Reflections on a year of change for accountancy

A lot can happen in twelve months…After his first full year at the helm, Jonathan Barber, Executive Director – UK of the Institute of Financial Accountants (IFA), has reflected on a year of change. He comments, “When you’re in the moment, running a fast-paced organisation, it is easy to overlook the amount of change and progress that happens in just twelve months. It’s certainly felt that way for me, but what a year it’s been, both for the IFA, and for the accountancy profession.” A year of change “Is there ever a year without significant change?” says Barber. “Perhaps the better question is not whether there has been change, or what change has happened, but more a reflection on what change has been significant,” he concludes. “Perhaps the most notable change is in the country’s leadership, and the raft of new policies that have come business’s way. It’s obvious that a new political party in government after fourteen years will signal a shake up.” “Labour’s first 100 days were marked with significant changes in taxation to fund public services; a change in policy on renewable energy generation purported to stabilise costs; and publication of the employment rights bill delivering important changes to hiring and firing policy,” Barber explains. “Taxation in particular was front and centre, with changes to capital gains tax, Business Asset Disposal Relief, and National Insurance rates. Our members continue to work with their clients to assist them in budgeting, forecasting, and pinpointing potential cost-saving measures to maintain business continuity - an essential task considering a year where insolvencies exceeded startups in several months.” in several months.” “Despite many negative narratives, 2024 has been a broadly good year for business, with both consumer and business confidence securing a largely upward trend, albeit with a dip in recent months*,” Barber argues. “We’d like to see this confidence continue well into 2025 and believe that accountants can and should play a pivotal role in helping businesses make metric-informed decisions that support calculated risk where appropriate, and budgetary cuts when needed.” Many of Barber’s 2023 reflections continue to persist, as new ways of working reach maturity. AI for example was offering the beginnings of opportunity for the profession, but application was not always easy, and it wasn’t clear how it would shape the future of the sector. “AI still has a long way to go, but it has reached a new level of maturity within businesses this year, supporting automation, predictive analysis, and enabling an increase in productivity. It still needs cautious application, as it is certainly imperfect, but it has scope to ease many of the resource pressures that businesses are facing, and to streamline internal practices” Barber argues. Similarly, ESG reporting was key to business in 2023, and Barber is clear that this remains a significant growth opportunity for savvy accountants. “Understanding the commercial reporting needs of your clients, not just from their own perspective, but from the perspective of their customers, is essential. Reporting is becoming more sophisticated, and more involved, with supply chain assessments also growing in demand. Accountants that aren’t already embracing this and offering it as a service risk being outstripped by those that can and do,” Barber asserts. Legislation updates “It’s been a strange one for legislation this year, given the impact of the General Election and the targets that were set. Some new legislation was launched, only to be quickly superseded by the inbound government, while others were delayed in anticipation of the election, and may never be revived under Labour government policy,” Barber says. “From 1 April, the new R&D regime changes came into effect, and from 6 April, the changes to the National Insurance contributions (NICs) were also implemented. The latter will change again from April 2025, under the changes set out in the Autumn Budget.” “Many consultations were postponed and key consultations findings delayed this year, leaving space for different reform,” Barber continues. “The pilot for Making Tax Digital for Corporation Tax launched, while HMRC called for agents and accountants to take part in the beta phase testing of Making Tax Digital for Income Tax Self-Assessment. Similarly, consultations were launched under the Conservative government for raising standards in the tax advice market, and the tax administration framework, but it is currently unclear whether these will stay on the agenda. Finally, The Economic Crime and Corporate Transparency Act is set to bring about several changes in the coming years. One of its key aims is to improve the accuracy and quality of the data on its registers, to help tackle economic crime and drive confidence in the UK economy. Since 4 March, Companies House has increased authority to investigate information, implemented stricter measures for company names, updated regulations for registered office addresses, and new lawful purpose declarations. Other changes now in force include changes to Companies House fees which came into force from 1 May. From spring 2025, there will also be a phased introduction of identity verification for anyone setting up, running or controlling a company in the UK.” Practitioner Pulse Report The IFA’s 2024 member survey offered some interesting insights from members working in business and practice. “Preparedness for tackling technological advances is something that is concerning accountants and will probably continue to do so for several years yet,” warns Barber. “Accountants already have a wide remit to support businesses, both from an advisory perspective, but also a compliance perspective, and technology, particularly AI is suddenly offering a new, or perhaps the better word is additional, way of doing things. It’s intense and while it offers great opportunity, it is obviously not without its challenges.” Improving standards Speaking to Barber, 2024 has been a good year for accountants with a lot reporting growth, progress, better training, and better opportunities. Yet it hasn’t been without its hurdles. One key point that Barber was keen to highlight was the number of accountants and firms that were fined this year for breaching Money Laundering Regulations. Around a quarter (105) of the 408 businesses named by HMRC were accountancy service providers, amassing almost £372,000 in fines. “Once more, this highlights the very definite and urgent need for businesses to ensure they are compliant with regulation. Many of the incidents were unintentional, but the law is clear,” Barber warns. “It’s why CPD is mandated for accountants annually, and looking ahead, accountants would do well to plan their programme of updates and training on key regulatory changes.” Similarly, the ethics code of conduct needs to come to the fore in 2025, with accountants refreshing their learning to ensure they are on the right side of any ethical arguments. Barber explains “In recent months, new research has highlighted that just 13% of accountants are confident in their ability to spot and manage ethical dilemmas**, with the remainder needing to refresh their knowledge, unsure where to locate the code of practice, or not familiar with it at all. This is of grave concern given the regulatory and moral responsibilities of accountants. I’m keen to see this balance redressed in 2025, and we’ll certainly be supporting our own members to refresh key knowledge”. In summary “As always, it’s been a mixed year,” says Barber. “Business is always typified by highs and lows, and 2024 has been no different. What is reassuring is that some of the persistent challenges from recent years seem to be reaching maturity, with proven strategies for managing them such as outsourcing, adapting digitally, or even just upskilling and training. I am excited about what the coming years will bring, and the maturing of many of the systems and processes, giving great opportunities for those poised to take them.” *Source: OBR Fiscal Outlook **Source: IFA Member Survey on handling ethical dilemmas