2018: what's in store for accountants in the year ahead?

From endless speculation about the effect of Brexit on business and jobs to the tax implications of the gig economy, the arrival of three major IFRS standards on revenue recognition, financial instruments and leases, not to mention the challenges of recruiting and retaining great staff, Rachel Willcox talks to leading tax and accounting experts about their concerns and hopes for 2018


John Preston, president, Chartered Institute of Taxation 

2018 has the potential to be an exciting year for both agents and taxpayers.

Despite the changes to the Making Tax Digital timetable announced by the government in July 2017, the future is definitely still digital.

We are likely to see a lot more progress on key aspects of HMRC’s digitalisation programme during the coming year including more ‘pre-population’ of personal tax accounts with data that HMRC already has, such as bank interest and the rollout of the agent services account, the new gateway into HMRC’s digital services that promises to radically improve the way agents interact with HMRC.

There will be the start of pilots ready for Making Tax Digital for VAT in April 2019, the expansion of pilots for businesses that want to enter Making Tax Digital for income tax voluntarily before mandation starts, and new developments and products on the Making Tax Digital software front for both taxpayers and agents.

Looking further ahead to the next decade, digitalisation has the ability to completely transform the tax system, turning the annual tax return process into a much more streamlined and efficient experience for taxpayers. Likewise, data analytics will be increasingly used by HMRC to identify and address risks of fraud and evasion, and to prompt corrective behaviour.

I hope and believe that 2018 can be a year in which HMRC moves forward on the basis of the changes announced by ministers in 2017.

The approach may be less ambitious as regards how much compulsion is to be deployed how quickly upon different groups, but it creates an opportunity to be more ambitious in focusing not just on reducing errors by broadly compliant SMEs but also on the many wider possibilities that technology can open up.

Francesca Lagerberg, global leader for tax services, Grant Thornton

Do you remember the time when we would argue over the regular misuse of the term tax evasion when people really meant avoidance? The niceties of the law versus perception have moved into a new world where ‘tax avoidance’ has become a term of abuse and the media has long moved on from trying to explain the difference.

The reality of life is that any business and any individual needs to be comfortable about their tax position and the choices they make, and a good rule of thumb is what would you feel if the harsh light of media attention was focused upon it?

The reporting on the Paradise Papers has once again shown that the mainstream press will find no difference between those who have entered in to legal tax planning and those who have not. Equally those who walk a fine line on tax issues but argue they did not really understand what they were signing up for, will receive no sympathy. Those who enter in to highly aggressive tax arrangements are likely to find that in due course this will come under close scrutiny.

Expect in 2018 to have more exposes arising from disgruntled employees sharing data on tax arrangements and a continuing pressure from revenue authorities around the world, and public opinion, to close down perceived loopholes.

But also look out for the fight back from multinationals who believe they have been unfairly caught up in aspects of this new world. For example, in November, Apple put out a strong statement on its own tax position and others will follow.

George Bull, senior tax partner, RSM


In 2017 it was difficult to avoid news about the 21st century workplace, it was in the the news every day. In July, the Taylor report kicked things off with a review of modern working practices, in November, the government released a draft framework for modern employment followed by the UK's Industrial Strategy report.

With so much activity, it would be reasonable to expect that massive progress is being made in the drive to create workplace practices which are good for employees, good for employers, good for the economy and fair in their tax results. Unfortunately, everything still feels rather provisional.

On the tax front, many changes have been suggested. They include a consultation on non-compliance with the intermediaries legislation in the private sector, and welcome improvements to the taxation and administration of employee business expenses.

There is the intention to enact further 'disguised remuneration' rules that catch arrangements involving the provision of employment income by third parties and a relaxation of the Save As You Earn rules to help employees on parental leave. However, most of these are no more than proposals which will be progressed through consultations.

While the Industrial Strategy seems to talk in generalities it will, if strongly developed, push forward overall rights and people issues while having little connection with taxation. The worry remains that tax issues affecting the workplace might be allowed to develop without reference to the ‘good work’ approach adopted in the Taylor Review.

