As a company director, your accountant is likely to be your most important and trusted source of professional expertise while running your business. But what happens if things go wrong?
At IT Contracting, we have worked with dozens of accountants over the years, and switched providers a number of times.
We’ve also received emails and talked to other contractors who have described their experiences with accountants (good and bad).
In this guide, we’re going to look at some of the classic warning signs that your accountant is not doing their job properly. And then, work out how to resolve the problem.
Missing statutory deadlines
One of the most fundamental jobs of an accountant is to submit tax information to HMRC on time and accurately.
Failure to meet a deadline – Corporation Tax, Annual Accounts, VAT, Self Assessment, or otherwise – can result in penalties, as well as HMRC’s unwanted attention.
The longer the delay, the higher the penalties.
Compiling your accounts incorrectly
If your accountant fails to audit your accounts properly… you may, once again, be liable to penalties.
HMRC may apply a penalty if a tax return, or other document is incorrect, and tax has been:
Unfortunately, it is you – the client – who is responsible for any inaccuracies or delays, as far as HMRC is concerned.
A frequent bugbear of our readers, an incommunicative accountant can be the source of genuine anxiety for clients.
There can be many reasons for poor communication – staff absence, misunderstanding, problems with technology (imagined or otherwise), etc.
However, once emails and calls haven’t been returned or dealt with adequately – over a period of time – it’s clear that there is a problem.
Even if you’re a ‘difficult client’ in your accountant’s eyes (yes, we work with a lot of accountants too), a good accountant should deal with you professionally, and not answer you with silence.
Another oft-mentioned issue is that of resourcing.
Many contractor accountants promise clients a ‘dedicated personal accountant’ – i.e. a single point of contact should you need help.
From our experience, this is essential. There’s nothing worse than having to re-explain things to multiple people.
Bad resourcing can lead – of course – to poor communication, and possible errors.
What is a ‘personal accountant’?
If you use a contractor accountancy firm, you will typically deal with non-qualified staff much of the time. A qualified accountant will deal with specific tasks, such as signing off your annual accounts, or providing a professional reference.
This isn’t necessarily an issue for many contractors – with most monthly and annual tasks being automated, routine and fairly uncomplicated.
However, when you need some specific professional accounting advice, you should be able to access this without delay.
From our experience, delays are often caused by a lack of input from qualified staff, for which ‘personal accountants’ may get the blame.
Are you being overcharged?
If your company is on a monthly fee package, have your fees increased to an unjustifiable level?
Has your original accountant been taken over by another player in the market, and service has declined as well as fees going up?
Perhaps ‘add ons’ such as self assessment filing have increased in price – to an unreasonable level?
Clearly, there’s nothing worse than feeling taken advantage of, so unfair pricing is another classic sign that you may need to look around for a replacement accountant.
Our Partner Accountants
|Aardvark Accounting||£76||Free company formation + FreeAgent.|
|Clever Accounts||£89.50||Free company formation + IR35 FLEX solution – for any contract.|
|SG Accounting||£109||Free company formation + free tax return.|
|InTouch||£105||Free company formation. Easily switch between ltd and umbrella.|
|You can compare the monthly fees of over 30 accountants here.|
Should you change accountants?
Company directors don’t tend to change accountants unless they have tried to resolve matters. Or until they’ve tolerated poor service for a significant period of time.
So, unless something dramatic has happened which compels you to give notice at once, chances are – you know instinctively that it’s time to call it a day.
It may be possible to negotiate lower fees, or successfully resolve specific issues.
But things like consistently poor communication tend to be systemic problems from our experience.
It’s up to you, of course, if and when you decide to change accountants.
But, how does the changeover process work, in practice?
How to change accountants
The process of switching accountants is governed by several things: professional courtesy, the competence of those involved in the process, and some client involvement.
- Choose a new accountant – we’ve covered this in detail here.
- Give notice to your current accountant – assuming your payments are up-to-date, there shouldn’t be a reason why this isn’t possible.
- Timing – accountants often say that the best time to change accountants is following your company year-end. You will typically have paid for your year-end accounts to have been completed by your old accountant. Alternatively, a new accountant may offer to take over your accounts and sometimes complete your current year’s accounts for free (or a set fee). It depends on how desperate you are to move firms. Read our guide to timing your move.
- Professional Clearance – as a courtesy, your new accountant will ask your current one for professional clearance. All of your accounting documents should then be transferred to your new provider, typically in zip format. If you use accounting software, such as FreeAgent, you will have to confirm that you want to switch from accountant A to accountant B. This is a fairly simple process.
- Switching HMRC access – your new accountant will ask you to sign form 64-8 to tell HMRC that they will be representing your company. If you have access to your HMRC business tax account, you may be asked to add the new accountant to act for you for Corporation Tax, PAYE and VAT. You may need to wait for HMRC to post codes to your registered office address before access can be granted. Read more about authorising your accountant.
- Be proactive during the transfer – once your new accountant has been instructed, they should be able to deal with the transfer fairly smoothly. The more proactive you are, the smoother the transfer is likely to be.
Good luck with your switch!
Tax-efficient life insurance via your limited company
Save up to 50% if your limited company pays the premiums. Find out more.