Lucy Franklin became managing director of Accordance VAT earlier this year, at a time when the country faces Brexit uncertainty and the profession is going through rapid change. Here, she shares some of her thoughts with Accountancy Age on how to find opportunities within that transformation.
What are the main challenges the business faces at the moment?
The big one for Accordance, like many other businesses, is being prepared for Brexit. We’re in a situation of not knowing whether or when it will happen, and what form it will have if it does! We specialise in cross-border VAT, so our purpose is to really drive greater harmony and trade for our clients across Europe. So, this is a challenging time. Nearly fifty percent of our clients are based in the UK; the rest are mainly based in the EU and the priority for us is making sure our clients are set up in case of a no deal.
We also have many EU nationals who are valued employees at Accordance, so we also need to be emotionally as well as operationally ready. Beyond that, implementing the right tax technology strategy and making sure the business is fully responsive to forthcoming major EU wide VAT legislative changes is also high on our agenda. Because of Brexit, many people talk as though Europe is a dying entity, already consigned to the past, irrelevant to the future and so on. We absolutely don’t see it that way. Whether the UK is in or out of the EU, Europe is a huge trading area: the opportunities are enormous. We want to ensure that we help our clients get the most from their European journeys because we are proud to be a deeply European company.
“Because of Brexit, many people talk as though Europe is a dying entity”
What has your approach been towards MTD?
We specialise in cross-border VAT, so most of our clients have until October to comply with the new requirements. We’re currently supporting clients with data reviews – the focus is on general VAT compliance and compatibility with our MTD filing solution. In the context of an increasing trend in tax digitisation it’s been a great opportunity to have wider conversations with clients about the importance of clear and consistent data. Tax digitisation requirements are generally pretty rigid; we’re fortunate in that our solution is fairly flexible – we can work with a variety of data types.
How has the MTD journey been going so far?
As with most new tax authority requirements, the biggest burden for clients has been lack of internal resources. Probably unsurprisingly, our UK based clients have been the first to respond but for non-residents the UK market may only be a very small part of their global offering. Our role is to guide them through the new requirements and offer pragmatic solutions.
Will digitisation, and automation in particular, steal accountants’ jobs?
It will change them more than steal them. For our business, we believe that human interaction and expertise will remain at the heart of everything we do – automation and digitisation continues to play a pivotal role in how we evolve, and so it is how one can complement the other that is important – and this is our focus.
How is technology changing the role of the accountant?
Tax professionals still need their analytical skills, but because of technology we are going to see an increase in the need for more data understanding and project management expertise in the field.
Is there still going to be a role for the compliance-focused accountant in 20 years’ time?
Yes, and their expertise will be vital, but they will have to have great tech proficiency. They will also need to have strong interpersonal skills. They will be overseeing and managing automated processes, but also developing business relationships. The client of today needs clarity from all of this complexity so the compliance-focused accountant may need to develop additional skills to meet their needs.
How is Accordance helping clients to prepare for Brexit?
It’s key for us that even in this uncertain and ever-changing panorama, we continue to provide pragmatic and commercially focused advice to clients. Our job is to help facilitate trade, and that means ensuring that Brexit does not become a burden to our clients’ activity across Europe. We want to be open and honest, and pride ourselves on having straight-forward conversations which allow our clients to see a way through complexity. Whilst the outcome of Brexit still is unknown, we recommend planning for the worst-case scenario – a hard Brexit. Our approach is to look at each case individually and carry out an ‘impact review’ – we ascertain the greatest risks but also possible opportunities, as these are likely to differ from business to business. Together we then establish how they can continue to trade and expand confidently across Europe, and what needs to be put in place in order to do so.
For example, when a client decides to use warehousing and/or shifting supply chains to the mainland, we would look at the VAT and cash flow implications and advise accordingly. We have also partnered with warehouse and logistics firms on the continent to make this transition easier. Alternatively, we can look at what the impact may be if our clients’ supply chains remain the same in the event of a hard Brexit, as not every business can be as flexible. Ultimately, this then allows businesses to make fully informed decisions, which is so crucial when future proofing growth.
