Key points
- With the Budget approaching, accounting professionals are scrutinising their developments and future plans.
- HMRC modernisation efforts are coming to the fore, with digitalisation and e-invoicing a particular focus.
- Regulation is also set for an overhaul, with ARGA rollout going ahead.
The Labour Government’s first Autumn Budget is scheduled for 30 October, drawing close scrutiny from the accountancy sector regarding their actions so far and their future plans.
Kelly Oakley, Associate Director at ForrestBrown, says that many taxes are increasingly in the spotlight, as “the narrative ahead of Rachel Reeves’ first Budget is heavily focused on how the ‘£22 billion black hole’ in the nation’s finances can be filled.”
Meanwhile Paul Lodder, VP of Accounting Strategy at Dext, expects the Budget to provide greater clarity and further changes that open new avenues to support businesses and their advisors.
Ahead of the Budget, we review Labour’s first 100 days and the impacts of the current developments on the accountancy sector, as well as potential future regulations that could influence tax compliance and financial reporting.
The modernisation of HMRC
Labour’s first 100 days in government have seen a strong emphasis on modernising HMRC, which has been a key focus for the party. A new Digital Transformation Roadmap was recently announced, due to be published in spring 2025, which will “set out HMRC’s vision to be a digital first organisation underpinned by customer insight.”
Lodder feels that if done well, modernisation efforts could increase regulatory oversight and further the digitalisation of the tax system, presenting an opportunity for accounting professionals to expand their advisory roles.
Accountants have a pivotal role to play in helping businesses navigate the changes to technology and tax reporting requirements.
Large businesses especially will likely face more intense audits and compliance checks, and accountants should be seizing the chance to position themselves as essential partners in strategic planning, streamlining processes, and ensuring clients meet higher standards efficiently.
Tax digitalisation commitments
Labour has also committed to enhancing tax digitalisation, which Lodder says may signal future reforms like the long-anticipated Making Tax Digital (MTD) scheme, with the expectation for businesses to transition from paper-based processes to digital tax filing. However, he notes that this was not explicitly mentioned in their manifesto.
Digitalisation efforts will result in accounting professionals needing to integrate digital tools to stay ahead, which could involve some upskilling. This should, however, help them focus their efforts on providing strategic advisory services in a time of change and uncertainty. Lodder says, “what may seem like challenges can actually present new growth opportunities for practices that leverage digital tools effectively.”
As businesses are increasingly expected to modernise their processes, accountants can play a crucial role in helping clients adopt and manage new technologies. This shift allows accountants to expand their service offerings, moving beyond traditional compliance work to provide strategic advisory services that foster business growth.
A potential e-invoicing rollout
As part of further efforts to update HMRC, the government also announced a consultation on e-invoicing in September to “promote its wider use across UK businesses and government departments.”
E-invoicing has the potential to significantly reduce administrative tasks, improve cash flow, and boost productivity, all of which will benefit businesses and their advisors.
Lodder says accounting professionals can take the opportunity to proactively prepare clients for these changes, and help them integrate e-invoicing solutions to automate processes and reduce errors with tax reporting.
R&D credit reforms
Oakley says accountants preparing R&D claims for clients need to be aware of the raft of changes to the incentive introduced under the previous government, which are now coming into force. This includes the requirement for claim notification, the process of letting HMRC know that you will be making a claim for R&D tax relief.
The new rules affect accounting periods beginning on or after 1 April 2023 and, where applicable, means that businesses now have six months following the end of their accounting period to notify HMRC if they are planning to claim R&D tax relief.
Regulating the accountancy sector
Finally, the Government is still pushing forward with the corporate governance agenda, emphasising accountability and financial transparency. New regulator, the Auditing, Reporting and Governance Authority (ARGA), is set to fully replace the existing Financial Reporting Council (FRC). ARGA aims to overhaul the regulation of auditors, accountants and, for the first time, large company directors.
The aim of reforms like ARGA is to strengthen the regulatory framework for businesses. Lodder says: “While specific details post-election are yet to emerge, Labour’s intention to modernise and boost regulatory oversight was clear in its pre-election commitments.”
For accountants and bookkeepers, Lodder says these developments present an opportunity to leverage technology to stay ahead. By implementing robust audit and reporting tools that ensure accuracy and transparency in financial records, they can act as strategic advisors to clients navigating the new regulations.
While the specifics of Labour’s tax reforms have yet to be finalised, there are several reasons for accountants to feel optimistic ahead of the Budget. Significant reforms are already in the pipeline that are expected to benefit the accountancy sector in the long term and the Budget should shed more light on what we can expect in the next 100 days of a Labour Government.