Are apprenticeships the answer to talent shortages in the sector?

Posted by & filed under Apprenticeships, Members.

Skills shortages are a growing threat to practices – apprenticeships could be the answer

The pandemic – and Brexit, to a certain extent – has brought about a talent and skills shortage across the accounting sector.

Many firms are struggling to hire the right people while some are losing existing talent to the competition. A collaborative report published in June by the Professional & Business Services Council and the Financial Services Skills Commission revealed that 32% of accountancy and professional services firms are experiencing talent shortages.

Higher wages and increasingly competitive remuneration packages can only go so far in encouraging a wider pool of talent in the short term. It’s long been recognised that a long-term solution is needed to address the growing problem.

Part of the Government-driven Plan for Jobs scheme includes a series of apprenticeship initiatives. There’s recognition that apprentices can help plug the widening talent gap by equipping individuals with the right skills which benefits both the company and the individual.

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The Government is giving extra help for apprenticeships in the short-term to help with current problems. Under the scheme:

  • Employers receive £3,000 for every newly-hired apprentice.
  • Apprentices must be taken on between now and the end of January 2022 to qualify.
  • The cash incentive can be used to pay for – and not necessarily limited to – specialist equipment, uniform, travel costs, additional training, membership to professional bodies and/or any relevant licences.

The above help is available in addition to funding from the apprenticeship levy, which can provide 95% of training funding for smaller employers whose total annual pay bill is less than £3m. Levy funding is available for upskilling and can include existing staff of any age.

Given the clear benefits apprenticeships can bring to firms on a micro level, how can apprenticeships address the sector’s talent and skills shortages at a wider, economic level? We spoke to several accountants to find out.

Apprenticeships bridge talent gaps by upskilling the workforce through on-the-job training

Rachel Martin, Founder, accountant_she

This time last year, the business consisted of just myself and my fiancée. Now we are a team of nine.

Every employee we’ve hired over the last 12 months have been through the apprenticeship scheme. I was an apprentice myself and so I was absolutely certain that’s how I wanted to grow and scale my business.

We see growth and development with every employee, with every exam. The apprenticeship scheme gives apprentices the opportunity to develop lots of other skills which sit outside of the standard qualification.

The apprenticeship scheme absolutely bridges the talent shortages whilst also upskilling our workforce. Instead of sending all of our candidates off to university for 3 years to study an accounting degree, we get them here with us, studying on the job, learning the same content but also gaining that valuable work and personal development skills that come with apprenticeships.

Verdict: Apprenticeships bridges talent shortage gaps through on-the-job training.

Apprenticeships are a quicker, more sustainable solution to skills gaps than university

Richard Pilmore, Director, RLTP Accountants

Apprenticeships are a quicker way to train people and a lot faster than going to university. There will always be a short-term time lag where you need to start providing on-the-job training to apprentices for the first 6 to 12 months but after that, they’ll become an asset to the business with their newly-gained skills and knowledge.

Apprenticeships are government-funded and employers will receive £3,000 for every newly-hired apprenticeship in addition to the existing £1,000 received for hiring an apprentice who is either 16-18 years old or 19-24 with an education, health and care plan and/or has been in the care of their local authority.

The Government will also pay up to 95% of apprenticeship training depending on business turnover, under the apprenticeship training levy already in existence.

We are currently considering putting our existing employees through the AAT apprenticeship scheme and I’m looking into HR policies, health and safety procedures and other internal policies to ensure compliance.

Verdict:  Apprenticeships provide a short-term yet sustainable solution to the skills gap and quicker route than university.

Apprentices add a vital skills layer to accountancy teams from a workforce planning perspective

Kevin Winterburn, director, Sheards Accountants

Apprenticeships are certainly one of the answers to talent shortages. In any firm, you need a good spread of skills and abilities within your team, you can’t have everyone at the same level and with the same skillset. It’s important to keep an eye on what the profile of staff in your team will look like in two or three years’ time: it’s not just about what you need to do now, but how it’ll feed into what you need to do later, from a workforce planning perspective.

We often take on apprentices, but we didn’t recruit any during the pandemic. We’re now noticing the skills gap of someone who would have been 18-months into their apprenticeship. That skills layer is missing.

We need more people in the industry, that’s essential. By training individuals through apprenticeship schemes and getting them enthusiastic about their accountancy careers from a young age, they’re going to be positive and loyal assets to the profession.

Verdict: Apprentices can add a vital skills layer to accountancy teams from a workforce planning perspective.

Picture: Vivian Laditan, an apprentice with KPMG.

How to set up your own accountancy business

Posted by & filed under Run your business.

There are lots of advantages to working for yourself. You can set your own hours, choose your own clients, and decide where and how you get the job done.

But how do you go about becoming self-employed, or even establishing your own firm? Find out with our step-by-step guide to setting up your own accountancy business.

1. Get qualified

If you want to set up an accountancy business, you’ll need certain accounting qualifications under your belt first. And the best way to instil confidence in your clients is to equip yourself with qualifications from a renowned body such as AAT, the UK’s leading professional membership body for accountants.

Whether you choose to study part-time, full-time or online, an AAT course is a great way to get started – or move up to the next level. “The first step to becoming a qualified stay-at-home accountant is to start studying,” recruitment company Reed said in a recent blog.

