UK accountants are facing a maze of compliance challenges in 2025.
At a glance
- The IFA’s Tim Pinkney identifies five major compliance challenges facing UK accountants in 2025.
- These include the Economic Crime and Corporate Transparency Bill, Making Tax Digital, and raising professional standards for tax agents.
- Further challenges include the transition from the Financial Reporting Council to the Audit, Reporting and Governance Authority (ARGA) and adoption of artificial intelligence.
- Pinkney advises accountants to be early adopters of new systems and engage with professional bodies to help navigate these complex regulatory changes.
“Accountants can’t afford to bury their heads in the sand when it comes to these changes,” says Tim Pinkney, Director of Professional Standards at the Institute of Financial Accountants (IFA).
“Those who stay ahead of these five key compliance areas will be best positioned to thrive.”
1. Economic Crime and Corporate Transparency Bill
The Economic Crime and Corporate Transparency Bill represents one of the most profound changes to UK business regulation in recent years. The legislation, which includes the Register of Overseas Entities and Companies House reforms, is designed to combat economic crime and strengthen transparency in corporate structures.
“The ACSP (Authorised Corporate Service Provider) regime is part of that,” says Pinkney. “Changes to size thresholds of companies will affect financial reporting requirements based on firm size.”
The reforms introduce new verification requirements, more stringent checks on company directors and greater powers for Companies House to query and remove information.
2. Making Tax Digital for income tax Self-assessment
After several delays, the deadline for the roll out of Making Tax Digital for income tax self-assessment (MTD ITSA) is now set for April 2026.
Pinkney advises accountants to begin preparing for MTD. Preparation will help accountants by:
- Ensuring their software is MTD-compatible
- Considering becoming early adopters to test systems
- Educating clients on the upcoming changes.
“Software providers are increasingly confirming compatibility,” Pinkney says. “HMRC welcomes testers and early adopters. Firms might want to consider becoming early adopters so they’re aware and ready for it.”
3. Raising professional standards
HMRC has sharpened its focus on tax agent standards, with several key initiatives in progress.
“HMRC has a real drive to improve the taxation standards of tax agents,” Pinkney says. “(It) consulted last year on requiring all agents who provide tax advice to register with HMRC, which is coming in from April this year.”
HMRC is considering making professional body membership mandatory for all tax agents to ensure all practitioners are covered by professional standards and ethical codes of conduct.
“We said ‘yes’ to this proposal, but we need to find a pathway,” Pinkney says. “We’re creating a transitional period to help practitioners obtain the qualifications needed for full membership.”
The IFA met with HMRC about adopting this measure to ensure all agents adhere to robust professional standards. This initiative aims to tackle what Pinkney describes as a “black market” where unregistered agents provide tax services without any proper oversight. “HMRC is ‘policing the perimeter’ by linking tax agent status with anti-money laundering supervision.”
“Accountants can’t afford to bury their heads in the sand when it comes to these changes. Those who stay ahead of these five key compliance areas will be best positioned to thrive.”
Tim Pinkney, Director of Professional Standards, Institute of Financial Accountants (IFA)
4. Transition to ARGA
The Financial Reporting Council (FRC) is set to transform into the Audit, Reporting and Governance Authority (ARGA), with legislation expected to be introduced in the first half of this year. However, a firm deadline has yet to be determined.
The new regulatory framework aims to enhance audit quality and corporate governance through more rigorous oversight as a means to rebuild public trust in the profession. This follows recommendations from independent reviews that highlighted the need for a stronger regulator with enhanced powers and statutory position.
“The audit bill was included in the King’s Speech, but there’s been some recent information about it being watered down to not hold directors liable,” Pinkney says.
This transition could impact accounting bodies such as the IFA. “We might become part of ARGA, which would be a ‘positive’ thing for us,” he says. “It would add another regulator to oversee us, but we would be recognised alongside the chartered bodies as part of ARGA.”
The FRC’s strategic plan for 2025-2028 outlines the path toward ARGA, but communication on the transformation has been limited. “We’re trying to be at the forefront of this transition, but we’re not hearing anything,” Pinkney says.
Mark Babington, Executive Director of Regulatory Standards at the FRC, previously said much of the groundwork had already been laid, with significant progress has already been made in implementing many of the recommendations.
“A lot of what the FRC has already done has dealt with an enormous number of the recommendations that were made back in 2018 and 2019,” he said. “What is needed now are the final steps to create a statutory vehicle for the regulator to sit in, to put in a statutory funding mechanism.”
5. Artificial intelligence
Amid a flurry of information about artificial intelligence, Pinkney advises practices to be strategic with adoption and target business needs.
“There’s a real danger that smaller practitioners will see AI as a wonderful sticking plaster,” he says.
“They might be driven by what software providers are saying AI can do, and might move their services and work methods to adapt to AI because they think that’s going to be the best model.”
Instead, Pinkney advises a more strategic approach: “Look at where you want to go with your practice and then target software to support your business needs, rather than changing your needs to adopt AI. It should enhance what you’ve already got.”
AI can play an important role in areas such as anti-money laundering compliance. “AI could really help with due diligence in anti-money laundering procedures,” he says.
According to a recent Sage survey, client communication, data analysis and compliance monitoring were the top AI applications for accountants.
Staying ahead of compliance
The IFA is taking proactive steps to help members navigate these complex compliance challenges and raise professional standards.
“If there’s not necessarily a public interest element, such as late CPD returns or issues with professional indemnity insurance, conduct committees can issue fixed penalties that members have 15 days to accept or decline,” Pinkney says. “It’s all part of our drive to improve standards.”
Pinkney cautions a proactive approach will help accountants stay compliant in 2025. “Keep abreast of changes, engage with professional bodies, and be proactive rather than reactive,” he says. “The firms that anticipate these challenges will be the ones to thrive.”
The IFA is holding a webinar on preparing and conducting your firm’s AML annual compliance review on 1 April. More information here.
