UK Accountancy Market Report Summary

The
Accountancy
and Allied
Services Market
July 2016
60 Eastern Green Road
Coventry, CV5 7LH
info@irn-research.com
www.irn-research.com

The Accountancy and Allied Services Market
1
© IRN Research 2016
IRN Research
60 Eastern Green Road
Coventry CV5 7LH
UK
E-mail: info@irn-research.com
URL: www.irn-research.com
___________________________________________________________________________
About IRN Research
IRN Research (trading name of IRN Consultants Ltd) was formed in 1991 and has a strong track record in
providing market research services to the professional services sectors. IRN 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 use a range of research techniques and questions to
understand 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 (U&A) surveys and undertaking desk research to come to a clear understanding of your
customer’s needs and potential growth opportunities.

2
Table of Contents
ABOUT IRN RESEARCH................................................................................................................................... 1
INTRODUCTION............................................................................................................................................... 3
AIMS OF THIS REPORT.........................................................................................................................................................................3
EXECUTIVE SUMMARY ................................................................................................................................... 4
SUMMARY INFOGRAPHIC ...................................................................................................................................................................4
KEY FINDINGS.....................................................................................................................................................................................5
THE STRUCTURE OF THE MARKET ............................................................................................................ 6
OVER 40,000 COMPANIES WITH MOST BEING ACCOUNTANCY AND AUDIT FIRMS..................................................................6
26% RISE IN FIRM NUMBERS SINCE 2011.........................................................................................................................................6
IT’S A MARKET WHERE SMALL FIRMS PREDOMINATE BUT THE BIG FIRMS DOMINATE...........................................................7
IT’S A MARKET EXHIBITING DYNAMISM..........................................................................................................................................8
OVER FOUR-IN-TEN FIRMS ARE BASED IN LONDON AND THE SOUTH EAST…......................................................................9
MARKET SIZE AND TRENDS.........................................................................................................................11
IT’S AN INDUSTRY THAT TURNS OVER MORE THAN £23 BILLION ............................................................................................11
AND AN INDUSTRY WHOSE SALES GROW WITH ECONOMIC ACTIVITY....................................................................................11
A MARKET THAT WAS HARD HIT BY THE GLOBAL FINANCIAL CRISIS ......................................................................................12
ACCOUNTANCY AND AUDIT REPRESENTS THE BULK OF THE MARKET ..................................................................................12
POST-BREXIT WORLD WILL BE A TOUGHER OPERATING ENVIRONMENT..............................................................................13
THE STRUCTURE OF DEMAND AND SUPPLY ..........................................................................................15
AROUND 10% OF ACCOUNTANCY AND ALLIED SERVICES ARE EXPORTED ...........................................................................15
FINANCIAL AND PROFESSIONAL SERVICES FIRMS THE MAIN USERS OF ACCOUNTANCY SERVICES....................................15
THE MAJOR PLAYERS.....................................................................................................................................18
THE BIG FOUR LEAD THE MARKET ...............................................................................................................................................18
KEY MARKET DEVELOPMENTS...................................................................................................................19
AUDIT ROTATION AND NEW RULES ..............................................................................................................................................19
CLOUD OUTSOURCING OF THE ACCOUNTING FUNCTION.........................................................................................................19
FROM DATA PROVIDER TO CONSULTANT.....................................................................................................................................20
THE PUBLIC TURNS AGAINST TAX PLANNING..............................................................................................................................20
ADVENT OF ONLINE TAX ACCOUNTS BY THE HMRC FROM 2017...........................................................................................20
APPENDIX: FINANCIAL PICTURE OF THE TOP TEN FIRMS.................................................................21
PRICEWATERHOUSECOOPERS LLP................................................................................................................................................21
DELOITTE LLP..................................................................................................................................................................................22
ERNST & YOUNG LLP .....................................................................................................................................................................23
KPMG LLP........................................................................................................................................................................................24
GRANT THORNTON UK LLP .........................................................................................................................................................25
BDO LLP...........................................................................................................................................................................................26
RSM (FORMALLY BAKER TILLY UK HOLDINGS LTD)...............................................................................................................27
MAZARS LLP......................................................................................................................................................................................28
SMITH & WILLIAMSON UK HOLDINGS ........................................................................................................................................29
MOORE STEPHENS/CHANTREY VELLACOTT DFK ...................................................................................................................30

