Shortfall of accountants

The UK faces a shortfall of 10,200 qualified accountants by 2050, due to skills shortages, an ageing workforce and restrictive migration policy, according to Randstad Finance and Professional, the specialist recruiter.

The UK workforce as a whole will have a deficit of 3.1m by 2050, a figure which represents 9% of the required workforce. Using employment rates from the most recent European population analysis from Eurostat, the statistical office of the European Union, as a measure of demand, Randstad analysed the projected changes in UK population and working age rate for 2050 to establish the gap between employment demand and workforce supply.

The analysis showed that with a population of 74.5m, in 2050 the UK will require a workforce of 35.4m to meet demand. However, with a pool of just 45.1m people (60.5% of the population) forecast to the eligible to work in 2050, even if the employment rate matches pre-downturn levels of 71.6%, an ageing population will leave the UK with only 32.3m people in employment – 3.1m short of the 35.4m required to meet demand.

Despite the shortfall, the accountancy and finance sector is set to fare better than others. Qualified accountants represent 0.3% of the entire UK workforce, assuming this proportion remains constant, by 2050, the UK will have a deficit of 10,200 accountants. The education sector faces the biggest shortfall with the prospect of a deficit of 128,000 teachers by 2050.

Tara Ricks, managing director of Randstad Financial and Professional, said: “If the UK economy is to grow and overcome the difficulties of the last few years then it requires a strong workforce capable of meeting demand. Our projections are conservative but they still portray a worrying scenario for the country over the coming decades. With an ageing population, we need to ensure we are open for business and welcoming talent from around the world to bolster our workforce. Unfortunately, with a stagnant economy and crippling work related migration policy, the UK represents a much less attractive option for both domestic and overseas talent.”

Big 4 to be grilled

The Big Four accountancy firms are next in line to face a grilling by the Public Accounts Committee (PAC) over their role in the ongoing tax evasion/planning row that has engulfed a swathe of multinationals such as Starbucks, Amazon and Google.

PAC chair Margaret Hodge told BBC Radio 4's Today programme:

‘The certainty that we want, particularly from the big four accountancy firms who have a duty to lead by example, is that, in the advice they give to their clients, they are not advising how to engage in aggressive tax avoidance schemes.’

The spat has ignited the debate about how multinational companies operating in the UK – many of them advised by the Big Four - enjoy a distinct competitive advantage over their UK-based rivals through their ability to legally use low-tax havens.

Hodge said firms not taking a tough stand on the issue should be denied lucrative government outsourcing contracts.

‘If we are to promote a culture change in the UK, we have got to take action now,’ she said. ‘I think using the power of the public purse to purchase contracts is an important power that we have.’

‘The big four are getting more and more government business as this government chooses to outsource a lot of back-office activities.’

But PwC’s head of tax policy Mary Monfries defended her firm’s tax planning role on the programme, saying:

‘We help companies when they are looking at tax as a cost, but we have some clear principles about the way we work. ’

‘Any tax advice that we give has to be based on and supported by the law.’

Recent research by the Tax Justice Network and the broadcaster found that the Big Four had over 200 offices scattered over 45 of the world’s lowest-tax jurisdictions Liechtenstein, Bermuda and the Caymans.

Starbucks last week caved in to public pressure and announced that it will pay an extra £10m a year in corporation tax in the UK until it turns a profit.

Since it opened in the UK in 1998 the company has racked up over £3bn in coffee sales, and opened 735 outlets but paid only £8.6m in income taxes and commands close to a third of coffee sales in the UK.

Directors duties

http://www.accountingweb.co.uk/article/directors%E2%80%99-duties-companies-difficulty/526675

Great article on directors' responsibilities

New rules for micro businesses

From ICAEW

Receipts and payments and flat rate expense deductions

The Office of Tax Simplification (OTS) has published its final report, Small business tax review: simpler income tax for the smallest businesses, in which it recommends a simpler way to calculate the taxable profits of nano businesses. The report makes some suggestions which would represent fundamental change and simplification for many of the smallest businesses in the UK.

The natural and instinctive reaction of many professionally trained accountants may be a desire to preserve GAAP accounting at all costs. However there are a few points worth keeping in mind. The OTS proposals are aimed at the very smallest unincorporated businesses, which it refers to as nano businesses. These are businesses:

• With turnover below £30,000
• With little or no capital investment
• Not normally registered for VAT, and
• Probably with no employees.

They are usually sole traders without professional advisers and it seems likely that many of them will already use some form of ‘cash accounting’.

The key recommendations of the OTS are as follows:

• Receipts and payments, rather than accruals accounting, should be used to calculate taxable profits. Businesses would still have the option to calculate profits in accordance with GAAP.
• A series of flat rate expense deductions should be allowed to cover items such as use of home, mileage, telephone and internet, subsistence, laundry, postage and stationery.
• Immediate tax relief should be given for small value capital items by allowing them to be deducted as expenses rather than through the capital allowances system.
• Small amounts of private use of assets and services would be disregarded.

