• Adapting to the cloud: New brands
    Adapting to the cloud: New brands
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    One of the more interesting approaches that we have seen in the last two years is existing firms creating entirely new brands focussed on providing cloud first, fixed fee, general accounting services, says Richard Sergeant.

    Although relatively small in number, this intriguing area is seen as having great potential for established firms to adapt quickly to the opportunities of cloud without major disruption to the existing practice.

    Continued…

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  • Charities: Overcoming barriers to the cloud
    Charities: Overcoming barriers to the cloud
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    In an age of decreasing donations and increasing scrutiny, charities are having to find ever more creative ways to reduce expenditure and streamline processes. Cloud accounting software has often been touted as a solution to some of these issues, but as previously reported on AccountingWEB many smaller charities remain reluctant to migrate for a range of different reasons.

    To find out about the potential barriers, benefits and pitfalls charities face when moving to the cloud, AccountingWEB spoke with Jen Gerrard, whose firm Gerrard Financial Consulting specialises in charity accounting services, and Sonia Hutchison, chief executive of Bath and North East Somerset Carers’ Centre, a local charity supporting people who care for family and friends that has recently moved its systems to the cloud.

    Time and money

    Time and cost are among the main fear factors for charities when it comes to cloud adoption. However, Gerrard argued that there is a lack of knowledge about how expensive such packages will be.

    “The perception is that it will take time and money – a major pain point for the majority of charities”, said Gerrard.

    “However, if a charity is using an on-premise accounting and payroll solution costing £2,500 a year, with something like QuickBooks and Receipt Bank (for a smaller charity) you can get that down to £50 a month – £600 a year. And with the automation aspect of things like data input you are also saving labour costs.”

    While those with access to a reliable internet connection may be able to access these savings, Gerrard admitted that cloud doesn’t work for everyone. “Yes, you do need the hardware to go with it. I was chatting to a charity with offices in Kenya where the broadband speed isn’t great, so cloud wouldn’t be the right solution for them – for now.”

    Streamlining processes

    One of the big drivers for Hutchison in moving the charity to the cloud was the amount of time taken up by processing. “Our systems seemed to have duplication in them so we wanted to look for something more streamlined, but still have all the evidence that we needed for our audits.

    “We felt that we were storing it here, looking at it and putting it through a number of systems rather than being able to look at it once and agreeing on it.

    “That [system] was costing us money”, continued Hutchison, “because our staff were taking more time and we couldn’t afford to employ someone else, so we needed to find a better way of doing it.”

    Data protection

    According to Gerrard, one of the key barriers she encounters when advising charities about cloud accounting software was concerns around data protection. With budgets already stretched and without in-house IT staff to react to breaches, many charities fear that cloud could leave them vulnerable.

    “A common theme I come across is ‘people can get at our data’”, said Gerrard, “to which I answer ‘do you work at home on a laptop via an internet connection? Because if you do, people can still get at your data’. You can be hacked. This really surprises people. Software like Xero or QuickBooks has military-grade security, so it’s actually harder to hack.”

    Access and transparency

    Part of Hutchison’s reasoning behind the move to cloud was that the charity is now spread over two sites. “Trying to make our accounting work across two sites was more difficult and we have a lot of people who work remotely”, she said. “Being able to access the software from wherever we wanted was quite a big driver.”

    According to Gerrard, a major benefit cloud offers charities in this era of increased scrutiny is visibility.

    “Cloud really provides enhanced visibility for potential investors and funders”, she said, “for example if a charity works with a cloud accounting software add-on, such as Crunchboards, anyone given access by the charity can log in and see what’s happening with their key performance indicators (KPIs) in real time. That means investors or investment management firms don’t have to wait for management reports.”

    Quicker and more efficient – with a few reservations

    In terms of outcomes Hutchison, whose charity started the cloud adoption process at the end of 2015, was broadly positive. “Everyone seems a lot happier”, she said. “It’s improved what we’re doing, particularly on the processing end – it’s much quicker and much more efficient.

    “QuickBooks online has some features that are different and that can be frustrating if you are used to functionalities on the desktop version which aren’t all on the online version. But the benefits of everybody being able to see everything and being able to input from wherever they are outweighs some of those things and hopefully QuickBooks which catch their online version up as time goes on.”

    “To properly embed it, it’s probably taken about six months. This will be the first set of accounts we’ve done with this system so I’ll hold reservations before we say that we’ve definitely bedded down!”

    Top tips

    Asked for any tips on successfully transitioning to the cloud, Hutchison added: “We realised we needed to invest time in making sure all the staff using the software had training and that we needed to revisit and make sure people were using it in the right way.

