The general election is over and we have a new government which will soon unveil its legislative program followed by a budget in a couple of months that will underline a change of economic direction.
There will be a lot of new announcements, policies and changes that accountants need to be aware of for their clients.
We’ll be across them all in our accountants hub so you won’t miss any of them as and when they are announced.
Our regular collection of the latest interesting insolvency stories and news are there along with new blogs every week.
We’re always keen to hear what you think too so email us at ask@businessrescueexpert.co.uk because we really want to write what you want to read!
New Minister with oversight of HMRC named
Lord Spencer Livermore has been named the new financial secretary to the Treasury with responsibility for HMRC and tax policy.
A former adviser to Gordon Brown, Lord Livermore had served as shadow exchequer secretary to the Treasury for 18 months and has had a peerage since 2015.
He was a member of the House of Lords economic affairs committee for three years until 2018 and was a visiting senior fellow at the London School of Economics.
In his new role he will be responsible for the UK tax system including oversight of HMRC, tax administration policy such as the transition to digital tax reporting and use of helplines, as well as the full gamut of taxes, and global tax talks with OECD and cross-border agreements.
His in-tray will include an urgent review of HMRC’s current resourcing levels and how this will meet the new government’s priority to recover an additional £6 billion from tax avoidance and evasion.
Darren Jones MP has been named as chief secretary to the Treasury, the role he had in the shadow cabinet. He will be responsible for spending reviews and strategic planning, public sector pay and pensions, infrastructure spending and procurement.
Emma Reynolds MP has been appointed parliamentary secretary at the Treasury and Department of Work and Pensions, the first time a joint brief has been created.
Additionally, ICAEW have sent two policy briefings to ministers ahead of the King’s Speech on July 17th.
The first focused on the local audit crisis and the second on corporate governance and audit reform.
ICAEW stressed the risk to local public services if a local audit recovery plan is not legislated for before the Summer.
On corporate governance and audit reform, ICAEW urged the government to legislate proportionately to enhance investor confidence, improve financial reporting and avoid the risk of disorderly corporate collapse.
New business minister wants input and feedback for first hundred days
The new Business and Trade minister Jonathan Reynolds is seeking direct feedback from accountants and their clients on what additional areas the new government should consider incorporating into their business strategy.
He said: “There is no time to waste. In my first few days as Secretary of State, I have spoken with dozens of business owners and entrepreneurs representing companies of all shapes, sizes and sectors.
“The four planks of our business policy are to deliver a new mission-driven industrial strategy, support small businesses, reset trade relations and champion British exports, and make work pay.
“We can’t do this alone. We must work with business every step of the way. It’s why I’m asking some questions of business owners to help shape our approach.
“It doesn’t matter if your business has one or 1,000+ employees. I want you to tell me:
- How we should use our industrial strategy to kickstart Britain’s economy;
- How you have supported your teams while also growing your business so we can take forward the best examples to inform our work;
- What’s stopping you growing if you’re a small business owner; and
- How we should use our trade strategy to drive up exports and sell more British-designed, British-made products and services to markets around the world?”
On small business strategy, Reynolds said the approach was about “hard-wiring the voice of small business into everything we do.”
All comments, ideas and suggestions should be sent to TellJonathan@BusinessandTrade.gov.uk
Growth Guarantee Scheme launched
A new Growth Guarantee Scheme has been announced by the British Business Bank (BBB) that will offer loans of up to £2 million to small businesses with 70% government backed guarantees.
The scheme, which will operate until March 31st 2026, is a successor to the Recovery Loan Scheme which helped smaller firms access finance.
Minimum facility sizes start at £1,000 for asset finance, invoice finance and asset-based lending and at £25,001 for term loans and overdrafts from between three months to three years.
11,000 smaller companies are expected to be supported with the scheme according to the BBB.
