ‘lumpy’ nature filing self-assessment (no more January busy season), offer live tax forecasts to clients throughout the year, and get reliefs and allowances claimed and out of the way the moment they arise. A delay allows more time for us to fine tune.

Although far fewer landlords will now be in scope for MTD due to the increased thresholds, for those who are, time is on their side to understand the implications and find the right digital accounting partner.

Verdict: It’s been an exciting journey but delays are necessary to restructure, introduce automation and fine tune.

ISA options explained

Posted by & filed under Members.

This content is brought to you by Mattioli Woods.

JISA, LISA, cash ISA, stocks & shares ISA, IFISAs… Confused? In the face of all these acronyms, I am not surprised!

Having previously made the mistake of assuming that everyone was well accustomed to finance abbreviations, I am going to shed some light on this jargon. So before going any further let me clarify, I am not referring to my favourite Auntie Lisa!

Essentially, I am referring to the number of different Individual Savings Accounts (ISAs) that are available to put your money in, which shows how ISAs have evolved from the original incarnation of the Personal Equity Plan (PEP).

So how do you know which ISA is the appropriate one for you to use?

That would depend on some of the following factors:

  • how old you are
  • which asset classes you would like to invest in
  • how long you would like to invest your money for
  • your risk profile

Let me elaborate.

For example, a Junior ISA (JISA) is for those under the age of 18 and comes with an annual subscription limit of £9,000. As with adult ISAs, JISAs can come in the form of cash or stocks and shares accounts, but importantly they belong to the child and will become accessible to them from their 18th birthday. 

Turning to the Lifetime ISA (LISA). This was introduced from 6 April 2017 as a more flexible way to save for first home purchases and retirement. Importantly, they can only be opened by those between the ages of 18 and 40, so if this milestone has passed and you have not already opened a LISA, breathe a sigh of relief as you have just narrowed down the choice of ISA accounts from which you can choose! If you have an account though, you can continue to add to it until your 50th birthday.

The standout feature of a LISA is that the Government provides a 25% bonus, which is capped by the lower subscription limit of £4,000 on these accounts. The catch? You can only access the funds on purchase of your first home, upon reaching age 60 or upon diagnosis of a terminal illness. Early access for any other reason is penalised via a withdrawal charge of 25%.

For those aged 40 and above, who have patiently read to this point, through the process of elimination you will have no doubt guessed that a cash or stocks and shares ISA is your starting point. That is not to say that those below 40 cannot use these accounts as they are available for anyone above the age of 16 (cash ISA) or 18 (stocks and shares ISA), who may wish to have greater flexibility in terms of accessing their funds.

Just a little nugget, you may find it interesting to know, a 16-year-old can make use of both their JISA limit (£9,000) and their adult cash ISA limit (£20,000).

Essentially a cash ISA and stocks and shares ISA are very similar in that an individual can invest £20,000 per tax year, noting that if you are fully funding your LISA, your remaining ISA entitlement for the year will be £16,000, still following?

The differentiating factor? You guessed it; the clue is in the name. If you want to keep your funds in cash, the cash ISA is for you. But if you want to invest in other asset classes – equities, property, fixed interest, real assets – you will need to open a stocks and shares ISA.

To round off the type of products to be found within the ISA family there are innovative finance ISAs (IFISAs). These essentially enable the investor to use their ISA allowance to invest in peer-to-peer lending.

In summary, an ISA (in whatever form) is simply a tax wrapper that enables you to hold your investments in such a way the returns and income they pay are free from tax. How you choose to invest the money will dictate what sort of ISA you require.

However, if you are thinking that you might want to utilise multiple types of ISAs that is absolutely fine too! As long as you do not exceed your annual allowance, you can put money into each type of ISA that you are eligible to open.

And if you choose to alter your investment strategy? Never fear, ISAs are flexible so you can not only transfer between providers (such as banks/building societies/investment houses/platforms) but also switch your funds between cash ISAs, stocks and shares ISAs, and IFISAs.

This content is brought to you by Mattioli Woods.

Why ditching Help to Grow: Digital will hurt the UK’s SMEs

Posted by & filed under Digital skills, Members, Policy.

AAT believes the Government is wrong to close Help to Grow and asks: does it have a better idea?

Amid the chaotic pre-Christmas rush of strikes and snow, it was easy to miss the UK government’s quiet announcement of its decision to scrap its own Help to Grow: Digital scheme.

Citing a lack of interest among the community it was designed to help, BEIS says the scheme will be wound down early in 2023. It’s a decision that will have both short- and long-term repercussions for the UK’s millions of SMEs– none of them good.

The aims behind Help to Grow: Digital

First, some background: Help to Grow: Digital was originally devised as a programme for small and medium-sized businesses to access free, impartial online support about how digital technology can boost their business’s performance. It is one of two Help to Grow schemes (the other focuses on Management)

Under the terms of the scheme, eligible businesses were supposed to be able to access a discount of up to 50% towards the costs of buying approved software (including accountancy software), worth up to £5,000.

We have been active supporters of the Help to Grow agenda and felt that its digital iteration was absolutely critical. The principle behind the scheme, we felt, was right in that its aim was to offer a user-friendly and potentially effective way of equipping small businesses in particular with vital support to digitise their systems and processes. We did, however, have significant concerns about the way that the scheme was structured in practice.

