1. UK accountancy and allied services market JULY 2016 www.irn-research.com A free presentation from IRN Research

2. 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.

3. 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

4. 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

5. 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

6. Market Size and Trends Industry Turnover (£m), 2011-2017 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%.

7. 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 T he 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 Turnover (£ billion), 2012-2021

8. 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

9. 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