THE ACCOUNT
The latest in finance and business
THE ACCOUNT
The latest in finance and business
Ashes to ashes
Directors are being cautioned against questionable procedures following reports that the owner of a failing Scottish company replaced a director when shutting down its winter sports business. It is alleged that the action was taken in a bid to avoid paying money owed to staff and HMRC.
Such a manoeuvre is often a prelude to illegal “phoenixing”, in which a business attempts to reinvent itself as a new, debt-free company, but typically in the same line of business and often operating under a similar name.
The Insolvency Service can seek a disqualification order where a director’s conduct warrants it. Craig Allison, Associate Director at Scottish accounting firm Wbg, said: “Simply abandoning a company with mounting debts is likely to be looked upon dimly by the Insolvency Service.”
While directors are free to start a similar business, Allison warned doing so is not without risk – especially if phoenixing is suspected. “If a director sets up a new company under the same name as a previous entity, they could be in breach of Section 216 of the Insolvency Act,” he said. “The director can not only be made personally liable for the existing company’s debt but could end up with a two-year imprisonment and/or a fine.”
Ashes to ashes
Directors are being cautioned against questionable procedures following reports that the owner of a failing Scottish company replaced a director when shutting down its winter sports business. It is alleged that the action was taken in a bid to avoid paying money owed to staff and HMRC.
Such a manoeuvre is often a prelude to illegal “phoenixing”, in which a business attempts to reinvent itself as a new, debt-free company, but typically in the same line of business and often operating under a similar name.
The Insolvency Service can seek a disqualification order where a director’s conduct warrants it. Craig Allison, Associate Director at Scottish accounting firm Wbg, said, “Simply abandoning a company with mounting debts is likely to be looked upon dimly by the Insolvency Service.”
While directors are free to start a similar business, Allison warned doing so is not without risk – especially if phoenixing is suspected. “If a director sets up a new company under the same name as a previous entity, they could be in breach of Section 216 of the Insolvency Act,” Allison said. “The director can not only be made personally liable for the existing company’s debt but could end up with a two-year imprisonment and/or a fine.”
CAs in the news
Chris Miller CA
Chris Miller CA is the former Commercial Director for the Soho House Group and founder of the White Rabbit Projects, which has a portfolio of restaurants including Lina Stores and Kricket. His newest venture, Arc, recently opened in Canary Wharf. It is London's first communal contrast therapy space and home to the UK’s largest sauna. Plans for a second Arc in Marylebone are already under way.
Shona Campbell CA
Henderson Loggie recently relocated to the Stamp Office on Waterloo Place. While many companies are reducing office space, the Scottish accountancy firm’s new premises are 40% bigger than its current Edinburgh office at Thistle Place. Henderson Loggie Chair (and convenor of the ICAS Insolvency Committee and Regulation Board member), Shona Campbell CA, said: “Our workforce in Edinburgh has more than doubled since 2018 and we plan for further growth.”
Future facing
As regular readers of this magazine will know, the nature of the accountant’s job is evolving. Far from just balancing the books and ensuring invoices are paid and payroll met, finance professionals are increasingly engaged in broader business planning.
That’s the finding of a new survey from embedded payments provider Modulr, which says the top priorities for accountants are now strategy (75%) and forecasting (73%), both well ahead of accounts payable/receivable, in third on 66%. While accountants still spend a great deal of time on their “traditional” jobs, such as reconciling accounts and compliance, increasing automation means these are moving down the priority list, with employers and clients often seeing them more as advisers.
Jakub Zmuda, Director of Strategy at Modulr, said: “It’s clear that the role of the accountant has, and still is, undergoing a transformation. What clients are asking for now is a far cry from their needs 10 years ago. Businesses are now seeking trusted advisers who can guide their financial strategy, predict future challenges and help navigate complex business decisions.”
Last year, ICAS launched a wide-ranging and ongoing research project into the evolving nature of accountancy, Shaping the Profession, covering much of this ground and more. You can read more about the programme here.
Future facing
As regular readers of this magazine will know, the nature of the accountant’s job is evolving. Far from just balancing the books and ensuring invoices are paid and payroll met, finance professionals are increasingly engaged in broader business planning.
That’s the finding of a new survey from embedded payments provider Modulr, which says the top priorities for accountants are now strategy (75%) and forecasting (73%), both well ahead of accounts payable/receivable, in third on 66%. While accountants still spend a great deal of time on their “traditional” jobs, such as reconciling accounts and compliance, increasing automation means these are moving down the priority list, with employers and clients often seeing them more as advisers.
Jakub Zmuda, Director of Strategy at Modulr, said: “It’s clear that the role of the accountant has, and still is, undergoing a transformation. What clients are asking for now is a far cry from their needs 10 years ago. Businesses are now seeking trusted advisers who can guide their financial strategy, predict future challenges and help navigate complex business decisions.”
Last year, ICAS launched a wide-ranging and ongoing research project into the evolving nature of accountancy, Shaping the Profession, covering much of this ground and more. You can read more about the programme here.
Pig in a Poké?
In this issue we put the spotlight on cryptocurrencies and make sense of how accountants might audit digital assets that are prone to wild fluctuations in value – as anyone tracking bitcoin’s rise and fall in the past few months will vouch.
If you’re looking for a more stable investment, the “word on the street” (by which we mean certain corners of the internet) is that you should be swotting up on Pokémon cards. At the time of writing, the value of the market for the collectible cards, based on the Japanese video game that was first released in 1996, has risen 20% in the past six months. But in the world of collectibles not all cards are equal and some have seen their values rise by 150%.