3 | P A G E
INTRODUCTION
Aims of this report
This report presents a short summary profile of the accountancy and allied services market. For
the purposes of this report, the accountancy and allied services market is taken to consist of
firms engaged in three types of activities:
 Accounting and auditing activities
 Bookkeeping activities
 Tax consultancy

4 | P A G E
EXECUTIVE SUMMARY
Summary infographic

5 | P A G E
Key findings
 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.
 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.
 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 but the big four players – PWC, Deloitte, EY and
KPMG – collectively account for 42% of the industry turnover. More than four-in-ten firms are
based in London and the South East.
 Accountancy and allied services firms in the UK have a collective turnover of over £23 billion
with accountancy and audit firms representing more than three-quarters of the sales.
 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%.
 While 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 - 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.
 By 2021, Brexit could cost firms between 3% (EEA style trade deal ) and 5% (WTO style trade
deal ) of their turnover. The biggest consumers of accountancy services in the UK are financial
and professionals services firms who will be hit by leaving the EU.
 Important issues facing the market at the moment are: new audit rules (and audit rotation); the
move towards cloud-based accounting and the growing automation of accounts production; the
advent of online digital accounts from the HMRC; and the growing need for accountants to
move from being data producers to account consultants.

6 | P A G E
THE STRUCTURE OF THE MARKET
Over 40,000 companies with most being accountancy and audit firms
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 and employed around 75% of employees. Bookkeeping firms, while
smaller in number, employ a relatively larger number of people given the fact that there tends to be a
small number of large firms which skews upwards average employee numbers in this sector (see later in
this report).
Figure 1 The number of accountancy and allied services firms and employment by type, 2015
No of companies Employment Av. No of
employees per firm
Number % Number %
Accounting and auditing activities 34,255 83% 231,927 75% 6.8
Bookkeeping activities 5,765 14% 73,594 24% 12.8
Tax consultancy 1,415 3% 4,191 1% 3.0
Total 41,435 100% 309,712 100% 7.5
Source: Office for National Statistics/IRN Research
26% rise in firm numbers since 2011
The number of firms in the accountancy and allied services market has risen by around 26% between
2011 and 2015. There has been an especially sharp rise in the number of bookkeepers (+75%) and tax
consultancies (+62%), while the number of accountancy and audit firms has risen by only 19%. As will
be shown later, most of these newbies are small operations.
One of the reasons for the relatively slow growth in the number of firms engaged in accountancy and
audit work is the drop in the number of audit firms recently. According to the Financial Reporting
Council, the number of audit firms registered with Recognised Supervisory Bodies (RSBs) has fallen in
recent years from 7,375 in the year ending 31st
December 2011 to 6,331 in the year ending 31st
December 2015. The change in regulations exempting more firms from the need to get audited explains
this.

7 | P A G E
Figure 2 The number of firms offering accountancy and associated services, 2011-2015
It’s a market where small firms predominate but the big firms dominate
It is clear that most accountancy firms are small in size, given that on average the typical firm employs
less than 8 people. Over 90% of accountancy and allied services firms employ fewer than 10 people and
85% of firms turn over less than £250,000 per year. There are only 90 firms in the market employing
more than 250 people and less than 300 turning over more than £5 million annually.
Figure 3 The size structure of the firms offering accountancy and associated services
28,740 30,180 30,410 32,480 34,255
3,290
3,945 4,405
4,865
5,760
875
1,025
1,200
1,320
1,420
32,905
35,150
36,015
38,665 41,435
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2011 2012 2013 2014 2015
Accounting and auditing activities Bookkeeping activities Tax consultancy
Number % Number % Number % Number %
Employment size band
0-4 26,870 78% 5,025 87% 1,240 87% 33,135 80%
5-9 4,315 13% 410 7% 120 8% 4,845 12%
10-19 1,990 6% 150 3% 35 2% 2,175 5%
20-49 770 2% 70 1% 20 1% 860 2%
50-99 180 1% 35 1% 5 0% 220 1%
100-249 85 0% 25 0% 0 0% 110 0%
250+ 45 0% 45 1% 0 0% 90 0%
Total 34,255 100% 5,760 100% 1,420 100% 41,435 100%
Turnover size band
0-49k 9,370 27% 2,520 44% 245 17% 12,135 29%
50k-99k 10,585 31% 1,655 29% 460 33% 12,700 31%
100k-249k 8,790 26% 1,120 19% 460 33% 10,370 25%
250k-499k 2,750 8% 175 3% 120 8% 3,045 7%
500k-999k 1,475 4% 100 2% 70 5% 1,645 4%
1m-4.99m 1,085 3% 110 2% 50 4% 1,245 3%
5m+ 200 1% 85 1% 10 1% 295 1%
Total 34,255 100% 5,765 100% 1,415 100% 41,435 100%
Accounting and auditing
activities
Bookkeeping
activities
Tax consultancy Total

