The big five challenges facing accountants in 2022

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f 2021 was about getting clients back on their feet, 2022 will be about helping them plan a route back to normality. And getting to grips with some of the biggest challenges that lay ahead – new legislation, National Insurance changes, hybrid working, and the unpredictability of UK Budgets and Statements – means accountancy businesses and their clients can face the new year with confidence.

While the UK tax and fiscal system used to run on a relatively predictable cycle of Budgets and Statements, recent political activity and pandemic impacts has made things harder to follow.

There was no Budget speech in 2019 for the first time in about 250 years; the 2020 Budget was overshadowed by Covid-related announcements, followed by two separate Budgets in 2021, and UK Chancellor Rishi Sunak recently used his Spring Statement to unveil a “mini budget” amid soaring energy costs.

Assuming this trend continues, we could see less of a focus on a condensed set of tax policy announcements made in one day, and instead more changes spread throughout the year.

Setting up a communications plan can make it easier to inform clients whenever relevant news emerges, including by preparing a template email that can be easily filled in with important details at short notice and setting up segmented mailing lists for different types of clients.

Since April 2019, businesses with an annual turnover above the VAT-registration threshold of £85,000 have had to do their VAT return digitally, and from April 2022 this will include all VAT-registered businesses, regardless of turnover.

The Government estimates this change will affect 1.1 million UK firms, so some accountancy clients may need help adjusting.

The next major step for MTD for income tax self-assessment (ITSA) is due to take effect from April 2024, while MTD for corporation tax is due in 2026 at the earliest.

To reach the right clients with MTD communications and to avoid sending people information they already know, look to segmenting email lists and group together clients who are already operating under MTD for VAT, who are due to be affected in April, and those who will be included in MTD for ITSA.

Possibly the biggest overhaul of employment tax law in decades, medium and large-sized companies are now responsible for making sure that contractors they hire pay the correct income tax and National Insurance contributions if they are found to be “deemed employees”.

The pandemic delayed the changes by a year, and there is still much uncertainty around the legislation.

Accountants don’t want their clients to be caught off guard – a last-minute panic could force them to ditch trusted contractors that they have used for years – and so explaining the changes (or updating clients who had the rules explained to them in the lead-up to IR35’s introduction) and helping clients to assess their existing contractors if necessary will be important.

After spending an extra £167 billion on public services during the pandemic, the Government has been determined to decrease the deficit, partly by raising taxes, and last September it announced the first step, in the form of a 1.25% increase in National Insurance contributions from April 2022.

This could cost UK businesses as much as £3.5 billion. Some accountancy clients will struggle to cover the cost and, by taking a close look at their books, accountants may be able to spot possible savings that they have missed.

Advisory services are becoming increasingly common among accounting firms, and our research has found many businesses already see their accountant as a mentor or adviser – but many accountants are giving advice purely on an ad-hoc basis and can instead formalise this advice as part of a service.

While the UK Government is no longer instructing people to work from home, many have grown used to the flexibility of doing so. Employers can make tax-free contributions to household expenses and equipment costs for homeworkers, these are subject to strict rules, so clients will be looking to their accountants for guidance.

Remote working also opens the possibility of more employees based outside the UK, and the tax implications of this can be extremely complex. Accountants may find themselves being quizzed on not just UK tax law, but international regulations, too.

Remote working has opened many people’s eyes to different methods of communication, and everyone has different preferences. Getting to know which method of communication clients and target clients are most likely to respond to, can be a really effective marketing strategy.