“With courses to suit all experience levels and the option to study full-time, part-time, or entirely online, there’s an AAT qualification out there to suit everyone.”

Philippa Shipp, founder of virtual PA and bookkeeping service Miss Kantoor Virtual Assistant, agrees that qualifications are important – even if you only want to offer relatively simple accountancy assistance.

“Bookkeeping is not a regulated industry, so you don’t need qualifications if you have the relevant experience,” she says. “However, industry recognised qualifications such as those available through AAT can be very useful.”

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2. Gain experience

It’s not vital to have experience before setting up your own business, but it will help you to find clients and to improve your practical skills and knowledge.

Working in a full-time job for a while, taking on a part-time role, volunteering in a finance department or even doing accounting work for your friends and family are all good ways to learn the ropes.

You might even realise that you prefer being an employee if you find the right job at the right company. Craig Moore worked as an accountant for several years before setting up his business CJM Associates in 2011.

“It’s useful to have an idea of where you want to end up, but it’s also important not to create a path set in stone,” he says. “Many partners of successful accountancy practices trained in industry, and many successful financial directors started in practice.”

3. Set up your business

Once you’re ready to branch out on your own, the first thing to decide is how to set up your business. You can create a limited company or start off as a sole trader; the choice is yours.

The type of business you choose will affect the steps you’ll have to take to adhere to legal standards, as well as the type of taxes you pay. So it’s worth taking the time to think about what is the right option for you.  

If, for example, if you decide to register as a limited company, you’ll need to register your business for tax, open and business bank account, and obtain the necessary permits and licences.

“To offer bookkeeping services, you will need anti-money laundering supervision from an accounting body or from HMRC direct, and to be registered with the ICO for data protection purposes,” Shipp says.

4. Make sure you have the tools of the trade

In order to run a modern accountancy business, whether as a sole trader or a company director, you’ll need to invest in accountancy software of some kind, as well as various types of insurance.

“For example, you will need professional indemnity insurance to offer bookkeeping or accountancy services,” Shipp says.

And to maximise your chances of success, it’s a good idea to develop a realistic business plan too. “The transition from employed to self-employed can sometimes be challenging,” Moore says.

“My advice would be to make a plan with achievable goals. Whether that’s to start on a certain date, employ x amount of people or to find x number clients by a certain date, you need to know where you want to be and how you’re going to get there.”

5. Build a client base

Good marketing is key to the success of any business. “The most difficult part of business for any new venture is getting new clients and gaining traction in the industry they’re based,” Moore says.

To build a client base, a slick website is a must. Other useful steps you can take include attending industry events where you can make contacts, asking existing clients for feedback and referrals, and advertising your services via freelance websites.

It’s also crucial to get your pricing right. “I’d advise setting prices based on your level of service and sticking to them,” Moore adds.

“I was always told, if you win a client based on price, you’ll lose that client based on price, and there’ll always be someone cheaper than you. So, believe in your services and believe in yourself!”.

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In summary

Setting up your own accountancy business can be a great career move – but only if you get it right. Things to consider include:

  • Do you have the necessary qualifications?
  • Are you experienced enough to manage your own business?
  • What type of business do you want to set up?
  • Do you have the necessary insurance and registrations?
  • How do you plan to market your business?

Further reading

How to turn negative stress into positive pressure

Posted by & filed under Students.

Some people naturally work better under a bit of pressure, whereas others need plenty of time to get the best out of themselves.

Even if you’re a deadline thrill seeker, there can be a fine line between that having a positive influence on your studies and causing undue amounts of stress for yourself by leaving things until the last minute. How can you make sure you’re creating positive pressure for yourself and not negative stress?

Make it smaller

Natasha Payce finished her advanced diploma in December, passing with distinction. She gives some great advice about breaking your revision down into more manageable chunks to avoid stress caused by overwhelm.

“With an exam approaching and knowing that there is a lot of work to be done can become quite overwhelming and very stressful. I find it helps to break everything down into smaller, more manageable chunks. Instead of thinking, ‘I have this whole unit of content to cover and practise questions, revision and mocks within the next four weeks’, I will set smaller targets.

For example, ‘this week I want to finish the chapter I’m on’, or even smaller than that, I say to myself, ‘today I will do four exam questions.’ Acknowledging the little achievements make the bigger tasks seem much more achievable, and my mindset moves from a place of stress to motivating pressure.”

Give yourself a break

No one expects you to be perfect, and you don’t need to set those expectations of yourself either.

Katherine Packer is resitting advanced level synoptics for the third (and hopefully last) time after getting 66% the first time and the second time having trouble uploading one of the tasks in her exam. She has started her professional diploma and is three exams into it.

“I had to learn to let go of self-imposed idealistic goals. There’s absolutely nothing wrong with having high standards, and I started the advanced qualification wanting to be one of the people who got all distinctions, but I quickly found out that it wasn’t going to happen like that for me. I passed my first four exams, but the first one’s result was 71%, but I was buzzing just to have passed when it came through on the website. I try very hard on all of my exams, but I’m just not someone who performs well under exam pressure, and I had to realise that that’s ok too.”

Plan for positivity

Making sure you leave yourself plenty of time is a great way to improve your exam confidence.

Lee Joinson is an Accounts Assistant who finished his advanced diploma last year and is now studying for his professional diploma.