8 | P A G E
As the figure below indicates, the accountancy and audit sector (like the whole accountancy and allied
services market) is very lop-sided in terms of the scale of the companies that operate. The top 50
companies, representing just 0.1% of the accountancy and audit firms in the UK, account for 70% of the
turnover.
Figure 4 The turnover breakdown of accountancy and audit sector firms, 2015
Number of
firms Turnover
Average
turnover per
firm (£ million)
(£billion) %
Top 5 firms 5 £9.61 57% £1,922.6
6-10 5 £1.19 7% £237.0
11-50 40 £1.11 7% £27.8
51-100 50 £0.36 2% £7.1
Others 34,155 £4.67 28% £0.1
Total 34,255 £16.93 100% £0.5
All Top 50 50 £11.91 70% £238.2
Source: IRN Research estimates based on Office for National Statistics/company accounts
It’s a market exhibiting dynamism
The accountancy and allied services market exhibits a high degree of dynamism. This is particularly so
for the bookkeeping and tax consultancy areas of the market where over four-in-ten firms were
established less than four years ago. The accounting and auditing sector is more stable with almost half
of firms having been established for 10 years or more, but even in this sector around one-third of
businesses are less than four years old.
In 2015, most companies operating in the accountancy and audit sector are limited companies (25,275)
with 6,755 being sole proprietors. Just over two thousand (2,165) are partnerships with just 60 being
either non-profit-making or mutual associations, or public sector bodies. Most of the largest
accountancy firms are limited liability partnerships.

9 | P A G E
Figure 5 The Age of accountancy and allied businesses, 2015
Accounting
and
auditing
activities
Bookkeeping
activities
Tax
consultancy Total
No of firms
Less than 2 years 6,385 1,350 360 8,095
2 - 3 years 4,545 1,185 310 6,040
4 - 9 years 7,540 1,775 460 9,775
10 or more years 15,785 1,455 285 17,525
Total 34,255 5,765 1,415 41,435
% of total
Less than 2 years 19% 23% 25% 20%
2 - 3 years 13% 21% 22% 15%
4 - 9 years 22% 31% 33% 24%
10 or more years 46% 25% 20% 42%
Total 100% 100% 100% 100%
All less than 4 years’ old 32% 44% 47% 34%
Over four-in-ten firms are based in London and the South East…
Most accountancy and allied service firms serve a local catchment area with only the larger firms serving
a regional or national market. The importance of London and the South East is clear across all the
sectors of the market, being at its highest for tax consultancy. In fact, Southern England as a whole
(London, South East and South West) accounts for around half of all accountancy and allied services
firms in the UK.
While London and the South East account for 43% of accountancy and audit business these areas
collectively generated 59% of the UK turnover of accountancy and audit companies in 2015.

10 | P A G E
Figure 6 The regional distribution of accountancy and allied services firms, 2015
The Figure below shows the geographic distribution of accountancy and audit firms in 2015. It
demonstrates how these firms cluster around the major conurbations such as London and the North
West (i.e. Manchester, Liverpool)
Figure 7 The geographic distribution of accountancy and audit firms in the UK, 2015
Number % Number % Number % Number %
North East 675 2% 110 2% 25 2% 810 2%
North West 2,880 8% 490 8% 130 9% 3,500 8%
Yorkshire and The Humber 1,975 6% 325 6% 100 7% 2,400 6%
East Midlands 1,915 6% 370 6% 75 5% 2,360 6%
West Midlands 2,670 8% 395 7% 85 6% 3,150 8%
East of England 3,600 11% 630 11% 140 10% 4,370 11%
London 8,880 26% 1,340 23% 365 26% 10,585 26%
South East 5,690 17% 1,110 19% 285 20% 7,085 17%
South West 2,675 8% 550 10% 95 7% 3,320 8%
Wales 1,005 3% 150 3% 30 2% 1,185 3%
Scotland 1,695 5% 245 4% 60 4% 2,000 5%
Northern Ireland 595 2% 50 1% 25 2% 670 2%
United Kingdom 34,255 100% 5,765 100% 1,415 100% 41,435 100%
All london and South East 14,570 43% 2,450 42% 650 46% 17,670 43%
Accounting and
auditing activities
Bookkeeping
activities Tax consultancy Total

