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Iain Hasdell is the Chief Executive of the Employee Ownership Association the voice of employee owned businesses in the UK

The report of the independent Nuttall Review into barriers to employee ownership in the UK has just been released at a Summit on employee ownership chaired by the Deputy Prime Minister. This marks another important step along the way towards employee ownership becoming a central part of industrial policy. And, critically, it will feed directly and very strongly into the separate review of employee ownership taxation that was announced recently by the Chancellor.

The Employee Ownership Association, the voice of employee owned businesses in the UK, very much welcomes the key recommendations in the Nuttall Review, having pushed hard for the Review to take place and having been closely involved in its work. Businesses that are owned by their employees contribute over £30 billion to the UK economy each year. And employee owned business tend overall to have higher productivity, greater levels of innovation, better resilience to economic turbulence and more engaged, fulfilled workers who are less stressed than colleagues in conventionally owned organisations. Even a cursory look at the compelling success stories of employee owned businesses such as Gripple, Clansman, Childbase,Unipart, and Sutcliffe Play demonstrates the very special value of employee ownership.

Chapter 2 of the Nuttall Report summarises the empirical evidence on the unique performance of employee owned businesses. The EOA is massively enthusiastic about the content of the Nuttall Report. The diagnostic sections go to the heart of the main challenges to be overcome in growing the number of employee owned businesses. And the prescriptions are compelling.

Nuttall recommends a major campaign to raise awareness of employee ownership options. He calls for much more progress at a faster pace on creating better access to finance for businesses that want to implement employee ownership. He points to the need for a more modern approach to some elements of the taxation system that affects employee owners. He recommends the simplification of employee ownership models through the development of simple toolkits and ‘off the shelf’ templates to cover tax, legal and other regulatory considerations – what the Deputy Prime Minister is calling ‘employee ownership in a box’. And Nuttall urges business and government to work together to remove the key barriers to employee ownership.

That brings me to one of those barriers – the role of financial advisors – which the report discusses in several places. Put simply the majority, with some brilliant exceptions, of accountants do not yet understand employee ownership, the various models that are available, how to finance transitions to employee ownership and how corporate financial governance needs to work in businesses that are owned by their employees. Consequently they are frequently found wanting when it comes to serving the needs of clients who are pursuing employee ownership.

Too often, either as auditors, or commercial advisors, accountants default to the PLC world in which they are regularly most comfortable. This militates against employee ownership in favour of sales of companies to competitors and/or management buy outs. This is nobody’s fault – this is not about ascribing culpability. But it is a significant challenge that the profession has to overcome.It has to start at the grass roots – with employee ownership becoming a much bigger and integral part of the learning and qualification process for those in the accountancy profession. And be reinforced within professional service Firms through the creation of many more teams who achieve genuine expertise in employee ownership matters. This is perfectly plausible.The ordinary disciplines of market demand and supply will lubricate progress as the number of employee owned clients grows. It is now too big a business opportunity to be ignored.

The Nuttall Report sets out an array of work for the EOA to take forward, including collaboration with the Employee Engagement Taskforce and also building on the Breedon Review on access to finance. As part of that agenda of practical next steps we are looking forward with confidence to helping the accountancy profession pick up the gauntlet of employee ownership in a very positive way. When the profession does this it will be a vital contribution to the future growth of employee ownership in the UK.


By David York, head of auditing practice at ACCA

The Higgs Boson is no doubt feeling rather exposed right now, which probably makes a change from feeling hunted. Even the Financial Times has gotten excited about the discovery.

The news recently has been full of the discovery of what some have dubbed ‘the god particle’, a fundamental building block of the universe that gives other particles their mass. Actually it is a bit more complicated than that – trust me I’m a physicist – or at least I have a degree in physics which is a starter. You will see from the job title that these days I am more of an auditing expert, so what is the connection?

When I joined the accountancy profession straight after university I was surprised to find that accountants were better experimenters than the scientists. A scientist reports the results of an experiment, plus or minus the margin of error, but an accountant can estimate the value of work in progress to the nearest pound. That is why financial statements balance – but in reality it’s all a bit of smoke and mirrors.

Auditors are also in an envious position in comparison to scientists because they can form a judgement, and report only that ‘in our opinion the financial statements give a true and fair view’. The auditor’s smoke and mirrors are hidden elsewhere in the report where readers are told that the evidence the auditor bases the opinion on is sufficient to ‘give reasonable assurance’. Actually it is a bit more complicated than that – trust me I’m an auditor.

