As another year draws to a close, our friends at AAT have been casting their minds to what 2019 will bring. Here, CEO Mark Farrar shares his thoughts on Brexit, the new technology which will transform the accounting sector, and the changes which we can expect to see within the apprenticeship scheme.
I remain concerned about the impact that Brexit will have on small businesses that currently trade with the EU, and the additional requirements new customs procedures will place on them after we leave. Small businesses will need to spend time and resources adjusting to the new requirements, which many can ill-afford.
That said, I believe that our government and indeed the wider Parliament will find a way to avoid a ‘no deal’ scenario, and the damage that would do to the UK economy. AAT and our members will have a role in guiding businesses as and when more clarity appears, to help them adapt to the coming new changes.
As well as Brexit, we must remember that underlying changes such as the increasing adoption of technology, including automation and artificial intelligence, will continue to change the wider accounting sector. I believe the pace will quicken in 2019.
I’ll be watching closely to see if 2019 is the year that the apprenticeship levy is embraced by businesses of all sizes, leading to an uplift in the number of starts. Although apprenticeship starts in the accounting sector have performed very well, increasing by 12% in 2017/18 compared to the previous year, other industries have seen a decrease, meaning there is still much work to do to educate smaller companies in particular as to the advantages apprenticeships can bring. In 2015 the government set their target of getting three million apprenticeship starts by 2020, but the target looks certain to be missed. We will see whether the government will announce any adjustments to the target or drop it altogether.
Brian Palmer, Tax Policy Expert at AAT, has a few thoughts on the impact of Brexit, the changes we can expect to see in the tax world, and the issue we still need to iron out on IR35. Here, he shares them:
Hands off our tax system!
Accountants and small businesses, like the rest of the country, start 2019 by playing the waiting game, as the Government attempts to land a Brexit deal. While there’s many conflicting voices as to what exactly that deal should include, I am convinced what we need most importantly is some certainty, so that businesses can start planning for the future.
In the meantime, I hope that the Government suspends unnecessary, non-Brexit related, tax changes which it might be tempted to implement and which are likely have a heavy administrative impact on UK-plc. All at a time when businesses will be struggling to cope with the rigors of whatever Brexit throws at us.
One must recognise, in post-Brexit Britain, Westminster will have to take some hard decisions, some of which are likely to require changes to the tax system. All I hope, if this turns out to be the case, is that the Government will not be tempted to make ‘changes for changes sake’, and that the benefits of any changes deemed necessary are carefully weighed against their potential administrative impact on businesses.
Devolution, tax avoidance, and IR35
In this vein, I hope that the pace of divergence in tax rates between the home nations of the UK under our devolved Parliaments is slowed. I urge each Parliament to adopt a measured approach to taxation, and not bring in policies that lead to further complexity for taxpayers already struggling to cope with the growing divergence in tax rates.
Similarly, while AAT is supportive of the Government’s objective of bearing down on tax avoidance in recent years, there’s now whole rafts of legislation in this area. In my view these now need time to bed in, in order to measure the effect of the changes.
Finally, given the lack of evidence that the off-payroll rules have worked to date within the public sector, it was a welcome part of the Chancellor’s recent Budget statement that the introduction of new rules determining the application of IR35 in the private sector have been delayed to April 2020. A great deal more work needs to be done to define those who should be taxed as employees, and then businesses need ample time to prepare. This is why AAT has always suggested that the earliest implementation date should be 2021.
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