11 | P A G E
MARKET SIZE AND TRENDS
It’s an industry that turns over more than £23 billion
Accountancy and allied services firms in the UK have a collective turnover of over £23 billion. Turnover
rose steadily between 2012 and 2015 but is likely to see only modest growth in 2016. Data from the first
four months of 2016, prior to the Brexit vote, already showed turnover slowing rapidly (growth of just
0.5% compared with the same period of 2015) and the uncertainty caused by the UK’s decision to leave
the EU is unlikely to have improved this situation for the rest of 2016. 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%
Figure 8 The turnover of accountancy and allied services firms (£ million), 2010-2016
And an industry whose sales grow with economic activity
The turnover of accountancy an allied services firms tend to move in tandem with economic activity in
the UK, with some slight deviations year on year. The long-run trend in accountancy turnover matches
closely the long-run trend of the UK economy. This indicates that any slowdown in the UK economy as a
result of the Brexit vote will have a direct impact on the accountancy and allied services market.
£22,073
£21,016
£21,509
£22,417
£23,287 £23,348
£19,500
£20,000
£20,500
£21,000
£21,500
£22,000
£22,500
£23,000
£23,500
£24,000
2011 2012 2013 2014 2015 2016 (est)

12 | P A G E
Figure 9 Turnover of accountancy and allied service firms and UK GDP
A market that was hard hit by the global financial crisis
The global financial crisis caused a significant drip in the turnover of accountancy and allied services
firms. Between 2007 and 2009, the turnover of firms dropped by almost 4%, causing a £620 million drop
in revenue. However, the market recovered quickly and in 2010 turnover grew by over 14%.
Accountancy and audit represents the bulk of the market
Accountancy and audit firms represent more than three-quarters of the revenue of the market, with
bookkeeping firms accounting for around 17% of revenue, leaving tax consultancies with around 5% of
the market. The structure of the market has not changed much in recent years, although over 2012 to
2014 accountancy and audit firms may have lost share of the market given the rapid growth in
bookkeeping and tax consultancy firms. This would have been offset by the fact that the largest players
in the market – the large accountancy and audit firms – have probably enjoyed above average revenue
growth recently.
400
600
800
1000
1200
1400
1600
1800
2000
500
5500
10500
15500
20500
25500
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016(est)
GDPatmarketprices(£billion)
Turnover(£million)
Turnover of accountancy and allied services firms GDP at market prices

13 | P A G E
Figure 10 Estimated breakdown of the turnover of accountancy and allied services firms, 2014-2016
2014 2015
2016
(est)
£m £m £m
Accounting and auditing activities £17,529 £18,255 £18,251
Bookkeeping activities £3,799 £3,916 £3,967
Tax consultancy £1,089 £1,116 £1,130
Total £22,417 £23,287 £23,348
In 2016, IRN Research expects the economic slowdown to hit all three sectors of the market, especially
the accountancy and audit sector.
Post-Brexit world will be a tougher operating environment
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
Scenarios 2 and 3 assume a trade deal is arranged or at least largely nailed down by the end of 2018.
Using these scenarios, IRN has laid out three future paths for the accountancy and allied services
market. The main negative impact of Brexit is felt between 2016 and 2018 because businesses will be in
the dark about the future trade relationship. After 2018 the uncertainty declines and the impact of the
trade arrangements take over.
Under a WTO deal by 2021, the turnover of accountancy and allied firms over the 2016-2021 period will
be £6.4 billion lower than it would have been without Brexit (£154 billion without Brexit and £149.3
billion with Brexit) while under an EEA style deal it will be £4.7 billion lower (£154 billion without Brexit
and £147.6 billion with Brexit). In other words,by 2021 Brexit could cost firms between 3% (EEA) and 4%
(WTO) of their business.

