What lies in store for accountancy in 2018?

Accountancy Age recently held a webinar about the year ahead for the accountancy industry, discussing hot topics, key regulations, the impact of financial events, and the challenges and opportunities that accountants imminently face.

Emma Smith, managing editor of Accountancy Age, drew upon the expert knowledge of Tim Davies, head of clients and markets at Mazars.

Listen to the webinar on demand here.

Below we summarise eight significant takeaways from the webinar:

1. Round up of 2017

The accountancy industry overall had a strong year thanks to long-term investment into the profession. Big firms continued to attract young talent into the business, despite young people having many career options.

Last year saw challenges in the form of diversity. Firms are beginning to get a grip on this, but there is still a long way to go.

Davies was particularly interested in the changes surrounding solutions for clients. A lot happened in 2017 globally and politically, and clients are looking for broader solutions rather than being service-line specific. Davies admits this year gave him “nervous optimism as we go into 2018”.

Davies would like to see more certainty in 2018, but recognises the tax world is becoming more complex by the day with regulatory changes and more focus on risk.

2. What are the key regulations for the year ahead?

GDPR is one of the main pieces of regulation to be aware of, with its imminent start in May 2018.

Other new regulations include the upcoming April tax changes, the introduction of Making Tax Digital in 2019, and potentially some fallout following the recent collapse of construction giant, Carillion.

3. GDPR

GDPR is on the very near horizon, coming in in May 2018. The non-compliance fines could be up to 2% of a firm’s global turnover.

There are multiple ways in which GDPR will change the firm-client relationship, with firms needing to consider marketing, IT and systems, HR, legal matters, and internal audit and finance.

Davies confirms that Mazars is ready for GDPR, but highlights that this has involved a significant investment of time. He believes that most companies will be prepared, but it will have come at a cost, taking attention away from other tasks at hand.

4. April tax changes

The dividend allowance will impact small businesses in particular. There are also the changes to mortgage interest on buy-to-lets, and Davies thinks it will become more difficult for buy-to-let landlords in terms of how they run their business.

5. The Spring Statement

We only have one budget this year, and so the question is, will the Spring Statement just be a forecast or are we in for some unexpected announcements?

Davies does not expect there will be many significant tax changes announced in the spring, and that Phillip Hammond will take the opportunity to focus more on the economy.

When asked about another general election, Davies thought it unlikely but said “after all the political events around the world over the last 12 to 18 months, nothing would surprise me anymore”.

6. Should accountants have Blockchain and the rise of cryptocurrencies on their radar?

Davies suggested that Blockchain, at the very least, demonstrates the extent of change in the world we live in. We are seeing these types of disruptors play a growing role in the business world accountants advise in.

“Blockchain and fintechs are starting to become more of the norm rather than the challenges.”

As a result, professional services firms need to take a view on where they will invest their resources and skill base to be able to assist clients, and to accept that these disruptors are growing.

Overall, Blockchain is “still very much on the horizon” for Davies.

7. What impact will Brexit have on the industry?

In preparation for Brexit, accountants need to realise that communication is important. The uncertainty around Brexit cannot be changed, but being in constant conversation with clients about personal worries will help them feel secure.

Davies found the biggest challenge voiced at Mazars was around the people, and the uncertainty they felt when the referendum results came in. It was the emotional side which came through most rather than the financial elements.

Businesses can find opportunity in Brexit too, such as in-bound investment into the UK. The greatest opportunity for accountants will likely be around M&A activity and taking advantage of greater trade deals outside of the EU.

8. Technology and cyber-security

Technology impacts the role of the accountant in two clear ways; accountants not only need technical skills, but also soft and interpersonal skills to continue providing valuable interaction with clients.

The routes to market are also changing. Market buying style is different; there are more requests for services through website applications, through RFPs digitally, and through social media.

Accountants must keep disruptors on their mind all the time, particularly Artificial Intelligence.

Everyone should continue being very concerned about cyber-security. Davies said that “anyone who doesn’t take it seriously is mistaken”.

9. What are the key opportunities for accountants this year?

Davies pointed out that the accountancy profession “can be accused of being very traditional”. To continue attracting high quality talent into the profession accountants must embrace change.

This year, change comes in the form of GDPR and Brexit. Companies will also be preparing for Making Tax Digital, with the first regulation being introduced in April 2019. Artificial Intelligence will impact the industry this year, and in years to come.