NECC is spearheading a proactive, intelligence led response to surges in romance and economic crime from international cyber criminals.
The latest annual reports from the UK’s financial and audit regulators reveal a shifting regulatory landscape and new challenges for accountants to navigate. Key themes from the 2024 annual reports by the Financial Reporting Council (FRC), HMRC and National Economic Crime Centre (NECC) include prevention strategies, data sharing and the continued integration of developing technologies.
Key points
- UK regulators are focusing on prevention and digital innovation.
- Cross-border cooperation is strengthening efforts against global economic crime.
- Accountants need to adapt to new digital tools and evolving compliance standards.
If you’re in the accounting industry, staying informed on these developments is crucial for maintaining compliance and offering strategic guidance to clients.
1. Prevention over penalty
Both HMRC and the NECC appear to be shifting resources towards preventing non-compliance and economic crime by addressing root causes, rather than relying on penalties.
According to the HMRC Annual Report and Accounts 2023 to 2024, the authority collected £41.8 billion of tax revenue over the past year, with 34 per cent attributed to reducing tax errors and fraud before occurrence. Higher levels of non-compliance were seen in R&D schemes and this is one area being closely scrutinised.
To continue closing the tax gap, HMRC will stay focused on:
- Improving policies, services and systems;
- Promoting good compliance through increased education, and;
- If necessary, penalising to correct non-compliance.
Similarly, the NECC Annual Report 2023-2024 is spearheading a proactive, intelligence-led response to an increasingly complex landscape, with surges in romance and investment crime and fraud perpetrated by overseas cyber criminals. Its objectives are to combat criminal networks, develop overseas partnerships and target both the criminals and the online services they use.
Paul Lodder, VP of Accounting Strategy at Dext, commented these focus areas will likely shape the future of compliance.
“Looking ahead, accountants can expect further developments in digital tax compliance systems, with a strong emphasis on preventing non-compliance and supporting customers in getting things right from the outset. The increasing integration of artificial intelligence (AI) and automation into tax management is likely to be a key area of development, and one which we welcome,” he says.
2. Cross-border cooperation
Another key theme of the NECC’s annual report is the “mature and productive” partnerships it has cultivated with global governments, agencies and the private sector.
Through the Online Fraud Charter, the agency engaged with technology sector leaders and worked alongside banks and cryptocurrency specialists to uncover criminal activities. The NECC says these public-private partnerships allow it to design processes and systems that make it harder for criminals to operate.
It also supported Ofcom in developing the Online Safety Act and has established strong operational partnerships with the US, Europe, West Africa and the UAE. Collaboration with 17 international law enforcement partners to dismantle an online victim credential marketplace highlighted this global cooperation.
The FRC Annual Report and Financial Statements 23-24 also examined international engagement, though with a focus on audit qualifications. The UK regulator signed mutual recognition agreements with Australia, New Zealand and Switzerland, allowing freer movement of auditing professionals and fostering global regulatory alignment.
These developments signal a trend towards enhanced international cooperation and consistency in regulations. Compliance expectations and reporting obligations could change as a result, making it crucial for professional advisors to stay informed on international developments.
3. Digital innovation, technological integration
Technology continues to play a critical role in reshaping compliance and service delivery for regulatory bodies.
HMRC’s annual report highlights the successful introduction of digital-first, modernising initiatives like Making Tax Digital (MTD) and an increase of 64 per cent in HMRC app logins for the year.
Mr Lodder says these initiatives solidify a shift towards real-time data collection and record-keeping. “Both are essential for today’s businesses to stay on top of financial obligations – in terms of profitability as much as compliance – while minimising the risk of errors,” he says.
“The benefits of digitalisation, like the mitigation of errors occurring and more up-to-date and complete records, translate into being able to deliver higher value services. As more elements of tax reporting shift online, the role of accountants is evolving into that of tech-enabled advisers, guiding clients through these changes while managing the complexity of digital tax systems.”
Digital innovation was also explored in the FRC’s annual report, particularly around data collection and the launch of its Technology and Digital Hub. One of its key priorities for 2024-25 is to “build capacity to deal with the increased use of data, technology and AI impacting the policy landscape in all regulated areas”.
Accountants can expect the digital shift to continue and will need to be open to using new tools and technologies to stay competitive, compliant and profitable.
What’s next for accountants?
Transformation and proactive compliance are standout themes across these three annual reports. According to Mr. Lodder, continued digitisation could reshape how the accounting industry is perceived.
“Coming out of the filing cabinet and into AI makes accountancy a far more attractive career for emerging talent who have a lot to offer in understanding tech-driven business models of today,” he says.