    “It’s simple things; because we are using Receipt Bank, the barriers are things like helping people install the app onto their phones rather than just saying ‘can you all put the app on your phone’.

    “You need to take staff with you so they don’t think you are imposing it, but you are helping them see how it will help them.”

     

    Has your charity moved, or is thinking about moving, to the cloud? How did you find the transition? If you haven’t moved, what’s holding you back?

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  • Good news for CIS repayments
    Good news for CIS repayments
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    Howard Royse has spotted an outbreak of common sense at HMRC over evidence of CIS deductions.

    It’s now time to start submitting claims from limited company sub-contractors, to recoup or offset CIS deductions not already offset against other deductions due (PAYE, NI, CIS) for 2015/16. Those excess CIS deductions can be offset against any other tax liability of the company, including VAT.

    If there are no liabilities, then an on-account payment can (and should) be made by HMRC on the agreed element of excess deduction.

    Bad old days

    For earlier years, any significant difference (of a few hundred pounds) between deductions stated as suffered by a sub-contractor, and those shown on HMRC’s records as relating to that business, would result in HMRC asking for large quantities of back-up evidence.

    This would delay the repayment process as the company had to spend ages compiling and copying; deduction certificates, bank statements, paying-in slips, original invoices or applications for payment, all to quantify the difference which HMRC had found.  

    But HMRC wouldn’t issue the full list they held of all the CIS deductions , citing legal restrictions. So the company or tax agent, had to supply evidence of all CIS deductions suffered in the year, to identify just one missing payment.  

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  • Facilitating evasion offence brought forward
    Facilitating evasion offence brought forward
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    The government will pass new legislation this year under which companies and partnerships will commit a criminal offence if their employees or associates ‘facilitate’ tax evasion.

    The open consultation, called ‘Tackling tax evasion: a new corporate offence of failure to prevent the criminal facilitation of tax evasion’, has been brought forward following the Panama Papers leak earlier this month.

    The new offence will apply to businesses based outside of the UK as well as those in the UK if UK tax is evaded.

    Businesses would also commit an offence in respect of the facilitation of non-UK tax evasion if it involves a UK entity or branch or if any part of the facilitation takes place in the UK.

    According to the consultation it will be a defence in all cases to show that ‘reasonable procedures’ were in place to try to prevent facilitation.

    Pinsent Masons said in an update that although the obvious targets are banks, fiduciaries and professional services firms, the new legislation is likely to increase compliance requirements and costs across all business sectors.

    Jason Collins, partner and head of tax at the law firm, said “…all companies and partnerships will need to put training, policies and procedures in place in order to avoid liability.”

    The draft guidance sets out six principles which businesses should take into account in formulating procedures to prevent themselves from falling foul of the new offence, including:

    • Proportionality of reasonable procedures
    • Top level commitment
    • Risk assessment
    • Due diligence
    • Communication (including training)
    • Monitoring and review

    The government is keen to get feedback from businesses and trade bodies, and is consulting on the draft legislation and guidance until 10 July.

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  • Resignation or removal of directors: Get the details right
    Resignation or removal of directors: Get the details right
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    Jennifer Adams looks at the procedure by which a director leaves a company – whether that director goes on his own accord for his own reasons, is asked to leave or is forced to leave through disqualification.

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  • 9am Lowdown: Former PwC employees face LuxLeaks trial
    9am Lowdown: Former PwC employees face LuxLeaks trial
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    Good morning. Here is Tuesday’s 9am Lowdown.

    * * *

    Former PwC employees face LuxLeaks trial 

    Two former PwC employees face trial in Luxembourg today accused of carrying out the LuxLeaks theft, according to the Guardian.

    Antoine Deltour, Raphael Halet and a journalist are charged with leaking confidential documents revealing corporate tax deals. Last month Deltour rallied supporters, saying they were helping “the fight against unfair tax practices”. Over 188,000 people have responded to Deltour’s trial by signing a petition in support.

    In defence of Deltour, Transparency International’s managing director Cobus de Swardt said: “Deltour should be protected and commended, not prosecuted. The information he disclosed was in the public interest.”

    * * *

    Notts County set for HMRC debt replay

    Notts County FC expected their HMRC court order to be dismissed in the High Court yesterday after insisting they paid off their debt. But the football club was surprised to learn the winding-up petition was adjourned for a further two weeks,the Nottingham Post reports.

    As reported in yesterday’s 9am Lowdown, Notts County’s owner Ray Trew claims he paid off the £84,500 debt since the sale of the club has not gone through. To add to the club’s confusion, according to the Nottingham Post, HMRC assured them on Friday that the case would be dismissed after making three fast payments and furnishing them with bank receipts.

