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UK Accounting and Financial Management market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Accounting and Financial Management market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

  • What are the implications of Brexit on the UK accountancy sector?
  • What are the likely implications of HMRC’s plans for “Making Tax Digital” for accountants?
  • How are the recently introduced audit reforms affecting mid-tier accounting firms?
  • How can big data analytics help drive growth for accountants?

Company profiles

  • BDO LLP
  • KPMG LLP
  • Deloitte LLP
  • RSM UK Holdings
  • Ernst & Young LLP
  • Grant Thornton UK LLP
  • PriceWaterhouseCoopers LLP

Market segmentation

  • Tax services
  • Audit & accounting
  • Consultancy services
  • Corporate finance & business recovery

Expert analysis from a specialist in the field

Written by Claudia Preedy, a leading analyst in the B2B sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Ongoing uncertainties surrounding Brexit will continue to impact business and investor confidence, with many companies delaying decisions while they wait for greater economic clarity. Claudia Preedy
B2B Analyst

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • The market
            • UK accounting and financial management market demonstrates consistent annual growth
              • Figure 1: UK market for accounting & financial management, 2014-18
            • Consultancy services drive overall market growth
              • Lack of competition in FTSE350 audit market remains major concern
                • Increased demand for tax advice and compliance services
                  • Figure 2: Segmentation of the UK market for accounting & financial management, by type of service, 2014 and 2018
                • UK market for accounting and financial management is expected to demonstrate moderate annual growth over next five years
                  • Figure 3: Forecast UK market segmentation for accounting & financial management, by type of service, 2019-23
                • Companies and brands
                  • ‘Big four’ account for over 80% of top 20 firms’ UK fee income
                    • Figure 4: Top 10 accounting firms in the UK, by fee income, 2018 (% of top 10 fee income)
                  • Mid-tier firms are on consolidation course
                    • Acquisitions, partnerships and alliances revolve around the technology space
                      • What we think
                      • Issues and Insights

                        • Audit market set to see further reforms as lack of competition at the top end remains major concern
                          • The facts
                            • The implications
                              • Accounting firms continue to build on their advisory capabilities and multi-disciplinary skills
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • Value of UK accounting and financial management market reaches an estimated £26.38 billion in 2018
                                      • Consultancy drives overall market growth
                                        • Lack of competition in FTSE350 audit market remains a major concern
                                          • Increased demand for tax advice and compliance services
                                            • Corporate finance & business recovery services sector accounts for 11% of total UK accounting & financial management fee income
                                            • Market Size

                                              • Overview
                                                • The Brexit effect
                                                  • Accountancy firms adopt new business models to expand, diversify or specialise
                                                    • UK accounting and financial management market shows consistent annual growth
                                                        • Figure 5: The UK market for accounting & financial management, 2014-18
                                                        • Figure 6: The UK market for accounting & financial management, 2014-18
                                                    • Market Segmentation