When we sought to capture views on the scheme at the meeting of our Digital Advisory Panel in January 2022, the Panel membership at that time was mixed in terms of awareness of the scheme, with some actively involved in it and others having not heard of it at all.

Shortcomings in implementation

We had a number of concerns from the off, and we organised and sent a joint letter to the Small Business Minister outlining these concerns in February 2022.

First, the eligibility criteria were too restrictive resulting in approximately 90% of small businesses being excluded, the software product range too narrow, and the range of costs that the available funding was allowed to cover needed to be increased; consequently there was a genuine concern that the scheme would be seriously undersubscribed among the very constituency it was designed to support.

Another key concern we had was around the scheme’s promotion among the business community. We reiterated this concern when the Government eventually announced changes to the scheme on 25 July 2022 , if Help to Grow: Digital wasn’t sufficiently promoted, then it was always likely to run the risk of falling flat.

AAT weighs in

It’s our role to provide constructive critical engagement. As AAT CEO Sarah Beale said in January, “We would very much like to see this scheme succeed… However, without prompt government intervention, the scheme may prove to be another missed opportunity and frankly underdeliver, despite good intentions and ambition.”

So, almost a year later and here we are: the lack of promotional resource, combined with only giving the scheme four months to pick up since the changes to the eligibility requirements were announced have ended in a predictable failure. Our fear that it would be undersubscribed, and the government would scrap it has come to pass.

In announcing the winding up of the scheme, the Government says Help to Grow: Digital fell short of its stated goal of ‘up to 100,000’ small businesses signing up.

The seeds of this failure were sown early on.

Government mistakes

The Government didn’t take the opportunity to engage with those that could have helped to design the scheme, including professional bodies, the likes of the FSB and small businesses themselves. There was, for us, a real sense that the scheme was first designed and only then a strategy to promote and apply it developed, rather than being clear on the problem and then developing a solution to address it properly.

It could have been so different: a look north of the border shows that it is possible to design a scheme for SMEs that garners healthy engagement and take up seen through the success of the Digital Boost national digital upskilling programme. Scotland’s success in helping its SMEs prepare for a digital future demonstrates not only that government can deliver effective schemes, but also that there exists a strong pent-up demand for this kind of support.

Conclusion

There’s no hiding our disappointment in this outcome. While the UK has an outstanding digital heritage and infrastructure, much more needs to be done to extend that to smaller and growing businesses. While no government scheme can help to address such a big issue all on its own, a well-designed and targeted scheme can make enormous impact. It’s a shame that Help to Grow: Digital got so little help to grow from those designing and promoting it.

The MOD is currently hiring: here’s what they’re looking for

Posted by & filed under Career, Look who's hiring.

If you are looking for a career that offers great development opportunities, flexible working and enables you to build your professional skills, you could consider an accountancy role within Defence Equipment & Support (DE&S).

DE&S is a government organisation, part of the Ministry of Defence (MOD). Based in Bristol, it procures the equipment and services for the UK armed forces and is staffed by a mix of civil servants, military personnel and contractors. It is a highly specialised part of MOD involved in the procurement of clothes to carriers, food to fighter jets.

The role of DE&S is to ensure that its UK military customers – the Royal Navy, the British Army, Royal Air Force and Strategic Command – have the equipment and support they need to carry out their duties effectively. It employs over 11,500 staff across more than 150 locations around the world. Over the next ten years it will operate with a budget of £178 billion and is made up of 9 Functions, of which the Finance & Accounting (F&A) team is one.

What does the DE&S Finance & Accounting Function do?

The role of the F & A Function is to record, communicate and drive financial performance. This involves ensuring the delivery of capability and capacity to the armed forces and securing the best value for the taxpayer.

The role of accountants within the Function is to:

  • Protect value – Ensure a robust control environment and accounting for all financial transactions accurately and efficiently
  • Add value – Deliver accurate, insightful, timely and meaningful financial information to our stakeholders
  • Drive value – Be an active and influential partner for the business, supporting effective decision-making through  expertise and judgment

What roles are available?

DE&S offers a range of roles across the key disciplines of management, financial accounting, management accounting, finance advisory and support. Typical responsibilities include:

  • Support planning and forecasting
  • Provide financial advice to delivery teams
  • Manage general ledgers
  • Prepare routine financial reports
  • Maintain financial records

What is DE&S looking for in its staff?

Pam Hawkins MAAT,Scheme Lead of F&A, Corporate Services Group & New Schemes Apprentices in the DE&S HR Entry Talent COE, says the skills that DE&S is looking for in new recruits include an interest in solving complex problems and being able to deliver clear and effective solutions.

“We are looking for people who can understand the bigger picture whilst dealing with the essential detail, have high standards of written and verbal communication and are keen on embracing change,” she says.

Recruits also need to be willing to share information, knowledge and skills, have a strong focus on internal and external customers and have a commitment to equality, diversity and inclusion.

The role would suit people who are keen to seek out new opportunities for learning, personal and career development, are prepared to commit to a three-year training programme and are pro-active and willing to take responsibility for their own development and career progression.

How do I join?

The  F&A Function of DE&S takes 25 people each year on its Apprenticeship Scheme, and they come from all sorts of backgrounds. F&A are committed to diversity & inclusion and are immensely proud of the ethnically and gender diverse background of apprentices. In fact, minority groups have the highest representation within this Function than anywhere else in DE&S

It is open to everyone from age 16 upwards and appeals to mature career changers as well as school leavers and people who have done A levels but decided not to go to university preferring to do an apprenticeship instead. 

