Former Tax & IT Partner
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What does 2022 have in store for the profession?

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Paul Aplin looks at the challenges facing the accountancy profession in 2022, including MTD, harnessing more digital technology, the rise of the bookkeeper and retirement plans for some.

10th Jan 2022
Former Tax & IT Partner
Columnist
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For most practices, the initial focus will be on the tax return rush. The next thing we know, it will be February, and many are worried about whether they can meet the 31 January deadline.

With Covid still seriously affecting clients and practices, I was pleased HMRC announced that it is waiving the self assessment late filing and late payment penalties for one month.

The argument for a penalty date deferral – and for making the process as simple as possible - is as strong as when I argued for it in January 2021. A repeat of last year's pragmatism will be welcomed by taxpayers, agents and HMRC.

MTD again

For most practices 2022 will be dominated by more discussion of MTD and basis period reform.

The MTD ITSA pilot needs to expand visibly and incrementally against a clear roadmap, so that as we progress through 2022 businesses, agents, software developers and HMRC see real, tangible progress.

Expansion from the current, highly restrictive, conditions for joining the MTD ITSA pilot to the virtually unrestricted access that will be needed by over 4m businesses and landlords by April 2024 is going to be challenging (but, I believe, achievable). 

Basis period reform will bring with it yet more challenges for the 578,000 businesses that will have to apportion two years accounts in order to arrive at their taxable profit, and especially for the 278,000 businesses that will have to estimate the second year’s profit.

For these businesses, the changes will introduce new uncertainty over their tax position and – although software will do the number crunching - more work.

HMRC has already floated some ideas for minimising the issues relating to estimates and we need to see some real pragmatism here. For those 278,000 businesses this is a real problem.

There will many conversations this year about changing year ends to 31 March unless there is a compelling reason not to.

I’ve had enough

Some practitioners are already wondering if this is the time to retire or change career, and it isn’t just MTD and basis period reform fuelling such thoughts.

Ever-increasing regulation, the relentless pace of technology change and remote working are all contributory factors.

But there is another: the great resignation, a global phenomenon which is seeing people resign from their current roles either to retire early or to move to new, better paid, less stressful, more satisfying or more flexible roles. This shift is being driven both directly and indirectly by the pandemic and has probably amplified another trend: a tendency to change employer more frequently.

None of this will end with the pandemic. Workers will continue to expect greater flexibility in terms of where and how they work. These trends bring as many opportunities as challenges.

As long as they have the necessary skill set, have access to the necessary office systems and are available by video-conference, does it matter where a worker is located? If there is more home-working, do we need to spend as much on office space and the associated costs? What new service opportunities are presented by flexible working and storing data in the cloud?

A changing profession

The accountancy profession has always faced and embraced change. MTD is currently driving some of that change but it should only be a catalyst. The primary focus should be on harnessing the power of digital technology to help businesses (especially the smallest) operate more efficiently.

Better tax reporting should be nothing more than a by-product of that. Deep knowledge of software and apps will become an ever more important skill set (as will knowledge of digital technology generally).

We will also have to consider how to ensure that people working remotely acquire some of the judgement skills that have traditionally been acquired through physically working alongside more experienced people. 

The day of the bookkeeper

I believe that good bookkeepers will be more important than ever over the next few years. Greater accuracy at transaction level is at the heart of the ambition for MTD and essential for maximising the value of business information and the potential of technology.

Bookkeepers with sound experience of software and apps will be ideally placed to deliver a cost-effective service – including training clients – in parallel with accountants, leaving the latter to focus more on planning and advisory work. I don’t see any shortage of work on the horizon for either community.

Regulation

While digitalisation, new ways of working and changing skill sets will all be themes in 2022, I believe that regulation will be as well.

In June 2021 CFE issued a discussion paper: “Professional Judgement in Tax Planning – An Ethics Quality Bar for All Tax Advisers”. The International Ethics Standards Board for Accountants (IESBA) also has a working group looking at tax planning and related services.

In November 2021 HMRC published a summary of responses to its consultation: Raising Standards in the Tax Advice Market: Professional Indemnity Insurance and Defining Tax Advice, alongside new research into Understanding the Characteristics of Unaffiliated Tax Agents.

Another paper published that day showed that R&D claims of dubious merit are very clearly – and rightly – in HMRC’s sights. Look out for my next article on the issue of regulation.