                                                      • Overview
                                                        • Consultancy services command a rising share of UK accounting and financial management market
                                                          • Figure 7: Segmentation of the UK market for accounting & financial management, by type of service, 2014-18
                                                          • Figure 8: Segmentation of the UK market for accounting & financial management, by type of service, 2014 and 2018
                                                        • Audit & accounting
                                                          • Audit market reforms fail to deliver increased competition, as ‘big four’ continue to dominate FTSE 350 market
                                                            • Audit market expected to see further reforms to improve competition
                                                              • Opportunities open up for mid-tier firms to compete for non-audit work for FTSE companies
                                                                • Recent developments in FTSE 350 audit contracts
                                                                  • Rise in audit threshold putting pressure on lower end of auditing market
                                                                    • Audit fees at lower end of the market remain squeezed, but fees are more stable at the top end as competition focusses on quality of audits
                                                                      • Auditors invest in innovative technology solutions to deliver continually higher audit quality and deeper insight
                                                                        • Audit and accounting services sector sees moderate annual increase in UK fee income
                                                                          • Figure 9: UK fee income from audit & accounting services, 2014-18
                                                                        • Tax services
                                                                          • Government clampdown on tax avoidance schemes
                                                                            • Regulatory changes and tighter tax rules stimulate demand for tax advice and compliance services
                                                                              • Implications of Making Tax Digital for accountants
                                                                                • UK fee income from tax services up by an estimated 5% in 2018
                                                                                  • Figure 10: UK fee income from tax services, 2014-18
                                                                                • Consultancy
                                                                                  • Accountancy firms expand consultancy and advisory functions through strategic acquisitions
                                                                                    • Technology, analytics and digital play important role in consultancy services
                                                                                      • Some accountancy firms target advisory services specifically at SME sector
                                                                                        • Move towards “integrated services model” sees firms facing increased competition from legal services firms
                                                                                          • Brexit-induced uncertainty stimulates demand for consultancy services
                                                                                            • UK fee income from consultancy services grows by nearly 30% between 2014 and 2018
                                                                                              • Figure 11: UK fee income from consultancy services, 2014-18
                                                                                              • Figure 12: UK fee income from consultancy services, 2014-18
                                                                                            • Corporate finance & business recovery
                                                                                              • Demand for restructuring services resurges as economic conditions turn more uncertain
                                                                                                • Tougher trading conditions and economic uncertainty see business distress levels trend upwards
                                                                                                  • Brexit could challenge UK’s leading position in cross-border restructuring
                                                                                                    • Buoyant M&A market drives recent growth in corporate finance & business recovery services sector
                                                                                                      • Corporate finance & business recovery services sector accounts for around 11% of total UK accounting & financial management fee income
                                                                                                          • Figure 13: UK fee income from corporate finance & business recovery services, 2014-18
                                                                                                        • Overseas trade in accountancy services
                                                                                                            • Figure 14: International trade in accountancy services, 2013-17
                                                                                                            • Figure 15: Exports and imports of accountancy services, 2013-17
                                                                                                        • Market Forecast

                                                                                                          • While the economic outlook remains cautiously optimistic, Brexit uncertainty will continue to impact business and investor confidence
                                                                                                            • Acquisitions, partnerships and alliances set to revolve around the technology space
                                                                                                              • UK market for accounting and financial management is expected to demonstrate moderate annual growth over next five years
                                                                                                                • Figure 16: Forecast UK market for accounting & financial management, 2019-23
                                                                                                                • Figure 17: Forecast UK market segmentation for accounting & financial management, by type of service, 2019-23
                                                                                                              • Audit and accounting
                                                                                                                • Investment in technology to remain key focus in audit sector
                                                                                                                  • Tax services
                                                                                                                    • Consultancy
                                                                                                                      • Corporate finance and business recovery
                                                                                                                        • Consultancy expected to remain key growth sector of accounting and financial management market
                                                                                                                          • Figure 18: Forecast UK market segmentation for accounting & financial management, by type of service, 2019-23
                                                                                                                      • The Impact of the Economy

                                                                                                                        • GDP growth rebounds in Q3 but challenges remain
                                                                                                                          • Figure 19: GDP growth rate, Q3 2014-Q3 2018, (% change on previous quarter)
                                                                                                                          • Figure 20: Forecast GDP development, 2018-23
                                                                                                                      • Market Trends

                                                                                                                        • Adoption of new technologies to drive increased automation and improved quality of audits
                                                                                                                          • Lower end of the audit market is becoming increasingly uneconomical for auditors
                                                                                                                            • Accounting firms continue to build on their advisory capabilities and multi-disciplinary skills
                                                                                                                              • Digital technology represents a key driver for the consultancy services sector
                                                                                                                                • Strong demand for cyber security advisory services, as ‘big four’ are now largest cyber security consulting firms globally
                                                                                                                                  • Regulatory and risk consultancy services continue to show strong demand growth
                                                                                                                                    • Large accountancy firms expand into marketing services industry via acquisitions
                                                                                                                                      • Large accounting firms move into legal services
                                                                                                                                        • ‘Big four’ legal teams at forefront in investing in LawTech
                                                                                                                                          • ‘Big four’ tap into start-up and SME market
                                                                                                                                            • Adoption of cloud accounting software is becoming more widespread across businesses of all sizes
                                                                                                                                              • ‘Big data’ and data analytics represent key growth areas for accountants
                                                                                                                                              • Regulatory and Legislative Environment

                                                                                                                                                • Industry regulation
                                                                                                                                                  • Audit market reforms aim to open up market to increased competition
                                                                                                                                                    • Audit market is facing further reforms amid serious competition concerns
                                                                                                                                                      • More companies are exempt from audit as thresholds are raised
                                                                                                                                                        • New UK accounting standards
                                                                                                                                                          • Crackdown on tax avoidance
                                                                                                                                                            • Companies Act shake-up
                                                                                                                                                              • Scottish tax devolution
                                                                                                                                                                • HMRC move towards digital tax services
                                                                                                                                                                • Market Drivers

