iXBRL

Avoiding tax is easier than avoiding hearing about it. During tough economic times, the headlines continue to be dominated by tax issues on a daily basis: the standard rate of VAT increasing to 20 per cent on 4 January 2011; Business Secretary, Vince Cable, choosing to float a graduate tax; £2.5bn a year levy on the banking industry in wide-ranging tax measures…to name a few.

However, there is an issue that rarely gains such front page press coverage and this is iXBRL. But is it really an issue for UK businesses?

What is iXBRL? 

XBRL (Extensible Business Reporting Language) has been in use for over 10 years and is a form of XML (Extensible Markup Language). A mark-up language is a dictionary of tags that allows a computer programme to describe the text and is a fantastic way for computers to share information. However, it is virtually illegible for humans and therefore it would be as impossible for HMRC to understand. 

The solution put in place is In-Line XBRL, which allows the production of a web page version of the financial data that both HMRC and humans are able to read and understand. Ideally, all submissions made after 31st March 2011 will be made in this format.   

Three taxonomies are applicable to XBRL:

1. CT Computation taxonomy-  1300 mandatory tags and over 4500 possible
2. IFRS taxonomy -  1600 mandatory tags and 3400 possible
3. UK GAAP accounts taxonomy – 1350 mandatory and 4375 possible

What are the implications on UK businesses?

On face value, iXBRL seems a total overhaul of the current HMRC submission process. However, in reality the effects have really seldom been felt. Most companies, particularly in the banking sector, have outsourced iXBRL tagging to accountancy firms and specialists. On the flip side, smaller tax departments have favoured sharing the workload between them in order to manage cost effectively. Realistically, iXBRL compliance will more than likely provide short-term pain in its first year of use; beyond that there will be potential for business gains to be made.

Recruitment

Initial expectations for a recruitment drive for candidates with particular skill sets in this area have not been realised. However, across the industry there continues to be a trend for more organisations bringing tax functions in-house, and coupled with the requirement for electronic tagging, the requirement for IT literacy has also increased. 

The necessity to manage costs and meet headcount quotas has given rise to broader tax positions whereby candidates are often gaining exposure to a range of tax issues. iXBRL compliance could well form a larger part of this so-called ‘ad-hoc’, which is often highlighted on job descriptions. Therefore candidates now need to be more flexible when considering new industry positions with regards to how the role will break down. Given the current position in the UK business cycle, and Chancellor George Osborne needing to decrease the budget deficit, the importance of the skillful and flexible tax professional will continue to increase. 


James Macdonald works as a Consultant in the Tax team at Marks Sattin, placing qualified accountants and qualified taxation professionals into permanent positions in the financial services sector.

Why does tax legislation matter?

In the UK, 99.9% of businesses sit under the SME umbrella. With the job market remaining unstable, it’s little surprise that even more people are opting to start their own business.

Many SMEs will not have time to absorb changes in tax legislation, not understanding the implications it has on their business or bottom line. In a competitive marketplace, those businesses that fail to pay attention to tax legislation put themselves at a serious disadvantage.

The UK tax system is complex and SMEs can feel at a loss against their bigger competitors who can employ specialists to keep on top of the constant changes in legislation. On top of that, many SMEs may be feeling disheartened, and think that the government should be doing more in order to stimulate small business growth.

The Chancellor has already announced changes to the personal tax and NIC bands from April of this year. Many business owners may find themselves paying 40% and even 50% income tax, with NICs on top of that. So knowing how to structure remuneration for any SME will be vital.

SMEs also need to think about the way in which they do business. SMEs that structure their businesses in the traditional sole trader or partnership will be paying more tax than those who run their businesses through limited companies. This is down to an anomaly in the law, and those wishing to change will need to properly understand the implications this will have on their business moving forward. 

Many SMEs may be aware that by not keeping up with tax legislation, they could be at a disadvantage – losing valuable tax breaks. Nonetheless, because the process is timely and administrative-heavy, it doesn’t and can’t always take priority.

SMEs must wise up. Tax legislation is always changing. A business that is aware of the implications of new legislation and how this affects their individual business needs will reap the benefits in the long run.


