How to change your contractor accountant and switch firms

As a company director, your accountant is likely to be your most important and trusted source of professional expertise. But what happens if things go wrong?

At IT Contracting, we have worked with dozens of accountants over the years and switched providers several times.

We’ve also received emails and spoken with other contractors who have shared their experiences with accountants (good and bad).

This guide will look at some classic warning signs that your accountant is not doing their job properly. And then work out how to resolve the problem.

Signs your accountant may be underperforming

Missing statutory deadlines

One of an accountant’s most fundamental jobs is to submit tax information to HMRC on time and accurately.

Failure to meet a deadline – whether for Corporation Tax, Annual Accounts, VAT, Self-Assessment, or another – can result in penalties and HMRC’s unwanted attention.

The longer the delay, the higher the penalties.

Compiling your accounts incorrectly

If your accountant fails to prepare or review your accounts properly, you may, once again, be liable for penalties.

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HMRC may apply a penalty if a tax return, or other document is incorrect, and tax has been:

• unpaid
• understated
• over-claimed
• under-assessed

Unfortunately, as far as HMRC is concerned, it is you – the client – who is responsible for any inaccuracies or delays.

Bad communication

A frequent bugbear of our readers, an incommunicative accountant can cause genuine anxiety for clients.

Poor communication can have many causes, such as staff absence, misunderstandings, or problems with technology (imagined or otherwise).

However, once emails and calls go unanswered or aren’t adequately addressed over time, it’s clear 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.

Resourcing issues

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, of course, lead to poor communication and possible errors.

What is a personal accountant?

If you use a contractor accountancy firm, you will often deal with non-qualified staff. A qualified accountant will deal with specific tasks, such as signing off on your annual accounts or providing a professional reference.

This isn’t necessarily an issue for many contractors, as most monthly and annual tasks are automated, routine, and fairly uncomplicated.

However, when you need 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 acquired by another player in the market, with service declining as fees rise?

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.

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Should you switch accountants?

Company directors don’t tend to change accountants unless they have tried to resolve matters or tolerated poor service for a significant time.

So, unless something dramatic has happened that compels you to give notice immediately, 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. You may also want to understand how fees work in practice – see our guide to catch-up fees.

But things like consistently poor communication tends to be a systemic problem 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 factors: professional courtesy, the competence of those involved, and some client involvement.

Choose a new accountant

If you’ve had a bad experience, you are likely to be extra cautious when it comes to choosing a new accountant. Take your time to research the marketplace – 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 this isn’t possible. Check your letter of engagement to find out if you have agreed to a notice period. Once you’re sure you want to leave, give written notice to your current supplier.

Timing is important

Accountants often say that the best time to change accountants is following your company’s 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 request professional clearance from your current accountant. 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.

Switching accountants is usually straightforward when handled properly, and a good new firm should guide you through the process with minimal disruption.