We hope that in 2018 clear, workable and definite measures will be brought forward to ensure that the 21st century workplace is fit for purpose and that tax developments harmonise with these rather than cutting across them.


Danielle Stewart, head of financial reporting, RSM

The two main subjects on every IFRS reporter’s mind just now are IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases. 2018 is the first year that UK plc’s revenue figures will be reported under the new IFRS 15 revenue recognition standard.

Its impact will depend on the industry. Businesses most affected will be telecoms, tech (software and internet businesses in particular), any business that issues licenses to use its products such as film/TV, and businesses with a design and install model, such as kitchen manufacturers.

Straightforward service providers who perform a single task in a short timescale then bill for it have nothing to fear, and even large widget manufacturers and retailers will hardly notice IFRS 15, until they have to make much more extensive disclosures at the year end.

We still have a year to go before IFRS 16 is compulsory and I think very few companies will adopt it early. Finance teams have been late to get to grips with this standard and are only now beginning to panic about its implications. Unlike IFRS 15, this standard will affect almost every IFRS reporter.

The impact will be higher EBITDAs (Earnings before interest, taxes, depreciation and amortisation), but also higher interest and amortisation figures. Balance sheets will be puffed up on both sides, with higher property, plant and equipment (PPE) figures but also higher debt.

Although every company has some operating leases, the businesses that will be most impacted are retailers, building societies and banks (anyone with a big high street presence).

It should be a bonanza for software manufacturers, since calculating the figures if you have a large portfolio of leases is time consuming, detailed and meticulous work, best suited to automation. Of course, the real impact of IFRS 16 will be next year, when it starts to change the face of financial statements for UK plc.

Scott Knight, head of audit & assurance, BDO

This will be the year that the so-called ‘Big Three’ new accounting standards really have an impact. The combination of IFRS 15 on revenue with IFRS 9 Financial Instruments and IFRS 16 Leases following shortly behind creates potentially more transformational impact than the conversion from UK GAAP to International Financial Reporting Standards (IFRS) a generation ago.

Different industries will be affected to varying degrees and we are only beginning to see individual companies showing their hand. Cross-industry comparisons will be fascinating but not necessarily illuminating for analysts and readers.

Such a massive change in standards sometimes muddies the waters and allows companies to clean up other financial statement areas that have come under pressure while readers are getting to grips with the standards-driven changes.

The forthcoming year will also see big changes in corporate governance with the fundamental review of the Corporate Governance Code as it celebrates its 25th anniversary.

The political environment is very different from the backdrop in 1992 when the Cadbury Report was published and there is much less trust in business today. However the concept of comply or explain has served us very well and I really hope it remains central to forthcoming proposals. What we certainly do not need more of is boilerplate!

Finally, the Financial Reporting Council (FRC) will publish its findings in relation to the thematic review into the culture in accounting firms. It is a big topic and a real challenge to condense but I really hope the FRC will produce something thought-provoking that helps put the profession on the right side of the debate about the need for further regulation.


Hywel Ball, UK head of assurance, EY

New technology is already having a big impact on the audit profession and the pace of change will only continue to accelerate in 2018.

Data analytics, artificial intelligence and robotic process automation are changing both what and how we audit. It enables us to search, sift and sort through large quantities of data, from company reports to social media, these tools are helping auditors to identify potential areas of risk and to understand a company’s performance at a more granular level. They are also providing insights into areas that were once thought to be impossible to measure, such as culture.

The availability of new technology and explosion of big data are also raising important questions around how audit delivers value in the knowledge economy.

We have never before had so much information available about organisations’ performance, and yet many companies are struggling to tell a clear story to their investors and other stakeholders about the long-term value they are creating.

Added to a general declining trust in business, it is clear that the audit profession has some big challenges if it is to reflect the changing demands of society.

One of my big focus areas for 2018 will be EY’s involvement in the Coalition for Inclusive Capitalism’s Embankment project for inclusive capitalism. The project is a proof of concept on EY’s long-term value framework which aims to better reflect the full value companies create through human, physical, financial and intellectual capital deployment.