“I think some negative stress can be avoided if you put a plan in place to avoid getting it to that point. Create a study plan, but make sure you also set yourself some free time for solitude. Solitude is important to allow your mind to process and absorb its thoughts (i.e. what you’ve just learned). I would advise anyone studying AAT to revise in small increments rather than large bouts, especially when close to the exam.

Your brain will absorb the information better, and you will feel less burned out. If you do this with plenty of time before the exam, the stress should significantly reduce, and after a few weeks, you’ll feel more confident in tackling the exam as the knowledge will have absorbed better. Make sure you reward yourself for your little bouts of revision too.”

Practice a positive mindset and create healthy habits

Martin Brooks MAAT is an AAT Licensed Accountant running Gold Stag Accounts who specialise in small business and freelance accounts.

“I try not to let stress be stress, and I think that’s down to having a positive outlook. That doesn’t mean I don’t have bad days, but there’s no point in worrying about things out of my control. We have 150+ clients, all with their own needs and problems, so it could be very easy to feel stressed, but I’ve always been pretty laidback.

Setting deadlines, having clear boundaries and managing people’s expectations enables me to crack on with a clear head and turn stress into positive pressure. I find getting early nights, going out for walks with the family, running and having set working hours enables me to achieve the right balance to do this.”

You don’t have to be a born optimist; you can teach yourself a positive mindset with practice, and surrounding yourself with other positive people will help.

10 top tips on turning negative stress into positive pressure

  1. Work out what causes your stress
  2. Talk to someone
  3. Plan ahead
  4. Split large tasks into lots of smaller tasks
  5. Just focus on today to avoid overwhelm
  6. Reward yourself for little achievements
  7. Let go of self-imposed idealistic goals
  8. Focus on your why
  9. Practice a positive mindset and being grateful
  10. Surround yourself with positive people who are a good influence on you.

Further reading

The importance of practice assessments

Posted by & filed under Professional Diploma.

You’re studying to achieve your qualification, so you need to pass assessments. 

It may be some time since you last sat an assessment.  As in life, preparation is key.

Failure to plan is planning to fail…

Enter your assessment date in your study planner. Then start to write your sticky notes and enter them in your diary.

  1. Review all your notes and practice, practice and practice. Reading the book is a passive form of learning and has limited success, so make your revision active. Can you recreate a definition on a postcard by only looking at the front?  Can you explain a principle to someone (real or imaginary)? 
  2. Once you’ve mastered that, do some e-learning on AAT, the Green Light tests are next on your task list.
  3. The Examiner reports are the next thing to read, review, scribble on and highlight.  All AAT units have one and it reviews the student’s past performances, showing what worked and where they were weak, learn from other’s mistakes – an easy win.
  4. Use the qualification specification for your qualification. , Go through the learning objectives and  work out what you can and can’t do.

Now you can plan – focus your studies to fill those weaknesses.

It’s very tempting to do questions you know, but in revision you need to concentrate on those you can’t answer.

Do as many practice questions as you can, the adage practice makes perfect is true in accountancy.

Practice assessments

When it comes to a practice paper, first read the question carefully, then read what you need to do, then read the question again.

So many marks are lost due to not answering the actual question asked, but answering what you think they have asked, or what you know.

Ensure that you understand the ’Active verb‘, it’s explained in more detail in the ‘Study tips – how to apply the active verbs’ article.

Consider your answers

With practice papers, attempt to highlight the active verb and key points. So for example:

“Describe what’s required in a business document to make it professional.”

Your answer would be “A business document should be clear, easily understood, polite, accurate and free from errors.”

Finally practice assessments, do them under assessment conditions, no books, no music or disruption.

Don’t read the answers and say “Yes, that’s what I would have written.” It’s better learning to try, finish the paper and then review, if it’s wrong, you will learn from that.

Practice assessments are designed to get you familiar with the layout, what is likely to be asked and in what format. The more you practice them the better final grade you will get. They are great active learning and focus on what knowledge is needed to pass the assessment.

Top tip

Each time you sit an assessment and self-mark, make sure you review where you could get more marks. Use them as a tool to further identify areas where you need to do more revision.

Finally, assessments are not as scary as you imagine.

If you’re likely to get stressed, practice deep measured breathing and remember the assessor just wants to be sure you understand the topic, they’re not trying to catch you out. 

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Members in business: rethinking well-being in the office

Posted by & filed under Members in business.

Mental health has been severely impacted by the Covid-19 pandemic. According to data from the OECD, the prevalence of anxiety increased by 20% in the UK during 2020. Depression increased by almost 10%.

The accountancy profession has not been immune to this. Finance teams have had to adapt to new ways of working, and have had to respond to a new measure almost every week. Business leaders have put more pressure on their accounts teams to manage cash flow and help keep the business afloat – a considerable responsibility to put on their shoulders.

Add to this the isolation that many accountants have felt as lockdowns continued into this year, and you have a recipe for mental ill-health. As restrictions have eased and teams have returned to the office, more focus on wellbeing is needed to ensure that people can return to the office while feeling safe and well.

Finance managers have had to look out for their team members’ mental health while also addressing their own issues. Members of our panel share their struggles and the changes they’ve made to look after the people on their teams.