Michael Steed, MAAT, CTA (Fellow) from Kaplan Financial will be presenting the AAT (Association of Accounting Technicians) UK tax update series hosted around the country throughout April and May 2011. To find out more click here.

The Peaks and Troughs of Hiring Management Consultants

Management consulting is often defined as a profession that provides advice in a specific area of expertise. However, another well-established view is that management consultants are people who you pay lots of money to tell you what you already know. It is clear that as the economy changes, so do public opinions, and with them, the need for consulting.

This line of work is one of the first to react to changes in the economy and following the recent drop, the second quarter recruitment figures show a sharp increase in hiring.

According to various management consulting-focussed websites, the consulting industry is steadily accelerating and has been for the most part of the year. More specifically, financial services consulting is a huge industry in its own right and the main focus for many large firms is seeing a dramatic increase in hiring; this is a prime example of the ‘peaks and troughs’ of recruitment.

Financial services topped an consultant poll as the industry leading the way in expected acceleration of hires by consultancy firms. This view is backed up by the Big Four; according to KPMG, the biggest increase in 2010 has been in their advisory functions that “have ambitious growth targets over the next two years”, whilst PwC revealed that “consulting will be a big focus for recruitment again for 2011 with  ambitious growth targets in this area”. Keeping up with the trend, Deloitte announced that they would be recruiting “predominantly in the technology and consulting area”.

Another huge indicator of the current shape of the market are the figures being announced by a number of management consultancies themselves. One specialist financial services consultancy has made over 100 new hires since March, and is in place to continue this massive growth into next year with a further 250 planned, almost doubling in size.

The explanation behind a lot of the growth in the market is mainly a simple reflection of the financial services industry and the economy as a whole. When times are hard in a struggling economy, paying someone lots of money to tell you what you already know is the first thing cut in a bid to save capital, but hiring an experienced management consultant is often the first thing done when a business looks to recover. An MD of a city-based boutique supported this idea, stating that “there’s been so much change in financial services, a lot of it government enforced, that consultants have been having a field day”.

This can be seen as a very basic indicator of market opinion on the economy, which in turn can help to form an outlook for the rest of the recruitment industry.

So, while we are experiencing uncertain financial times at the moment, with not a day going by without another headline from Vince Cable or Mervyn King, perhaps it is not all doom and gloom. 

Often the first sign of a change in fortunes, the aggressive growth acceleration of management consultancies suggests businesses and the economy are also getting ready to grow again. As a result I would now expect the recruitment industry to follow, enjoying the ride to the next peak. 



Andrew Wilde is a Consultant in the Management Consultancy team at Marks Sattin, working across a range of industries. Andrew has a strong portfolio of clients within Financial Services, placing Principals and Senior Managers in high profile Banking, Payments and Capital Markets positions.

The Budget 2011: Breathing Life Back into Business

Another year, another Budget. As expected, George Osborne has painstakingly focused on the promotion of businesses and the economy whilst clamping down on tax avoidance and the banks.

Whether you’re an accountant, finance professional, jobseeker, first-time buyer or simply the man on the street, yesterday’s Budget will have some kind of impact on you.

Here are the points of note:

• A personal tax allowance increase of £630 (rising to £8,105) will come into effect from April 2012;
• A £2 billion tax on oil companies has resulted in an immediate cut to fuel duty by 1p, with the expected 4p rise discarded;
• First-time buyers will be offered a £250 million fund shared equity scheme to help them get on the property ladder;
• The forecast for the year’s economic growth has been downgraded, indicating that there is still some way to go;
• Twenty-one new ‘enterprise zones’ will be created, designed to rejuvinate Britain’s businesses;
• A charge on non-dom tax will raise more than £200 million;
• A cut to corporation tax will be offset by bank levy;
• The State Pension Age will rise to 66 by 2020;
• Alcohol duty will rise by 4p, 15p and 54p on a pint, bottle of wine and bottle of spirits respectively.

With cuts in fuel duty, increases to tax allowances, and help for first-time buyers, there is much for the general public – in particular, jobseekers – to appreciate.

