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2015 trends: Auto enrolment crunch ahead

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22nd Oct 2014
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Auto enrolment, online payroll and the new UK GAAP are adding to accountants’ stress levels as they look forward to 2015.

Regulatory change is what keeps many accountancy firms in business, but figures from the AccoutingWEB/Xero 2015 trends survey reveal that a significant minority within the profession are struggling with the new burdens.

2015 challenges

1. Auto enrolling clients 36%

2. Tax Season 19%

3. HMRC interventions  16%

4. New tax legislation 15%

5. RTI and payroll issues 10%

Source: 2015 trends survey

More than 500 accountants took part in the recent online survey and more than half of the respondents (53%) rated keeping up to date with compliance issues was the biggest regulatory challenge in the year ahead, second only to profitable client care (71%).

The issue that has leapt to the top of the regulatory agenda is pensions auto enrolment, named by 36% of respondents as their biggest challenge in 2015. Auto enrolment is not a new phenomenon, but having cycled through larger organisations it is now filtering down to the small and medium size companies.

Few can argue with the merits of saving for retirement, but did anyone formulating the policy ever sit down to work out how much work will be needed to assess needs and preferences at all UK businesses? And it’s not just a one-off; the responsible officers have to maintain records of those preferences as well as managing payments to those who are opted in to company schemes.

Xero UK managing director Gary Turner commented that the with first wave of companies staging into auto enrolment at a rate of 10,000-15,000 a year, the process worked in a fairly measured way. But with the figure rising to 300,000 companies a year the problems are going to “spike” for the profession.

Following the transition to real time information for PAYE - named by 10% of respondents as their biggest challenge for 2015, two years after it was introduced - auto enrolment is helping to turn what used to be an innocuous loss-leader into an administrative quagmire.

Comments on AccountingWEB point to numerous practitioners giving up on payroll work due to the AE burden, but most firms will be soldiering on. One survey respondent spoke for this group when they complained payroll was eating up time that should be devoted to accounts and tax services.

Tax advice remains the thing that 73% of accountants in the survey felt clients wanted most, followed by lower prices (62%) and closer collaboration and contact (53%).

When taken together, tax issues dominated the early warning radar for next year. The annual slog leading up to the 31 January self assessment deadline preoccupied 19% of respondents, along with dealing with HMRC enquiries, penalties and payments queries (16%)  - the latter boosted by the persistent reconciliation errors within the RTI system - and new tax legislation (14%).

Voicing a frustration shared by many within the profession, one respondent commented, “The HMRC tax deadline leaves the practice with two months of little work, the deadline should be 31 March.”

Throw in the transition to FRS 102 (a significant write in vote), VAT on digital services and new Scottish income tax rates and 2015 is beginning to look like a vintage year for regulatory headaches.

On the whole, more than half the AccountingWEB/Xero survey respondents indicated that they anticipated only a little (49%) or no disruption (7%) from these changes, but 39% anticipated “quite a lot” and 5% said they could cause “massive” disruption.

The inability to control workloads and challenges is a significant source of stress in any walk of life, but this is the paradox that accountants sign up for when they go into practice. Even with all the red-tape reduction initiatives, there’s going to be no shortage of compliance work in 2015.

But as many of the survey respondents indicated, the failure of policy makers to assess the resources required for their new initiatives invariably dumps new burden on businesses and their advisers accountants.

Is your firm equipped to face the challenges of 2015? One of the core streams at AccountingWEB’s Practice Excellence Conference on 6 November will focus on managing the skill base within your firm.

To find out more about these sessions and book your £99 for the all-day event, visit the Practice Excellence Conference website.

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