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Accountancy firms rise - but could be reaction to HMRC clampdowns
by Susie Hughes at 12:59 12/02/14 (News on Business)
The number of new accountancy firms opening has increased significantly which could be a sign that businesses are on the up since the recession - or could be a reaction to more firms needing accountancy advice as HM Revenue and Customs run high profile tax avoidance clamp-downs.
Whatever the reason, accountancy firm openings are outstripping closures, with the number of new accountancy firms opening in 2012 showing a nine per cent increase to 4,500, while 3,700 accountancy firms closed in the same year – a net gain of 800 more new firms.

Compared to 2010, the low point for the creation of new accountancy firms, there has been a 30 per cent increase in the number of accountancy firms ‘births’.

Bloomsbury Professional, a tax and accounting information group, says that the accountants are feeling more confident about setting up new accountancy practices, as the economy continues to recover.

Martin Casimir, Managing Director at Bloomsbury Professional, who released the figures said: “Accountancy firms were hit hard during the recession, with the number of businesses closing down reaching all-time highs. The fact that openings are now outpacing closures is an optimistic sign for the future.

“However, even now the number of closures is still quite high, which suggests that profitability is still a big issue in the sector with continued downward pressure on fees and competition between rival firms.

“Despite this, the fact that there are more firms opening than closing could well mean the sector has overcome its worst days, which is a great sign of positive things to come.
“As the economy continues to recover, more and more businesses will be undertaking more ambitious expansion plans involving M&A or corporate finance, and this inevitably will require the services of accountants.”

HMRC campaigns
Bloomsbury Professional says that demand for accountants may be recovering as a result of HMRC’s well-publicised campaigns that it is getting tougher on tax returns and tax evasion.

Martin Casimir said: “We have seen HMRC’s approach to collecting tax returns becoming increasingly stringent in recent years, and this has been a wake-up call to businesses of all sizes.

“Sole practitioners or small businesses who may have once filled out their returns themselves are aware that the penalties for failing to submit forms on time or incorrectly could cost them heavily, and are now choosing to pay for the services of an accountant to avoid being caught out by the Revenue.

“Individuals are responding too, and taxpayers who might have left relatively small income streams or capital gains unreported in the past, are no longer prepared to take any risks.”

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Susie Hughes © Shout99 2014

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