With the launch of our accountants hub that’s specifically to help accountants find the information they need for their clients, we know more of you are coming to the site and reading our blogs.

So as well as the latest interesting insolvency stories and news every week, we’re now curating a regular monthly round-up for accountants of the items they might have missed but are worth checking out.

Let us know what you think on our social channels or at ask@businessrescueexpert.co.uk and we’ll tailor our future updates closer to what you’d like to see.

IASB unveils new accounting standard 

The International Accounting Standards Board (IASB) have made their first major accounting change to IFRS for years with the new IFRS 18 Presentation and Disclosure in Financial Statements standard being issued to replace the existing IAS 1. 

IFRS 18 has been designed to give investors more transparent and comparable information about companies’ financial performance, enabling better investment decisions, following complaints from investors about a lack of transparency about financial performance.

This decision affects all companies using IFRS accounting standards and while it will improve the usefulness of information presented and disclosed in financial statements, it will also entail additional costs for implementation and ongoing compliance.

The new standard automatically replaces IAS 1 Presentation of Financial Statements, although it retains many requirements from IAS 1 unchanged. 

The IASB first announced they would review IAS 1 in July 2014 as a high priority but it has taken a decade to see the launch of the final standard.  

The key changes include a requirement in the statement of profit and loss to detail defined subtotals on operating profit, more detailed disclosure about performance measures defined by management, and group items for aggregation of information.

Referring to costs the IASB said: “Most costs are likely to relate to changes in internal processes and systems to make the company’s financial statements comply with IFRS 18. These costs will vary depending on the company’s current systems and reporting practices”, adding that there would be higher ongoing costs as a result. 

They also expected there to be costs for audit firms which would have to develop new procedures for auditors to assess new disclosure requirements.

IFRS 18 will be effective for annual reporting periods beginning on or after January 1st 2027 but companies can apply it earlier. IASB said that changes in companies’ reporting due to adoption will depend on their current reporting practices and IT systems. 

Andreas Barckow, IASB chair, said: “IFRS 18 represents the most significant change to companies’ presentation of financial performance since IFRS accounting standards were introduced more than 20 years ago.

“It will give investors better information about companies’ financial performance and consistent anchor points for their analysis.”

Are accountancy jobs more at risk from AI than others?

A new paper from the Institute of Public Policy Research (IPPR) found that finance, accountancy and tax jobs are amongst the most vulnerable from the rollout of AI as they found that the emerging technology could handle nearly two thirds of the routine tasks professionals complete regularly. 

Once AI systems are given more “access and ability to execute tasks in accountancy and tax”, the amount of tasks needed to be completed by a human could reduce by up to 59%. 

This wide-scale implementation of AI into the labour market has the potential to boost GDP by 13% but the downside of this assumption is that it would also see the loss of up to eight million jobs. 

This is why the IPPR thinks “it is urgent that policymakers start preparing a policy response now.”

They estimate that up to 11% of tasks are at risk from AI today with this becoming five times worse for high paid roles “if AI systems become more deeply integrated in organisational processes.”

The first wave of jobs to be under threat are described as back-office, entry-level or part-time positions such as personal assistants which IPPR note are mainly occupied by women.  They also estimate that up to a third of all admin jobs would be under threat in this first phase of adoption. 

The second phase would begin to impact higher paid positions including accountants, finance officers, taxation experts, sales administrators, IT technicians and more at risk. 

Bhargav Srinivasa Desikan, senior research fellow at IPPR said: “We could see jobs such as copywriters, graphic designers and personal assistants’ roles being heavily affected by AI. 

“The question is how we can steer technological change in a way that allows for novel job opportunities, increased productivity and economic benefits for all. 

“We’re at a sliding doors moment, and policymakers urgently need to develop a strategy to make sure our labour market adapts to the 21st century, without leaving millions behind.”

AI is predicted to be adopted rapidly in comparison to other technological advancements with ChatGPT reaching 100 million global users in two months. In comparison it took Facebook two years to reach this milestone.

Debt Relief Orders threshold raised to £50,000

From June 28th 2024, the total amount of debt which can be covered by a debt relief order (DRO) will increase from £30,000 to £50,000 for non-home owners. 

Andrew Shore, assistant director of policy at the Insolvency Service, said: “We understand how difficult things can be for people who are struggling with bills. 

“That’s why the government is making it easier for people with debts they can’t pay back to access the help they need. 

“It’s difficult to know where to turn when dealing with debt, and we’d always encourage people to talk to a regulated debt adviser as a first step. 

“If a debt adviser thinks a DRO might be the best solution, the new changes will help make it a more accessible option.” 

As well as increasing the cap to £50,000, the current administration charge will no longer be required from April 6th.

Another change from June is that the value of a car which can be owned by a DRO applicant doubles from £2,000 to £4,000. DROs still cannot be used to alleviate student loans.

HMRC freezes director’s loan interest at 2.25%

For the second year running the official rate of interest (ORI) for beneficial loan arrangements such as director’s loans will be held at 2.25%. 

HMRC have confirmed that the official rate will not be increased for director’s loans outstanding throughout the tax year 2024/25 using the normal averaging method of calculation, despite a base interest rate of 5.25%

Analysts are surprised by the move for several reasons. 

The last time Bank of England interest rates were comparable was in the mid 2000s when HMRC’s official rate of interest was scalable against base rates. Similarly the interest rate for late tax payments has been 7.75% since August 2023. 

This means that directors opting for directors’ loans instead of dividends will enjoy a more favourable tax environment especially as the tax-free threshold for dividends is being reduced to £500.