    * * *

    Barriers to cloud software revealed

    Although the majority of accountants (74%) surveyed in the recent Thomson Reuters Digita survey recognised the importance of technology to their growth plans, only 63% admitted to not changing their software in the last five years.

    The surveyed accountants blamed a variety of reasons for refusing to update their software. The biggest barrier to change (50%) was their employee’s familiarity with their exisiting solution. However, the research reveals 54% of accountants are looking to introduce cloud software to their practice over the next 12 months. 

    Commenting on the survey results, Digita’s product manager Ian Cooper said: “We discovered accountants may be paying a high price for failing to switch to improved technology solutions which can help them grow their practice.”

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  • Fix your practice’s profit leak
    Fix your practice’s profit leak
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    Whether it’s reluctance to charge for work outside of scope, failing to delegate, or not creating a business plan, some practices stumble when trying to grow profitably.

    For practices trying to fix profit leaks, Heather Townsend and Jon Baker, the co-authors of The Go-to Expert, joined PracticeWEB in a webinar exploring how practices can reach their profit ambitions.

    However, the need for practices to tighten any potential leaks was exposed early on in the webinar, as 55% of attendees admitted marketing plans lurked in their head, rather than written down or actively pursued. This statistic corresponds with Baker’s explanation that profit leak often comes from leadership issues or a lack of strategy.

    Despite best intentions, founders often fall into bad habits. Outlining a case study, Townsend recounted how the owner of a practice she assisted didn’t manage their team well enough, and responded to rapid growth by making decisions in a rush. The practice’s profit leak trickled down into other areas, such as their haphazard marketing model and basing pricing on undercutting rivals.

    But simple tweaking of the practice’s pricing increased revenues by £40,000.

    Fixing profit leak

    Townsend and Baker highlighted the following techniques practice owners can enlist rather than firefighting or getting caught in the feast or famine cycle:

    • Give yourself permission to take regular time out to reflect on business performance. Is what you have now fit for purpose and being adhered to?
    • Seize the moment: Try to give a rough quote in a new business meeting, and get back quickly with a firm offer. “You will be amazed how much time you waste by those clients who say they’ll sign up and never do,” said Townsend
    • Have a tight definition of the right type of client for your practice and focus your marketing at them. It’s far more profitable to go after a small section of the market place
    • Price correctly based on your business model rather than anyone else’s. Some accountants look at their nearest competitors and base price on that price point. To improve cash flow, Baker recommended implementing a direct debit system. He recalled a a practice which struggled to sign clients to this payment method. However, when they were given the choice of raised fees or retain the same fee through direct debit, unsurprisingly, the practice increased direct debit clients
    • Engage your team: “Performance management is not something you do when you have bad staff. It’s something you do across the year,” said Townsend. To ensure your team performs better all the time, focus on the “not quite bad enough” staff who usually slip through criticism. Have regular conversations with staff to ensure they know what you expect and make sure everyone in the business is working to the same standard

    Marketing plan

    As for those 55% without a marketing strategy, PracticeWEB’s Alex Tucker presented a seven point marketing plan. Implementing a plan is important as it removes spontaneous decisions which ultimately leads to marketing not working:

    1. SWOT (strengths, weaknesses, opportunities, threats): What do you do really well?
    2. Goal setting: Set the direction of your practice
    3. Match goals to strength and opportunities: Assess your current capability to prevent over trading
    4. Create buyer persona(s): Who are your ideal clients?
    5. Write a two/three sentence practice message: What’s your elevator pitch? What differentiates your practice?
    6. Schedule of activity: Where is your practice going and when?
    7. Measurement and review: Come back to this regularly, at least once a month

    What techniques or strategies have you brought in to fix your profit leak? Have Townsend and Baker suggested any techniques which you plan on implementing? 

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  • New UK GAAP: Revalued assets
    New UK GAAP: Revalued assets
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    The introduction of FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ has resulted in some questions being asked by accountants concerning some of the accounting treatments within the new regime.

    One of the most frequently asked questions relates to items of fixed assets that were previously carried under the revaluation model or at open market value (i.e. investment property) and the impact that new UK GAAP has on the accounting for such assets.

    At the outset it is worth pointing out that FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime does not allow any assets to be carried at revaluation or at fair value.

    This is not something the Financial Reporting Council have brought in. It is because the EU Accounting Directive does not recognise any of the fair value accounting rules or the alternative accounting rules – hence on transition to FRS 105 such micro-entities will have to remove any revaluation amounts or fair values (in paragraph 28.10(c) FRS 105 provides guidance on how to deal with this issue when a micro-entity has an investment property on its balance sheet and is reporting under FRS 105).

