Accountancy firms have asked the UK government to offer exemptions to professional services firms from rules blocking them from working with Russian clients.
The calls come after the government this month set out plans to block British accountants, business consultants, and PR managers from providing their services to Russians, in response to the country’s invasion of Ukraine.
Industry bodies have however raised concerns the embargo will block them from meeting certain professional obligations, whilst working with Russian linked clients, amid fears they could be made criminally liable if they breach the rules.
Association of Chartered Certified Accountants (ACCA) director Mike Suffield called for greater “clarity” as to what the new rules cover, as he called on the government to offer “some limited exceptions” to professional services firms.
“What we and our members need is total clarity on what’s in scope and what isn’t,” Suffield told City A.M. “Agreement may also need to be reached about some limited exemptions, but these should be considered very carefully, to avoid ways around the ban.”
“We know our members want to do the right thing, and that’s why transparent guidance from the government is so essential.”
A spokesperson for the ICAEW said the government should “carefully consider” the implications of banning firms from providing “services needed to meet statutory requirements,” as they noted large and medium companies are required by UK law to “have an audit, submit tax returns and to comply with insolvency law and regulation”.
“Given the potential for unintended consequences, it’s crucial that the scope and intent of the new measures is clear to ensure the resulting legislation will be free from ambiguity,” the ICAEW spokesperson said, as they called for clarity as to what services the sanctions will cover.
“If it’s the government’s intention to stop certain entities from complying with these requirements, careful assessment is needed to determine which entities would be affected and their role in the UK economy. To ensure maximum effectiveness, these measures should be – where possible – aligned with EU and US sanctions.”
The ICAEW spokesperson also said that until clear guidance is issued, professional services firms, including insolvency practitioners, will likely be avoiding any Russia linked clients
A government spokesperson told City A.M. that it will “make no apology” for having targeted professional services companies, as they claimed “Putin’s oligarchs” have used British firms to “bolster their respectability”.
The government is however considering offering “very limited exceptions” to its rules, in order to facilitate the winding down of Russian operations or ongoing service contracts, City A.M understands.
Tamzen Isacsson, chief executive of the Management Consultancies Association (MCA), said the MCA had not heard of any of its members requesting the government lifts its sanctions, as she claimed British consultancies have already “ceased” providing services to Russia.
Prior to the ban, imports of professional services accounted for around 10 per cent of all UK imports to Russia, according to figures from the UK government.