                                                                                                                                                                  • Number of active businesses in the UK
                                                                                                                                                                      • Figure 21: Number of private sector businesses in the UK, 2004-18
                                                                                                                                                                      • Figure 22: Number of private sector businesses in the UK, 2004-18
                                                                                                                                                                      • Figure 23: Number of VAT and/or PAYE registered enterprises in the UK, by industry group and turnover size band, 2017, (Number and £000)
                                                                                                                                                                    • Rapid rise in self-employment since 2008 financial crisis
                                                                                                                                                                        • Figure 24: Self-employed workers in the UK, 2007-18, (000s and %)
                                                                                                                                                                      • Insolvency rates are edging upwards
                                                                                                                                                                          • Figure 25: Number of company insolvencies, receiverships and administrations in England & Wales, 2008-18
                                                                                                                                                                        • Corporate credit conditions
                                                                                                                                                                          • UK M&A market remains resilient, despite uncertain economic and political backdrop
                                                                                                                                                                              • Figure 26: Mergers and acquisitions involving UK companies, 2005-18
                                                                                                                                                                            • Number of listed companies on a downward trend
                                                                                                                                                                              • Figure 27: Number of main market and AIM listed companies, 2008-18
                                                                                                                                                                              • Figure 28: Number of main market and AIM listed companies, 2010-18
                                                                                                                                                                          • Companies and Brands – What You Need to Know

                                                                                                                                                                            • Mid-tier firms are on consolidation course
                                                                                                                                                                              • Major mid-tier firms BDO and Moore Stephens set to merge
                                                                                                                                                                                • Grant Thornton to no longer bid for FTSE350 audit work
                                                                                                                                                                                • Industry Structure

                                                                                                                                                                                  • Overview
                                                                                                                                                                                    • Figure 29: Top 20 accounting firms in the UK, by fee income, 2018
                                                                                                                                                                                  • Number of audit firms gradually declining
                                                                                                                                                                                    • Mid-tier firms are on consolidation course
                                                                                                                                                                                      • Industry structure
                                                                                                                                                                                        • Figure 30: Analysis of the changes in the structure of the UK accounting, bookkeeping, auditing and tax consultancy industry, 2013-17
                                                                                                                                                                                      • Structure by employment
                                                                                                                                                                                        • Figure 31: Analysis of the employment structure of the accounting, bookkeeping, auditing and tax consultancy industry, 2017 and 2018
                                                                                                                                                                                      • Structure by turnover
                                                                                                                                                                                        • Figure 32: Analysis of the financial structure of the UK accounting, bookkeeping, auditing and tax consultancy industry, 2017 and 2018
                                                                                                                                                                                        • Figure 33: Analysis of the financial structure of the UK accounting, bookkeeping, auditing and tax consultancy industry, 2018
                                                                                                                                                                                    • Competitive Strategies

                                                                                                                                                                                      • BDO and Moore Stephens in advanced merger talks to create the largest UK accountant and business adviser focused on mid-sized businesses
                                                                                                                                                                                        • Deloitte combines nine European member firms to support clients’ closer integration between countries
                                                                                                                                                                                          • EY acquires Riverview Law as firm works to expand its legal offering
                                                                                                                                                                                            • Grant Thornton to no longer bid for FTSE350 audit work as market is “extremely difficult to penetrate”
                                                                                                                                                                                              • PwC’s digital transformation sees step change with significant investment in cloud-based technologies
                                                                                                                                                                                                • EY announces major investment in technology solutions
                                                                                                                                                                                                • Company Profiles