The entry requirement for the Apprenticeship is five GCSEs grades four to nine (or grade C and above under the old system), with Maths grade B (current level six and above) and English grade C (the new level four or five). The Apprenticeship is for three years and trainees take two AAT qualifications – Level 3 and Level 4 – during that time. Starting pay last year was £17,500 per annum.

What would a role involve?

The roles on offer are different from other types of accountancy.

“This is because government finance is non-profit making,” says Pam Hawkins. “We do not have to make a profit, but we are accountable and have to spend the money wisely. Value for money and good decision making is very important.”

Apprentices benefit from a mentoring scheme and are paired with a buddy from previous Apprenticeship Schemes in order to help them settle in.

The Apprenticeship Scheme has a very good retention rate because of the tremendous job opportunities. There are a number of different career directions. The F&A Function provides high-quality financial support to DE&S and the Submarine Delivery Agency (SDA), which procures and project manages the construction of future Royal Navy submarines, as well as supporting the UK’s Continuous at Sea Deterrent. There are also opportunities to specialise in areas such as tax, audit, and inventory.

What does a career at DE&S offer?

DE&S is a first-class and inspiring organisation, offering a unique employee experience supporting the UK’s armed forces and delivering some of the world’s most complex projects. It offers a comprehensive benefits package, the flexibility to maintain a great work-life balance, and the opportunity to achieve your full potential.

Recruitment is managed via the DE&S HR Entry Talent Centre of Expertise (ETCOE) team.

The link to the AAT apprenticeship application page is here.

What other benefits are available?

“We feel that DE&S can still offer a first-class Finance Apprenticeship scheme despite the difficult times we are going through,” says Pam Hawkins. “Our training providers have adapted their training methods to enable training and exams to continue, and we have had some very positive results. We are all mindful of their health and wellbeing, and both their placement and scheme team offer support at all times.”

The benefits package is very generous and after six months of working you can take advantage of the flexible working options, to work from home or adjust your hours. This can be very helpful for parents, or people who have responsibilities, for example caring for elderly relatives. 

How do I apply?

“We take on 25 apprentices a year and the onboarding starts in November. The next advertisement that we will be putting out is in February 2021, and we try to align this with the National Apprenticeship Week. It will be advertised on the Civil Service Jobs  website and we also liaise with schools, universities and colleges,” she says.

What will my first year of Apprenticeship look like?

One of the most interesting aspects of the work is that Apprentices will be moved around, so they can experience different parts of the business both in DE&S and SDA. The first placement is for one year and it gives trainees the opportunity to settle in. After that, for the next two years, they will experience two or three different placements. 

“We encourage them to network with each other and study together, and we also hold regular cohort meetings,” says Pam Hawkins. “There are various volunteering opportunities which enables them to mix with other functions, not just finance as it is for all apprentices.”

What are the advantages of a career with DE&S?

“Compared with other apprenticeship schemes, we feel that ours is a high-quality apprenticeship which provides qualified, experienced and capable Finance professionals to the DE&S organisation. Our retention rate is high and  apprentices have the opportunity to go on to study higher qualifications on completion of the scheme such as  CIMA (Chartered Institute of Management Accountants)  or other available development opportunities,” she says.

Clients are being penalised due to software issues with HMRC’s online filing system

Posted by & filed under Making Tax Digital, Members, Tax.

Accountants discuss the tax miscalculations – and headaches – being caused by software issues.

HMRC has admitted to teething problems with its new online filing system, with many accountants struggling to file some tax returns. Software provider TaxCalc says the latest problems are due to various introductions of additional allowances and amendments of certain types of income, making calculations of tax treatments and liabilities much more complex.

In response to the growing issues, HMRC published an updated list of exempt returns which cannot be filed online due to software issues and now need to be filed on paper.

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Existing tax return exclusions have been in place for a number of years, listed by HMRC as ‘category one’, requiring significant system alternations and improvements. Category 2 exclusions have now been added, which refer to recent teething issues and which are under review by HMRC until solutions can be found. 

Some of the issues include miscalculations of tax treatments and inability to take allowances, relief or additional savings into account. Some taxpayers are therefore either under or overpaying tax as a result. In usual circumstances, the deadline for paper returns is 31 October, with the online filing deadline the following year – 31 January. But due to reported issues, the penalty for late paper returns will be waived, provided the reason for late return is made clear on the tax return itself, along with the reference number of the specific exclusion.

Here are some exemptions and exclusions of tax returns that have been experiencing these issues:

  • Claim for pre-incorporation losses, with total loss relief claim over £50,000: £50,000 should be excluded from the cap but are restricted instead, impacting calculation of net adjusted income and other allowances.
  • Where income falls within higher rate and/or non-savings income is less than personal allowance and starting rate for savings: personal allowance is not allocated in the most beneficial way.
  • Non-UK residents where income limit has been reached for High Income Child Benefit Charge (HICBC): HICBC is currently included within non-UK resident tax liability, but it should only include income tax that would otherwise be charged on disregarded income.

We spoke to a few accountants who have experienced issues with online returns to talk about their frustrations with the online system.

Often you don’t find out there have been issues until after returns have been submitted

Jessica Middleton, founder, Middleton Professional Accounts Services (MPASUK)

We use a third-party software for filing self-assessments and it is brilliant. However, the communication between third-party software and HMRC’s systems is severely lacking. Generally, you don’t find out that there are issues until after you have submitted a return to HMRC.