14 | P A G E
Figure 11 The forecast path of the turnover of accountancy and allied services firms to 2021
Source: IRN Research
£21.0
£21.5
£22.4
£23.3
£24.1
£24.6
£25.3
£26.0
£26.7
£27.4
£25.0
£25.9
£26.6
£23.9 £23.9 £24.1
£24.4
£25.3
£26.0
£20.0
£21.0
£22.0
£23.0
£24.0
£25.0
£26.0
£27.0
£28.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
No-Brexit Brexit (EEA) Brexit (WTO)

15 | P A G E
THE STRUCTURE OF DEMAND AND SUPPLY
The official input and output figures produced by the ONS provide a useful guide to how the supply of
accountancy and allied services to the UK market is structured and which sectors are the major users of
accountancy services. Unfortunately, the last set of data relates to 2013 so is out of date but it still
provides a useful introduction to the market.
Around 10% of accountancy and allied services are exported
The figure below shows the structure of accountancy supply and demand valued at producer prices. The
figures here do not match the turnover figures given earlier because of timing differences and because
the table below deals with value added, therefore, looks at a firm’s sales less intermediate goods and
services purchased.
The input/output data shows that accountancy and allied services firms export around 10% of their
output and that the UK accountancy market is overwhelmingly supplied by domestic firms: imports
account for only around 3% of the final market.
Figure 12 The supply structure of the UK accountancy market, 2013
Supply
Total domestic output of accountancy services at basic prices* £16,506
PLUS: Imports £528
PLUS: Taxes paid on accountancy services £311
EQUALS: Total supply of accountancy services at purchasers' prices £17,345
LESS: Accountancy services exported £1,694
EQUALS: The UK accountancy services market £15,651
Exports as a % of domestic output of products at basic prices** 10.3%
Imports as a % of the accountancy services market 3.4%
* value added not turnover
** this slightly inflates the export share because exports are valued at purchaser’s prices (i.e. include taxes) and
output is measured at basic prices (excluding taxes)
Financial and professional services firms the main users of accountancy services
The input output tables for 2013 show that two sectors of the economy are the most important for the
sales of accountancy services. Financial service firms and professional, scientific and technical firms both
account for over 20% of the UK accountancy market. These two sectors plus the wholesale and retail

16 | P A G E
trades (including the repair of motor vehicles and motorcycles) are the only sectors accounting for more
than 10% of the market.
Figure 13 The largest sectors consuming accountancy services, 2013
UK
Market
Demand
(£m)
% of
total
Financial Services £3,611 23.1%
Professional, scientific and technical activities £3,344 21.4%
Wholesale and retail trade; repair of motor vehicles and motorcycles £1,735 11.1%
Administrative and support service activities £1,432 9.1%
Manufacturing £995 6.4%
Information and communication £853 5.5%
Transportation and storage £837 5.3%
Construction £592 3.8%
Other service activities £485 3.1%
Accommodation and food service activities £448 2.9%
Human health and social work activities £372 2.4%
Real estate activities £251 1.6%
Electricity, gas, steam and air conditioning supply £151 1.0%
Mining and quarrying £138 0.9%
Education £122 0.8%
Arts, entertainment and recreation £113 0.7%
Water supply; sewerage, waste management and remediation activities £83 0.5%
Households/Consumers £48 0.3%
Agriculture, forestry and fishing £29 0.2%
Investment* £12 0.1%
Grand Total £15,651 100.0%
* accountancy services sold as part of gross fixed capital formation
A closer look at the figures indicates that the types of firms who are the most significant users of
accountancy services are
 Financial service activities, except insurance and pension funding
 Architectural and engineering activities; technical testing and analysis
 Insurance and reinsurance, except compulsory social security & Pension funding
 Retail trade
 Wholesale trade
 Legal activities
 Construction
 Computer programming, consultancy and related activities