                                                                                                                                                                                                  • BDO LPP
                                                                                                                                                                                                    • Targeted approach to technology sees BDO focus on automation, analytics and innovation
                                                                                                                                                                                                      • BDO and Moore Stephens in advanced merger talks to create the largest UK accountant and business adviser focused on mid-sized businesses
                                                                                                                                                                                                        • Company performance
                                                                                                                                                                                                          • Figure 34: Financial Analysis of BDO, 2014-18
                                                                                                                                                                                                        • Deloitte LLP
                                                                                                                                                                                                          • Deloitte combines nine European member firms effective from 1 June 2017
                                                                                                                                                                                                            • Recent acquisitional activity, investments and partnerships
                                                                                                                                                                                                              • Deloitte follows rivals into legal services market
                                                                                                                                                                                                                • Financial performance
                                                                                                                                                                                                                    • Figure 35: Financial Analysis of Deloitte, 2014-18
                                                                                                                                                                                                                    • Figure 36: Segmental turnover analysis of Deloitte, 2018, (£million and %)
                                                                                                                                                                                                                    • Figure 37: Turnover analysis of Deloitte, by industry, 2018, (£ million and % of total)
                                                                                                                                                                                                                  • Ernst & Young LLP
                                                                                                                                                                                                                    • Financial year 2017 sees record investment in technology by EY
                                                                                                                                                                                                                      • EY acquires Riverview Law as firm works to expand its legal offering
                                                                                                                                                                                                                        • Financial performance
                                                                                                                                                                                                                          • Figure 38: Segmental turnover analysis of EY, 2018. (£million and % of total)
                                                                                                                                                                                                                          • Figure 39: Financial analysis of Ernst & Young, 2014-18
                                                                                                                                                                                                                        • Company strategy
                                                                                                                                                                                                                          • Grant Thornton UK LLP
                                                                                                                                                                                                                            • Grant Thornton restructures to serve three strategic markets
                                                                                                                                                                                                                              • Grant Thornton to no longer bid for FTSE350 audit work
                                                                                                                                                                                                                                • Financial performance
                                                                                                                                                                                                                                  • Figure 40: Segmental turnover analysis of Grant Thornton, 2018
                                                                                                                                                                                                                                  • Figure 41: Financial analysis of Grant Thornton UK, 2013-17
                                                                                                                                                                                                                                • Company strategy
                                                                                                                                                                                                                                  • KPMG LLP
                                                                                                                                                                                                                                    • Recent notable UK acquisitions
                                                                                                                                                                                                                                      • Financial performance
                                                                                                                                                                                                                                        • Figure 42: Segmental revenue analysis of KPMG, 2018
                                                                                                                                                                                                                                        • Figure 43: Financial Analysis of KPMG, 2014-18
                                                                                                                                                                                                                                      • PriceWaterhouseCoopers LLP
                                                                                                                                                                                                                                        • Recent acquisitional activity
                                                                                                                                                                                                                                          • Investment in technology continues
                                                                                                                                                                                                                                            • Financial performance
                                                                                                                                                                                                                                              • Figure 44: Segmental turnover analysis of PwC, 2018, (£million and % of total)
                                                                                                                                                                                                                                              • Figure 45: Financial analysis of PwC, 2014-18
                                                                                                                                                                                                                                            • Company strategy
                                                                                                                                                                                                                                              • RSM UK Holdings
                                                                                                                                                                                                                                                • Company performance
                                                                                                                                                                                                                                                    • Figure 46: Segmental turnover analysis of RSM UK Holdings, 2017
                                                                                                                                                                                                                                                    • Figure 47: Financial analysis of RSM UK Holdings, 2014-18
                                                                                                                                                                                                                                                  • Company strategy
                                                                                                                                                                                                                                                  • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                                                                                      • Abbreviations
                                                                                                                                                                                                                                                        • Methodology
                                                                                                                                                                                                                                                        • Further Sources and Contacts

                                                                                                                                                                                                                                                          • Trade associations
                                                                                                                                                                                                                                                            • Association of Chartered Certified Accountants (ACCA UK)
                                                                                                                                                                                                                                                              • Chartered Institute of Management Accountants (CIMA UK)
                                                                                                                                                                                                                                                                • Chartered Institute of Public Finance Accountancy (CIPFA)
                                                                                                                                                                                                                                                                  • Institute of Chartered Accountants in England and Wales (ICAEW)
                                                                                                                                                                                                                                                                    • Institute of Chartered Accountants Scotland (ICAS)
                                                                                                                                                                                                                                                                      • Trade magazines
                                                                                                                                                                                                                                                                        • Accountancy Age
                                                                                                                                                                                                                                                                          • CCH Daily inc. Accountancy Live
                                                                                                                                                                                                                                                                            • Tax Advisor
                                                                                                                                                                                                                                                                              • Taxation
                                                                                                                                                                                                                                                                                • The Accountant
                                                                                                                                                                                                                                                                                  • Trade events
                                                                                                                                                                                                                                                                                    • Accountex 2019
                                                                                                                                                                                                                                                                                      • CIPFA annual conference 2019