This lack of communication has meant clients who thought they were receiving tax refunds actually have a bill to pay because RTI wasn’t available at the time of filing. One client hadn’t even been taxed correctly through payroll, and this wasn’t picked up until two weeks after filing their self-assessment.

We have had to file three paper returns for one client and the processing time of those returns meant that the client was given a fine. I appreciate that if a system isn’t working properly an alternative needs to be put in place whilst fixing it, but if paper returns are the alternative and they aren’t being processed on time resulting in fines then frankly what is the point?

Processing of paper returns needs to be handled quickly and efficiently to stop clients being penalised. More staff and more training on how to handle individual cases would be an effective solution. Given the software glitches, better real-time communication and departments talking to each are essential to avoid shock bills or multiple recalculations for clients.

Verdict: Improved real-time information and better communication is needed to ensure clients aren’t faced with bill shocks or miscalculations.

HMRC’s lack of resources is creating cash flow concerns for clients

Christina Nawrocki, Managing Partner, Wellers

We deal with a lot of R&D tax credit claims on behalf of our clients and until October, this was largely a paper process because of HMRC software issues.

With the lack of resources at HMRC, we are experiencing significant delays in the process with the minimum turnaround time being six months. Whilst HMRC is now focused on online filing, it still doesn’t have the resources to cope when there are issues.

For our clients, this is understandably very frustrating. On a commercial level, it can be detrimental to their cash flow. The delays mean that some of our clients have struggled to make ends meet in the current financial climate and having to wait 6-12 months for money that is owed to them is only worsening the problem.

These cash flow concerns are also affecting their ability to make recruitment and investment decisions, which could impact the future of their business.

Verdict: Lack of resources means HMRC cannot cope with additional online filing issues, and miscalculations are creating cash flow concerns for clients that could have a long-term impact.

Software issues haven’t caused us major headaches – yet

Alan Broome, MD Acumenica Group LTD

We are aware there have been significant software issues with online filing affecting accountants and agents in the sector. So far we’ve been very fortunate, with only one case that was on the exclusion list, so this hasn’t really been an issue for us. It was a bit of a pain as we had to print and post the tax return rather than file online. But as it was only one case, and it was before the 31 October deadline for paper returns, it didn’t present a major issue.

It would be helpful if HMRC were able to be flexible enough to update their systems when these exclusions come to light and allow software developers to debug whatever the issue with the submission. However we know that HMRC isn’t so flexible, so it would be most helpful if they met us in the middle and allowed the ‘paper’ returns to be uploaded somehow as PDFs or similar.

Verdict: The effect of software problems depends on timing and client needs. It would help if HMRC were more flexible.

How Best Accountancy Services (Plymouth Ltd) are embracing Making Tax Digital for ITSA

Posted by & filed under Making Tax Digital.

This content is brought to you by Xero.

With just over a year left to prepare for Making Tax Digital for Income Tax Self Assessment (MTD for ITSA), accounting practices and their clients are getting ready for the future of tax. From April 2024, MTD for ITSA will apply to sole traders and landlords earning above £10,000 annually.

In this article, we’ll take a look at how Best Accountancy Services (Plymouth Ltd) are embracing MTD for ITSA and setting their practice up for success. Learn how they’ve onboarded clients using Xero’s MTD for ITSA product, and the benefits for clients and practices.

First steps

Alexa Whyatt, Personal Tax Manager and Macauley Brammer, Personal Tax Senior at Best Accountancy Services (Plymouth) Ltd) didn’t waste any time getting set up early. There’s still plenty of time to prepare if you’re yet to get started, though.

“We began our MTD for ITSA project in February this year,” Alexa says. “January tax returns were out of the way, so we got our heads together and started with client segmentation. From this, we highlighted ten key clients, a mix of straightforward and more difficult cases – those with shoeboxes full of paper – to test it.”

By segmenting clients and creating a plan of action, the team could move forward with onboarding five clients. Both Alexa and Macauley make the case for frequent, open conversations about the importance of MTD. Bringing Making Tax Digital into everyday conversations with clients can make the legislation feel less intimidating.

Macauley says, “We tried to discuss it as soon and as often as possible, whether that’s through emails, phone calls or face-to-face conversations. We even added short MTD summaries to tax returns. Clients need to know this is coming – communication is a vital part of MTD for ITSA.”

Tackling the tough questions

While the response from clients has been positive, Alexa points out that difficult questions will always pop up. “We often hear from clients, ‘What’s it going to cost me?’ or ‘I can’t do this because I’m bad with technology’.”

These concerns are only natural when facing the unknown. Alexa explains to clients that there will likely be a period where costs are higher, but this initial investment reflects the increased workload for accountants during the transitional year.

Alexa adds, “We’re very engaged with the goal of MTD for ITSA, but that transitional year will be a challenge for overworked practices and clients who will need to pay more, albeit temporarily.”

A path through with Xero

There’s no denying that the road to MTD for ITSA compliance is challenging. But despite the obstacles, both Alexa and Macauley feel assured that MTD for ITSA is a long-term positive change.

After a series of targeted emails, follow-up calls, and plenty of moral support, they onboarded five clients to MTD for ITSA using Xero’s beta.

Macauley explains, “The process of working with Xero and onboarding clients is great – we can already see they’re engaged. Communication has been excellent, and any changes we request are made straight away. The Xero team has been extremely helpful, even speaking to HMRC on our behalf.”

