Table of Contents
Executive Summary
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- The market
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- Figure 1: Segmentation of the UK market for accounting & financial management, by type of service, 201317
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- Figure 2: Forecast UK market for accounting & financial management, 201822
- Figure 3: Forecast segmentation of the UK market for accounting & financial management, by type of service, 2018 and 2022
- Market factors
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- Figure 4: Number of private sector businesses in the UK, 200317
- Companies
- What we think
Key Insights
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- What are the implications of Brexit on the UK accountancy sector?
- What are the likely implications of HMRC’s plans for “Making Tax Digital” for accountants?
- How are the recently introduced audit reforms affecting mid-tier accounting firms?
- How is new technology, such as artificial intelligence, impacting the audit sector?
Introduction
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- Definitions
- Methodology
- Abbreviations
- Market Positioning
- UK economy
- Overview
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- Figure 5: Forecast GDP development 2017-23
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- Figure 6: UK GDP quarterly development, 2004-17
- Inflation
- Interest rates
- House prices
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- Figure 7: UK House price changes, 2006-2017
- Consumer spending
- Manufacturing
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- Figure 8: UK manufacturing, 2014-17
- Business investment
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- Figure 9: UK GFCF, chained volume measures, seasonally adjusted, 2004-17
- Imports
- Exports
Market Factors
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- Key Points
- Legislation and Government Policy
- CMA audit order and new EU regulatory framework on statutory audit
- Impact of Brexit on EU audit reform
- New audit threshold
- New UK accounting standards
- Large accounting firms under spotlight in clampdown on tax avoidance schemes
- Measures put in place to crack down on tax avoidance
- Finance Bill 2017-18
- Companies Act shake-up
- Scottish tax devolution
- HMRC move towards digital tax services
- Other Market Factors
- Number of active businesses in the UK
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- Figure 10: Number of private sector businesses in the UK, 2003-17
- Figure 11: Number of private sector businesses in the UK, 2003-17
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- Figure 12: Number of VAT and/or PAYE registered enterprises in the UK, by industry group and turnover size band, 2017
- Rapid rise in self-employment since 2008
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- Figure 13: Self-employed workers in the UK, 2006-17
- Trends in insolvencies and business recovery
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- Figure 14: Number of company insolvencies, receiverships and administrations in England & Wales, 2007-17
- Corporate credit conditions
- UK M&A market remains resilient in 2017, despite uncertain economic and political backdrop
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- Figure 15: Mergers and acquisitions involving UK companies, 2005-17
- Number of listed companies on a downward trend
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- Figure 16: Number of main market and AIM listed companies, 2009-17
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- Figure 17: Number of main market and AIM listed companies, 200917
Market Size and Segmentation
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- Key points
- Overview
- Consultancy sector is key driver for market growth as accountancy firms expand their service offering
- Accountancy firms adopt new business models to diversify or specialise
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- Figure 18: The UK market for accounting & financial management, 2013-17
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- Figure 19: The UK market for accounting & financial management, 2013-17
- Market segmentation
- Overview
- KPMG is top listed company auditor, PwC is top FTSE 100 auditor
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- Figure 20: Segmentation of the UK market for accounting & financial management, by type of service, 201317
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- Figure 21: Segmentation of the UK market for accounting & financial management, by type of service, 2013 and 2017
- Audit & accounting
- Rise in audit threshold putting pressure on lower end of auditing market
- Audit fees at lower end of the market remain squeezed but fees are more stable at the top end as competition focusses on quality of audits
- Innovative technology solutions enable auditors to deliver continually higher audit quality and deeper insight
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- Figure 22: UK fee income from audit & accounting services, 2013-17
- Tax services
- Government clampdown on tax avoidance schemes
- Panama and Paradise Papers leaks reveal global industry of tax avoidance packages in offshore tax havens
- Regulatory changes and tighter tax rules stimulate demand for tax advice and compliance services
- Implications of Making Tax Digital for accountants
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- Figure 23: UK fee income from tax services, 2013-17
- Consultancy
- Accountancy firms expand consultancy function and multi-disciplinary skills through strategic acquisitions
- Technology, analytics and digital play increasingly important role in consultancy services
- Accounting firms face increased competition in consultancy services sector
- Brexit-induced uncertainty stimulates demand for consultancy services
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- Figure 24: UK fee income from consultancy services, 2013-17
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- Figure 25: UK fee income from consultancy services, 2013-17
- Corporate Finance & Business Recovery
- Insolvency practitioners struggle with a more sustained economic recovery
- But more uncertain economic outlook could see more UK businesses fall into financial distress
- Brexit could challenge UK’s leading position in cross-border restructuring
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- Figure 26: UK fee income from corporate finance & business recovery services, 2013-17
- Overseas trade in accountancy services
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- Figure 27: International trade in accountancy services, 2012-16
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- Figure 28: Exports and imports of accountancy services, 2012-16
Market Trends & Issues