In fact, it’s so complicated you would probably find the standard model of particle physics easier. To make a start on that you could do worse than the BBC's Q&As about the Higgs Boson

But one thing in all the news coming out of the Large Hadron Collider (the Cern Giant) that I found strange yet charming was the life breathed into Sigma – a Greek letter that has unfortunately never been as popular as Alpha and Omega. The physicists analysing the results applied a test of statistical significance call 5-sigma – and achieved instant popularity because it would have been less catchy to have to refer to five standard deviations; although that itself might make a boson blush.

5-sigma means that there is a 99.99994% chance the results are right. Which seems pretty certain, although perhaps only what we should consider necessary for something so important. 

So what about audit opinions? They are important too – just ask yourself how much the global capital markets moved on the announcement of the Higgs Boson discovery! Well as I said such things are complicated. But think 2-sigma (95.5%) or 3-sigma (99.73%) as a maximum – not quite the certainty the Higgs Boson has required.

Who has it right? You choose.

By Jamie Lyon, head of corporate sector at ACCA

The benefits of finance transformation and the adoption of alternative finance models such as shared services and outsourcing — transparency, lower cost, greater efficiency, standardisation and improved governance, and more – continue to be lauded.

Recently ACCA spoke to finance leaders from 20 of the world’s leading global brands to discuss their views and perspectives on finance transformation and the use of shared services and outsourcing.

Client organisations such as Coca Cola, Kimberly Clark, Shell, Unilever, Pearson and WPP shared their client insights on the successes, or otherwise, of remote delivery in the finance function. The analysis was complemented further from key advisory firms Deloitte, KPMG, PwC and Ernst and Young, as well as key business process outsourcing players such as Accenture and IBM. Critically, we asked participants what are the finance transformation issues that kept them awake at night?

The report, Finance Transformation: Expert Insights on shared services and outsourcing makes for interesting reading. For example, some leaders use shared services and outsourcing as a functional finance fix, improving the “factory,” while others see shared services and outsourcing as having a greater purpose — transforming the business, not just stopping at a better finance function; focusing on fixing the end-to-end business processes. Using finance transformation as a catalyst for business change, typically brings into play greater complexity and requires the finance function to be truly connected and influential across the organisation to drive the change process.

This brings me nicely on to the concept of change. Change management was cited across leaders as being the biggest challenge, underestimated often at the outset of the journey, and insufficient change management capability being evident to manage the transformation process effectively. The retained finance function was also cited as another key challenge. How do you truly make the retained finance function tick with the shared service/outsourced delivery to drive the optimal finance function, and how do you develop those entirely new relationship management and governance skills to make these new finance models work?

After the initial benefits of implementation had been gained (cost reduction, standardisation), finance leaders also recognised the business they are serving don’t just want a better finance function per se – they also want to see what else the finance functions can deliver. For finance leaders, their internal business counterparts continue to look for ‘more’ — how do I get more cash, more information, more service, more intelligence, more cost out from finance? It’s a big ask for finance leaders to meet, and the solutions are not cut-and-dried. For finance functions adopting shared services and outsourcing, the report suggests there is plenty more to do to unlock all the value and meet business needs. Undoubtedly, however, one point came through very strongly across the board – there’s no turning back from finance shared services and outsourcing.

Anita Brook, Managing Director of Accounts Assist UK Ltd and vice-president of ACCA’s practitioners panel explains how mentoring is good for both the mentee and the mentor


We all start somewhere. We’ve all taken the first steps in our careers and at times could have done with some additional support. This is why having a mentor can be an essential link between knowledge, experience and support.

Typically within the accountancy sector a mentor will be a fully qualified accountant with a number of year’s frontline experience. A mentee is normally a student studying for ACCA accreditation, or a degree in accountancy or they are already a practicing accountant at junior level. 


The mentor and mentee both gain from the mentoring experience in difference ways. A few are listed below:

Benefits for the mentor:

  • Get to reflect on their own experience and knowledge
  • Gain an insight into the younger side of their own industry 
  • Gain an insight into new/current teaching methods
  • A way of being close to current issues as they happen
  • Recognised at work for getting involved and giving something back in a positive way
  • Can be a great way to spot talent for future recruitment campaigns

 Benefits for the mentee (student):

  • Having a mentor is an important form of learning during the early stages of a professional career
  • Mentors offer real experience and working knowledge that cannot be gained from textbooks or the internet
  • Access technical support. A mentor traditionally has a higher qualification level, typically a qualified accountant with a number of years experience
  • A mentor can provide an independent, yet experienced voice that isn’t work or education focused
  • Can advise how to balance workloads and set priorities 
  • Mentors can share work place do’s and don’ts
  • Provide networking opportunities and other important contacts
  • A mentor can be a positive force to push a mentee forward to achieving professional goals and qualifications
  • A mentor can also become a mentee’s champion. This could be for further opportunities within the business or wider industry

Both mentor and mentee benefit from the relationship, and when undertaken in a business environment it can have a positive effect on the team’s working relationships.

by Gillian Sayburn ACCA member and Insolvency Director at Begbies Traynor (Central) LLP

The concept of limited liability for limited companies (including LLPs) is, in the event of the failure of a SME business, often a false belief.  An awareness of the areas where an SME director may be personally liable could help to minimise or avoid such liabilities should their business fail.