This sentiment is echoed by Alexa, who says, “With MTD for ITSA, you can use a range of products, but we’re keen to stick with Xero. We know it, we understand it, and we love it. Xero does everything we need it to.”

Alexa has a few words of advice for ITSA newbies about HMRC requirements when signing into the agent services account: “This required a lot more information than we expected. We got through it smoothly, but this is definitely something to be aware of.”

When the hard work pays off

After overcoming the transition period, MTD for ITSA compliance can be rewarding for everyone involved.

Alexa explains, “MTD for ITSA means we can process more and take on more clients. There will also be less ambiguity over receipts, while the ability to access real-time figures will help landlords, sole traders and their accountants understand their taxes better.”

Macauley highlights, “For clients, we explain they’ll have a much more immediate handle on what they owe at any time in a year. While this may invite more questions for the practice, it will help them gain a greater understanding of the process.”

And it goes without saying less paper makes for more efficient practice. “Using software, the process should tick along nicely,” Alexa says. “No more shoeboxes.”

So, how much coaxing do clients need to kickstart the process? Surprisingly little, according to Alexa: “No encouragement is needed. We explain they have to take this up, and it’s our job to smooth the process. We have fantastic software, we’re using Xero’s MTD for ITSA beta product, and we’re ahead of the game. We’ve got your back.”

Tips from the ITSA-ready team

Now the team at Best Accountancy Services (Plymouth) Ltd are familiar with the ins and outs of ITSA; they have a few tips for other practices.

“First, if you’re not looking into it already, do it now,” Macauley says. “We’re always amazed to hear practices haven’t started yet. One of our stated aims is to get every client on software by the end of March 2023.”

Before you start selecting software, Macauley notes that a little due diligence on the legislation goes a long way. “You need to be able to offer technical guidance, so know your subject. Also, make sure you have a plan and work towards it. Understand segmentation, what you’ll agree to, and have a set timeframe.”

To ensure all stakeholders are on board, Alexa advises proper planning and full transparency around pricing. “Understand costing. Everyone – your clients, your boss – will ask what this will cost. Do you need more staff, more clients, or new IT resources? This could be a very successful project if you get the costing right. If you get it wrong, it could be disastrous. This is one of the reasons we’re taking part in Xero’s MTD for ITSA beta – it helps us understand how this will look in two years.”

Practices can start preparing for the future of tax today. With MTD for ITSA fast approaching, now’s the time to get clear on the legislation and plan your transition to the new system. Learn more about how Xero can help your practice prepare for MTD for ITSA.

This content is brought to you by Xero.

Accountants predict the main challenges they’ll face and the tools they’ll need to survive in 2023

Posted by & filed under Members, Run your business, Tricky topics.

Prepare to deliver value and advisory services.

The past year has brought many challenges for UK businesses, thanks to inflationary pressures and increased costs from suppliers and energy providers. Many have struggled with whether to pass on these increases to clients, while others have been more agile in their approach in response to economic volatility.

Now we face more questions like, what might 2023 bring to the mix? Will inflation be brought under control? What impact is the increased rate of corporation tax rise likely to have on businesses?

Some of the official predictions for 2023 include:

  • The UK economy will shrink 1.4% in 2023 (The Office of Budget Responsibility, OBR)
  • ‘Significant pressure’ likely on households and businesses due to higher inflation and borrowing costs along with falling real incomes and high unemployment rates (The Bank of England)
  • Businesses investment likely to be 9% below pre-pandemic levels (CBI)
  • Year-long fall in consumer spending due to financial pressures on households (CBI).

Yet there is some cause for optimism: KPMG research found the IPO market is expected to experience a bounce back. Many experts are advising that you can increase the chance of business survival by taking a more strategic, digitally focused approach.

To find out more, we spoke to accountants working in industry and in practice, across public and private sectors about their expectations and predictions for the coming year.

2023 will be challenging for NHS services, with the need to reduce spend yet continue to meet patient demand

Guy Dakin MAAT, Management Accountant, Berkshire NHS Trust

Next year is going to be very challenging for us, especially with high demand for our services.

We’re expecting a real reduction in spend to meet efficiency targets. The Procurement Bill is expected to come into force late 2023, and will introduce significant changes to the way public sector organisations buy goods and services. Like every other public sector organisation, we’ll be getting ready for it.

One of the biggest concerns for us and across the NHS in general is recruitment and retention of staff. But Berkshire Healthcare is a great place to work and we’re rated by the CQC as Outstanding, so we’re hopeful we will continue to attract and retain top talent.

Verdict: 2023 will be challenging for NHS services, with the need to reduce spend while continuing to meet patient demand.

The increased rate of corporation tax in 2023 will eat into SME profits

Sarah Gardner, Founder, Allegro Tax

A lengthy recession continues to be a huge risk. Inflation is not yet under control and may increase further in 2023. Getting this under control will be a key priority for the government, but in the meantime businesses will be reviewing their budgets to manage rising costs, particularly wages and energy prices.

Challenges are varied: the construction and manufacturing sectors face increasing costs of materials, while high street retailers are playing catch-up to Covid-propelled uptake of online shopping.

I am concerned about the impact of the increasing rate of corporation tax on smaller businesses. The increase in the main rate to 25% means that profits between £50,001 and £250,000 suffer an effective rate of tax of 26.5%.