So far 41 lenders for the scheme have been accredited with 20 confirming they are already accepting applications. The scheme provides the lender with a 70% government-backed guarantee against the outstanding balance of the facility after it has completed its normal recovery process. The borrower always remains 100% liable for the debt.
Personal guarantees can be taken at the lender’s discretion, in line with normal commercial lending practices although principal private residences cannot be taken as security within the scheme.
Business which took out Coronavirus Business Interruption Loan Scheme (CBILS); Coronavirus Large Business Interruption Loan Scheme (CLBILS); Bounce Back Loan Scheme (BBLS) or a Recovery Loan Scheme facility before June 30th 2024 are not prevented from accessing the new scheme but existing borrowing under these may reduce the maximum amount the borrower is eligible for.
A spokesperson for the British Business Bank says the scheme would address a long-term structural issue of businesses, especially younger ones, being turned down for debt funding.
“There have been schemes along similar lines in place since the 1980s and they provide good value for money in terms of outlay versus the amount of lending they can potentially generate.”
Companies House tightens ID verification for new firms
New rules for future potential business owners are coming into force that will make opening a company through Companies House harder as draft ID verification compliance rules are published.
Stricter requirements to prove identity when setting up a company is being established in order to stem the risk of fraudulent companies being created and rogue directors taking advantage of a lax system.
The details are set out in a draft document as Companies House is waiting for the final enactment of a new statutory instrument, Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024.
A set date for the introduction of the new process hasn’t been confirmed yet but will come into force when the identity verification regime comes into effect. Failure to comply with the new rules will be subject to fines for non-compliance according to the draft legislation but the penalty system has still to be confirmed.
Accountants add expertise, not expense
As the business world changes dramatically around us, how much is the accounting industry itself changing to meet it?
A recent accounting conference, Xerocon, held in London discussed this as a key understanding for the future if accountants are to become more relevant to their clients and prove that they are a trusted and valuable asset rather than an expense.
One good example of this is in client billing itself. For decades the industry has relied on the hourly billing model which values time spent on work rather than the quality of outcomes. With advancements in technology and evolving client needs and expectations, this approach is at risk of being entirely disrupted by AI and automation.
For instance, the process of billing for time itself seems one that could be automated simply and the time dedicated to more productive and rewarding duties and tasks.
So what other areas can accountants begin to evolve their roles and help their clients see around corners?
- Technology
What began with cloud accounting has now encompassed artificial intelligence and put accounting at the forefront of the latest phase of the digital revolution.
So many routine accounting tasks can now be performed more efficiently and accurately by machines and are also quicker at spotting patterns and finding trends and meanings within the numbers. This shift is rapidly reducing the time required for traditional bookkeeping and compliance work, further rendering the hourly billing model obsolete. The value accountants now bring will be in the insights and strategic technical advice they can bring supported by these technologies.
- Managing client expectations
Clients’ needs are continually evolving and they are higher and have more expectations than before. Accountants need to be essential business partners who can bring their insight to the table, not just provide a transactional service.
The fastest growing revenue streams among the biggest accounting firms is consultancy with Deloitte seeing a 19.1% annual growth in this area last year and PwC seeing a 13% rise primarily fueled by clients’ need for digital transformation and changes to their strategic business models.
- Providing a competitive advantage
Accountants that differentiate themselves in a crowded market by articulating their value as forward thinking and client centric. Even just a change as implementing value-based pricing over time-based is a concrete step in this direction.
One in three UK businesses victims of invoice fraud
According to new research nearly a third of businesses have been the target of invoice fraudsters with only 39% of them being able to stop the transactions in time.
The scale of the problem is higher with companies that don’t have digitised invoicing processes. Being able to digitally compare invoices against orders, contacts and payment information will substantially reduce risk.
Additionally, the research found that 49% of business respondents say they were taking longer to pay their suppliers than a year ago with a further half of these delaying payments by over a month or longer.
The average delay was 26 days late which puts increasing pressure on smaller businesses.