The Modern Accountant Weekly Newsletter | 🚀Modulr’s New Playbook

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Editors Pick 📣

The Shift Is On — Strategic Accounting Is Here

In Modulr’s latest research, 75% of firms reported increased demand for business strategy advice. But only a minority have positioned themselves to meet it.

The compliance era is fading fast. To stay indispensable, entrepreneurial accountants are stepping into Fractional CFO roles, pairing sharp financial insight with the power of automated payment rails. Modulr’s new Fractional CFO Playbook shows how to swap time-based tasks for high-value partnerships, deepen client relationships and open fresh revenue streams. Modern businesses demand more from their accountants.

Your essential guide to:

• Transitioning from compliance-based services to strategic roles.

• Overcoming operational bottlenecks caused by outdated payment systems.

• Delivering high-value services like payroll, forecasting, and cash flow management.

👉 [Download the Fractional CFO Playbook Here]

Sector Spotlight 🌟

TAX REPORTING

Making Tax Digital For Income Tax 2026 Is A Comprehensive Guide For Accountants

Making Tax Digital for Income Tax (MTD ITSA) is set to overhaul how income from self-employment and property is reported to HMRC, beginning in April 2026. Crucially, this change marks a departure from previous digital initiatives by mandating quarterly online submissions and final declarations, thereby requiring a strategic rethinking of client workflows and technology. With income thresholds set at £50,000 and above from 2026 and £30,000 from 2027, firms must prepare early to adapt their processes and technology stacks, employ the right software solutions, and train their staff to avoid backlog and misreporting.

Technology selection emerges as a critical factor, as not all existing VAT solutions are compatible with MTD ITSA. The market is dominated by app-based systems for small businesses, spreadsheet solutions with bridging software, and comprehensive accounting platforms, each catering to different business needs. The push towards digital compliance is about more than meeting HMRC requirements—it's a chance to streamline operations and enhance client interactions, uncovering insights and forging stronger adviser relationships. With early adoption, firms can navigate this transition smoothly, ensuring resilience in the face of evolving digital tax landscapes.

AI IN ACCOUNTING

Is AI Adoption in Accounting a Smooth Development or an Imposed Change

As AI technology continues to gain attention, accountants face a crossroads: embrace or resist integration. Though hailed as transformative, AI's impact on accountancy could resemble the evolution seen in the early 2000s' "thumb generation," where technology redefined interaction but sparked debate on genuine improvement. This AI evolution could shift from traditional graphical user interfaces to more intuitive, dialogue-driven systems, allowing a new generation to query data naturally, akin to conversing rather than navigating manual pathways.

Accountants may still hesitate due to AI's "black box" nature, lacking transparency and accountability, which remain crucial in the field. Despite tech giants investing heavily in AI, its true value lies not in a complete overhaul but in subtle enhancements in efficiency and precision. The question remains: will accountants adapt voluntarily like previous technological evolutions, or will forced adoption be inevitable as companies push for returns on their massive AI investments?

TAX COMPLIANCE

HMRC To Issue 1.4 Million Letters for Unpaid Tax Notifications

HMRC is embarking on a large-scale compliance effort, issuing 1.4 million Simple Assessment letters to UK taxpayers over unpaid income tax. These letters are primarily targeting individuals with income that hasn't been fully taxed through the usual Pay As You Earn (PAYE) or Self Assessment systems. Key triggers include untaxed savings interest, income from additional jobs, or when tax-free allowances are mistakenly claimed. It's crucial to review these letters to avoid penalties, as action is required by 31 January 2026. Payment can be managed through various online and traditional banking methods, but failure to respond could lead to enforcement consequences.

The system behind these letters is designed to streamline tax collections without the need for a full Self Assessment return. People who disagree with their assessment can query it within 60 days, with the possibility of appeal if the issue isn't resolved. HMRC has made it clear that while these notices are routine, they play a vital role in the agency's compliance strategy, efficiently addressing small tax discrepancies. Understanding this process is essential to navigating potential issues with unpaid taxes efficiently.

TAX POLICY ANALYSIS

Could Eliminating Taxes Actually Boost Economic Growth in the United Kingdom

The debate over whether eliminating taxes could invigorate the UK economy has drawn mixed responses, particularly among economists and policymakers. While some argue that tax reduction could fuel economic growth, others warn of the consequences like reduced public spending capabilities, which would affect services crucial to citizens. Many advocate for a wealth tax targeting those with assets exceeding £10m, but its practicality due to valuation complexities remains contentious.

Eliminating taxes altogether might seem appealing, promising ultimate simplification and potentially boosting economic output, but it raises significant challenges too. Without tax revenues, funding for vital public services such as healthcare and defence would collapse, leading to undisputed chaos rather than progress. This notion might be more of an illusion of economic advantage rather than a feasible strategy, encouraging a deeper examination of tax structure reform instead of complete abolition.

TAX ALLOWANCE RULES

Understanding Employment Allowance Rules for Connected Companies and Complexities

When two or more companies are recognised as "connected", they face a choice: only one can claim the £10,500 employment allowance for 2025/26. The difficulty usually lies in determining what defines "connected". A company is generally considered connected if it controls, or is controlled by, another entity, most often evidenced through ownership of a majority of shares. In scenarios involving associates, such as family members, a subjective test assesses financial and economic interdependence. Press above to learn more.

COMPANY MERGER

Menzies Merges With Beever and Struthers to Create £110 Million Firm

Menzies LLP and Beever and Struthers have joined forces to form a formidable national accountancy and business advisory firm, now boasting a combined fee income of £110 million and over 1,000 professionals. This merger distinguishes itself from typical market consolidations that are often driven by private equity, as it is rooted in shared independence and cultural alignment, promising lasting value and service excellence. By merging, these firms extend their office network across London's South East to Manchester, Birmingham, and Cardiff, enhancing their sector expertise, particularly in not-for-profit and social housing sectors, where Beever and Struthers have excelled.