Beyond 2022

Most of the things I have flagged here will affect the accountancy profession way beyond 2022; the way we react to them this year will have a strong impact on precisely how they do so.

Some changes are beyond our control, but there are many that we can influence to ensure they impact positively for businesses, clients, practices, tax administration and the UK generally. And where we can, we should.

Replies (6)

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By Hugo Fair
10th Jan 2022 17:23

Nothing with which to quibble in terms of imminent 'issues' for the next 12 months although I fear that I don't share the author's innate optimism that underpins the 'forecast' elements.

The most interesting point raised (but not followed through in terms of scale of impact) is "the great resignation". I encounter this daily (not just within this profession, but in education and medical services and across a spectrum of commercial enterprises) ... and it appears to be almost entirely driven by the impact of 'living with the pandemic'.

This is not a mental health issue (or any other label that govts & media like to apply to make everything seem 'safely normal') ... it is a fundamental step-change in attitude allied to a much shorter-term expectation horizon.
At it's simplest, and particularly amongst the 25-35 years old cohort, this is akin to the Epicurean concept of “eat, drink and be merry, for tomorrow we may die.”
But it also ties in with an odd combination of defeatism and yet determinism to effect change that can best be seen within determined 'eco warriors' - typically from a slightly younger cohort.
Mix all these in with the more obviously resigned & (partly) burned-out of those of us who are approaching or have reached retirement age ... and there's a measurable paucity of energy or even desire to go out there and create dynamic new businesses.

This is quite probably not the right forum for this kind of discussion, but my glass-half-full that has sustained me for many years is beginning to show signs of leaking!

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Replying to Hugo Fair:
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By johnjenkins
11th Jan 2022 09:41

What is strikingly apparent is the fact that prior to pandemic people were travelling at a fast pace with seemingly no stopping. Once you slow down, then realisation comes to the fore, whether it be retirement, just slowing down or even changing jobs (including work habits). What I have told all my clients who have been affected is that it is time to start again from scratch. Remember how you got where you were before the pandemic hit. Some will heed my advice, some will not and some just don't have the energy to start again. However one thing is very certain. The 15-25 year olds will bring back values and put technology firmly in its place, but you're quite right the 25-35 have been "making merry" but as they reach the age of maturity (which these days is between 35 and 40) they will set the pace. I have a sneaky feeling that the pace will be a lot slower than prior to the pandemic. At present the 40-60 age group are keeping us going. (no disrespect to those under and over that age group who are also keeping us going).

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By Paul Dunn
11th Jan 2022 09:38

Paul is right on target about 'the day of the bookkeeper'.

My observation of the profession shows that, as we've all become more surrounded by Apps, bookkeepers have (generally) been ahead of the curve in helping clients in that area.

But most importantly, bookkeepers have ALWAYS (or so it seems) had much more real connection with the firms they serve — certainly more frequent connection — precisely the kind of things that Accountants should have been doing all along.

In these times, creating that 'sense of belonging' and connection is crucial to on-going success.

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Replying to Paul Dunn:
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By johnjenkins
11th Jan 2022 09:46

I have to disagree. The elderly Accountant has always had close connections with their clients. It is the number crunchers that don't and unfortunately many bookkeepers do just that. I think you will find that technology in our profession will plateau, as it will be realised as to what is achievable and what is not. HMRC are already realising that MTD isn't as straightforward as it was first muted to be.

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By HLB
11th Jan 2022 12:22

'This shift is being driven both directly and indirectly by the pandemic and has probably amplified another trend: a tendency to change employer more frequently'.

I am experiencing exactly the opposite to this. I just can't get the staff. Recruitment agents tell me that people are sticking with their employers as a result of the pandemic. Better the devil you know!

I have had two vacancies since the beginning of the pandemic that I have been unable to fill. Every time someone says they are coming to us their existing employer pays them more to stay.

I was hoping to be one of those retiring this year. It had been planned since prior to the pandemic as being Wednesday 6th April 2022. I have had to delay until such time as the recruitment position is resolved. The practice cannot afford to lose another pair of hands at this time as another recent issue is the numbers of team self isolating due to this new variant. Perhaps later this year!

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Replying to HLB:
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By johnjenkins
11th Jan 2022 12:36

There will be many amazing changes this year. My advice (as long as health issues aren't involved) is stick it out till next year.

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