    Section 17 Property, Plant and Equipment in FRS 102 allows a reporting entity to carry property, plant and equipment (PPE) at cost or at revaluation. Unlike FRS 15 Tangible fixed assets, FRS 102 does not specifically require revaluations to be carried out every five years, with valuations in the intervening years where there has been a material change in valuation.

    Instead, the standard requires revaluations to be carried out with ‘sufficient regularity’, noting that the carrying amount of the asset(s) should not differ materially from its fair value at the reporting date when the revaluation model is used….

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  • Are you a specialist or a generalist?
    Are you a specialist or a generalist?
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    Mark Lee considers the pros and cons of accountants specialising rather than being a traditional general practitioner.

    Four years ago I posed the question: Are you a bog-standard accountant? More recently I was asked whether accountants are more likely to build successful practices if they are generalists or specialists.

    General practice

    Most accountants start out as general practitioners and tend to stay that way as their client base has always been quite disparate. Many of those who specialise do so only because they originally trained in firms that had a specialism.

    It is especially difficult for multi-partner firms to focus on a single specialism. What tends to happen is that different partners focus on different niches. Indeed this is another reason for there being so many general practices. Even if individual partners focus on a specific niche, the firm itself cannot claim to specialise.

    Why focus?

    There are several reasons why focusing on a niche makes it easier to make more profits.

    The starting point is that it becomes easier to attract more clients. This is because it is easier for people to recognise when to recommend you. Having a clear focus also makes it easier to attract PR. In simple terms an accountant who has a clear and distinct niche will STAND OUT from the other accountants they and others might previously have seen as their competition.

    When you try to be all things to all people you end up being the same as everyone else. Why should anyone recommend or refer clients to you as distinct from the accountant down the street? Why should anyone who meets you remember you as distinct from the other accountants they have met or might meet in the future?

    Having a clear focus or niche also helps your ranking on search engines. The key point here is to rank highly for what prospective clients are searching for. Being number one for ‘Accountants in London’ is a tough ask. Being number one for ‘accountant for taxi drivers in London’ is easier. And easier still when referencing more specific areas than ‘London’.

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  • Practice Excellence: Go big, but stay focused
    Practice Excellence: Go big, but stay focused
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    Throughout its rapid ascent, BKL’s key to success has been retaining the granular focus of a smaller practice, explained Myfanwy Beynon, head of property and real estate at BKL.

    For a large practice, BKL retains a familiar cast of characters. Beynon has been at the firm for 16 years, and almost half of BKL’s clientele have been with them for a decade. This consistency was one of the deciding factors that clinched BKL’s victory in the ‘Large practice of the year’ at last year’s Practice Excellence Awards.

    BKL has seemingly retained the spirit of a small practice, especially when it comes to client service. One of their novel features is a dedicated team of tax experts. These individuals do nothing but tax consultancy.

    The team is populated by experts in all kinds of facets of taxation. From the abstruse to the mainstream, BKL’s clients have direct access to a glossary of expertise. Compliance is streamlined, done accurately and efficiently, but BKL finds its niche in this specialised network of tax consultants, explains Beynon.

    The consultancy team enables BKL to effectively serve high net worth clients that frequently have complex affairs. These tax consultants also help other accountants who may be unsure of how to deal with a difficult tax query.

    “Many firms dabble in certain fields, but never establish the base of expertise necessary to really service specialised clients,” said Beynon. “For example, we brought in a tax expert from BDO, Andrew Levene, last year, and all he does, all day, is property tax.”

    The rebrand

    BKL began its life as Berg, Kaplan and Lewis. In everyday parlance though, the firm was designated as BKL by clients. The practice officially rebranded and accepted its informal moniker.

    “It was a simplification more than anything else,” said Beynon. “Our vision for growing the practice was to double in size in five years, something we’re on track to achieve by next year.

    “To achieve that growth, though, we realised that we needed a brand we could sit under comfortably. Instead of just the name of people – and none of those partners are here anymore – we wanted an identity that encompassed the whole practice.

    “When you become a large practice, it’s not just about individuals anymore.”

    Challenge yourself

    BKL’s impressive growth has also brought its share of challenges, Beynon explained. “We’ve brought in lots of new people with lots of new ideas. The practice had to learn to work together with other people.”

    These growing pains were important for BKL, however. According to Beynon, it forced the practice out of its comfortable orbit. “Just because something is comfortable, doesn’t mean it’s right,” said Beynon, referring to the need for a practice to constantly challenge itself.

    With the end of their five year growth plan in sight, BKL is now putting on the brakes slightly. “It can be very tempting when you’re moving fast to keep going,” said Beynon.

    “We’ve grown very fast – and we’ve got to a point where we recognise its time to consolidate. To make sure that we grow in a sensible way, so we can keep looking after our clients effectively.”

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