Accountants reveal top challenges and outlook for 2023 in ICAS Practice Survey
The majority of accountancy firms (70%) feel they are not well prepared for the introduction of Making Tax Digital for Income Tax Self Assessment (MTD ITSA), according to the annual ICAS Practice Survey 2022, conducted by ICAS’ CA magazine in conjunction with Xero.
The survey of ICAS practice firms from across the UK found that only around half (53%) of firms have already adopted software for MTD ITSA.
David Menzies CA, ICAS Director of Practice, said:
“With only 18 months until MTD ITSA becomes a requirement, the state of unpreparedness can be largely attributed to the slow progress of HMRC’s MTD ITSA pilot project which remains open to only a very small number of individuals. Technical difficulties and a lack of expansion are hampering firms and taxpayers who will ideally want to have a full year bedding in period before the mandatory implementation date.”
The survey also found that balancing workload, compliance and regulation, and economic uncertainty are the top challenges facing chartered accountants in the year ahead.
However, the 2022 survey showed no significant change in the top issues facing accountants compared to the 2021 survey, despite ongoing economic uncertainty.
Additionally, the survey revealed that some of the anticipated impact on profits were due to increased investment in software and technology (50%), training (24%) and recruitment (18%), while staff costs as a percentage of turnover over the past year have been more or less stagnant.
The top five challenges facing accountants for the year ahead were:
- Balancing the volume of work throughout the year
- Compliance/regulation
- Uncertainty about the economy
- Recruitment of quality talent
- Keeping up to date with tax
Other key findings:
- When compared to the 2021 survey results, there is now greater adoption of cloud-based systems, especially when it comes to insolvency case management where it has increased by 37% on the previous year.
- 81% of respondents believe the accountancy profession will become more technology focused in the next five years, while 45% predicted an increase in advisory work and strategic advice.
- Despite the anticipated increase in technology, only 25% (down from 43% in 2021) think that the accountancy profession will become more efficient.
- The majority of sole practitioners and small firms surveyed (75%) expect to see either a downturn (33%) or stagnation (42%) in their profits over the next 12 months.
- Firms have embraced the post-pandemic challenge of talent retention. Nearly 40% report working flexibly; only 14% are sticking to the traditional premises and working-hours model. Reflecting the changes already made, only 55% of respondents expect an increase in remote working in the next five years, compared to 70% in 2021.
Commenting on the findings, David Menzies CA, ICAS Director of Practice, said:
“Overall, the survey indicates the ICAS practice community are resilient and responsive to change. Underlying this is a multiplicity of performance, attitude to technology and demand for talent.
The ICAS practice community is complex but also reassuringly stable, ensuring clients are supported in a way which is appropriate to them.”