17 | P A G E
Figure 14 The 25 largest sub-sectors consuming accountancy services, 2013
* except of Motor Vehicles and Motorcycles
PST = Professional, scientific and technical activities
ASSA = Administrative and support service activities
Sector Sub-sector
Demand
(£m)
%
Financial Services Financial service activities, except insurance and pension funding £2,383 15.2%
PST Architectural and engineering activities; technical testing and analysis £1,697 10.8%
Financial Services Insurance and reinsurance, except compulsory social security & Pension funding £1,125 7.2%
Wholesale and retail trade Retail trade* £768 4.9%
Wholesale and retail trade Wholesale trade* £766 4.9%
PST Legal activities £711 4.5%
Construction Construction £592 3.8%
Information and communication Computer programming, consultancy and related activities £537 3.4%
Other service activities Other personal service activities £390 2.5%
ASSA Office administrative, office support and other business support activities £387 2.5%
ASSA Public administration and defence; compulsory social security £362 2.3%
PST Activities of head offices; management consultancy activities £342 2.2%
Transportation and storage Warehousing and support activities for transportation £330 2.1%
Accommodation and food service Food and beverage service activities £326 2.1%
Human health and social work Human health activities £268 1.7%
PST Accounting, bookkeeping and auditing activities; tax consultancy £245 1.6%
Transportation and storage Land transport services and transport services via pipelines, excluding rail transport £240 1.5%
PST Other professional, scientific and technical activities £234 1.5%
ASSA Rental and leasing activities £222 1.4%
ASSA Employment activities £214 1.4%
Wholesale and retail trade Wholesale and retail trade and repair of motor vehicles and motorcycles £201 1.3%
Real estate activities Buying and selling, renting and operating of own or leased real estate £200 1.3%
Manufacturing Manufacture of basic pharmaceutical products and pharmaceutical preparations £143 0.9%
ASSA Services to buildings and landscape activities £139 0.9%
Information and communication Telecommunications £131 0.8%

18 | P A G E
THE MAJOR PLAYERS
The Big Four lead the market
The lopsided nature of the accountant and allied services market was outlined earlier in this report.
Given what was said earlier, it is no surprise that collectively, the Big Four accountancy firms in the UK
account for almost 42% of the turnover of all accountancy and allied services firms in the UK and almost
53% of the turnover of firms in the accountancy and audit sector. The Big Four led by PwC and Deloitte
are the only accountancy and audit firms to control more than 10% of the market.
Figure 15 The share of accountancy and allied services turnover taken by the top 15 accountancy
firms, 2015
* RSM (formally Baker Tilly)
** including Chantrey Vellacott DFK (Moore Stephens and Chantrey Vellacott DFK merged in 2015)
Source: IRN Research based on company accounts and ONS data
The Appendix presents a series of tables for each of the top ten accountancy firms by sales, showing
their latest turnover and profit figures and the breakdown of their revenue and fee income.
0.2%
0.3%
0.3%
0.3%
0.4%
0.4%
0.6%
0.9%
1.3%
1.7%
2.2%
8.4%
8.6%
11.7%
13.2%
0.3%
0.4%
0.4%
0.4%
0.4%
0.6%
0.8%
1.2%
1.6%
2.2%
2.9%
10.7%
11.0%
14.9%
16.9%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0%
UHY Hacker Young
Crowe Clark Whitehill
Haines Watts
Saffery Champness
PKF UKI
Moore Stephens**
Mazars
Smith & Williamson
RSM*
BDO
Grant Thornton UK
KPMG
EY
Deloitte
PwC
% of turnover, 2015
Accountancy and audit only Whole market
THE BIG FOUR

19 | P A G E
KEY MARKET DEVELOPMENTS
Audit Rotation and new rules
From 17th
June 2016, new rules came into force making it compulsory for firms to rotate their auditors
(subject to some transitional arrangements). The Regulation only applies to the audit of ‘Public Interest
Entities’ (‘PIEs’), defined as all companies listed on an EU regulated market plus unlisted banking and
insurance companies and groups, unless they are small. PIEs must tender their statutory audit at least
every ten years and change their auditor every 20 years.
The Regulation also imposes additional independence requirements for PIE audits, over and above those
laid down by the Financial Reporting Council and the ethical codes laid out by accounting bodies.
The new rules impose
 Limits to the proportion of non-audit fees that can be incurred in a year, by reference to the
average audit fee.
 The prohibition of certain activities for PIE audits. The prohibited activities are similar to those
banned activities laid out in current standards but are broader with fewer exceptions.
Therefore, almost all tax work, unless it has no material effect on the financial statements being
audited, is prohibited as is work on the design and implementation of internal controls over
financial information and systems undertaken 12 months before the auditor is appointed. There
are also are more restrictions on internal audit, corporate finance and management accounting
activities.
The result of these changes has been a rotation of auditors among some very large corporations and
organisations, although most of these changes have involved one Large Four accountancy firms being
swapped for another.
Even before the new rules were established, the number of practices providing audit services was falling
because of new regulations and legislation. Smaller audit firms have lost out, given that their main
clients – smaller businesses – have become except from having to have their accounts audited. From
2015, companies that meet two of the three following criteria no longer need an audit
• They have sales of less than or equal to £10.2m;
• They have a balance sheet total of less than or equal to £5.1m; or
• They have 50 employees or less
Cloud outsourcing of the accounting function.
Many accountancy firms are making large investments to offer their clients cloud based outsourced
accounting. This is in response to demand from mid-sized to large companies who are increasingly
looking to outsource or continue to outsource all or parts of their finance and accounting operations in
the near future.

