UK accountancy and allied services marketJULY 2016www.irn-research.com

A free presentation from IRN Research

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 and 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

0-49k29%

50k-99k31%

100k-249k25%

250k-499k7%

500k-999k4%

1m+4%

Percentage of Businesses by Turnover (£000)

Structure

Structure While the industry is dominated by small companies, the big four

players – PWC, Deloitte, EY and KPMG – collectively account for 42% of the industry turnover.

* Formerly Baker Tilly** Including Chantrey Vellacott DFK 

Moore Stephens**

Mazars

Smith & Williamson

RSM*

BDO

Grant Thornton UK

KPMG

EY

Deloitte

PwC

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%0.4%

0.6%

0.9%

1.3%

1.7%

2.2%

8.4%

8.6%

11.7%

13.2%Share of industry turnover, 2015

% of turnover, 2015

Structure• It’s a dynamic market with many new businesses entering the market

each year and the number of firms having risen by around 26% between 2011 and 2015

• One-third of firms started in business in the last four years• London and the South East account for 43% of accountancy and audit

businesses

2011 2012 2013 2014 20150

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

28,740 30,180 30,410 32,480 34,255

3,2903,945 4,405

4,8655,760

8751,025

1,2001,320

1,420

32,90535,150

36,01538,665

41,435Number of firms

Accounting and auditing activities Bookkeeping activitiesTax consultancy

Market Size and Trends

 

• Industry has a collective turnover of over £23 billion.

• Market turnover moves closely in sync with the trends in the UK economy.

• Between 2012 and 2015, turnover grew at an annual average rate of 3.5% but in 2016 IRN Research anticipate growth of just 0.3%.

• Brexit and new auditing rules will slow business turnover in 2016

Market Size and Trends

2011 2012 2013 2014 2015 2016 (est)£19,500

£20,000

£20,500

£21,000

£21,500

£22,000

£22,500

£23,000

£23,500

£24,000

£22,073

£21,016

£21,509

£22,417

£23,287 £23,348

Industry Turnover (£m), 2011-2017 

Impact of Brexit• The UK market is very self-contained - firms export only around 10% of their services and only

3% of the domestic market is supplied by imported services

• But Brexit is anticipated to have a negative impact on the market with the scale of the Brexit hit varying according to the trade deal the UK arranges with the EU

• The biggest consumers of accountancy services in the UK are financial and professionals services firms who will be hit by leaving the EU

• In IRN Research’s report The Impact of Brexit on Consumer Financial Services, IRN laid out three scenarios for the future course of the UK economy:

 • Scenario 1 (No-Brexit): Brexit did not happen and the economy grows in the fashion laid

out by the Office of Budget Responsibility in its March 2016 forecasts• 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

Impact of Brexit

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021£20.0

£21.0

£22.0

£23.0

£24.0

£25.0

£26.0

£27.0

£28.0

£21.0£21.5

£22.4

£23.3

£24.1£24.6

£25.3

£26.0

£26.7

£27.4

25.0318373169368

25.8565828675238

26.5731879167063

23.914012593841523.851943868082724.075409558412524.4253373169368

25.3317828675238

26.0373879167063

No-Brexit Brexit (EEA) Brexit (WTO)

Turnover (£ billion), 2012-2021

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/ACCOUNTANCY-AND-ALLIED-SERVICES-MARKET.pdf

To discuss your research requirements contact

Gary Giddings – ggiddings@irn-research.com