Member Since: 28th Sep 2010
20th Apr 2021
Another great article Neil. Thanks for including your opinion about one option the accountancy firm could have used to structure the transaction more VAT efficiently. It just goes to show, if you have a big VAT purchase, call Neil first!
26th Mar 2021
I think HMRC should give every tax agent a code which clients can enter into a national database to double check the name of the accountancy firm, who supervises the firm for AML, whether or not any supervision has expired, PII details, principal of the firm, ICO registration number, and basic contact details, e.g. trading address, phone number, email, and website.
In addition, I think CPD should be mandatory on top of AML and PII. Surely, HMRC can produce a few multiple choice CPD questions for tax agents to complete each year to double check that they have up to date knowledge.
1st Feb 2021
I think firms that go down the WFH route will have 3 major competitive advantages: (1) cost savings in terms of relocating to a smaller office which could then be passed onto clients as a reduction/stalling in their accountancy fees, (2) being able to attract employees more easily (e.g. geography is no longer a barrier and being able to attract employees from firms that do not offer WFH), and (3) employees being able to work longer/flexible hours (if they choose) as they are no longer commuting and no longer need the office key to work on weekends (for urgent work).
If the salary of 2 jobs is the same but one is WFH, then theoretically in some situations the WFH job would be 'better paid' as the employee would lose less money in terms of commuting, lunches out, office clothes, etc. So WFH jobs could become more sort after.
It will be interesting to see how things pan out in 2022, e.g. could more and more firms outsource work overseas (e.g. Ireland or Poland or another country with a similar time zone) rather than employing local staff?
1st Feb 2021
I believe what Mr Temple is referring to is the actual reporting on the pay slip. The pay slips that these umbrella companies produce are highly detailed and can be two pages long. Many umbrella companies even produce a detailed guide for contractors to use to understand their pay slips.
The umbrella company pay slips that I have seen contain all sorts of details, e.g. a full reconciliation showing when the work was done/what time sheet was submitted/authorized, number of days worked and the amount of money that the umbrella company receives excluding VAT, the deductions the umbrella company makes (e.g. service charge/admin fee, employers pension, apprentice levy, employers NI, holiday pay, etc) and then you get the standard pay slip from whatever balance is left over. Without a full reconciliation and audit trial an umbrella company is unlikely to get the necessary accreditation and unlikely to pass the recruitment agency's compliance checks.
Without the proper specialist payroll software very costly mistakes could be made when calculating employer pension, apprentice levy, employers NI and holiday pay deductions based on the money the umbrella company receives.
Also, without the specialist payroll software an umbrella company owner would struggle to scale up and grow their umbrella business (as they would not be efficient). And the business model of umbrella businesses is high volume and low margin, and therefore achieving scale is essential.
I think the take home message from this article is that trying to setup an umbrella company from scratch without actually having the experience of working for one is likely to fail due to the costs involved and also due to the difficulty of getting the agencies to agree to use your new umbrella company that has no financial history. In fact, I would go as far to say that setting up a new umbrella company is much harder, more costly and more risky compared to setting up an accountancy firm.
1st Feb 2021
According to AccountingWeb, Sovereign Capital bought SJD Accountancy (and another contractor tax firm called Nixon Williams) for more than £100 million in 2014.
According to Companies House, Mr Dolan resigned as director from SJD Accountancy Ltd on 17 September 2014. He was a director there from June 2007 to September 2014 and his occupation is listed as "chartered tax advisor".
According to Companies House, he setup another accountancy and tax firm in June 2017 called Dolan Accountancy Limited. He is listed as the only director and only person with significant control for this accountancy firm (he holds 75%+ of the shares).
Consequently, in my opinion, I feel like his knowledge of tax is potentially being slightly down played here. I wonder if HMRC will appeal this decision?
1st Feb 2021
He is not retired. After selling and resigning from SJD in September 2014 he subsequently setup another accountancy firm in June 2017 called Dolan Accountancy Limited.
29th Jan 2020
Another great article regarding the evolution of the business strategy of contractor accountants. It is going to be really interesting to see which contractor accountancy firms ends up like Thomas Cook (if anyone). I have no concerns about Crunch's ability to thrive in this new off payroll world. This is because they appear to be led by a very passionate founder/CEO. I worry about all the other mega contractor firms. They all appear to be owned by private equity or venture capitalists who probably don't really care and are just focusing on cost cutting. It is really interesting seeing Crunch spend money/invest to grow, while others are trying to cut costs in order to survive. I think I know which strategy will win long term.
9th Jan 2020
I don't understand how the big contractor accountancy firms such as Clearsky, SJD, Brooksons, JSA, Nixon Williams, Crunch, etc are going to cope with this new reform? Sure their umbrella operations may get bigger but what about their accountants in the accountancy side. Surely a few redundancies ahead? I am assuming their accountants must currently be leaving these firm in big numbers. The next Thomas Cook or Toys R Us could be a contractor accountants? However I believe John Stokdyk wrote a good article on how crunch is currently adapting so maybe they will be OK?
9th Jan 2020
My money is on this being a pre-cursor to a 12 month implementation delay. There's no other explanation, given the very short timescale and the fact that the new CEST tool was only wheeled last month. HMRC have form in this sort of thing. Off the top of my head I can recall the "new" CIS scheme, the SRT rules and MTD, for all of which the roll-out was delayed by at least 12 months.
The reason is invariably because HMRC "over-promise" delivery timetables to their Treasury masters, only for it to dawn on them very late in the day that they are simply not ready. And they will then claim that the delay is because their "customers" are ill-prepared and need more time.
I think the government are only going to look at how to have a smooth implementation of the reform. I believe this reform was suppose to come into the private sector on 6 April 2019 but then got delayed. My money is firmly on this reform going through on 6 April 2020. It has already been operating for nearly 3 years in the public sector.
10th Dec 2019
Really interesting article. It is fascinating to find out what the big contractor accountancy firms are doing to avoid being the next Thomas Cook or Toys R Us. I think Crunch diversifying into sole traders (Crunch One) and small businesses (Crunch Three) is an admission and is in response to the IR35/off payroll changes (as already mentioned in the article). Crunch could easily lose 20% - 30% of it client base by the end of 2020. It looks like Crunch is getting ready to replace this loss of income with other revenue streams. I guess if you don't evolve you die, just ask Kodak and Blockbusters. Thanks for reporting the evolution in this sector, John.