The reaction to the 2011 Budget has generally been positive, with the public backing proposals that are designed to drive UK businesses forward. As the changes are implemented, financial leaders will be relied upon to help rebuild the economy.

Didn’t get a chance to catch the speech in full? Have a look at my Wordle below.

Finance professionals trained to excel at Excel

As a professional membership body, at the AAT we find much of the motivation to becoming a member is due to commitment to the profession. We strongly advocate the need to keep your skills up to date.

All aspects of career development are vital but budgets and time often dictate those priorities. It’s not always feasible to take time out of the office or spend money on a training course.

As a professional body, we aim to equip our members with the right tools and support to do their job. In addition to providing learning materials relevant to technical accountancy, we also concentrate on supporting our members in related areas.

Excel is an essential software tool that is used widely across all industries. However, the complexity of tasks range from inputting numbers into a spreadsheet to consolidating and analysing and interpreting large and disparate data sets. Most finance professionals know how to use Excel for the actions they need it for. But newer versions of the software may mean there are easier ways of carrying out the same actions.

We have always provided Excel learning opportunities for our members, but we were conscious that not everyone was able to attend or use the resources due to geographical, budgetary or time restrictions. We also knew that unless someone is a complete beginner, it can be hard to gauge which is the right skill level for them.

With that in mind, AAT teamed up with Excel with Business (EwB) to provide an online Excel tuition package. The package allows our members to study any time and anywhere. Users can take a diagnostic test to determine quickly the right skill level before prescribing a bespoke, business-focused Excel course. Users can work on the areas they need to develop rather than trudge through a prescribed, encyclopaedic course. To make the course even more user-friendly, EwB reviewed Excel's 500 functions and stripped out any business non-essentials to provide a streamlined Excel course for bookkeepers and accountants.

As consumers we are used to having choice and convenience. And there is absolutely no reason why this shouldn’t extend to training. People should be able to learn in a way that best suits them. We all have a responsibility to maintain our skills and the learning materials we choose must enable us to do this.


Paul Fulton is Benefits and Services Manager at the AAT.

Fuel duties and a fair fuel stabiliser: fuel for thought

Rapid increases in pump prices have sparked renewed debate on the level of fuel duties, with calls for the Chancellor to cancel April's planned real-terms increase in the forthcoming Budget. There is also continued speculation about the prospect of a "fair fuel stabiliser" (FFS) - a formal mechanism to cut duties at times of high oil prices (and to raise duties when oil prices fall). During Prime Minister's Questions on March 2, David Cameron made it clear the FFS was still under consideration, saying: "...we will look at the fact that extra revenue comes to the Treasury when there is a higher oil price, and see if we can share some of the benefit of that with the motorist. That is something that Labour never did in all its time in government." What are the facts and how should we assess these proposals?

Day-to-day changes in fuel prices are highly visible and fuel is an important share of spending for many households, so the salience of the issue is unsurprising. In 2009, vehicle fuel made up on average 4.9% of household spending, and more than one in five households spent over 9% of their budget on fuel. As prices have risen since 2009, fuel's prominence in household budgets has probably grown further.

In real terms, fuel prices are now about 17% higher than they were in autumn 2000, the period of the fuel price protests. Taxes now make up around 61% of the price of a litre of diesel and 63% of the price of petrol (for petrol, 46% of the price is duty and 17% VAT). The total tax paid for a litre of petrol amounted to around 80.2p in January 2011 following rises in both duty and VAT, though this is below the real-terms peak of 82.5p/litre seen in July 2000.

Fuel duties are set to rise by one penny above inflation each April up to 2014-15 as part of a duty escalator introduced by Labour in the 2009 Budget and extended in the March 2010 Budget. Even with no real increase, duties would rise by just over 2p/litre to reflect inflation (the inflation rate used is the expected RPI in the third quarter following the Budget , currently forecast at 3.5% by the Office for Budget Responsibility, OBR). Cancelling the one penny real increase would cost about £500 million. Freezing duties in cash terms would cost just over £1.5 billion. The latter figure would be higher if inflation forecasts for the third quarter are revised upwards in the Budget (RPI inflation was 5.1% in January 2011). If oil prices remain high, future planned increases in duties would also come under pressure. Cancelling all the real rises to 2014-15 would leave revenues about £2 billion lower each year from then. Cancelling all inflation-adjustments as well would leave revenues about £6 billion lower.