There are three main areas where directors can find themselves personally liable: liability under a personal guarantee; liability under contracts; and liability as a result of their failure to carry out their duties as a director which may then be challenged by an Insolvency Practitioner (IP) under Insolvency Act 1986 offences.

Personal guarantees are often given in respect of bank borrowing, company credit cards, property leases, hire purchase, lease and finance agreements.  Should the business fail, a creditor with a personal guarantee will call on this personal guarantee. Where there are two or more guarantors, then the guarantee will usually be ‘joint and several’ whereby the creditor can pursue any director for the full amount.  Guarantees may be either limited or unlimited in monetary terms.

Personal contracts and personal liability often occur where a company was formerly a sole trader or partnership and following incorporation, the proprietor did not legally and effectively transfer contracts he had entered into personally into the name of the limited company.  The director will remain personally liable. Alternatively, the creditor may consider that they have contracted with the director personally rather than with the company.

Should a company be placed into a formal insolvency process then the Insolvency Act contains various provisions which are designed to provide relief for creditors when directors have failed to fulfil their duties as a director.  A claim may be brought under one section or several sections of the Act which we will now briefly comment upon.

Misfeasance (s212 Insolvency Act 1986)

The court may make an order against anyone who “…. has misapplied or retained, or become accountable for, any money or other property of the company, or been guilty of any misfeasance or breach of duty of any fiduciary or other duty in relation to the company”.

Increasingly in insolvencies, we are finding directors with overdrawn directors’ loan accounts.  Leaving the legality of loan accounts aside (dealt with under the Companies Act 2006), the IP will seek to recover these funds from the director. Unauthorised loans may in some circumstances be recoverable from all directors on a ‘joint and several’ basis

Another area that is often discussed is the payment of dividends rather than remuneration to save PAYE and NI usually where the director and shareholder is the same person.  The company may have made dividend payments at regular stages throughout the year at a time when the company did not have sufficient distributable reserves to make the dividend payment.  The IP will seek to recover such ‘illegal’ dividends from the shareholder.  The director may also be liable, as he has authorised the payment – again, it is a ‘joint and several’ issue.

Wrongful Trading (s214 Insolvency Act 1986)

When a director allows a company to continue to trade and incur liabilities when he “knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation” then the director can be liable for wrongful trading.

An example would be the company taking on a new supplier and incurring credit when the director was aware the company would not be able to pay.  In this case, he could become personally liable for the additional debt incurred by the company beyond the point, viewed with hindsight, when “he knew or ought to have concluded….”. Again a ‘joint and several’ issue if there are two or more directors.

Transactions at an Undervalue (s238 Insolvency Act 1986)

A director allows the company to enter into a transaction at an undervalue where the company makes a gift for no value or enters into a transaction where the value received is significantly less in money than the value given.

An example would be where a director may sell a vehicle or piece of equipment to himself and in return he injects some cash into the business, but less than the value of the asset.  In this case the IP would look to the director to pay the difference or return the assets.

Preference (s239 Insolvency Act 1986)

This is where the company does anything that puts one creditor in a better position than it would have been.

An example is where a director knowing that the company is close to failure repays to himself his directors loan or repays monies owed to friends and family or settles a debt where the director has given a personal guarantee, thereby  putting him in a better position than other creditors.

This list is not exhaustive but gives an indication of areas where, should a business fail, the directors may face personal liability.

Should a director believe his company is at risk of failure then, in order to minimise his personal liability, he should seek appropriate and relevant advice sooner rather than later and act on it. 

Such early independent and professional advice will help the company meet its legal requirements and provide evidence that the directors are aware of their duties.  Directors should hold regular board meetings and maintain a record or minutes of the meeting.  These minutes should show the directors are aware of the financial position of the company and detail the steps they are taking to ensure the creditor position does not worsen.  The company should maintain up to date management accounts and circulate to all directors and retain evidence that they have been used for example when considering taking on new creditors or disposing of assets, agreeing dividends or loans.