UK accountancy and allied services market A free

UK accountancy and allied services market A free presentation from IRN Research JULY 2016 www. irn-research. com

About IRN Research www. irn-research. com IRN Research is a full-service research agency with research capabilities from small-scale research requests to large-scale international projects. We utilise a range of research techniques, e. g. desk research, telephone/online surveys, face-to-face interviews, focus groups, and can provide a full results analysis. We undertake a wide range of research for professional services firms including: Customer Experience Research: We identify what your customer thinks of your company and brand what drives such perceptions. Customer Segmentation: We identify and assess how to target customer sub- groups, using a variety of data including attitudinal and usage information plus consumer demographic and business structure data. Market Understanding: We seek to understand the market you operate in by running usage and attitude surveys and undertaking desk research to come to a clear understanding of your customer’s needs and potential growth opportunities.

Structure • In 2015, just over 41, 000 firms were active in the accountancy and allied services market, collectively employing over 300, 000 individuals. • Over eight-in-ten firms engaged in the market undertook accountancy and audit activities. • Most accountancy and allied service firms serve a local catchment area with only the larger firms serving a regional or national market. As such, most firms active in the market are small in size: over 90% employ fewer than 10 people

Structure Share of industry turnover, 2015 Pw. C 13. 2% While the industry is dominated by small companies, the big four players – PWC, 11. 7% Deloitte, EY and KPMG – collectively account for 42% of the industry turnover. 8. 6% EY 8. 4% KPMG Grant Thornton UK 2. 2% BDO 1. 7% RSM* Smith & Williamson Mazars Moore Stephens** 0. 0% 1. 3% 0. 9% * Formerly Baker Tilly ** Including Chantrey Vellacott DFK 0. 6% 0. 4% 2. 0% 4. 0% 6. 0% 8. 0% % of turnover, 2015 10. 0% 12. 0% 14. 0%

Structure • Number of firms It’s a dynamic market with many new businesses entering the market each year and 41, 435 the number of firms having risen by around 26% between 2011 and 2015 45, 000 36, 015 38, 665 • 40, 000 One-third of firms started in business in the last four years 35, 150 1, 320 • 32, 905 1, 420 1, 200 5, 760 London and the South East account for 43% of accountancy and audit businesses 1, 025 35, 000 4, 865 875 30, 000 3, 945 4, 405 28, 740 30, 180 30, 410 2011 2012 2013 3, 290 25, 000 20, 000 15, 000 32, 480 34, 255 10, 000 5, 000 0 Accounting and auditing activities Bookkeeping activities 2014 Tax consultancy 2015

Market Size and Trends Industry Turnover (£m), 2011 -2017 • Industry has a collective turnover of over £ 23 billion. • Market turnover moves closely in sync with the trends in the UK economy. Between 2012 £ 24, 000 and 2015, turnover grew at an annual average rate of 3. 5% but in 2016 IRN Research anticipate growth of just 0. 3%. £ 23, 348 £ 23, 500 £ 23, 287 £ 23, 000 £ 22, 417 £ 22, 500 £ 22, 073 £ 22, 000 £ 21, 509 £ 21, 500 £ 21, 016 £ 21, 000 £ 20, 500 £ 20, 000 £ 19, 500 2011 2012 2013 2014 2015 2016 (est)

Impact of Brexit • The UK market is very self-contained - firms export only around 10% of their services and only 3% of the Turnover (£ billion), 2012 -2021 domestic market is supplied by imported services £ 28. 0 £ 27. 4 • But Brexit is anticipated to have a negative impact on the market with the scale of the Brexit hit varying £ 26. 7 according to the trade deal the UK arranges with the EU £ 26. 6 • £ 26. 0 £ 25. 9 The biggest consumers of accountancy services in the UK are financial and professionals services firms £ 26. 0 £ 25. 3 £ 25. 0 who will be hit by leaving the EU £ 24. 6 £ 25. 3 £ 24. 1 • In IRN Research’s report The Impact of Brexit on Consumer Financial £ 24. 4 Services, IRN laid out three £ 24. 0 £ 24. 1 £ 23. 3 scenarios for the future course of the UK economy: £ 23. 9 £ 22. 4 • Scenario 1 (No-Brexit): Brexit did not happen and the economy grows in the fashion laid out by the £ 22. 0 £ 21. 5 Office of Budget Responsibility in its March 2016 forecasts £ 21. 0 • Scenario 2 (EEA): The UK arranges a European Economic Area style deal with the EU • Scenario 3 (WTO): The UK arranges a World Trade Organisation style deal with the EU £ 20. 0 2012 2013 2014 2015 No-Brexit 2016 2017 Brexit (EEA) 2018 Brexit (WTO) 2019 2020 2021

Key issues Audit Rotation and new rules Cloud outsourcing of the accounting function Move from providers of data to providers of consultancy services Negative public perceptions of tax planning and avoidance Advent of online tax accounts by the HMRC from 2017

IRN Research www. irn-research. com To download a copy of the Accountancy and Allied Services Market report visit http: //www. irn-research. com/wp-content/uploads/2016/07/ACCOUNTANCYAND-ALLIED-SERVICES-MARKET. pdf To discuss your research requirements contact Gary Giddings – ggiddings@irn-research. com