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5 Things Accountants Need To Look Out For In 2020

20th Mar 2020
Brought to you by
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Myriad Associates helps businesses maximise tax reliefs.

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As a competent, experienced business accountant you’ll know that the tax world is an ever-changing, highly complex beast. It’s essential to keep an eye on the tax landscape in general, as well as any legislation updates, in order to offer the best service to clients.

But what are the big things coming up in 2020 that accountants should look out for? Here we’ve put together a quick rundown.

1. IR35 rules

This is a big one, and of course you’ll already be pretty clued up on it. But it’s a crucial piece of tax legislation that’s about to come into force, so we couldn’t really ignore it.

In a nutshell, IR35 is a piece of HMRC legislation that affects contractors who could more accurately be described as employees. This means that a contractor working through an intermediary (commonly a limited company) as an employee would now come under IR35 tax rules.

Where the contractor’s contract is in the private sector, IR35 stipulates that the intermediary must pay additional tax to compensate for the extra tax and NI that HMRC would have obtained for an equivalent employee’s remuneration. If the contract is in the public sector however, it’s down to the engager (the contractor’s client) to determine if IR35 will apply. If it’s decided that it does apply, the engager must then include the contractor onto their payroll, therefore deducting National Insurance and income tax before the contractor is paid.

A key thing to note is that from next month (April 2020), there’s set to be a change in rules regarding contractors working in the private sector with medium to large sized clients. If this is the case, it will be down to the engager to decide if the contractor should be subject to IR35 rules or not, just like in the public sector at the moment.

You can find out more about IR35, as well as latest updates to the legislation, on the Gov website.

2. Making tax digital

Again, something you'll already be aware of. However, it’s an ongoing process so still something to keep an eye on.

HMRC are bringing in Making Tax Digital via a series of gradual phases. Making Tax Digital for VAT-registered companies began last year on the 1st April (as long as their VAT threshold is over £85,000). HMRC now has plans to implement Making Tax Digital for Income Tax and Corporation Tax by 2021 at the earliest. Eventually it’s also likely to affect everyone who is self-employed (including freelancers, sole traders and anyone under the VAT threshold). This is something you’ll no doubt get more enquiries about towards the end of this year.

3. Concerns around cybercrime and data security

As accountants are encouraging their clients to ‘go digital’, more and more data is now being stored and exchanged online. It’s therefore crucial that accountants themselves continue to lead way in demonstrating stringent online security practices and data protection.

Business accountants hold a wealth of sensitive personal and company information, more so than many other sectors. Throughout 2020, data security will remain very high on the government’s agenda, with new guidelines and legislation updates likely. Accountants will need to fully understand these, and be able to communicate their practices’ own robust data protection policies to clients when needed.

4. An increase in virtual accountancy practices

Myriad Associates is a team made up of accountants and specialists ourselves, and being experts solely in R&D tax relief we have worked with many company accountants over the years. Recently, we’ve seen an increase in accountancy firms setting themselves up as digital practices from day one. They’re likely to have a home office, working with clients remotely and taking meetings entirely online. Communications tend to be electronic and/or through a portal.

It’s an attractive way to run a business. Where traditional accountancy firms have offices and associated overheads, virtual accountancy practices can be run on a shoestring. They offer a very flexible and fast-response service to clients, allowing them to deal with client demand in a particularly agile fashion.

Virtual accountancy practices tend to rely strongly on integration with cloud products. Traditionally, many accounting and bookkeeping duties, like bank reconciliations, entering invoices and reporting were completed manually. With cloud accounting, this work is more automatic, significantly reducing manual data input and the chances of human error.

Although virtual accountancy services are on the increase, there’s nothing to suggest traditional bricks-and-mortar firms are disappearing any time soon. But in order to stay competitive and offer clients an increasingly flexible service, it’s certainly something to be aware of.

5. A push for R&D tax relief

The UK government has long encouraged businesses to grow and innovate, not only to boost market competitiveness but to shore up the economy. Since the year 2000 it has offered the R&D Tax Credits scheme, a highly lucrative tax incentive that encourages companies to undergo technical or scientific project work. This work could perhaps involve the developing and marketing of a new product, service or process, or the upgrading/improving of an existing one.

R&D Tax Credits are offered to profitable UK companies as a reduction in their Corporation Tax to help fund the costs of innovative scientific/technological project work. Companies making a loss can also claim the relief as a lump sum payment.

The scheme is divided into two branches - SME and RDEC. Which one a company applies under depends on its size and whether it has previously received any state aid.

You can find out more about the SME and RDEC branches of R&D tax relief - and how much can be claimed - on our blog: What’s the difference between SME and RDEC.

Also, further information about relevant projects, eligible costs and more can be found on our R&D Tax Credits page.

Why would a company accountant like myself use Myriad Associates?

Claiming R&D Tax Credits is complex. The legislation can often be unclear, and the chances of submitting a claim that doesn’t quite meet HMRC’s strict criteria are high. If any inaccuracies or anomalies are detected, further questions from HMRC can hold up the claim, or even bring about a full (and costly) investigation into your client’s tax affairs.

We deal entirely with R&D tax relief and nothing else. This means we can work alongside you and your client in putting together a fully optimised, accurate claim - and we have a 100% success rate. Let us help you help your client, so you can get on with the day job.

Contact our team today on 0207 118 6045 or use our contact page and we'll be pleased to call you back.