Given the scale of the deficit, the government has little room for manoeuvre to make any concessions on tax that are not paid for through tax rises elsewhere, or deeper than planned spending cuts. One particular consideration for fuel taxes must be that reductions in fuel duties would also make the government less likely to meet its objective to raise the share of total receipts generated from environmental taxes.

Beyond the fiscal issues, there are two particular problems with a FFS:

1. In order to stabilise fuel prices around their long-run trend, the government will need to distinguish between short-term blips in prices around the trend and shifts in the trend itself. This is likely to be difficult, and large adjustments to duties may be needed if mistakes were apparent only with a significant lag. There could also be a political 'ratchet effect', in which popular cuts to duty when prices were high were easier to implement than unpopular increases when oil prices fell again. If the government decides to adopt a FFS, it should have a clearly proposed mechanism for how and when duties would be adjusted, how the assumed trend in oil prices is determined and updated, and what the target trajectory for pump prices will be.
2. The claim that the Treasury receives a windfall gain when oil prices rise that it can "share" with motorists is incorrect. Estimates published by the OBR last September suggested that a temporary £10 increase in oil prices would generate a revenue gain of £100 million in the year of the shock, and a net revenue loss of £700 million in the year after. This need not prevent a FFS being adopted, but it could only be done so by injecting more uncertainty into the public finances rather than less. If the Treasury disagrees with the OBR's analysis, it should provide robust evidence to back up its view.

That said, one could argue that while no formal fuel stabiliser policy has been in place before, the previous Labour government did informally help to stabilise pump prices with their fuel taxation policy. The chart shows real-terms petrol pump prices and duty rates between January 1990 and January 2011. Aside from the autumn 2000 protest period, there was a relatively steady upward trend in pump prices throughout much of the 1990s and 2000s. This was caused first by the previous duty escalator introduced in 1993.During this period oil prices were relatively low and stable and so higher prices were driven by higher taxes. The escalator was abandoned in 1999 as oil prices began to rise, and duties were frozen in cash terms for a number of years, meaning higher prices were driven by the pre-tax cost of fuel.

Fuel Prices


Source: Calculated from DECC energy price statistics (http://www.decc.gov.uk/assets/decc/statistics/source/prices/qep411.xls)

It may be that a formal stabiliser policy would be preferable to ad-hoc adjustments to duty rates made Budget by Budget, adding (hopefully) more transparency and predictability to the process. But it should not be sold on the basis that it would stabilise the public finances: a formal stabiliser would - at least according to the OBR's estimates - lock in even more uncertainty to the overall fiscal position.

This post is part of the IFS Observations series. You can view the original article here.


Andrew Leicester and Peter Levell


Andrew Leicester is a Senior Research Economist in the Consumption Sector at the IFS. His work focuses on indirect taxation - including environmental taxes, excise duties and VAT - and other factors affecting consumer choice behaviour and expenditure decisions.

Peter Levell is a Research Economist in the Consumption and Development Sectors at the IFS. He has been a co-author of several IFS publications on environmental taxes, including work for the recent election analysing the parties' environmental proposals.

Thames Valley recruitment leads the way to economic recovery

These past two years have been tough for the recruitment industry, as employers streamlined their companies in response to the poor economic climate. As we experience the beginnings of an upturn, those who fell victim to the job cuts look towards London for hope, with the impression that it is where they will be offered the best opportunities.

This is not necessarily the case; the Thames Valley area can offer a real alternative the bright lights of London. So why is it set to prosper?

The ‘No City Left Behind’ report, produced by The Work Foundation, focuses its research on the geography of the economic recovery, naming several Thames Valley towns and cities amongst the top 10 places likely to do well. Reading and Bracknell took the premier spot ahead of London (third), Oxford took fifth place, closely followed by Milton Keynes and Aylesbury in sixth.

Hi-tech manufacturing is easily identifiable as one of the key sectors that, alongside intermediate services, finance and creative industries, will drive the UK’s economic growth over the next two decades. Nicknamed ‘Silicon Valley’ and housing the likes of Microsoft, Oracle, Dell and Hewlett-Packard, the Thames Valley looks set to be a vital location to drive economic recovery.

Statistics published by CBI illustrate the dominance of manufacturing and IT companies; they collectively represent 42.6% of the total number of companies in the region. Such a strong presence of companies within a key growth sector will surely mean that the Thames Valley will prove lucrative to the recruitment industry, and also to finance and accountancy professionals within the IT sector. But it’s not just hi-tech manufacturing that’s helping the region expand.

Despite being ranked third in the list of cities likely to do well in the recovery, and attracting many jobseekers from the UK and from across the world, London can be held partly responsible for the success of smaller cities that surround it. The Thames Valley has profited greatly from the excellent transport links that enable a commute of less than 30 minutes from many of the regions, towns and cities from either Paddington or Waterloo.

Companies are receptive to the benefits that the region offers, and you only need to take a trip down Slough’s Bath Road to see the validity of this statement: the headquarters of multinational companies spanning all industries decorate the landscape. With many blue chip companies offering excellent opportunities, it is no wonder that candidates are also seeing the benefits of working outside London.

With a more relaxed pace of life and cheaper living costs, many are becoming more open to the idea of working away from the rat race. An easier commute and a more relaxed work environment is a welcome incentives to those wanting an equal work-life balance. The region’s potential for growth, combined with the improving quality of life outside of London, positions the Thames Valley as a great place to work.



Lucy Zimmerman works in the Thames Valley team at Marks Sattin, placing part-qualified and qualified accountants into interim positions.

The Modern Apprentice

With the rise in university fees and the decline in graduate jobs, young people are wise to look to other alternatives. A degree is no longer a guaranteed route into a profession. Figures released in January show that one in five recent graduates are still unemployed six months on – and this does not include people who might be employed in entry level jobs.

Conversely, at the Association of Accounting Technicians (AAT), we have noticed an increase in the number of employers choosing to recruit school leavers instead of graduates. Examples include P&G, who are solely recruiting school leavers within their European Finance Centre. However, this trend is not just restricted to the large multinationals but seems to be across the board in companies of all shapes and sizes.

This growth has also been reflected in our student figures. In 2010, the number of students under the age of 18 grew by 11%, suggesting that both employers and young people are moving towards this approach.

Along with earning a salary, accountancy apprentice training with the AAT can avoid student debt but still reward a professionally recognised qualification. The apprentice gets to put the skills they’re learning into practice, which means the qualification is put into context. In the case of accountancy, qualifying with the AAT enables you to progress and become a chartered accountant more quickly than someone with a degree. It is quite possible that someone going through this route could qualify as a chartered accountant at 21 – the average age of a university graduate.

Not only are there benefits for the apprentice, there are also benefits for businesses too. Research from the National Apprenticeship Service (NAS) shows:

• 80% of employers who employ apprentices agree they make their workplace more productive;
• 88% of employers who employ apprentices believe that Apprenticeships lead to a more motivated and satisfied workforce;
• 83% of employers who employ apprentices rely on their Apprenticeships programme to provide the skilled workers they need for the future.

The AAT has developed an apprenticeship programme for employers who want to complement their finance recruitment with employees undertaking work-based training. As the AAT Accounting Qualification is so practical, it means as the employer, you get to see the benefits of training immediately.

Employing an AAT apprentice can also be cost-effective. Government funding is available depending on the needs of your organisation and your training requirements. You can access full funding for all 16-18 year olds – so you only need to pay their salary. You could also be eligible for funding for apprentices aged 19 years and over. In addition, the Government has committed to recruit 75,000 new apprentices by 2014. AAT has a dedicated Account Management team who can provide advice on financial support.

Extra administration can be a worry for employers. But you won’t be bombarded with forms and paperwork; your apprentice’s training provider will do most of the admin for you, including a health and safety check. However, you will need to commit to supporting your apprentice's time spent out of the office, and provide a mentor for them at work.

An apprenticeship not only offers value for money but helps you grow someone into your organisation’s culture. Above all, you’re giving someone a great opportunity to take their first step in their accountancy career.

7-11 February marks National Apprenticeship Week. For further details of the National Apprenticeship Service and how they can help your business, please visit www.apprenticeships.org.uk. For further information, please contact the AAT.



Rob Alder is Business Development Manager at AAT. He is responsible for looking after the business relationships between AAT and employers training and developing their staff with AAT qualifications.

Solvency II: An increase in demand for knowledgeable professionals

Financial services organisations face yet another major challenge in the European Union’s new directive for Insurers. The proposed new EU legislation establishes a new framework to govern the capital requirements of insurance companies, which has far-reaching consequences on how firms are managed. For this reason, the implementation of Solvency II represents a significant demand for knowledgeable professionals on the market.

Taking Action

The financial regulator wrote to insurance firms in August 2009 reminding them of the impact Solvency II will have on their businesses. Although the framework directive will not take effect until October 2012, the financial regulator strenuously recommends firms to commence planning for the implementation process now.

There is no excuse for inaction or delay. Given the enormous range of the Solvency II directive, a 2012 timeline appears extremely short. The implementation of such a change demands active boardroom direction, a full understanding of the implications at all levels of the business, clear allocation of management responsibilities and the earliest possible investment of resources.

Demand Surge

The Solvency II directive will necessitate the establishment of the following functions: risk management, actuarial, internal audit, internal control and compliance. The need for competent and suitably-qualified individuals is heightened by a ‘demand surge’ for knowledgeable professionals as the implementation deadline looms.

Early recruitment activities will not only cut the costs and help alleviate any last-minute panics; they will also allow time to develop a dialogue with supervisors and embed the new risk and capital management framework into the strategic and operational management of the business.

Approach

Adherence to Solvency II regulations will present major challenges and potential opportunities to many insurers and professional service firms.

It is important to constantly keep abreast of developments in legislation, as well as analysing how this will affect human capital management requirements.

All professional recruitment areas will be significantly changed by Solvency II. It is our aim to prepare for how Solvency II will affect recruitment and to supply knowledgeable professionals who can help our clients through this major industry challenge.



Barry Richardson is a Senior Consultant with Marks Sattin in Dublin, specialising within the Insurance Sector. Barry’s client portfolio within Marks Sattin ranges from large multi-national insurance and reinsurance companies to small and medium-sized broking houses.

 

‘Blue Monday’ Sparks Mass Job Hunting

The arrival of the statistically ‘most depressing day of the year’ – Monday 16th January – drove a 505% increase of traffic to our job site – suggesting that disillusioned employees chose that day as the first day of 2011 to start the search for a new job.

With terrible weather not helping the mood and causing some commuters difficult journeys and delays, people with a long way to travel may have decided to look for something closer to home.

‘Blue Monday’ traditionally falls on the third Monday of January, when the memory of Christmas revelry has dissipated and the harsh reality of summer a good few months away leaves people cold.

It is no coincidence that as people wind down over December, traffic levels to recruitment sites slow dramatically in comparison to the rest of the year. But with January bringing New Year’s resolutions to find that perfect job, it is no wonder that site traffic is on the up.

So far, January has been both candidate and job-rich, with an increase in both finance and accounting professionals looking for work and employers creating new roles.

Jobseekers know that there is generally an influx of new exciting roles after the end-of-year lull, and since ‘Blue Monday’ is the third Monday of the month, it has given recruiters the time to source and upload their roles onto their sites. The peak of visitors hit a high between 12pm and 2pm, the lunchtime slot, suggesting that the majority of people are already at work when they are looking.

We have been able to note that, with the rise of the smartphone and mobile-friendly technology, jobseekers are now logging onto job sites at all times of the day – accessing the web when on their commute and even at their desks without fear of being caught in the act.

The amount of traffic also rises between 6pm and 9pm, when people can sit and watch TV or eat dinner with full access to online jobs and mobile apps at their fingertips. We are looking forward to seeing how jobseeking trends progress as technology advances throughout 2011.



Dan Jones is Manager of the Accountancy & Finance Division at Alexander Lloyd.