It is an exciting time to be an auditor and I am looking forward to seeing how this project and the framework develops over the next 12 months.


Andrew Gray, global financial services Brexit leader, PwC

Brexit will remain uncharted waters for the foreseeable future. While the UK government has made major commitments on the financial settlement, key issues remain on the Irish land border. Further complexity has been added by the challenges to form a coalition government in Germany and the position of the Irish government regarding the border.  

While all of these issues may be resolved, and productive trade talks may well kick off in the near term, significant uncertainties will remain. This is the biggest and most complex political process in recent times. Deals are rarely cemented early to allow businesses to plan and adapt (with or without transitional agreements). We do not expect certainty on the future trade agreements for many months. 

Membership of the Customs Union is outside the UK government's red line, other models such as the Comprehensive Economic and Trade Agreement are narrow in scope compared to the economic relationship the UK has with the EU.

Specifically for financial services, regulators including the European Central Bank and the UK Prudential Regulation Authority are increasing their dialogue with each other and the industry. They are aiming to providing greater clarity on their expectations for firms to plan for a hard Brexit, but not able to second guess the outcome of trade talks. 

The UK regulators expect to authorise over 140 EU firms who have branches in the UK. Such approval is critical if those firms wish to maintain their access to UK markets. Firms should already have engaged in dialogue with the regulators as the process will take a minimum of six months once the required paper work has been submitted.

Our experience shows that without a trade deal, organisations will face considerable complexities in executing their Brexit strategies which take time to implement, but they need to start now, waiting is no longer an option.


Martin Blackburn, UK people director, KPMG UK

While attracting and retaining a diverse, talented employee base will no doubt continue as a key theme for the year ahead, there are broader aspects that will also impact the profession from a people perspective. Brexit and its likely influence on not just EU nationals but other non-UK nationals will be a major theme, particularly when we consider the skills gaps that exist in the UK and the very high employment rate.  

The profession's need to attract the most diverse range of talent will come under renewed focus.

Companies will be working through what their gender pay gaps mean for them; in reality this will mean looking at ensuring greater gender diversity within senior roles. In addition, the apprenticeship levy is encouraging organisations to consider entry routes into employment and as part of this, whether those routes are appealing to the broadest socio-economic demographic. 

We are at an exciting time. We have five generations within our workforce from the millennials and post-millennials through to baby boomers, all with a different outlook on their careers and what they are seeking from the profession. Firms will be thinking through what this means in terms of engagement and how everyone can fulfil their potential.



Caron Bradshaw, chief executive, Charity Finance Group

2018 is undoubtedly going to be a challenging year for the charity sector. Brexit will loom large; not just in direct loss of EU funding but also in terms of the challenges regarding skills (the sector employs 1000s of EU citizens in skilled roles), particularly in education, research and social care. However,it also may conversely offer opportunities to positively change procurement, state aid and irrecoverable VAT for the sector. 

Alongside increasing demand the sector is facing increases in core costs; the apprenticeship levy, national living wage, insurance premium tax, the Fundraising Regulator and a possible Charity Commission consultation on charging the sector will all have an impact.

Charities need to be flexible and creative in seeking out new ways of funding if they are to keep pace with the changes and ensure they can continue to support beneficiaries on an ongoing basis.

The good news from the rising interest rates and weak pound may be a positive impact on the legacy defined benefit pension deficits. Funds with heavy dollar dividend investments particularly may see their deficits reduced significantly.

The outcome of the Charity Commission’s current consultation on what information goes into the annual return will be processed and brought on stream in 2018 and charities in England and Wales will need to look out for changes in the data required by their regulator. 

Finally there is an increasing awareness of and appetite to counter the significant financial and reputational risks that flow from fraud against the sector. While some will be concerned that the heightened focus on combatting fraud will burden the sector, it is important to recognise that successfully frustrating criminal activity has the potential to release back into the sector over £1bn.

About the author

Rachel Willcox is a regular contributor to Accountancy and is a specialist business and finance writer


Rachel Willcox |Specialist writer and contributor

Rachel Willcox is a specialist business writer and regular contributor to Accountancy...

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