Work needs to fit us as individuals

Andy Murray MAAT, AATQB, Finance Lead, Manna Pro

The last 10 months have been challenging at times. There has been an added strain through not seeing family and friends as often as I would have liked to. I don’t think we realise how much we take these things for granted until a situation like this occurs. Being fortunate enough to work from home, I have been able to channel my energies into professional development. While there have been challenges and added pressures, I feel the daily structure has helped me positively channel my anxieties.

As expected with a global pandemic, there has been absences from work; employees taking time off due to positive COVID testing, self-isolation and family illness, which has directly impacted them. The organisation was quick to respond to reassure these employees that their health is the main concern, allowing these employees to take control of the number one priority, themselves or their loved ones.

Throughout the pandemic, we’ve been driven to keep spirits and motivation moving in the right direction. This has been driven by holding weekly companywide discussions and daily team meetings to make sure that all employees are getting that daily interaction with one another (like we would over a coffee in the office or by sharing that odd laugh together whilst working).

The business has operated on a remote working basis, with only essential office visits where necessary. Once lockdown restrictions started to ease, our management took the decision to implement a flexible/hybrid working model. This allowed employees to continue working from home on a full-time basis or return to work on a hybrid model (three in and two at home, or whatever worked best for them). As long as the work is getting done and there is no impact to productivity or efficiency then there are no concerns.

This approach has been really well received. Some staff still feel more comfortable working from home on a full-time basis, while others are pleased to get back into a more ‘normal’ routine. Others do not miss the commute and like working new hours to suit childcare requirements and other personal commitments which they have.

The organisation already provided an employee assistance programme that staff could use. At the beginning of the pandemic, the decision was made to remind all employees about the benefits of service should it be required. I would personally say the company has always put their employees at the forefront of what they do.

I find being organised and having structure in both my professional and personal life helps me keep a positive state of mind. By making the best use of my time, such as listening to a podcast to contribute towards my CPD while doing household chores, I can create more time to relax and do the social things which I enjoy. Alongside being organised, I make time for exercise to increase the positive endorphins which we always need more of.

You have to be proactive with employees’ well-being

Farha Jamadar, FMAAT, finance manager, Todd Doors

The past 10 months have taken their toll, especially with the lockdown at the start of the year. As we saw the gradual reductions of restrictions, I started to remember how I used to function before Covid. Phasing back into the office also had its challenges.

The thought of going back to normality was scarier than going into lockdown. This was certainly the case for me and my team. It went from a skeleton staff and reduced work to suddenly being hit with being busier than normal. There was definitely more instant gratification with work, but all of a sudden there was so much more to do. Keeping an eye out for burnout was also important. We had regular chats with the team and dealt with any concerns. Rolling your sleeves up and getting in the midst of it all was also very important while ensuring deliverables and deadlines were met. It was important to observe the team and ensure they had regular breaks and took a day off here and there.

We were used to working from home and then we were asked to come back. We all knew it was going to happen but was a case of when. Even so, there was a bit of apprehension coming back. We all agreed to go into the office at least some of the time, which allowed us to collaborate better and work more closely. Training and communication is easier. While it was jarring at first. It’s nice to be able to go back into the office and get back to ‘normal’.

I now ask more questions such as: “How are you? Are you worried about anything?” Sharing my own battles definitely helps others open up too. Well-being is a serious issue and I feel being proactive rather than reactive or waiting for an error is important. Make sure your team is happy and their roles are fulfilling, which is a sure-fire way to ensure productivity. Team members seem more driven because I’m more in tune to their needs.

I manage my own well-being by ensuring I switch off. This is so hard when working from home and the hours can bleed into your off times in the name of making tomorrow easier. Now I’m in the office I can decompress in the car when I leave and not log on to do any more work. This has helped my well-being a lot as boundaries have gotten blurred.

We must be open about the mental health crisis in accountancy  

Eva Mrazikova, MAAT, founder of Innovation Accounting & Training and Accountancy Market Specialist for IRIS Software Group

Those months of the first lockdown were the most challenging in my entire career. The additional workload that arose from furlough, loans and businesses having to improvise has proven to be a huge one. 

I felt an enormous responsibility to be able to service all of my clients that came to me. But the working day started to blur with family time; weekends became catching up with the rest of the work, there was no proper family time anymore. Even if there was, I found myself thinking about all I had to do and all the people relying on me. 

I was worried that it was just me who wasn’t coping, that I am weak. Only after some time I have realised that many of my fellow colleagues and professionals felt exactly the same. 

The perception of accountants is that they are always “cool, composed, and have all the answers”. But inside it was a completely different matter. Many times I asked myself if there isn’t more to life than this.

Looking back, I realise I am much more resilient than I thought. I have learned to take time out and say ‘No’ to protect myself, my integrity, and my family. 

As a mental health first aider, I recognise the importance of talking to others about your feelings and struggles. I often “check-in” with my colleagues. 

I think this is the big challenge for our profession. We keep up to date with all the regulations and laws, but we often forget to ‘check up’ on ourselves. 

Managers need to listen to employees and encourage them to look after themselves.

Even when someone is smiling, they might desperately need to talk to someone. Recognising this can make a huge difference.

It’s ok not to be ok – and to admit it. Even Accountants are human beings.

How businesses need to ‘wrap up’ the Coronavirus Job Retention Scheme

Posted by & filed under Coronavirus, Members.