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- Key points
- Market trends & issues
- FTSE 250 audit market to remain preserve of the ‘big four’ for the foreseeable future
- Adoption of new technologies to drive increased automation and improved quality of audits
- Lower end of the audit market is becoming increasingly uneconomical for auditors
- Accounting firms continue to strengthen their consultancy arms and multi-disciplinary skills
- As digital technology represents a key driver for the consultancy services sector
- Strong demand for cyber security advisory services, as ‘big four’ become the globe’s largest cyber security consulting firms
- Regulatory and risk consultancy services continue to show strong demand growth
- Buoyant M&A activity as accountancy firms look to rapidly expand consultancy capabilities
- Accounting firms are moving into legal services
- ‘Big four’ tap into start-up and SME market
- Cloud computing is transforming the accounting industry
- ‘Big data’ and data analytics represent key growth areas for accountants
Industry Structure
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- Key points
- Industry development
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- Figure 29: Top 20 accounting firms in the UK, by fee income, 2017
- Mid-tier firms are also on consolidation course
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- Figure 30: Analysis of the changes in the structure of the UK accounting, bookkeeping, auditing and tax consultancy industry, 2013-17
- Structure by Employment
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- Figure 31: Analysis of the employment structure of the accounting, bookkeeping, auditing and tax consultancy industry, 2016 and 2017
- Structure by Turnover
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- Figure 32: Analysis of the financial structure of the UK accounting, bookkeeping, auditing and tax consultancy industry, 2016 and 2017
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- Figure 33: Analysis of the financial structure of the UK accounting, bookkeeping, auditing and tax consultancy industry, 2017
Company Profiles
RSM UK Holdings Ltd (Formerly Baker Tilly UK Holdings LTD)
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- Figure 34: Segmental turnover analysis of RSM UK Holdings, 2017
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- Figure 35: Financial Analysis of RSM UK Holdings, 2013-17
- Company strategy
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BDO LLP
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- Company performance
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- Figure 36: Financial Analysis of BDO, 2013-17
- Company strategy:
Deloitte LLP
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- Deloitte combines nine European member firms effective from 1 June 2017
- Recent acquisitional activity, investments and partnerships
- Deloitte follows rivals into legal services market
- Financial performance
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- Figure 37: Segmental turnover analysis of Deloitte, 2017
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- Figure 38: Turnover analysis of Deloitte, by industry, 2017
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- Figure 39: Financial Analysis of Deloitte, 2012-16
- Company strategy
Ernst & Young LLP
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- Financial year 2017 sees record investment in technology by EY
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- Figure 40: Segmental turnover analysis of EY, 2017
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- Figure 41: Financial Analysis of Ernst & Young, 2013-17
- Company review and strategy:
Grant Thornton UK LLP
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- Recent acquisitions and developments
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- Figure 42: Segmental turnover analysis of Grant Thornton, 2016
- Figure 43: Financial Analysis of Grant Thornton UK, 2013-17
- Company strategy:
- Company performance and outlook:
KPMG LLP
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- Figure 44: Segmental revenue analysis of KPMG, 2017
- Figure 45: Financial Analysis of KPMG, 2013-17
- Company performance:
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Mazars LLP
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- Figure 46: Segmental turnover analysis of Mazars, 2016
- Figure 47: Financial Analysis of Mazars, 2012-16
- Company performance
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Moore Stephens LLP
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- Figure 48: Segmental turnover analysis of Moore Stephens, 2017
- Figure 49: Financial Analysis of Moore Stephens, 2013-17
- Company strategy:
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PricewaterhouseCoopers LLP
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- Figure 50: Segmental turnover analysis of PwC, 2017
- Figure 51: Financial Analysis of PwC, 2013-17
- Company review & strategy:
- Clients are number one
- Growth underpinned by technology
- People empowerment
- Backing the tech revolution
- Integrity and promoting standards
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Smith and Williamson Holdings Ltd
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- Figure 52: Financial Analysis of Smith & Williamson Holdings, 2013-17
- Company strategy:
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Market Forecast
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- Key points
- Market prospects
- UK economic outlook remains positive despite backdrop of Brexit-induced uncertainty
- Acquisitions, partnerships and alliances to continue to revolve around the technology space
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- Figure 53: Forecast UK market for accounting & financial management, 2018-22
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- Figure 54: Forecast UK market segmentation for accountancy & financial management, by type of service, 201822
- Audit and accounting
- Tax services
- Consultancy
- Corporate finance and business recovery
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- Figure 55: Forecast UK market segmentation for accounting & financial management, by type of service, 2018-22
Further Sources & Contacts
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- Trade and professional associations
- Association of Chartered Certified Accountants (ACCA UK)
- Chartered Institute of Management Accountants (CIMA UK)
- Chartered Institute of Public Finance Accountancy (CIPFA)
- Institute of Chartered Accountants in England and Wales (ICAEW)
- Institute of Chartered Accountants Scotland (ICAS)
- Trade exhibitions
- Accountex 2018
- CIPFA annual conference 2018
- Trade magazines
- Accountancy Age
- CCH Daily inc. Accountancy Live
- Tax Advisor
- Taxation
- The Accountant
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