The figures from the Financial Reporting Council (FRC) show there were 6,962 accounting firms registered in the UK in 2013, a 4% drop on the previous year when there were 7,239 firms registered. The main reasons are shortage of audit work and HMRC’s campaigns to cut down on tax planning.
Peter Alderson, Managing Director of LDF, a financial services provider, said: “One key reason is that the impact of new rules loosening the requirements for businesses to carry out an audit is starting to filter through, adding to the financial pressures that many, particularly smaller, firms were already feeling”.
“Audit is a core revenue stream for many accountancy businesses, so any drop-off in this type of work is going to have a significant impact on profitability”.
The company says that tax planning work is also under pressure as HMRC reduces the number of tax schemes it allows. Thus, it’s more challenging for accounting firms to offer advice and identify legitimate planning approaches.