The Coronavirus Job Retention Scheme (CJRS) may be closed, but paperwork and record-keeping requirements remain.

The Coronavirus Job Retention Scheme (CJRS) or furlough scheme officially ended on 30 September, with businesses having until 14 October to claim for furloughed wages during September. The scheme and its variations which ran from March 2020 to September 2021 enabled employers to retain staff during lockdowns and temporary business closures, paying up to 80 per cent of employees’ wages.

Latest government figures show that by 14 September 2021, 11.7 million employee jobs had been furloughed through the scheme, costing £69.3 billion, with the numbers of staff on furlough peaking during June and November 2020 and January 2021.

But with the final closure of the scheme, businesses now have the task of wrapping everything up, yet there has been very little guidance on how to go about this. Businesses will need to consider:

  • The return-to-work process.
  • Notifying employees of any contractual employment changes.
  • Repaying overclaimed grants.
  • Accuracy and clarity of record keeping.

We spoke to several accountants across the UK for their advice on how to sort out their furlough-related housekeeping.

Review every claim to ensure compliance and accuracy

Andy Hamman, Employment Tax Director at audit, tax, advisory and risk firm Crowe

Employers that claimed under the CJRS scheme have vital housekeeping to do.

HMRC has already started enforcement action against employers who have submitted incorrect claims. Employers will have to repay overclaimed grants and face penalties of up to 100% of the overclaimed amounts.

Next steps: We would encourage employers to review their claims for the most recent months. Any amounts overclaimed can be paid back without penalties as long as these amounts are repaid within 90 days from the original grant date. Employers who identify any errors and voluntarily disclose these to HMRC are also more likely to receive reduced penalties.

Employers should also ensure that any previous changes to employment contracts due to the furlough scheme are now reverted and accurately reflect the terms of the post-furlough employment.

Verdict: Review all claims since the start of the scheme and speak to their advisors if they need any assistance.

Keep all records associated with furlough claims including payslips

Iain Black, MHA Monahans

Now CJRS deadlines have passed, companies must look forward and ensure they are prepared for potential HMRC investigations. Due to the sheer amount of furlough claims, it is likely that HMRC will undertake targeted checks, especially in cases where a business wasn’t significantly impacted by the pandemic but still made claims.

For most businesses, the use of the furlough scheme will have been completely valid and no action will need to be taken. If a business receives a letter of investigation, it doesn’t necessarily mean they’ve done something wrong. Accountants can support their clients by helping to review claims and accounts and advise on the best course of action.

Next steps: Businesses need to ensure they have kept all records associated with all furlough claims, including payslips of furloughed employees and enough information to support the decisions made to furlough staff in the first place.

Verdict: HMRC may make targeted checks on businesses over the next few years – ensure records and information are easily accessible and orderly to justify claims.

Ensure records are thorough, detailed and show calculation methodology

Mahmood Reza, CEO of ProActive Resolutions

Furloughing is effectively employee hibernation. CJRS was the money to support it.

Accountants can support clients to ensure their housekeeping is in order in case of HMRC investigation by ensuring the business has:

  • Reviewed procedures, processes, and calculations for all submitted claims.
  • Consulted and discuss with staff over any changes to employment contracts.
  • Confirmed to employees in writing that they are required to return to work.
  • Kept records of each employees’ working hours plus furloughed hours for six years.
  • Calculated methodology and workings for how much you claimed.
  • Calculated methodology for calculating regular pay.

Companies also need to disclose relevant furlough-related figures on company tax return, CT600. This is the total amount of CJRS grant payments in the accounting period covered by the return. Overpayments also need to be disclosed.

Next steps: Try not to panic. Acting reasonably in interpreting HMRC guidance, claim preparation and submission gives you a good defence against penalties for overclaiming.

Verdict: Ensure records disclose every detail relating to furlough and staff are consulted on any employment changes.

Review post-furlough cash flow to help determine impact and future strategy

Jamie Skelding, Director, Prime Accountants Group


There was no definite process for ending the furlough scheme unless the individual furlough agreement provided one.

However, employers should have given their furloughed employees reasonable notice that they were required to return to work and provided all the necessary details of any new or existing working patterns. Staff should also have been consulted in advance with time to address any difficulties or concerns.

Changes to working patterns – which must be consulted on – may include:

  • Reducing employees’ hours/days of work due to downturn in work.
  • ‘Private’ furlough/lay-off/short-time working.
  • Hybrid working/staff work from home.

Furlough ending may also have mean redundancies, but there are some alternatives that an employer may wish to consider first such as temporary or permanent redeployment to another business area, unpaid leave, reduced hours due to the temporary downturn of work and/or short-term or long-term pay reductions, which must be agreed by staff by written consent.

Next steps: With the scheme’s closure, it’s good practice for employers to revisit plans and look at their cash flows to determine the effect of the lack of furlough since the start of October.

Verdict: Revisit plans and look at cash flow post-furlough to determine impact and future strategy.

Why we need lower, flatter taxes to pay for Covid-19

Posted by & filed under Coronavirus, Members, Tax reform.