Building up cash reserves and developing comprehensive business resilience plans will be key to business survival. Businesses will need to focus on both growing revenue and controlling costs to thrive.

Verdict: The increased rate of corporation tax in 2023 will eat into SME profits.

Accountants need to make informed decisions to manage interest rates and capital gains

Nadeem Raziq, Head of Tax, Provestor

A variety of different concerns will shape our plans this coming year. The biggest task will be helping clients manage uncertainty. Most accountants will have clients managing property, so the economic conditions of high inflation will make people think about profitability and tax liabilities associated with holding onto stock, selling it or transferring it. They’ll want to make informed decisions to manage interest rates and capital gains, for example. I believe this is where accountants can really deliver value this coming year.

Delivering value is going to be crucial for all clients – it’s where the market is heading. Accountants can no longer trade solely on being able to do the numbers. They must also be able to deliver an empathetic service and provide advisory services people didn’t expect to need.

It will be the firms that can give well-timed and well-founded advice that will grow. So too will the practices that are keeping pace with HMRC’s digital agenda. Take making tax digital for landlords: HMRC expects all landlords will be able to file quarterly updates themselves but very few even know if they are in scope. The industry will have to be proactive on this but also demonstrate full value for money. Those that automate the service and anticipate HMRC’s next move will win hands down.

Verdict: Accountants can deliver value through informed decisions to manage interest rates and capital gains in 2023.

The deposit return scheme (DRS) is likely to have a massive impact on retail businesses

Andy Walker, chartered accountant and partner, Oliver Wight

We’re likely to see a two-tier economy in 2023. High street retailers will particularly suffer. The sector was already in decline well before Covid but they’re now under even more pressure.

Although it’s been a great year for pubs, restaurants and cafes with the sector bouncing back stronger than expected, 2023 is going to be a different story. Rising energy costs, inflation and people having less disposable income will have an impact.

At the same time, I believe the luxury end of retail will continue to thrive, while the middle economy will really struggle. The healthcare and pharmaceutical sector meanwhile are booming and are likely to continue to – people will always spend money on health.

The biggest concern for many of our retail clients is the introduction of the DRS, soon to be introduced across the four UK nations, which will have a massive impact. Under the scheme, consumers pay a 20p deposit for a single-use plastic container (can, glass, plastic), which is then returned when they return the empty bottle for recycling. The responsibility is on retailers to provide a recycling service.

Ultimately, our approach when supporting clients is helping them plan for uncertainty so they’re not caught on the back foot. Businesses need to have an integrated plan where all their different functions work together over the long term. That’s the key differentiator between organisations that thrive despite uncertainty and those that barely survive.

Verdict: The DRS is likely to have a massive impact on retail businesses.

There will be a heavy emphasis on cost in 2023

Andy Murray MAAT, Finance Manager & Company Secretary, Galson Sciences Ltd – Egis UK

The main concern for us is cost. There’s going to be a heavy emphasis on cost going forwards, including the cost-of-living crisis, supplier increases and staff expenses.

We’ve already noticed a significant increase in travel and hotel accommodation expenses from staff travelling away and these will only continue to increase into the new year.

To mitigate this, we’re looking at building greater provision into our budgets while looking at how we can help staff through the cost-of-living crisis. We are also looking at the rate of uplift with existing client contracts and it’s one area we’ll be spending a lot of time on before April.

IR35 and Corporation Tax increases are both on our radar and although Corporation Tax won’t come in until 2023, it has to be built into our five-year plans as corporation tax increases are likely to have quite a significant impact.

Finally, the main concern for us as a newly-acquired company (we were acquired by French-based Egis Group a year ago), is moving from an SME mentality to that of a corporate entity. It’s still early days in the acquisition and I’m getting involved in the wider strategic plan.

Verdict: Cost will be a major factor when setting budgets and planning.

5 strategies to survive the rising cost of doing business

Posted by & filed under Members, Run your business, Skills.

The strategic moves accountants are making to support their businesses and clients into 2023.

Chief among AAT members’ concerns are rising overheads and increased costs from suppliers, not to mention mental health and the vexed question of whether or not to raise their own prices. Here are their methods to combat those pressures.

Strategy 1: Negotiation

Clare Elliott FMAAT is CFO of IT support company ILUX, and has noticed clients increasingly querying prices and delaying projects to save expenses.

“It’s hard to increase prices because we’re all in the same situation. Our clients are across a variety of sectors including healthcare, education, manufacturing and the service industries and they’re starting to feel the pinch,” she explains. “When we sell to clients, we’re getting pushback all the time. Before, clients would happily accept quotes, but now they’re scrutinising everything. More and more projects and software implementations are either being paused or delayed.”

Hayley Beckley FMAAT, client manager and team leader at Effective Accounting, has been having similar conversations with clients. She’s found explaining the underlying situation helps them understand.

“Our clients, who are mainly service-based contractors in the film and TV industries, as well as small businesses, on the whole seem to be doing well,” she says. “Currently, we charge monthly subscription fees and we have to be careful how we approach any price increases. We’re mindful of not pricing our services so much that it puts clients under strain. It’s about being sensitive to how it’s done. Sometimes it’s about having that conversation with clients and saying ‘we need to increase it to this much and you’re only paying this much, so let’s meet in the middle’.”

Strategy 2: Budgetary discipline

Sam Mitcham FMAAT, founder of SJCM Accountancy, says exercising greater discipline is the bedrock of good budgeting – across both business and personal spending.