20 | P A G E
Increasingly outsourcing is growing in scope moving from the traditional (mainly offline) outsourcing of
payroll or benefits administration and moving to the outsourcing of multiple, inter-twined finance and
accounting processes. It remains the case, however, that outsourcing, cloud-based or not, is centered
on transactional processes, which are less likely to require a depth understanding or each individual
business and instead are more open to standardization and are more rules based.
Outsourcing is seen as a mean for clients to lower costs, speed up the generation of financial
information and free internal staff resources.
New services, such a Steam launched by Moore Stephens in 2016, allows businesses to view and drill
down into their financial data through one easy-to-use central hub and provide real-time reporting and
analytics to support better decision making.
From data provider to consultant
Within accountancy firms, the greater use of software and cloud based services means the production of
accounts and reports is quicker and involves less “grunt” work by accountancy staff. This is freeing the
time of accountants employed within accountancy firms, allowing them to move from being data
producers to accountancy consultants. Cloud based accountancy services can do only so much to help
firms automate their finance functions. The UK tax system, for example, remains complex, meaning
firms still require expert assistance to calculate their tax liabilities and meet their obligations. When the
“grunt work” is done by computers, accountants are free to offer personalised advice and consultancy
services to clients.
The public turns against tax planning
High profile examples of tax avoidance have turned the public and the firms that serve them against
aggressive tax avoidance. This has hit some tax consultancy firms and has made some larger clients
reluctant to engage in aggressive tax avoidance schemes.
Advent of online tax accounts by the HMRC from 2017
While many accountancy firms see the introduction of personal online tax accounts in 2017 as an
opportunity to gain more work, others were concerned that it could lead to an increase in DIY
accounting by many individuals and smaller businesses.
While self-assessment will be dropped, it will be replaced by quarterly online tax returns. Accountants
fear clients will not be willing to pay for accountancy services four times a year and instead will pay once
to get their initial online tax return filed and then try the DIY approach for subsequent filings. This could
hit the revenue of smaller firms over the longer-term and/or may cause them to lower their prices to
maintain and on-going relationship with their clients.

21 | P A G E
APPENDIX: FINANCIAL PICTURE OF THE TOP TEN FIRMS
PricewaterhouseCoopers LLP
Figure 16 Financial picture of PwC LLP, year ending 30th
June
2014 2015
£m £m
Revenue 2,814 3,083
of which fee income
Audit 571 604
Non-audit work for Audit clients 332 365
Work for non-Audit Clients 1,636 1,790
Total fee income 2,539 2,759
Pre-tax profits 793 850
No. No.
Partners 854 885
Number PEI Audit clients na 428
Source: Company accounts/Financial Reporting Council/IRN Research

22 | P A G E
Deloitte LLP
Figure 17 Financial picture of Deloitte LLP, year ending 31st
May
2014 2015
£m £m
Revenue
Audit and risk advisory £706 £708
Tax £562 £590
Consulting £622 £687
Financial advisory £424 £462
Switzerland £236 £267
Total Revenue £2,550 £2,714
of which fee income
Audit £486 £475
Non-audit work for Audit clients £176 £173
Work for non-Audit Clients £1,653 £1,799
Total fee income £2,315 £2,447
Pre-tax profits £581 £620
No. No.
Partners 718 721

23 | P A G E
Ernst & Young LLP
Figure 18 Financial picture of EY LLP, year ending 3rd
July
2014 2015
£m £m
Revenue
Assurance Services £550 £585
Advisory Services £559 £584
Taxation Services £470 £517
Transaction Advisory Services £289 £324
£1,868 £2,010
of which fee income
Audit £341 £370
Work for non-Audit Clients £1,263 £1,373
No. No.
Partners 576 624