Now we are returning to work, the bill for Covid-19 has to be paid. Eamonn Butler of the Adam Smith Institute believes he knows how

Covid-19 policy hasn’t come cheap. The furlough scheme, extra intensive care beds, millions of jabs – it all adds up. Meanwhile, with businesses closed, workers laid off and less spending, tax receipts plummeted too. So the Government has ended up borrowing maybe an extra £500bn over 2020-22.

Rishi Sunak entered office promising to balance the books, so it’s no wonder that he has edged up taxes.

Income tax allowances have been frozen, businesses will pay more corporation tax, and National Insurance has gone up.

In September, when the National Insurance rise was mooted, there was outrage at how regressive this would be – falling mainly on poorer workers rather than richer investors. So to make the plan pass muster, convoluted new rules were added onto the convoluted old rules. That’s how the UK tax code got to be long and complex. Great for accountants, but a waste of energy and a drag on growth.

Do we need to raise taxes to clear the Covid-19 debt? Maybe we should treat it as a once-in-a-century aberration, park it away from everyday finances and create a new bond to extinguish it over 30 years. Then move on.

We should still accept that debt is bad. Interest and capital repayments are money you can’t spend on schools and healthcare and pensions. So, we need to tackle the Government’s chronic overspending.

Let’s start with a blank piece of paper, work out what we really need the Government to do, and ditch the rest. My guess is we could easily save £100bn a year doing that, with no loss in public benefit. Then go for growth – not by printing money as the Heath government did in the 1970s, and not by raising taxes, but by cutting taxes.

High taxes throttle economic activity, raising the debt/GDP ratio. The IMF found that tax rises create “large and long-lasting recessions” lasting “several years” – a rise equivalent to 1% of GDP, reducing growth by 2% of GDP. Spending cuts, by contrast, produce “very small downturns in growth” that “typically lasted less than two years” before upturns.

Let’s reform our taxes. Today, we tax the wrong things. When you tax something, you get less of it. We tax work (income tax), jobs (National Insurance), enterprise (corporation tax), saving and capital formation (capital gains tax). It’s madness. Let’s shift the burden onto bad things, like pollution and congestion.

And let’s make taxes flatter and simpler. For instance, our complex income tax exemptions and concessions are designed to make high rates remotely bearable but mean that high earners don’t pay anything like 45%. Let’s remove all the hiding places and have a simple, low-income tax rate (of around 22%). And let’s take everyone on the minimum wage out of tax (and National Insurance) entirely.

Under flat taxes, surprisingly, the rich pay more. In 1979, the richest 10% paid 35% of income tax revenues. After Geoffrey Howe slashed the top rate from 83% to 40%, they paid 48%. There is simply no point in trying to avoid a low tax. QED. 

Eamonn Butler is Director of the Adam Smith Institute one of the world’s leading policy think-tanks. He has degrees in economics, philosophy and psychology, gaining a PhD from the University of St Andrews in 1978.

Needs an accountant – FC Barcelona

Posted by & filed under Members.

How one of the world’s top sporting institutions lost the greatest player of all time and saddled itself with enormous debt 

Before the pandemic, Barcelona became the first club in any sport ever to breach $1bn (£722m) in revenues. Today, the Financial Times reports, its gross debt is $1.4bn, much of it short-term. 

Now, with Spain’s top league (La Liga) blocking it from spending any more cash that it doesn’t have, it has suffered the unthinkable loss of its talisman, Lionel Messi, to nouveau riche Paris Saint-Germain – despite the player reportedly agreeing to stay in Catalonia and cut his pay by half. 

With player wages making up 95% of the club’s income even without Messi, the club faced beginning the season unable to register new signings, unless it could offload some high earners in order to make room in the budget. 

How did the once all-powerful Catalan side get here? As with most spectacular declines, its roots actually go much deeper than what is immediately apparent – in this case, to the mid-2010s. In total, Barcelona spent over €1bn on transfers between 2014 and 2019, more than any other sports team in the world, yet that outlay did not translate into results on the pitch. 

Huge signings, such as Brazilian star Philippe Coutinho from Liverpool and Ousmane Dembélé from Borussia Dortmund cost €160m and €145m respectively in 2018, but failed to live up to expectations. Nor did similarly expensive acquisitions such as French forward Antoine Griezmann and Bosnian midfielder Miralem Pjanic, as the club’s scatter-gun approach to player transfers manifested itself in disjointed performances on the field. 

By last August, after an 8-2 thrashing by Bayern Munich in the Champions League, Barça’s financial crisis became acute. The club needed to shift overpaid older players for whom there was little demand. Former Liverpool star Luis Suárez was informed in a one-minute phone call that his services were no longer needed. He promptly signed for Atletico Madrid, with whom he won La Liga last season. 

When huge investments such as these fail, the resources to fix them dwindle, and soon Barcelona stopped shopping at Harrods and began looking for answers in the bargain bin. Instead of signing the very best in world football, the club turned to journeymen such as Denmark forward Martin Braithwaite – who had a disappointing spell at Middlesbrough in the Championship, England’s second tier, between 2017 and 2019. 

Still, results worsened on the field and Barcelona stopped winning trophies. So what now? At the last AGM, a proposal to borrow a further €525m was passed in order to restructure the club’s finances and, while welcome, it will do little to address the issues on the pitch. 

In tying the club’s successes so tightly to Messi – the greatest player ever – the club became extremely short-sighted and failed to spread its risk. Now, without him, it is bereft.   