There are many ‘what ifs?’ to this. For example, there would need to be flexibility around businesses with fluctuating profits. The report suggests a ceiling of £40,000 before a business would need to use traditional computations instead. There would also need to be a period of grace to allow those businesses which grow enough time to make the transition into GAAP accounting. The rules for the new Universal Credit should reflect whatever basis is adopted for income tax and NIC. But this can all be discussed.

The immediate next step is that the Chancellor will consider the proposals and may announce a way forward in the March 2012 Budget

New Euro rules on small businesses

New Euro rules

New European rules

European new rules on accounts

Changes to audit exemption thresholds

This is a message on the proposed changes from the President of the ICAEW (at http://www.icaew.com/)

Today the Department for Business, Innovation and Skills has announced a formal consultation on increasing audit exemptions, removing some of the gold plating that previous governments have applied to EU directives in this area. In a nutshell, the proposals are:-

• To extend audit exemptions for SMEs by aligning the mandatory audit thresholds with EU small company thresholds. Currently in the UK, SMEs have to meet both turnover and balance sheet thresholds to be exempt from audit. In future, to be classified as small for accounting purposes, businesses will have to meet two out of three criteria (turnover, balance sheet and headcount).
• To exempt subsidiary companies from the statutory audit where they fulfil a rigorous set of conditions including a commitment from the parent company to guarantee its debts.

In considering these proposals, what is important to me is that we continue to reinforce the message that effective financial management is crucial for any business. Strong financial controls and appropriate management oversight are important components for any company seeking to grow and build their business, no matter what their size. That’s what chartered accountants tell their clients and that’s the message I continue to press home to ministers.

Audit is critical in this. It plays a vital role in the oversight and governance of companies. This is as true for many smaller businesses as it is for larger multi-nationals. It provides investors, shareholders and management with trusted independent verification of an organisation’s financial statements and gives some insight into how well it is being run.

In my view, many SMEs and subsidiaries will continue to choose to have an audit, even though they may qualify for exemption, because it provides confidence and peace of mind. It can be important to have audited accounts when pitching for contracts or seeking finance.  For those who choose not to have an audit, we should absolutely continue to encourage them to seek third party assurance on their financial statements. This is a service an ICAEW Chartered Accountant can provide.

We need to look carefully at the detail of the proposals and ICAEW’s Audit and Assurance Faculty will be responding to the consultation in due course. To help us shape our response, we will be consulting members and would like to know what you think. If you’re in business and as a result of these proposals are now eligible for audit exemption, will you take it? If you’re in practice and have clients who may now be exempt from audit, how do you think this will impact on you and your business?

I look forward to hearing your thoughts.

Harristick

HARRISTICK Ends Tax Red Tape Misery

Small businesses owners across Northamptonshire are finding more time to run and grow their business thanks to a new USB-based solution.

Harris & Co’s innovative new service enables micro and small businesses to ditch red tape, save time and slash their bookkeeping costs.

No longer do businesses have to slave over long and tedious tax forms - they simply sign up at www.harrisandco.biz and get Harris & Co to do the hard work:

• Harris & Co sends each businesses a Harristick USB memory stick containing some simple pre-prepared electronic record sheets
• Businesses simply list their sales and purchases - it can take as little as just 15 minutes a month - then email them back to Harris & Co
• Harris & Co calculates each businesses' VAT, wages, business tax and personal tax.

Harris & Co launched the 'Harristick ' solution after realising that small firms across a wide range of sectors needed much cheaper and simpler accountancy services than the market currently offers.

Harristick’s service starts from £85 + VAT per month - half the cost the market currently charges many start-ups and small firms.

It covers not just VAT returns but also wages, annual accounts and "everything else the average small business needs".

Each Harristick contains four electronic record sheets: sales invoices, purchase invoices, cash receipts and cash payments.

They also come with lots of other useful calculators and information relating to items such expenses/mileage claims, payroll and personal tax.

Principal Phil Harris said: "The feedback has been very positive. Our clients like the simplicity of it - and they certainly like the fact that it is a fixed monthly fee.

"We started our business in my spare bedroom and are still a small business ourselves so we know the challenges that start-ups and small businesses face. Even so, we did extensive research with our clients to ensure that our new service meets their needs.

"This has been developed with small businesses for small businesses."

Principal Phil Harris said: "It's simple - we worry so you don't have to.

"We take care of all your dealings with HM Revenue & Customs and Companies House - including VAT returns, tax returns, annual returns and wages paperwork.

"That frees up your time and allows you to concentrate on running your business."

Harris & Co  provides businesses across Northamptonshire with professional, high quality accountancy services in a friendly, approachable way.

For more information, contact Phil Harris at Harris & Co, 01604 660661

 http://www.harrisandco.biz