New Year, New Horizons
Monday, January 7, 2019
As the door closes on 2018 and a new one opens on 2019, members of the CPAA’s expert team have considered what may lie in store. Here, they provide their forecast for the most exciting opportunities and flag some important potential challenges facing accountants and the profession in the coming year, as Brexit, MTD and technological advances loom large.
Making Tax Digital
“The first and most obvious challenge for 2019 is the introduction of MTD for VAT,” says Bruce Mummery, of the CPAA’s Making Tax Digital Working Group. “With only a few months to go, the questions raised by agents on HMRC’s webinars indicate that there is still a lot of misunderstanding and myths about how it will work. We need to keep in mind that April is only the start; there are bound to be glitches and hitches as the process beds in.
“With the challenge comes opportunity – in fact, a range of opportunities. Numerous VAT-registered businesses that are currently self-filers will look for professional advice and ongoing support. These will often be small businesses that need the personal touch of a small practitioner. It is fertile ground for the accountant who is well prepared.
“There is also an opportunity to use MTD as an incentive to make clients improve their record-keeping, which leads to another opportunity; to bid farewell to trickier clients! We need to remember that MTD for VAT will be followed by MTD for other taxes, notably self-assessed income tax. More challenges, more opportunities – and as always, preparation is the key.”
Chris Schei, CPAA Deputy Chairman, builds on this issue, adding, “MTD presents a real opportunity to expand bookkeeping and accounts preparation services, from being a once a year or once a quarter event to a month by month, almost real-time service, providing up to the minute information to clients.
“However, the challenges faced by practitioners to comprehend, adopt and provide a valuable service to clients in the face of increased competition, downward pressure on fees and increased encouragement by HMRC for businesses to do-it-themselves will be a major challenge beginning in 2019. Additionally, as it comes on stream, MTD will require practitioners to make a significant investment in software and training and will require them to move from an annual or quarterly based service to providing more frequent support.”
Undoubtedly Brexit is going to be one of the biggest economic and social issues of the coming year – and it is impossible at this stage to know the requirements and ramifications of the UK’s exit from the European Union, and how this will impact practitioners and their clients.
Chris Shei speculates, “Brexit will continue to breed uncertainty throughout 2019, especially for those practices who have clients who buy or sell outside of the UK. Practitioners need to be ready to offer advice and assistance wherever possible to help clients meet the challenges of the new economic environment that will develop once the UK has left the EU.”
Looking at it from another angle, Lee Haywood, Operations Manager at the CPAA, comments, “A hard Brexit will likely impose tariffs on imports and exports, to and from the EU. Accountants with clients who buy or sell to member states will suddenly be confronted with a tax regime they have probably never had to deal with. Accountants should be prepared to be asked questions and should consider if they are willing and able to offer advice or services relating to tariffs.”
Bruce Mummery adds, “One way or another, it looks like the diversion of Parliament’s and HMRC’s resources away from routine business will continue, and this might lead to hasty and ill-considered legislation and regulation. The challenges here look greater than the opportunities; but keeping up to date with changes in the tax system and being prepared to give sound advice, will reap rewards.”
Chris Schei, CPAA Deputy Chairman, looks at how 2019’s technological advances may also help revolutionise practices and provide an array of opportunities. “The evolving Cloud technology will enable small and medium practices to transform themselves from being purely office based to a work anywhere, anytime business.”
“By making use of cloud technology and electronic storage, some small practices with fewer than five employees may find that they no longer require a physical office and may transform into a predominantly work from home business that utilises offices rented by the day for staff or other meetings. Cloud based accounting and payroll software will add to the efficiency and effectiveness of the services made available to clients.
“The number and types of small business start-ups and those that have been trading for less than five years is greater than ever and provides the practitioner who has embraced the new technology available with the opportunity to provide services and advice over and above that available from larger practitioners.
He cautions that while technological advances herald huge opportunities for how practices work, there are still areas to approach with caution. “Smaller practices must face the challenges posed by increased cybercrime and security issues and be prepared to make the necessary investment in security software, hardware protection and training needed to meet these threats. They may find it difficult to fund the technology required and recoup it in increased fees,” warns Chris.
“The challenge of combating the ever-increasing threat from criminals who are finding it increasingly difficult to launder the proceeds of crime will continue to grow. With the increase in cyber based businesses, smaller practitioners must guard against criminals attempting to use their services as a legitimate cover for illegal activities.
“Many smaller practices will find the onslaught of technical developments coupled with the increased demands of clients, government bodies, stakeholders and third parties for fast, accurate clear and concise information extremely challenging.”
Bill Annand, CPAA Chairman, rounds-up this forecast for the year ahead. “2019 will see a number of events likely to cause disruption to how accountants operate, from Brexit to MTD. Disruption creates both challenges and opportunities. Practices will need to adapt and that is why it is important to be part of a community of professional accountants, such as the CPAA, which can represent your interests with government and regulators – and keep you up-to-date and informed.”
From the whole of the CPAA team, we wish you a happy and prosperous New Year. We look forward to working with and supporting you through whatever 2019 brings.