UK Accountancy Firms shrink after HMRC Efforts
HM Revenue and Customs’ (HMRC) increasingly tough stance on tax planning is taking its toll on the UK accountancy industry, according to finance provider LDF.
There was a 4 percent drop in the number of accountancy firms registered in the UK in 2013, from 7,239 the previous year to 6,962.
LDF points out that tax planning had been a highly profitable way for firms to add value, by helping clients reduce their tax bills. However, HMRC is increasingly clamping down on the number of tax schemes it allows.
Peter Alderson, Managing Director of LDF, said: “Tax planning is fraught with many more risks for clients and advisers than it was, with many schemes closed down completely and the scope for identifying new ones dramatically reduced. So there are now far fewer opportunities for firms to help their clients in this way.”
Alderson added that the impact of relaxed auditing requirements for businesses is beginning to filter through to the accountancy industry. “Audit is a core revenue stream for many accountancy businesses, so any drop-off in this type of work is going to have a significant impact on profitability,” he explained.
Lastly, funding remains an issue, especially for smaller firms, who struggle to borrow from banks. According to Alderson, this means that companies are “having to look around for alternative forms of finance to help give them the financial cushion they need to manage peaks and troughs in cash flow, pay major tax bills, fund insurance premiums or invest for growth.”
Source: tax-news
