What matters to the profession this election?

These are the manifesto items you won’t find in any of the election documents from the three main parties.

We asked you to tell us what manifesto demands you wanted to see presented to the new government when it is formed after polling day on 6 May. You didn’t disappoint.

With a keen eye on the development of regulation, the tax system, the profession and the economy, you let us know in droves, sometimes emphatically, what the government should be doing.

There were proposed reforms for National Insurance, the Big Four, registration of accountants, the tax system as a whole, capital allowances, IHT, audit in both the private and public sector, financial literacy, the Finance Act and financial reporting for small businesses. Some proposals were strategic, others delved into the nitty gritty that accountants face every day.

The response gave a real insight into what is troubling accountants both in business and practice. Hopefully this article will offer a taste of the profession’s concerns. It may not be exhaustive, but it is illuminating.

The profession

The single most popular proposal in our manifesto poll was the idea that use of the term “accountant” should be restricted to qualified professionals only and that a register of those individuals should be maintained. This has long been a bugbear of the profession and the one that really grates when accountants look at the privileges accorded to their peers in the legal profession, where a restriction is enforced.

One of our readers wrote: “Only a qualified barrister can call themselves a barrister. Yet anyone can set themselves up as an accountant. This is bad news for the general public who – as the old joke goes – don’t really understand the difference between a chartered accountant and a turf accountant.”

The institutes made an effort in 2007 to move this issue up the agenda, but the current government would not listen.

Also on the agenda was the proposal that accountants, or at least tax advisers, should enjoy legal professional privilege over their working papers in the way lawyers do.

The Prudential case tried to establish this principle in the High Court, but the plea was thrown out.

Audit regulation proved a hot topic for many. Some readers proposed there should be a legal cap on the number of audits a single firm could do in any given public company index, eg. FTSE 100 or 250. One reader said the limit should be set at 15%. Alongside that was the idea that there should be a complete ban for auditors on undertaking any other work for an audit client.

The first proposal is clearly aimed at easing the strangle hold the big firms have on public company audit, an issue that has long been debated. It would be interventionist in nature and so far regulators and government figures have remained well away from such direct action.

Business

One of the more interesting business proposals put forward was a back-to-basics push by government to improve financial literacy in the boardroom.

It’s not clear from the sender whether this is aimed at executives directors or non-execs but it’s obviously a sensitive topic. The main issue was that executives have a better understanding of balance sheets and financial statements and know the difference between income and capital. If there are executives around who don’t know these differences then a return to the classroom really is in order.
But, if there is one sore spot in business, it is credit terms. Despite

all previous legislation intended to persuade debtors to cough up, readers now want to see mandatory obligations. Some put that at 60 days others suggested it went as low as 30. The recession has revealed just how sensitive small business cashflows can be to slow payment and some of our readers clearly want action.

Taxation

Unsurprisingly, taxation prompted most of the proposals for our manifesto. But there was a real diversity of views and ideas.

Some of the most interesting included inviting the general public to submit suggestions for new taxes but also polling the public to find out where spending cuts or tax rises would be least unpopular.

A popular proposal was the raising of the inheritance tax threshold. Some wanted that set at £500,000 with a reduced rate of just 20% and more
rate cuts to follow. Another wanted the threshold set at a dizzying £2m.

The abolition of tax on savings income was called for, as was a “fairer” stamp duty system. One radical wanted to see income over half a million pounds taxed at 85% while others wanted the duty on alcohol and tobacco doubled.

But there were two main areas which triggered broad agreement. The tax system needed to be simplified – fast. There were few specific proposals for this, though in business taxation, readers felt the system of capital allowances was in particular need of attention.

The biggest area of consensus however was over National Insurance contributions and income tax. Readers believe the government should give up the charade of claiming NICs are not a tax and lump the rate in with income tax.

This would have two benefits. It would end the pretence, readers said, plus it would significantly reduce the administration costs for business. This would be a highly charged issue to tackle but, pragmatists as many of them are, our readers see it as a key issue for transparency and efficiency.

Miscellaneous

Some readers wanted to see the end of fair value, or mark-to-market, accounting. Others want the government to hold to its rules on consultation rather than ignoring them. Still more wanted a better finance bill process, including a government imposed limit on the bill’s size. One reader said it should be no longer than 75 pages. For the sake of efficiency one reader wanted a single reference number for VAT, PAYE and NIC returns. The technology-minded wanted free XBRL compliant software to help speed up tax returns and filings to Companies House while there was much support for the separating of investment banking from retail or consumer banking.

Mostly, however, our readers want to see some change in detail on issues that have been pushed to one side for years. Simplification of the tax system, protection for the term accountant, reform of capital allowances. These are not new ideas.

The profession just wants the next government to deal with them at last.

Manifesto porposals so far :

* Free XBRL software to speed up tax returns

* More powers for the National Audit Office

* Root and branch reform of HMRC

* Restricted use of term accountant – a register of accountants like that for lawyers

* Give legal privilege to accountants like lawyers

* Simplify corporation tax regime and system of capital allowances

* Increase in IHT threshold to £500,000, others say £2m

* Bring together income tax and NICs in a single tax

* Bring together VAT, PAYE, NIC and corporation tax into a single payment

* Apply government’s own consultation rules fairly

* Abolish fair value accounting

* Commit to reducing the size of the Finance Act each year and improve the process – remove surprises and improve consultation

* Bring PFI on to the balance sheet of government financial reporting

* Invite general public to vote on new taxes

A manifesto from the profession

Accountancy Age has asked readers to submit their ideas for a manifesto from the profession. From this we will draw up a long list and then ask readers to vote on them to produce a list of ten manfiesto items. Items can be as strategic or specific as you like. Once the list is complete we will present them to the relevant ministers in the new government. Performance against the list will then provide a measure against which the new government can be judged.

Send your ideas to comment@accountanc yage.com