“Barcelona spent over €1bn on transfers between 2014 and 2019, more than any other sports team in the world…” 

Photograph: Getty Images

How to avoid common exam mistakes

Posted by & filed under Students.

The Examiner’s Reports reveal what areas of assessments students are performing well in, and the areas they are struggling with. We outline some results from a selection of the reports to help you focus your studies.

Each year, AAT publishes Examiner’s Reports for all assessments. These reports provide helpful information on student performance in assessment tasks, which can be used to prepare for future assessments. The reports are intended to be constructive and informative and promote a better understanding of the assessment requirements. Full reports can be viewed here on the AAT Lifelong Learning Portal. 

Remote invigilation for selected AAT assessments

Assessments can be taken at any time and most are available for scheduling every day, allowing real flexibility when completing your AAT qualifications.

Find out more

Foundation  – Bookkeeping Transactions 

Common mistake: Incorrectly calculating net and VAT amounts 

  • On average, students completed the assessment in 73% of the 90 minutes available, with the most time spent on Tasks 1 and 3. 
  • Even the most successful students often fail to recognise simple calculation errors, so any remaining time should be used to review responses. 
  • The most common error in this assessment was incorrectly calculating net and VAT amounts from a total amount. 

Students should focus on improving their skills in: 

  1. Extracting net and VAT amounts from a total amount. 
  2. Balancing T accounts. 
  3. Transferring amounts from the cash book to the general ledger. 

Foundation  – Elements of Costing 

Common mistake: Not reading the questions properly 

  • On average, students completed the assessment in 72% of the 90 minutes available, with the most time spent on Tasks 3, 4 and 8. 
  • There is sufficient time available for students to spend longer on tasks and to take their time to properly read the questions. 
  • A key area of strength for students was in completing inventory records and completing basic pay calculations. 

To prepare for the types of questions in this assessment, students should complete the: 

  1. Real-life scenario. 
  2. e-learning modules. 
  3. Green Light Test. 
  4. Practice assessments. 

Foundation  – Using Accounting Software 

Common mistake: Not providing enough evidence 

  • On average, students complete this assessment with around 20 minutes to spare, so they should take time to check that the correct evidence is uploaded. 
  • Students need to ensure that they are familiar with the reports that their specific accounting software produces. 
  • Students that are not yet competent are neglecting to sufficiently evidence the completion of tasks. 

Common errors across tasks are: 

  1. Failing to enter transactions using the general ledger code provided in Task 3. 
  2. Failing to accurately enter information provided in the task – in particular, dates and references. 
  3. Failing to upload evidence in accordance with the assessment requirements. 

Advanced  – Management Accounting: Costing 

Common mistake: Not double checking answers 

  • On average, students completed this assessment in 69% of the 150 minutes that they had available. 
  • Students should spend more time re-reading the questions and checking their answers. 
  • Over 70% of students achieved minimum requirements in most tasks. Tasks 5, 7 and 8 showed the weakest performance. 
  • Key strength areas demonstrated by students are understanding inventory valuation methods and overhead allocation, apportionment and/or absorption. 

To prepare for this assessment, visit the AAT Lifelong Learning Portal to complete the: 

  1. Real-life scenario. 
  2. e-learning modules. 
  3. Green Light Test. 
  4. Practice assessments. 

Advanced  – Indirect Tax 

Common mistake: Struggling with VAT practice 

  • On average, students completed this assessment in 68% of the 90 minutes available. Some tasks, such as Task 7, could benefit from more time and attention. 
  • Performance in this assessment has improved when compared to previous years, but it seems that students still struggle with certain areas of VAT practice. 
  • Students were either very good at the calculations or very poor, with very few cases in between. 

Students would benefit from: 

  1. Making use of the e-learning material on the AAT Lifelong Learning Portal. 
  2. More practice with calculation tasks. 

Remote invigilation for selected AAT assessments

Assessments can be taken at any time and most are available for scheduling every day, allowing real flexibility when completing your AAT qualifications.

Find out more

Further reading:

How to make a great impression at your first interview

Posted by & filed under Career, Students.

Going to your first interview after a year of remote working can be a daunting prospect.

Firstly, dress codes may have changed, as many organisations have adopted less formal workwear. Secondly, many of us are out of the practice when networking, presenting to more senior members of staff, or the experience of being interviewed face-to-face or remotely.

Whatever your career stage, an interview is more likely to go well if you know the culture and expectations of the company, understand the dress code, have research your prospective role, and have prepared properly. This is the case whether you are being interviewed in person or over the internet.

Do your research

It is even more important to prepare in advance if this is the first interview you have ever done.

“Doing your homework is key: look at external sources and media coverage to determine what the organisation is proud of in its people, its news and its products,” says Elise Sallis, Head of Communication & Culture at Wolters Kluwer Tax & Accounting UK.

“Be sure to ask lots of questions about the company’s culture, including questions that explore the mindset of the people in leadership as well as the people you’ll be working alongside.”

Don’t be shy about asking after the company’s approach to learning and development, as well as opportunities for work shadowing, mentoring and advancement.

“Putting forward a few Achilles Heel-driven questions is also a great approach – asking what culture-focused areas still need improvement within a company may help you determine the true nature of its culture,” she says.

