What does 2022 have in store for the profession?by
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.
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.
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.
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.
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.
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Paul Aplin was for many years a tax partner with an independent West Country firm. He is a past president of ICAEW, a former Chair of the ICAEW Tax Faculty, a member of CIOT Council and the Tax Technology Committee of CFE. He is a non-executive director of three companies, a member of HMRC’s Admin Burdens Advisory Board and the OTS Board....