Worryingly, of the 75% who share the bleak outlook, 33% of the survey’s 163 respondents predict a downturn in profits and 42% believe profits will stagnate. Only 22% foresee a growth in profits, with the remaining 3% uncertain.

The research from the Institute of Chartered Accountants of Scotland (ICAS) had over 160 respondents, with the majority (97%) either sole practitioners or small firms. Concern over dwindling profits was more common among smaller accountancy practices.

Respondents rated the top five challenges for the year ahead, on a scale of 1–10. The average worked out to:

1. Balancing the volume of work throughout the year – 5.8
2. Compliance/regulation – 5.6
3. Uncertainty about the economy – 5.3
4. Recruitment of quality talent – 5.1
5. Keeping up to date with tax – 4.9

The midpoint for this is scale is 5.5, meaning only the top two are seen as an above-par challenge by the majority of respondents.

An ICAS spokesperson said: “This is virtually identical to our results from 2021, where the same two issues went above that 5.5 mark.”

David Menzies

David Menzies, Icas’s director of practice, said: “The survey was completed by CAs whose practice income ranged from £7,000–£55m. Some 91% operated in a firm with fewer than three principals and over 60% were sole practitioners.

“Average profitability per firm increased from 2021 by 25% to £342,000. This, though, masks that sole practitioners’ average profit fell marginally to £64,000 while the largest firms saw significant increases.”