How to handle video interviews

Chris Willsher, Senior Regional Director and Reed’s Accountancy expert, says that although you may not physically be in the same room as your interviewer, body language remains important. Sit up straight, look attentive and enthusiastic.

“Be aware of the limitations in sound quality and volume in this situation – you want your interviewer to hear you clearly,” he says. “Don’t cover your mouth, remain conscious of your hand-to-face gestures, and try and keep your hands at bay in a safe place. Use hand movements to emphasise a point if it feels natural but try not to overdo it.”

In terms of dress code, ultimately, a video interview is supposed to follow the same rules and format as a face-to-face interview, so it is a good idea to wear the same outfit you would wear if you were going to the workplace.

“Being professionally dressed will also put you in the right mindset and stop you from falling into an overly comfortable ‘I’m at home’ state,” he says.

“Since you’ll be sat down, and expectedly, only viewable from the waist up, it might be tempting to wear interview-appropriate clothes on top and some kind of pyjamas on the bottom. But, as comfy as it sounds, we don’t recommend you do this, just in case you have to get up.”

Another way to make a good impression, especially online, is to remember to make eye contact. Video calls make it a lot harder to follow as if you look directly at the interviewer on the screen, it might feel like you’re giving good eye contact, but all they’ll see is you looking down. Focus on looking directly at the camera instead, at least for the most part of the interview. With video interviews, you can look at your notes for help but try to do it subtly. Use them to help you answer any difficult questions or remember specific facts about the role or company.

Emphasise the positive skills you have learnt in lockdown

Being suitable for a job is as much about organisational fit as it is about skill set – so it is important to work that into your interview – regardless of whether you have gained such skills remotely or in the workplace.

“Remote jobs and learning are often no less collaborative than those who work in-house, so whether you’re working on the move, at a remote office, or from home, you’ll need to have a certain set of characteristics to be happy and productive in an environment that differs from the norm – not to mention fit within your wider team,” says Chris Willsher.

Choose the aspects of your ideal environment that are in line with the role (e.g. an independent workspace, good team communication), and avoid referencing anything they probably aren’t going to be able to give you (e.g. large amounts of face-to-face feedback) – and you’ll be on the right track.

“Also, try and work on your tech skills and communication skills,” he says. Acknowledge a variety of tools and their uses (specific to your potential role) – and also prove your ability to use them in a work-based sense, for example, talking about video meeting programs as being a core component in attending team meetings and sharing ideas.

Conduct thorough research of the company. Look on the company website, its LinkedIn page, and even reviews that may be online on websites like Glassdoor. You will get an impression of what it is like to work for the company and can base your questions around what you find.

“Although no two companies are the same, adding some structure to your research will really help you maintain focus – not to mention cut down on the time it takes you,” he says.

Explain what you have learnt from working at home

“Working from home has actually helped many people to learn and develop new skills which they may not have been able to in an office environment,” says Simon Bell, Founder of www.careermap.co.uk. Those working from home are likely to be highly motivated and effective when managing their time.

“Finding the motivation to work when you’re so close to those home comforts shows a level of restraint many people won’t have and not only that, but it is likely those who work from home will be better with time and task-load management,” he says.

“Working from home isn’t easy; it requires you to create your own working environment and during such unprecedented times, adapting to working from home proves how adaptable you can be. Back up any skills you mention to a potential employer with real life evidence that you can demonstrate this skill. Just because you may have only ever worked from home does not mean you aren’t capable of doing an office-required job,” he adds.

 Top questions to ask at interview:

“Is this post a new or existing one?”. This question is a great way to get an idea of what’s expected of you, and it can lead to a wider discussion, says Chris Willsher.

If it’s a new post, then ask why it’s been created or how your performance will be measured. If it’s an existing one, ask who you’ll be replacing (and if they’re big shoes to fill). This can also set the groundwork to further discuss your potential responsibilities and duties.

“What are the company’s plans for the future?”. This is a great way to show that you’re interested in the company – not just the industry as a whole. It will also allow the recruiter the chance to get overly excited whie talking about their plans (something some recruiters have been known to enjoy).

Key questions to answer when researching a company by Chris Willsher, Senior Regional Director and Reed’s Accountancy expert:

  • What do they do? Find out everything you can about their products and services, along with who their target audience is.
  • What are they looking for in an employee? Check their job advert, careers page, and social media profiles to find out what skills, attributes, and experience they value most.
  • What’s new within the organisation? From news stories to ‘about us’ pages, you’ll be able to gain a good idea of a company’s recent developments, successes, and failures.
  • What are the company values? Find out what they’re passionate about, and what their goals are as a company. If you can find a mission statement, that’s even better.
  • Are there good opportunities for progression? By finding out more about the company structure, and whether there are any senior vacancies coming up, you’ll be able to get a rough idea of whether progression is an option.
  • What are their employee benefits? Do they offer flexi-time hours? How much holiday will you get? What about pensions? This is often stated in a job description but may also be referenced on review sites and on a company’s career page.
  • Who are their professional contacts? Check their social media pages to find out how well-linked they are within their industry.
  • Who will you be interviewed by? Learning about their background, position, and common interests means fewer surprises if you’re invited to interview.
  • Who are their competitors? Make notes on how their competitors differ, and what makes the company you’re applying for stand out.

Further reading: