Tag Archive | "regulation"

Red tape is still stopping businesses grow

Small enterprises, including accountants for contractors, in the UK say that one of the most onerous and complex issues they face is still excessive red tape.

According to a recent survey by the FSB, 27% of UK businesses think increased regulation makes it hard to expand and 33% believe regulation provides the biggest obstacle to growth.

The coalition has placed a three year moratorium on new domestic regulations for micro businesses. But the FSB has expressed disappointment that some large regulations are not covered by this moratorium. Of particular concern are regulations which increase the administrative and organisational burdens on small firms, such as extending paternity rights and removing the default retirement age.

The Home Office recently invited businesses to tell the coalition what it should do to reduce bureaucracy and boost business growth. The Red Tape Challenge website has been set up to give everybody the opportunity to contribute their opinions and suggestions on the subject of bureaucracy.

One problem that we face in the UK is that even if we scrap certain domestic regulations; we can do nothing about the legislation drawn up in Brussels. So even though micro firms are exempt from our government’s regulations during the moratorium, they still have to comply with edicts drawn up in the EU. However, the government does admit that it may have enforced some EU regulations beyond the minimum legal requirement.

Reducing bureaucracy is going to be a long process. The Red Tape Challenge is open until April 2013 and will look at more than 21,000 active rules and regulations.

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Regulatory burdens are still weighing companies down

Ed Davey, the employment relations minister, recently reinforced the government’s commitment to removing the barriers to job creation.

The minister made his comments at a breakfast event at Epsom Downs Racecourse, saying the coalition wants to remove both perceived and real barriers. He acknowledged that employers’ felt it was difficult and tricky to employ staff but stressed that the new Employer’s Charter was not biased in favour of employees.

Employers have rights too, and if they behave reasonably they have nothing to worry about, he continued.

The government will press ahead with reforms that will give employers confidence to recruit. All business organisations have complained about Employment Tribunals and so the coalition intends to reduce the unfair dismissal qualifying period.

He finished off by telling the audience that Whitehall is currently reviewing all employment related legislation and in the future, the government intends to deregulate or re-regulate rather than introducing new legislation.

It isn’t only employment legislation that is weighing employers down. The latest Annual Global Accelus Survey from Thomson Reuters GRC found that 71% of senior compliance and risk managers feel the global economy is being held back by the burden of regulations. And a massive 88% of the respondents said regulators must find better ways to ensure the regulations they are trying to enforce are effective.

In the financial sector last year, there were 12,500 regulatory updates globally and there will be even more this year, said the president of Thomson Reuters GRC, David Craig.

It’s not only the financial services sector that is weighed down by the burden of regulation either. Energy, healthcare, legal, life sciences and shipping are all heavily regulated industries and companies are getting increasingly concerned over how to cope with the daily avalanche of rules and regulations, he added.

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How will City contractor accountants fare this year?

It is unlikely that city hiring this year will reach the heights of 2010, according to recruiter Robert Walters.

Chief executive, Robert Walters, said that last year banks were correcting from the savage cuts they made during the economic downturn. They needed to re-staff quickly but that was a one-off and we now need to wait and see what they’ll do next.

He also commented that the hiring process was starting to take longer. Employees are unsure of their worth and complex variations in salary packages are confusing, he pointed out.

Robert Walters placed 2,000 City workers in 2010 and has seen a 10% rise in net fee income in the first quarter of 2011.

Large recruiters report a buoyant demand for financial staff, in particular those with experience in risk management and regulatory functions. However, much of this demand is due to churn as people look to change employers. Some analysts have predicted that banks will reduce their headcount by between five and eight per cent this year.

Ambition recruitment consultants say that workers in the City pay the same amount in taxes as the whole Scottish population. Its research found that Square mile staff paid a total of £11 billion in NI and income tax, equal to the remittances from the entire workforce north of the border and 7% of the UK total.

Ambition UK’s managing director, Simon Lynch, said that City workers have been subjected to a torrent of abuse in the last few years but they make a very valuable contribution to the public purse.

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Big Four accused of dereliction of duty

The Big Four’s domination of the audit market came under threat last week when the House of Lords recommended a detailed Office of Fair Trading investigation.

This investigation would be the first time the Big Four have been investigated since a full scale competition investigation was discounted in 2002, following the collapse of Arthur Andersen.

The regulators also came under fire as the House of Lords committee slammed both groups for dereliction of duty and said the breakdown of communications between regulators and auditors compounded the financial crisis.

Box-ticking International Financial Reporting Standards were in the limelight and the Lords recommended that caution should once again become the guiding principle of audit.

The economic affairs committee has now published its report on the eight-month investigation into the UK audit market. The inquiry said that large firms are limited in their choice of auditors because of the oligopoly of the Big Four. Last year, they conducted the audit of all but one of the FTSE 100 organisations and these large companies tend to stick with the same auditor for an average 48 years.

The report went on to point out that there is a risk of one of the firms dropping out of the audit market and this would lead to an unacceptable level of market concentration.

The committee recommends, amongst other things, that companies in the FTSE 350 must put their audit contract out to tender every five years and that external auditors are banned from giving internal advisory services and advice to the risk committees of firms they audit.

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Contractor accountants need a financial contingency plan

Contractor accountants and other professional freelancers must be prepared for financial changes, especially in these times of economic uncertainty.

The MD of the Debt Advice Foundation, David Rodger, said that everybody should have a Plan B, even if they believe their job is secure.

Rodger pointed out that redundancy might have a massive financial impact on a person’s household budget so having the foresight to plan ahead can lessen the chance of future difficulties.

This is simple to do, he says. Set yourself a realistic budget so that you do not overstretch your finances or spend large amounts on credit and keep a “rainy day” fund to tide you over if you have the misfortune to lose your job.

Contractor accountants working through umbrella companies might find that they are in and out of work due to the nature of freelancing. It is therefore vital for them to have a reserve cash fund in case work dries up for several weeks at a time.

The threat of more job cuts in 2011, coupled with the increase in VAT, could mean that more people fall into financial difficulties. The Money Advice Trust has already forecast that the number of people seeking advice on debt is going to reach a record high soon. Surprisingly, only around 16% of people who currently have money troubles seek advice.

However, consumers are showing signs of concern when it comes to debt, according to quarter four data from R3. 47% are worried about their credit card debt, 28% about their overdraft and 23% are concerned about meeting mortgage repayments.

Last week, the government launched a consultation into the regulation of consumer credit. It wants to transfer the responsibility from the OFT to a new authority; the consumer protection and markets authority. The government hopes this would provide more protection for consumers and remove regulatory burdens on businesses.

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Everyone’s an expert

Another frustrating week in the hunt for the next contract. It’s clear that there is still a fair bit of work out there for the taking. Sadly it’s also clear that there are an awful lot of people out there trying to take it and competition is very strong. But it seems to have had at least one side-effect; you must only apply for a job if that’s the job you’re already doing.

You can accept that if the role is in say Finance, then clearly you do save a lot of issues taking on someone who already works in Finance, since they would know the regulatory and business environment. Actually it turns out an awful lot of openings are in Finance since the only people with the money to spend are the banks. Wonder where they got it all…

Anyway, I digress. Taking someone already in an industry vertical, while frustrating to the outsiders looking in, is quite understandable. However, the market now sees to be taking this to a whole new level which is what causes the frustration: no matter how good you are at what you do, if someone doesn’t want you to do exactly the same thing for them that you’re doing now, then you have a problem.

I’ve talked before about the whole agency candidate-finding process being reduced to a box-ticking exercise in an attempt to get the flood of applications down to manageable levels. This also saves them a lot of money themselves of course, since the bulk of the work can be delegated to fairly junior researchers who don’t actually need to understand the role or the candidates.

So getting a role is now totally dependent on what it says on the CV. And that is where it all starts to go a bit wrong.

If your CV is to stand a chance it has to be a very close match to the original requirement. Sadly, however, with the laziness of the average agent, a lot of the job specification doesn’t make it to the advert; probably takes too long to cut-and-paste it in to Broadbean or whatever they use to set the adverts up. Given a career history like mine that is pretty wide ranging, I then have to work out which bits to highlight in the first page summary on my CV – no agent bothers to read the detailed job history any more – to stand even a vague chance of getting past the first filtering process at the agency, never mind getting passed on to the client. And if the advert misses a key bit of information, then you fail at the first hurdle.

As an example, I put an application in yesterday evening and around midday today I finally got to talk to the agent about the role. Too late! It seems the role was largely about recovering a programme of work that was not delivering and needed a total shake up. “But you didn’t ask for that, and as it happens that’s what three of my last four roles were mostly all about, fixing and successfully delivering broken projects” I pointed out. One of which, incidentally, was worth around £250 million.

“Ah but”, was the reply, “You didn’t state that explicitly so I didn’t pick it up. Sorry, but I’ve already sent in all the CVs I’m allowed to”. End of conversation.

So there in a nutshell is why good people are sat on the bench. This whole market needs a different approach. And that’s something I will talk about next week.

Meanwhile, anyone need an expert is anything?

Alan Watts can found at LinkedIn.
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HMRC choose not to produce Time To Pay data

HMRC has postponed releasing any Time to Pay data while it reviews the release of statistical information. A spokesman from the Revenue said that he could not say how long the review would take.

The Time to Pay arrangements allow businesses to defer tax payments and were set up during the credit crunch as a lifeline for companies that were struggling to meet their tax liabilities.

The president of the UK200Group, Colin Howe, remarked that the Business Secretary, Vince Cable, had recently told the Institute of Directors that his department had instructed the Revenue to continue to ensure that it would be easy for applicants to obtain Time to Pay arrangements. However, if HMRC doesn’t publish statistics, we won’t know if that is happening.

Tax expert Richard Mannion from Smith & Williamson said that the review doesn’t tie-up with HMRC’s message that TTP works. He believes that government spending cuts could be the cause of the review.

In the first 15 months of the scheme, 300,000 Time to Pay arrangements were set up, allowing £5.13bn worth of taxes to be deferred.

Meanwhile, the Regulation Policy Committee is calling for vigorous, independent scrutiny of all new business regulations. Vince Cable announced last week that the ‘one in, one out’ policy for new regulations will come into force at the beginning of September and the RPC would like to see Whitehall produce a robust analysis of all possible alternatives and implementation cost estimates prior to the formation of new regulations.

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Online accountants should prove their qualifications

UK200 wants the government and accountancy industry bodies to do more to highlight the differences between qualified and unqualified accountants.

Anybody can set themselves up as an accountant and a lot of clients don’t appreciate that firms who are not regulated are offering substandard advice, albeit at a cheaper price than a regulated practice.

The MD of a firm of accountants in Chesterfield pointed out that at first glance there seems to be very little difference between a qualified or unqualified accountant. However, there are some things that an unqualified accountant cannot do.

Software packages now make it easier for limited company contractors to do their own accounts and coupled with the coalition’s proposals to reduce red tape, unqualified accountants could start to find life even easier.

The UK200 Group wants the ICAEW and the ACCA to promote the brand so that people won’t use an unregulated accountant. They would also like to see the government take action to regulate or close down operators who are unqualified.

The vice-president of UK200, Jonathan Russell said that some small accountancy firms are seriously thinking about whether the burden of regulation is now too onerous to bother with. Russell thinks that there are three possible options going forward. Either regulation has to be compulsory for all accountants, or accountants who are not qualified are barred from practising, or the regulation on those who are qualified is reduced so that they can compete on a level playing field.

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Excessive bureaucracy may start to disappear

The Reducing Regulation Committee had its first meeting last week and contractor accountants are relieved that something is eventually being done to cut the red tape that has strangled enterprise over recent years.

Vince Cable, the business secretary, is heading the Committee which met for the first time on July 1st. Mark Prisk, the Small Business Minister, Francis Maude, the Cabinet Office Minister and Danny Alexander, the Chief Secretary to the Treasury, are also members of the Committee.

Mr Cable said that the government must give the balance of power back to individuals. Businesses such as online accountants are required to drive economic growth, not spend all their time filling in forms. The Committee wants to change Government culture away from regulation and find alternative ways of solving problems.

In future, all proposed regulations will have to be stress tested by the Committee and only those which are deemed high quality and priority will be allowed to proceed. There will also be a one-in, one-out system so that businesses will not be burdened by excessive regulations.

The first meeting coincided with the launch of a new government campaign called Your Freedom. Limited company contractors and individuals are invited to tell the government which of our current laws and regulations they would like to see abolished.

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