“One of my new year tasks is to go through my bank statements and see if there are any non-essential standing orders or direct debits that can be cancelled – there are usually a few. I’ve done this a bit earlier this time, at the end of 2022. It’s so important to do, to take a deep dive into your spending.”

Andy Smith MAAT, founder of Abbeygate Accountancy, agrees, and takes a rigorous approach to doing so.

“On a personal level, we are in a fortunate position, but we are watching what we spend at home. We’ve just had our fifth child and we’ve made a lot of changes – we’re growing our own vegetables, buying second-hand items instead of new,” Smith says. “I often run courses for Ipswich-based charity Future Inclusion, and the main emphasis is on running your personal finances like a business. Knowing what your numbers are, what’s coming in and going out.”

Strategy 3: Avoiding a price trap

Ensuring your prices keep pace with the rest of the economy is a delicate task, and one made more difficult as clients feel the pinch.

Mitcham has found walking that line with clients requires a degree of subtlety.

“Many of my clients in the health and beauty industry are particularly struggling because people have less disposable income. These clients tend to develop good relationships with their customers who will often confide in them and tell them they’re having a hard time because of cost increases. It then makes it very difficult to then say, ‘Actually, this haircut is going to cost you £10 more.’

“I’m stuck in the same price increase trap. Do you put prices up to protect yourself because everything else is going up, or do you take the hit because you empathise with your clients?”

Developing strong relationships with her clients serves her well and helps when it comes to client management, although she warns it can be a hard balance to strike.

“I’m a small business, supporting other businesses and I like to communicate that, sharing worries. Although there needs to be a line between the two relationships sometimes, I think there are certain parts where actually a crossover can be quite healthy. Clients do appreciate the beauty in that.”

Strategy 4: Adjusting service levels

To become more efficient Mitcham has adopted a pragmatic approach.

“I look at what services I’m providing to clients to check if it’s still value for money and I balance it out. For example, I may have assigned some software to a client for £20 a month, but if they’re not using it, we cancel it. Yes, I will lose the mark-up, but then we switch to a service that makes me money elsewhere and is actually more beneficial to them.”

A word of caution from Smith, that tighter budgets do not mean lower quality services. “We’re having regular meetings with all clients to discuss concerns and provide extra help and support where needed.”

Ultimately, it’s about appreciating that these crises affect everyone to a greater or lesser extent. “We’re all in the same situation,” says Elliott.

Strategy 5: Managing mental health

Mental health among finance professionals has been hit hard by recent crises, and it’s critical that both members and their colleagues carefully manage theirs to ensure they are not under too much strain. According to Mitcham, Beckley, Smith and Elliott, there are two key principles to follow when it comes to mental health:

Stay on top of your own finances

“I do feel privileged that I fixed my mortgage last year, but it’s the energy costs that really concern me,” says Beckley. “Last year, I turned the heating on whenever I felt like it, but now I’ll either wear more layers or use the heating at a lower temperature. I use the ‘do I need it or want it’ approach now – it’s what my mum used to say.”

Look out for colleagues

“We have a lot of initiatives in place. We have a few staff members trained as mental health first aiders to help support colleagues and we also make use of trivial benefits. Trivial benefits can be anything up to the value of £50 and don’t count towards taxable income. Employees also have access to free, private dental, physio or optician appointments through a Bupa cash plan scheme,” says Smith.

The great rejuvenation

While circumstances have been, and continue to be, trying, there are some positive signs emerging.

Research for AAT’s small business website Informi.co.uk has found that 64% of the UK’s Generation Z (16-25 years old) workers have either started their own business or aspire to do so in 2023 – compared to nearly a third of people overall. The findings show that being their own boss and quitting to start a business are top of the agenda for Gen Z, with 20% stating that they want to start their own business so they have something of their own, followed by 16% wanting to be their own boss and 10% feeling trapped in their job.

Despite this, nearly one in 10 (9%) people are put off starting a business by tax and accounting, and one in five (20%) don’t think accountancy skills are important to start a business.

Additional research by AAT with 500 small business owners in the UK revealed that the top three mistakes when starting a business are poor understanding of the target market (30%), cash flow management (19%) and ignoring technology (19%).

The research also found that some 93% of people starting their own business made mistakes and that approximately 16% missed a tax deadline. On average, the research found, small business owners didn’t hire a qualified accountant until just over a year into operating.

Green & Black’s co-founder Jo Fairley was not surprised by the findings and offered words of encouragement. “Don’t be scared to start a business in a recession: Green & Black’s was born in one, and it taught me some important lessons about always being lean and hungry, agile and adaptable, and above all, not wasting money, which has stuck with me ever since,” she said.

To help those considering starting a business, Informi has launched a new version of its ebook, How to Start a Business in 20 Days.

How to stick to your study plan during the holidays

Posted by & filed under Students.

It’s not always easy to stay motivated during the festive season. Here are ten tips to keep you on the right track during the holidays.

1. Create a study plan

You can’t stick to a plan if you don’t have one, so if you’ve yet to make a study plan that’s your first job.

To do this, you’ll need to consider:

  • The subjects you need to cover
  • The time available to master them
  • How much studying you can fit in
  • Your short-term and long-term study goals

Then buy yourself a large diary, or sign up to an app such as Todoist or My Study Life, and start working on your schedule.

2. Mix it up

Reading notes or textbooks, again and again, is not very interesting and is probably not the best way to remember the information you need to anyway.