How much of your business has been focused on these preparations, proportionately?
At times, a whole lot of it – there is so much knowledge here, but we needed to pull it all together! Nevertheless, the trick is to keep the Brexit planning up to speed without compromising business as usual. I think we’re largely happy with how that’s worked out.
Is the industry improving when it comes to diversity?
The industry is more conscious about the need to improve diversity, and that’s a good first step. In fact, it’s hard not to be more conscious – last year research was published which showed that the UK economy would grow to the tune of billions if there were greater progression of people from BAME backgrounds. We also know that people want to work for diverse companies. And we know that diversity is good for business. So really, it’s not that we need more evidence, it’s that we need to take effective measures. There are lots of initiatives underway, like Gender Pay Gap Reporting and the Treasury’s Women in Finance Charter, but they are still quite new and so it remains to be seen how much impact they have. Until we have truly diverse and representative workforces, the job isn’t done.
We’re proud of our gender representation at Accordance, and we buck the finance industry trend in terms of women in senior positions. But we also want to do more. We’re looking at recruitment practices, the publications we advertise in, how we increase ethnic and cultural diversity, and programmes to assist employees with disabilities to come or return to work.
Your vision puts people at its heart. What does that mean in practice?
Simply put: protecting the most important asset this business has, our people. Like all businesses we want to expand and grow – but if we are not all heading in the same direction it is an impossible task. We have grown at an unprecedented rate, so for me, it is about stepping back and taking stock. There is no point in having vision and mission statements, strategies and objectives if your workforce are not engaged and on the journey with you. I think most businesses forget that, but I don’t intend to. So, the starting point is building a new ‘people strategy’, which is already underway.
How do you attract a young workforce to accounting in the face of competition from other industries, including start-ups?
I think this is where we can – and already do – lead the field. Our location works in our favor. We’re based in Brighton, which is a young, thriving University city full of talented young people, and we provide an alternative to the commute to London.
We positively encourage young people through having a growing, vibrant and exciting workplace, and we have recruitment practices to back up our offering. Something that’s key for us is hiring for competencies and abilities, and then training once appointed for knowledge.
Another aspect that we know appeals not just to younger workers but to the whole team is our flexibility. This is a core value for us, and we make sure that working hours suit the differing lifestyles of the team. It sounds obvious – but it wasn’t for a long time – that someone in the 40s with children may want a different working pattern to someone in their 20s. The same goes for benefits – we want to recruit and retain the right people, and that means having benefits that suit different needs.
“European and International VAT is extremely complicated”
HMRC has adopted quite an aggressive approach towards tax collection in recent years. Is this fair, or should they focus on different targets?
There is no doubt that fundamental attitudes to taxation have changed since the credit crunch. The public is just not prepared to tolerate business not contributing its bit. And most businesses want to be good tax citizens; most entrepreneurs and managers completely understand that commerce and society are mutually interdependent. The biggest danger to social democratic capitalism is that corporations try to cut corners. If that happens, if they are seen to be gaming the system, we will end up with foolish and counterproductive economic policies being imposed on us.
Are there any areas of tax which you think should be simplified?
European and International VAT is extremely complicated. Partly that is just a necessary by-product of countries having their rightful tax sovereignty. But the expectation in the VAT world is that technology will usher in some major systemic changes and simplifications in the next decade, probably via the OECD.
What else do you have planned for the next five years?
A huge amount: continued growth and expansion, technology implementation, continued Brexit planning, a re-brand. But fundamentally, I would simply like Accordance to be one of the most progressive finance and professional services companies in Europe – a truly great place to work – a company where individuals really feel valued and where expertise is harnessed at every level of the business. I don’t want this to be a place where people come to just earn money, but rather a place where everyone can grow professionally (should they want to), and where everyone is stimulated by their day to day activities. Of course, this is only possible if people are given the right work-life balance and empowered to do so, this is where a lot of my focus is for this year and next. I would like us to move away from days and hours, and simply concentrate on quality output. We are not quite Virgin and Google, but I would like us to embed the same ethos.