24 | P A G E
KPMG LLP
Figure 19 Financial picture of KPMG LLP, year ending 30th
September
2014 2015
£m £m
Revenue
Audit and related services £438 £471
Other assurance work £57 £55
Taxation Services £381 £432
Risk Consulting £327 £316
Management Consulting £271 £281
Deal Advisory £400 £403
Overseas £35 £0
Total £1,874 £1,958
of which fee income
Audit £438 £471
Work for Non-Audit Clients £1,178 £1,206
No. No.
Partners 599 624

25 | P A G E
Grant Thornton UK LLP
Figure 20 Financial picture of KPMG LLP, year ending 30th
June
2014 2015
£m £m
Revenue
Audit and allied work £135 £142
Taxation and financial planning £91 £96
Corporate finance £36 £51
Forensic and Investigation Services £14 £17
Recovery and Reorganisation £117 £89
Other £119 £126
Total £512 £521
of which fee income
Audit £125 £132
Work for Non-Audit Clients £338 £341
Total fee income £512 £521
No. No.
Partners 195 184

26 | P A G E
BDO LLP
Figure 21 Financial picture of BDO LLP, year ending 3rd
July
2014* 2015
£m £m
Revenue
Audit £128 £132
Advisory £157 £140
Tax £99 £119
Total £384 £391
of which fee income
Audit £128 £132
No. No.
Partners 277 285
* 53-week period

27 | P A G E
RSM (formally Baker Tilly UK Holdings Ltd)
Figure 22 Financial picture of RSM/Baker Tilly Ltd, year ending 31st
March
2014* 2015
£m £m
Revenue
Tax and advisory £110 £121
Audit and assurance £66 £76
Restructuring advisory £26 £43
Risk assurance £12 £22
Corporate finance £16 £21
Consulting £3 £8
Total £232 £292
of which fee income
Audit £66 £70
No. No.
Principals 330 319
* 2014 revenue figures from the accounts were restated. The fee income figures from the FRC reflect the non-
restated data.

28 | P A G E
Mazars LLP
Figure 23 Financial picture of Mazars LLP, year ending 31st
August
2014 2015
£m £m
Revenue
Assurance, internal audit and actuarial £52 £60
Accounting and advisory £34 £43
Taxations and financial planning £24 £28
Insolvency and investigation £20 £19
of which fee income
Audit £41 £44
No.* No.*
Partners 126 128

29 | P A G E
Smith & Williamson UK Holdings
Figure 24 Financial picture of Smith & Williamson, year ending 30th
April
2014 2015
£m £m
Revenue*
Investment management and banking £106 £115
Tax and business services £92 £98
Other £1 £2
Total £199 £215
of which fee income**
Audit (Nexia Smith & Williamson Audit) £12 £13
No.** No.**
Principals 161 138
* figure from the group accounts Smith & Williamson Holdings Ltd
** figures for Smith & Williamson LLP and Nexia Smith & Williamson Audit combined

30 | P A G E
Moore Stephens/Chantrey Vellacott DFK
Moore Stephens consists of a network of companies worldwide, headquartered in the UK. In the UK, it
operates a series of regional companies, none of which is large enough to file full company accounts. Its
main operation in the UK is Moore Stephens LLP, which now also incorporates Chantrey Vellacott LLP
which merged with Moore Stephens in 2015. Moore Stephens LLP makes up more than half the UK
operation’s fee income of around £137 million and Chantrey Vellacott will push that up to £163 million.
The accounts below relate only to Moore Stephens LLP prior to the merger with partial Chantrey
Vellacott figures included in the fee income data.
Figure 25 Financial picture of Moore Stephens LLP, year ending 30th
April
2014 2015
£m £m
Revenue (Moore Stephens LLP) *
Audit and assurance £43 £43
Restructuring & insolvency £6 £5
Tax advisory £10 £10
Corporate advisory services £1 £2
Forensic accounting £1 £0
Financial planning £2 £2
Management consulting £6 £7
£68 £68
of which fee income**
Audit £12 £15
Pre-tax profits
No. No.**
Partners 55 85
* Moore Stephens LLP only excluding the revenue of Chantrey Vellacott and the revenue of the rest of Moore
Stephen’s UK operations
** Includes four months of Chantrey Vellacott DFK’s income prior to merger (FRC data)

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