We must stress, of course, that the value of investments can go down as well as up, and we’re reminded of the craze for Beanie Babies. In 1997, $500m worth of the cuddly toys were bought through eBay auctions, an astonishing 6% of the online auctioneer’s total sales that year. However, mass production swiftly followed and their value plummeted almost as quickly as they had surged.
Pig in a Poké?
In this issue we put the spotlight on cryptocurrencies and make sense of how accountants might audit digital assets that are prone to wild fluctuations in value – as anyone tracking bitcoin’s rise and fall in the past few months will vouch.
If you’re looking for a more stable investment, the “word on the street” (by which we mean certain corners of the internet) is that you should be swotting up on Pokémon cards. At the time of writing, the value of the market for the collectible cards, based on the Japanese video game that was first released in 1996, has risen 20% in the past six months. But in the world of collectibles not all cards are equal and some have seen their values rise by 150%.
We must stress, of course, that the value of investments can go down as well as up, and we’re reminded of the craze for Beanie Babies. In 1997, $500m worth of the cuddly toys were bought through eBay auctions, an astonishing 6% of the online auctioneer’s total sales that year. However, mass production swiftly followed and their value plummeted almost as quickly as they had surged.
The cost of cutting
What happens in the US tends to make its way to the UK eventually. But something happening right now on the other side of the Atlantic arguably began over here. Don’t unfurl the flag and start warming up for a rousing chorus of “Rule Britannia”, however, as this is one we should be proud of.
Few, if anyone, would contest the idea that government bodies should always come under scrutiny to see whether they are delivering value for money.
So, in that respect, it’s hard to argue with Donald Trump and the Elon Musk-run Doge (both an acronym for Department of Government Efficiency and the name of a Musk-favoured “meme coin”) deciding to go root and branch through federal agencies.
Trump has already said he will aim to use the money “saved” to give every American a cheque. The figure being bandied about is $5,000 (£4,000). Indeed, some voters look back favourably on Trump’s first term because he gave everyone a tax break. But the execution has been chaotic. To cite just one example, hundreds of federal employees working on the nation’s nuclear weapons were fired, then all but 28 had to be reinstated.
“Move fast and break things” goes the famous Silicon Valley motto. But the danger is that if you go way too fast and too far, you break a lot of things of value and create an even bigger mess – for which the taxpayer still ends up footing the bill.
Among the bodies in Trump’s crosshairs is the Internal Revenue Service, which has already lost 6,000 staff. And here’s where we come in: in the UK between 2010 and 2015, 11,000 full-time equivalent staff posts were cut from HMRC. A further 5,000 posts were set to go between 2020 and 2025. Last year, however, Permanent Secretary Jim Harra said the only way to solve HMRC’s many problems was to start employing more staff, not fewer.
Those problems have included long waits to speak to an adviser on the phone and several high-profile cases where companies escaped paying major fines because HMRC failed to follow its own procedures. Axing tax inspectors is arguably the definition of a false economy, as they would typically earn the Treasury more than they cost.
And yet we end up spending more money to unpick a mess that has been more than a decade in the making. In the rush to make things more “efficient”, we have created new inefficiencies. Go figure, as they say in America.
Ryan Herman
The cost of cutting
What happens in the US tends to make its way to the UK eventually. But something happening right now on the other side of the Atlantic arguably began over here. Don’t unfurl the flag and start warming up for a rousing chorus of “Rule Britannia”, however, as this is not something to be proud of.
Few, if anyone, would contest the idea that government bodies should always come under scrutiny to see whether they are delivering value for money.
So, in that respect, it’s hard to argue with Donald Trump and the Elon Musk-run Doge (both an acronym for Department of Government Efficiency and the name of a Musk-favoured “meme coin”) deciding to go root and branch through federal agencies. But the execution has been chaotic. To cite just one example, hundreds of federal employees working on the nation’s nuclear weapons were fired, then all but 28 had to be reinstated.
It is a sad reflection of our times when so many people don’t expect things to get better for themselves. Yet so long as the groups they don’t like – anyone from immigrants to civil servants – are also losing they’re happy to mark that up as a win.
Trump has already said he will aim to use the money “saved” to give every American a cheque. The figure being bandied about is $5,000 (£4,000). Indeed, some voters look back favourably on Trump’s first term because he gave everyone a tax break.
“Move fast and break things” goes the famous Silicon Valley motto. But the danger is that if you go way too fast and far too soon, you end up breaking a lot of things of value and creating an even bigger mess – for which the taxpayer still ends up footing the bill.
Among the bodies in Trump’s crosshairs is the Internal Revenue Service, which has already lost 6,000 staff. And here’s where we come in: in the UK between 2010 and 2015, 11,000 full-time equivalent staff posts were cut from HMRC. A further 5,000 posts were set to go between 2020 and 2025. Last year, however, Permanent Secretary Jim Harra said the only way to solve HMRC’s many problems was to start employing more staff, not fewer.
Those problems have included long waits to speak to an adviser on the phone and several high-profile cases where companies escaped paying major fines because HMRC failed to follow its own procedures. Axing tax inspectors is arguably the definition of a false economy, as they would typically earn the Treasury more than they cost.
And yet we end up spending more money to unpick a mess that has been more than a decade in the making. In the rush to make things more “efficient”, we have created new inefficiencies. Go figure, as they say in America.
Ryan Herman
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