According to Wolters Kluwer survey, a leading provider of tax and accounting software and information, the leading UK accountancy firms saw profit decline last year, as they invested heavily in technology to improve services to their clients.
The annual survey of the financial health of the Top 75 firms, conducted by Wolters Kluwer’s Accountancy magazine, found that the sector had enjoyed its seventh consecutive year of fee income growth.
But average profits per partner were down as firms invested in software and technology to automate compliance work and develop new ways of analysing their clients’ businesses to enable them to provide added-value advice to their clients.
Claire Carter, UK Managing Director of Wolters Kluwer’s Tax & Accounting division said: “The survey results mirror what we are seeing among our customers. Accountants want to help their clients grow and develop. Compliance work, like completing tax returns, while important, is something software can help them deliver more effectively.
“But we all need to move beyond compliance. Our customers recognise that they need to collaborate with their clients to help them drive their businesses forward in challenging times and we are delivering the tools to allow them to do just that,” says Carter.
“Studies show that accountants are regarded as the most important business advisers and our ambition is to be the number one companion to accountants and tax advisers. That’s why we are investing in solutions that free them up to deliver business critical advice to their clients.”
The survey found that the 75 highest earning firms generated total UK fee income in 2016 of £13.9bn, £1bn up on the year before, a 9% increase. The Big Four – PwC, Deloitte, Ernst & Young and KPMG – continue to dominate the UK accountancy market accounting for 77% of the total fee income of the Top 75.
Growth in pre-tax profits for the Top 75 slowed to 3% as a result of investments in technology and restructuring with profits per partner down year on year in three of the Big Four firms. Firms told Accountancy they believe this investment will come through in increased profits in future years.
Accountants expect Brexit to bring them more business and, as well as software, they are investing in hiring new people, buying up smaller firms and retraining their staff to meet future challenges.