From sticking up post-it notes to listening to audio lectures and doing practice assessments, variety is the spice of life as an AAT student.

If you like gaming, you may also benefit from using apps such as Focus To-Do to motivate you to finish the various tasks on your list.

3. Seek the right environment

It’s generally easier to study in a quiet place. So, if your home is busy and noisy over the festive season, consider heading to the local library and setting yourself up in a peaceful area where you’ll be able to focus on the task at hand.

If there’s a café or coffee shop you know is quiet at certain times of the day, that can be a good place to base yourself from time to time too.

You may find the change of scene also helps to avoid stress about studying taking over the rest of your life.

4. Involve your family

You can’t spend all your time avoiding your family so you can concentrate on your studies over the holiday period.

Instead, turn the fact there are so many people around to your advantage by asking relatives (or anyone else who’s there) to test you on a series of flash cards, for example.

5. Find a study buddy

There are bound to be other people on the same AAT course who are trying to study during the holidays; if you don’t know any, you can find them via the various AAT student groups on Facebook.

If they live nearby, meeting up every so often will help to ease the tedium of your study schedule; and if they don’t, you can organise to get together on video calls instead.

Either way, studying alongside someone who is aiming to pass the same exams will allow you both to discuss aspects you find difficult and should help to deepen your understanding of the entire syllabus.

6. Study in short bursts

Our brains are not generally designed to stay focused for long periods of time without a break. For most people, it’s, therefore, best to take a short – say five-minute – break every 30 minutes or so.

That said, some people can concentrate for an hour or more at a time, so find a pattern that suits you and stick to that.

7. Stop checking social media

While short breaks can help you to refocus your mind and avoid burning out, it’s usually best not to use them to start scrolling through social media platforms.

Getting a breath of fresh air, having a quick chat with a family member, or making a drink all give you a better chance of sitting back down, ready to study again a few minutes later – especially as five minutes on social media can quickly become 50 minutes without you noticing!

8. Test yourself regularly

It’s important to check you are on track to meet your study goals on a regular basis. Doing practice assessment papers such as those available on the AAT Lifelong Learning Portal is one of the best ways to do this.

In the early stages, you can make life easier by giving yourself more time, for example. But as the subject becomes more familiar, try to complete them in the time you will have on the day.

9. Reward yourself for hitting study goals

We all like having something to look forward to, so motivate yourself by planning rewards for when you pass a test or finish your notes on a certain topic, for example.

You might, for example, set yourself the goal of finishing a practice assessment paper within the allotted time by 31 December so you can enjoy a night out and a guilt-free day off on 1 January.

Or if sweets are more your thing, you could promise yourself one of your favourites each time you complete a task, such as writing out a set of flash cards.

10. Don’t overdo it

While some people find it difficult to motivate themselves to start a study session, others have a harder time knowing when to stop.

But while it’s important to do enough studying to meet your goals, doing too much can be counterproductive.

Make sure you leave enough time for other activities, such as exercising, spending time with friends and family, and simply slouching on the sofa watching your favourite Christmas film.

Getting enough sleep is also crucial, as it’s much harder to retain information when you’re over-tired.

Further reading

Wasps RFC knocked out by revenue problems

Posted by & filed under News.

Wasps RFC has entered administration and been suspended by the Premiership following the club’s relocation.

Wasps, one of the oldest clubs in the world, faces retirement 100 miles away from its Hampstead territory following a series of off-pitch miscalculations. English club rugby is in a parlous state, with £500m of gross debt across the Premiership’s 13 clubs. Wasps accounts for about £123m of that sum, by far the largest share.

In 2014 the club announced it would move to a new home in the Midlands, the Coventry Building Society Area (formerly the Ricoh Arena). Previously, Wasps played around the capital, at Queens Park Rangers C’s Loftus Road in the 1990s and Wycombe Wanderers FC’s Adamas Park in the 2000s.

When Coventry City FC had a bitter dispute with the CBS Arena’s operating company over its tenancy agreement, Wasps’ hierarchy sensed an opportunity and purchased the stadium.

The calculation was that the move would function much like franchise relocations in US sport. An example of this is American football’s Los Angeles Rams, which have previously been the St Louis Rams and the Cleveland Rams. The stadium would also provide Wasps with an attractive asset and ownership over its revenue streams, such as hospitality on match days, rent from Coventry City FC and from the conference facilities.

However, a culture of relocation is not only absent in UK sport, it is viewed extremely negatively. Fans based in London complained about the 200-mile round trips to attend home games, while rugby fans in the Coventry area already supported local teams, such as Coventry RFC, Leicester Tigers and Northampton Saints. Turnouts were not only disappointing from a sporting perspective, but they hit Wasps’ cash flow significantly, which had already suffered badly during the pandemic.

Wasps had been hopeful of securing new funding to help with a £35m debt owed to bond holders following its relocation from London, and HMRC pursuing it for £9.5m unpaid taxes. That debt was due to be paid in May 2022, but Wasps defaulted.

Despite saying talks with interested parties were “ongoing”, the club was forced to appoint administrators. In all, 167 club staff and players were made redundant.

There are several lessons here. Chief among them is that sport is not like other business, and fans are not like other customers. Teams have deep, historic links with both their fans and communities. When Wasps moved from London to Coventry, it severed those links and torched any goodwill (both in an accounting and a traditional sense) it had, depleting any revenue with which it could service its debts.