The London leg of ICPA’s Practice Evolution conference tackled the accounting acronyms that have challenged small practices over the past 12 months, including MTD for VAT, AMLGAS, and GDPR.
“We’re the heartbeat of the profession,” declared ICPA chairman Tony Margaritelli during his keynote, and the topics up for discussion at the event certainly captured the pulse of accountancy in 2018.
First up, AMLCC’s Richard Simms brought his excellent AccountingWEB article on the new anti-money laundering guidelines to life with a session on being AML compliant. Later, TaxCalc’s Steve Checkley closed the event with the latest on Making Tax Digital ahead of his return to the accounting lecturing circuit.
But with the BBC’s broadcasting house within stones throw from the Portland place venue, Margaritelli’s morning session took a fittingly televisual approach, as The Magnificent Seven was used to describe the Wild West challenges some accountants may find themselves.
Still no ‘hocus pocus’ bridging software
With MTD for VAT rolling out from 1 April 2019, Margaritelli updated the Practice Evolution delegates on how they should prepare for this obligation; from exemptions (“they not giving it away for sweets”) to those that keep records manually (“you’re dead in the water”).
But HMRC is in for a challenge transitioning when those 1.1m businesses over the VAT threshold hit the mandation period. “What they forget is that 80% of returns are filed through the gateway,” said Margaritelli.
But where do spreadsheets fit into this? The much-debated subject hinges on what Margaritelli called “hocus pocus” bridging software. As a member of HMRC’s agent strategy group and an MTD key stakeholder, Margaritelli recalled how he asked HMRC, and after much conferring, HMRC said it had seen two. “There are two somewhere but they don’t know if it will work or how much it will cost,” he said.
But with the April 2019 go-live date fast approaching, Margaritelli’s focus turned to getting clients ready and ensuring their software is up-to-date and compliant. “Are they going to be ready? If they’re not, the worst thing is put in new software halfway through a year. You need to ask these questions,” he said.
Why MTD? It’s the tax gap
But the main subject of Margaritelli’s ire was HMRC’s tax gap assertions. He railed against the tax gap, and this being the motivation behind HMRC pursuing MTD.
It was a quote from HMRC’s second permanent secretary Jim Harra that really irked Margaritelli. Harra said: “Half the UK tax gap is attributed to small businesses, despite the fact that the vast majority of them pay a tax agent to help them comply.”
Margaritelli took equal umbrage with HMRC’s Jon Thompson, who said: “We need to drive up the value the tax system gets from agents.” Margaritelli retorted: “How about driving up some of the value from his side.” Adding, “How about some software that works.”
In his final salvo to debunk the tax gap, Margaritelli directed the delegates towards this choice quote from the government’s Measuring Tax Gaps report: “The tax gap isn’t sufficiently timely or precise enough to set performance targets.”
Have you got a GDPR plan?
“Personally I have never seen so much rubbish written about a subject – I thought MTD was bad,” said Margaritelli about some of the dubious GDPR advice peddled ahead of the 25 May deadline.
Instead, Margaritelli’s advice was more direct: “Have a plan and make a start.” After all, accountants are like squirrels when it comes to data, he said. Rather than sticking data on “another disk”, he urged the delegates to analyse who, what, where and how personal data is collected. “Let’s get rid of stuff you don’t need.”
GDPR enforcement body the ICO rather cryptically advises organisations to “keep people’s information for as long as necessary”. However, Margaritelli recommended:
Make friends with change
Elaine Clark echoed Margaritelli’s sentiments in her “at first I was afraid, I was petrified, but I will survive” session, where she described the challenges she has faced over the last 11 years since launching her Cheap Accounting brand as being “the most significant since the invention of the abacus”.
These challenges are widespread and varied, and include potential clients using the internet like the age-old “man down the pub” for advice, the introduction of RTI, “the number of spurious umbrella companies entering the market with dodgy tax schemes”, and as Clark said, the best is yet to come with MTD (“the right idea but the wrong project”).
Under such pressures, it’s no wonder some dwell on the anger stage of the change chart illustrated in the picture above, but Clark advised the delegates to “make friends with change”. As she outlined, self employment has increased 64% since the turn of the century and the rise of cloud bank accounting apps such as Coconut and Tide are great for clients starting a business.
She also advised delegates to apply the change theme to their client base, too. For clients who are not the easiest to deal with, Clark recommended client reviews: “Ask yourself, am I over-delivering?” or come up with a plan to get them back on track. “We’re not the NHS - we don’t need to service every client.”
As she detailed in her session, Clark’s own career - from writing her own cloud accounting software to promoting women in accountancy - has been based on embracing change.
Accountants become successful by doing good
It was clear that many accountants don’t feel their work is valued. When Margaritelli asked the delegates to raise their hands if they feel HMRC values the work they do, the question was met with the tumbleweed response you’d expect from the Westerns referenced in the morning session.
Appropriately then, Steve Pipe's "become the most respected and successful accountant in town by doing good" afternoon session took a more upbeat turn.
He opened with the scenario of two coffee shops: both sell the same priced coffee, but one not only sells coffee but donates to an African clean water cause. He asked the delegates to choose between the two. Unsurprisingly, the group unanimous favoured the more benevolent coffee shop. And that’s the power of doing good and becoming a respected business.
Pipe made the business case for an unselfish approach through a series of examples from the 2017 Cone Communications CSR study. The prevailing statistic showed that 87% of those surveyed buy based on the values of the business.
This shared values approach trickles down into referrals and loyalty, as 81% would be more likely to talk about that business.
So how does this work in practice for an accountant? One such example would be instead of having just a free consultation with a prospective client, use that meeting to do different things that will compel them to get their chequebook out, such as recommending new technology or improvements to their business.
You can hear more from Tony Margaritelli and the challenges small practices face in this Accountex video panel.
About Richard Hattersley
Richard is AccountingWEB's Practice Editor. If you have any comments or suggestions for us get in touch.